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Amid Secrecy Dispute, Fistful of Schedule B Forms Show Power of Big Political Dollars

February 05, 2018 | dark money watch |
Activists hold a protest near the Manhattan apartment of billionaire and Republican financier David Koch. (Photo by Spencer Platt/Getty Images) Activists hold a protest near the Manhattan apartment of billionaire and Republican financier David Koch. (Photo by Spencer Platt/Getty Images)

As Congress last year debated a $1.5 trillion tax cut, special interests mobilized to support and oppose the measure. One of the more prominent supporters was the American Action Network, a conservative dark money organization that spent roughly $28 million for activities that included  “carrying out grassroots organizing at town halls to build momentum for a tax system that lowers rates and prioritizes working families and jobs creators.”

AAN may have carried out “grassroots organizing,” but a crucial section of the network’s tax return shows the money for that organizing didn’t come from grassroots sources such as local activists or small dollar donors.

Instead, a heavily redacted section in AAN’s annual tax return known as a Schedule B shows the conservative organization made it through an entire year without receiving a single donation smaller than $5,000. The AAN reported receiving almost $14.6 million in contributions and grants during its 2015-16 tax year, with a single $5.9 million contribution amounting for more than one-third of all donations.

The example highlights the importance of an obscure tax form in providing transparency about the role of large donors in American politics. MapLight, a Berkeley, Calif.-based money in politics watchdog nonprofit, asked federal regulators earlier this month to force Americans for Prosperity — the flagship political organization of billionaire libertarian brothers Charles and David Koch — to release a redacted copy of its Schedule B to the public.

Although Internal Revenue Service instructions to nonprofit organizations clearly state that the names and addresses of donors in a Schedule B can be redacted to provide anonymity for contributors, AFP argues that even releasing individual donor amounts could allow the public to identify its donors. The Arlington, Va.-based dark money organization reported raising almost $64 million last year. A document filed with the North Carolina Secretary of State’s office shows that AFP received more than 80 percent of its 2016 contributions from five donors; the individual amounts, however, can’t be determined without a Schedule B.

Other recent examples of the importance of the Schedule B include:

– The Wellspring Committee, a conservative, Virginia-based dark money organization, provided funding for a $17 million campaign to block former President Obama’s Supreme Court pick and support President Donald Trump’s nomination of Neil Gorsuch to the nine-member high court. Wellspring received $32.2 million in grants and contributions in 2016, according to its last publicly available tax return; more than $28 million came from a single donor, according to a MapLight examination of the organization’s Schedule B.

– Crossroads Grassroots Policy Strategies, a nonprofit spinoff of the conservative American Crossroads super PAC co-founded by Karl Rove, former President George W. Bush’s top political strategist, might not have been an entirely grassroots organization, according to National Public Radio. A 2013 examination of the dark money organization’s Schedule B showed that 99.8 percent of its $179 million in grants and contributions came from donations that topped $5,000. Almost 85 percent came from donations exceeding $1 million.

– The National Rifle Association, which bills itself as “America’s longest-standing civil rights organization” with more than 5 million members, received more than 15 percent of its total grants and contributions in 2016 from a single $19.3 million donation, according to its latest Schedule B. The NRA, based in Fairfax, Va., is able to shield the identities of its major donors because of a precedent set by a 1958 U.S. Supreme Court case that protected the names of contributors to the National Association for the Advancement of Colored People.

– An inadvertent posting of the Schedule B for the nonprofit policy arm of the Republican Governors Association in 2013 that was obtained by the Washington, D.C.-based Center for Public Integrity revealed that contributors included HCA Inc., one of the nation’s largest for-profit hospital chains ($89,000); David Humphreys, a Missouri chief executive and member of the board of a Koch-funded economics program at George Mason University ($50,000); and James Haslam, the chief executive of the nation’s largest truck-stop firm and brother of Tennessee Gov. Bill Haslam ($10,000).

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