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A politically active nonprofit that supported Sen. Marco Rubio’s (R-Fla.) failed 2016 presidential bid raised nearly $22 million in two years, 93 percent of which came from either one or two anonymous donors, tax documents obtained by the Center for Responsive Politics show.
From OpenSecrets.Org
Two (at most) secret donors funded 93% of pro-Rubio nonprofit
by A politically active nonprofit that supported Sen. Marco Rubio’s (R-Fla.) failed 2016 presidential bid raised nearly $22 million in two years, 93 percent of which came from either one or two anonymous donors, tax documents obtained by the Center for Responsive Politics show.
Conservative Solutions Project, a 501(c)(4) “social welfare” organization with no employees or volunteers that isn’t supposed to be primarily political, spent millions of dollars on ads, research and polling to boost the Florida senator’s candidacy, but it appears to have done little or no social welfare — unless one counts portraying Rubio as a champion on taxes and foreign policy as being a public good. That raises questions of whether CSP crossed a legal line by acting mainly as a political group — and also whether it existed to benefit a single person, violating the IRS’ “private benefit” rule.
The bulk of CSP’s revenues were derived from two anonymous donations — a $13.5 million contribution shown in its first full-year tax filing, and another $7 million contribution in its most recent filing. But because CSP, as a social welfare organization, is not required to publicly disclose the identities of its donors, it isn’t clear if the two contributions came from a single source — an individual, a corporation or some other entity — or two. This lack of donor disclosure is the reason politically active nonprofits are often referred to as “dark money” groups.
CSP did not respond to phone calls or emails with a detailed list of questions about its funders and activities.
The Rubio shadow campaign
CSP was formed in January 2014, nearly a year after a pro-Rubio super PAC with almost exactly the same name came into being. Through the first half of 2015, it kept a low profile, its biggest expenditure being a $1.4 million payment for “research & polling” to a firm called Optimus Consulting, which at the time was also being paid by Rubio’s leadership PAC, Reclaim America PAC.
The 283-page Optimus report, entitled The American Electorate, was a rich trove of voter demographic data and policy polling in early primary states. In other words, it was just the kind of thing a presidential campaign and its allied groups would find extremely useful. But because campaigns aren’t allowed to coordinate with outside groups, CSP — which was completely unknown at the time — quietly put the report online at an address the general public wasn’t likely to stumble upon; since most of the people who worked for CSP also worked for other political groups backing Rubio, however, there seemed little doubt it would find its way into the right hands.
As the presidential primaries went into full swing, Rubio’s own campaign began paying Optimus Consulting, and would remain the company’s largest client in 2016, at $1.3 million, according to FEC data — twice as much as the firm’s next biggest client, the National Republican Congressional Committee.
Optimus wasn’t the only beneficiary of the $13 million in anonymous funding CSP had at its disposal in its first year. A handful of people with close ties to Rubio and his other political organizations were paid either directly or through firms they’re closely associated with, underscoring the complicated but unmistakable connections between the social welfare group and the rest of Rubio’s political galaxy.
CSP’s most recent 990 tax form shows that payments to many of the same people continued in 2016. And none more than Patrick Shortridge, who earned a salary of $125,000 for 30 hours of work per week last year — a generous sum that was doubled by a payment to PCS Consulting, of which Shortridge is the sole owner. That money came on top of the $127,500 Shortridge and his firm were paid in 2015.
Shortridge is the only CSP board member to take a direct salary from the group, but the firms of other board members also did well. Parlay Political, a consulting firm where CSP board member Joel McEhlannon is managing partner, received a total of $187,000 from CSP over two years. In another instance, a firm called J. Warren Tomkins Inc. was paid $150,000, in addition to both the $137,500 it was paid the prior year and the $245,048 it was paid by the pro-Rubio super PAC through the end of 2016. The company’s owner and namesake, Tomkins, is a seasoned political operative In South Carolina — an important early primary state in the presidential nominating process — and another CSP board member.
When asked in 2015 about the ties between Rubio allies and CSP, the group’s spokesman Jeff Sadosky didn’t deny them. “Absolutely, the two groups are related,” Sadosky said of CSP and the Rubio super PAC in an interview with National Journal. “But they are separate and distinct entities. One is focused on supporting Marco Rubio’s potential presidential campaign, and one is focused on issue education.”
Marco Rubio 101
If you were to look through Federal Election Commission data trying to find any political spending by a group called Conservative Solutions Project, you’d come up empty. While the super PAC arm filed FEC reports showing it spent $55.4 million from November 2015 to March 2016, CSP itself reported no outlays whatsoever.
But that doesn’t mean it wasn’t active. In fact, it was so busy in the early days of the campaign that by Dec. 9, 2015, it had spent more than $8 million to run 4,882 ads favoring Rubio. For comparison, Rubio’s own campaign and his allied super PAC, combined, had only run 1,714 ads up to that point, according to a Wesleyan Media Project report published in partnership with the Center for Responsive Politics.
One of the only ads run by CSP that mentioned another candidate ended showing Rubio front and center with bold “Support Marco Rubio” text
None of the CSP ads were mentioned to the FEC, though, because they were all framed as the kind of “issue education” that Sadosky was talking about. Yes, they were were airing in early primary states and yes, they cast Marco Rubio’s positions on taxes and national security in the most flattering possible light. But they ran far enough ahead of the election — in this case, more than 60 days before a primary — that, under FEC rules, they didn’t have to be reported.
CSP’s single largest payment was $13.1 million — 64 percent of the group’s spending since its founding — to Target Enterprises for “media placement.” Target’s purchase of the air time for CSP is shown in the Center for Responsive Politics’ Federal Communications Commission ad data.
Other disbursements by the group are harder to track. For example, it spent $2.2 million on direct mail and telemarketing, but there is no way to track such outlays if they weren’t used to call explicitly for the election or defeat of a candidate. News reports show that one mailer in Iowa featuring a blue-eyed baby promised Rubio would defund Planned Parenthood, while another in New Hampshire tied Rubio’s primary opponents, Sens. Rand Paul (R-Ky) and Ted Cruz (R-Texas), to Edward Snowden, the former government contractor who leaked thousands of classified National Security Agency documents, and Sen. Bernie Sanders (I-Vt.), who was vying for the Democratic presidential nomination. CSP won a Pollie Award for that one from the American Association of Political Consultants.
Target Enterprises and the firms that directed CSP’s direct mail and telemarketing operations — On the Mark Direct and Bask Digital Media — were paid $53.7 million by CSP’s super PAC arm for the same services.
In all, Conservative Solutions Projects’ payments to companies linked to its Rubio advocacy come out to $15.6 million, which accounts for 76 percent of the group’s combined spending from its founding in 2014 through the end of its last tax filing in mid-2016. That total doesn’t include the $1.4 million paid to Optimus Consulting for research and polling, or the payments to board members and their firms.
This overwhelming spending on services that benefited Rubio’s campaign could easily look, to an average citizen, like excessive politicking on the part of a social welfare organization. But an analysis of the legal merits of that argument, even if the IRS were to investigate (a rare event), could well get bogged down in murky definitions and go back and forth for years — as similar disputes have. Historyshows that groups rarely lose their tax-exempt status.
Congress isn’t helping to sharpen the picture. In the omnibus spending bill passed this week, lawmakers extended a ban on the IRS advancing any so-called “bright line” rules for measuring a nonprofit’s political activities.
But even if the IRS didn’t go after CSP for spending the majority of its resources for overtly political purposes, it could decide that most of the nonprofit’s spending had gone for an array of services that benefited a single person, Rubio, and thus violated another requirement — that nonprofits benefit the broader public.
Philip Hackney, former chief counsel of the IRS division overseeing exempt organizations who now teaches law at Louisiana State University, says that if the IRS could show that CSP “was exclusively or primarily benefiting Rubio” through its focus on him and his policy positions, then the agency might have grounds to revoke the group’s tax-exempt status “without having to go the political route.”
Marcus Owens, former head of the IRS exempt organizations division, agreed, saying that if the IRS looked into CSP, it “would probably say there’s an overwhelming private benefit to its activities” as well as possible campaign intervention “depending on if the messages got close to ‘vote for’ or ‘vote against'” in substance.
Working in CSP’s favor, though, is that the odds of it being audited at all are about as good as those of a Shetland pony running away with Saturday’s Kentucky Derby — and that’s been no secret to the group or its lawyers. “[T]he IRS doesn’t have the capacity to do a lot of audits of any kind right now,” noted Owens, due to chronic and deliberate underfunding; that stands little chance of changing under President Trump and the Republicans controlling Congress, who have been at odds with the agency for years.
Meanwhile, CSP lies quiet, save an occasional tweet. There’s always another election cycle to consider.
