Forum explores ‘dark money’ behind TV ads

The 2012 election, the most expensive in U.S. history, has seen the ascendance of big-money donors who so prize anonymity they’ve resorted to using a tax designation known as “social welfare nonprofits” to fund their TV ad buys.

These groups, known as 501(c)(4)s, have created “the darkest corner” in political fund-raising, said editor Stephen Engelberg during an Oct. 12 forum on polling and politics at Bnai Keshet in Montclair.

“Don’t forget about money, because money changes everything,” he said.

Engelberg, managing editor of the nonprofit newsroom ProPublica, shared the stage with Jay Leve, a former Miami Herald reporter and founder of SurveyUSA, and news veteran Nancy Solomon, managing editor of New Jersey Public Radio and a former colleague of Engelberg’s at the Portland Oregonian. All three are Bnai Keshet members.

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Solomon, the moderator, first invited the crowd of more than 100 to pay tribute to the Montclair High School students and teachers in the room who had launched a national call for a female presidential debate moderator. Students Sammi Siegel, Elena Tsemberis, and Emma Axelrod, inspired by teachers Shana Stein and Beryl Steinbach, collected 170,000 signatures. Siegel and Stein are Bnai Keshet congregants.

Engelberg spoke while Leve polled a crowd of 100, asking them to pick the winner in the presidential election. He said after the U.S. Supreme Court lifted a ban on corporate campaign spending in January 2010, ProPublica, a recipient of two Pulitzer Prizes for investigative work, launched a project to unmask “dark money.”

Called Free the Files, it follows the money spent on TV ad buys back to nonprofit donors. The task was so big, ProPublica enlisted volunteers to review filings and nail down key details from ad buys in 50 media markets. They sign up on-line at ProPublica’s website.

There is no oversight of groups set up to promote the public welfare, Engelberg said. “Nobody checks. Such loose oversight of these groups allows activity we’d never get away with. If we filed these tax returns, we’d be in jail.”

Supreme Court Justice Anthony Kennedy’s majority opinion in Citizens United v. Federal Trade Commission, which lifted a corporate campaign spending ban, said “prompt disclosure of expenditures” would provide accountability, Engelberg explained.

“You can see the fantasy universe that Kennedy thought existed,” Engelberg said after quoting the opinion. “It exists only in the mind of Kennedy.”

Instead, he said, these mysterious donors shun super PACs, which must report their donors, to form social welfare nonprofits, which don’t have to report donors. These fake nonprofits, he said, are outspending super PACs.

“TV stations are required to keep a log of ads,” he said. “You can see the amounts spent. At least you can find out which of these phony-baloney groups spent money on political ads. When we’re done, we’re not going to have Justice Kennedy’s fantasy world but at least we’ll have something.”

ProPublica has data on 20 percent of the “dark money” groups. Many underreport their political activity; others are downright deceptive. “One group said it wasn’t going to engage in politics at all,” Engelberg said. “The same day, it took out $100,000 in TV ads.”

Both parties are exploiting the loophole. In New Mexico, he said, more than 50 percent of the ad money in a Senate race came from nonprofits. “Nobody ever imagined these organizations would become the primary conduits of hundreds of millions of dollars. Single groups dwarf whole presidential campaigns.”

He wrapped up by citing Ohio, where pollsters predict the presidential race will get decided. So far, Engelberg said, nonprofits and super PACs have dumped “almost $400 million in ads in Ohio’s four media markets,” he said.

Before Leve divulged poll results, Solomon said New Jerseyans didn’t have to look far to find “dark money.” She said a colleague at WNYC pulled media records on ads for Gov. Chris Christie. “There were many single pieces of paper from a nonprofit group called Committee for our Children’s Future that spent $6 million in ads,” Solomon said. “Because it’s a 501(c)(4), there’s no way to get the records.” She asked about it at a press conference, she said, but got no answer.

Leve opened his presentation with a joke. “Two Jews get on a scale and weigh themselves,” he started out. One believes what it says he weighs, he said; the other doesn’t. So it is with polls, he said.

Leve’s Oct. 12 poll result: 83 percent for President Obama, 17 percent for Republican candidate Mitt Romney. “It’s an optimistic crowd,” he said.

Polls had been characterized by “fever-pitch volatility,” he said. But if the election season were to have ended that day, Leve said, Obama would win the Electoral College with the narrowest margin in U.S. history: He needs 270 electoral votes; Leve gave him 281.