Sen. Charles E. Schumer (D-N.Y.) commented at a news conference on Wednesday… (Pete Marovich, Getty Images )
Reporting from Washington — President Obama's first campaign ad of 2012 decried "secretive billionaires attacking" him through conservative nonprofit groups that do not reveal their contributors.
But two Democratic nonprofit groups that do not disclose their donors made payments last year to their affiliated "super PACs," a tactic that can be used to undermine transparency.
Priorities USA Action, a group started by two former Obama White House aides, accepted $215,000 from its tax-exempt arm, Priorities USA, for "operating expenses," according to campaign finance reports filed Tuesday with the Federal Election Commission.
American Bridge 21st Century, which concentrates on opposition research to help Democratic campaigns, received nearly $246,000 from its sister group, American Bridge 21st Century Foundation, for "overhead and staff expenses," according to the finance reports.
Officials with the organizations said the transfers were simply reimbursements from the nonprofits to super PACs to cover administrative costs. They noted that in reporting the transfers they were providing transparency about the groups' spending. Representatives of both groups declined to comment on the record.
But campaign finance experts said that such transfers underscore a troubling relationship between super PACs and their affiliated 501(c)4 social welfare organizations. The latter are "weakening transparency in the political world," said Michael J. Malbin, executive director of the nonpartisan Campaign Finance Institute.
Paul S. Ryan, associate legal counsel at the Campaign Legal Center, which advocates for tighter restrictions on political spending, said the money transfers to cover shared overhead highlighted the coziness between the groups.
"It reaffirms the general notion that this is a single political operation setting up two bank accounts, one of which has the primary purpose of evading disclosure," he said.
Obama has repeatedly railed against secret money in politics and called for the passage of the Disclose Act, which would require third-party groups to identify their donors.
"The American people deserve to know who's trying to sway their elections," he told voters in Philadelphia in October 2010.
But in the months that followed, Democratic operatives set up super PACs with nonprofit arms, citing the need to compete on an even playing field with the GOP.
The dual-armed groups are part of a phenomenon that took off in 2010 after several court decisions, including the Supreme Court's ruling in the Citizens United case. That led to the advent of super PACs — independent political action committees that can accept massive donations, as long as they do not coordinate with the candidates or party committees.
Super PACs must disclose their contributors to the FEC. But that's not the case with 501(c)4 social welfare organizations, which are allowed to participate in a limited amount of political activity. Under the current guidelines, nonprofits can't spend more than 49% of their budget on political activities, including donations to super PACs. Yet even with these limitations, electioneering by such groups has swelled in the last two years.
Because tax-exempt groups — which tend to be more successful than their super PAC counterparts at raising money — cannot make political activity their primary purpose, some election law experts anticipated that many of them would simply transfer increasing amounts of money to their sister organizations, effectively funneling untraceable money into political spending.
But so far, there have been few examples of such transfers. Campaign finance reform advocates said there has actually been little need for nonprofits to funnel money to super PACs because the tax-exempt groups have been able to engage in political activity with little oversight.