As tea party activists rail against the special interests and backroom deals that shape Washington, the movement's leaders are embracing classic old-money politics in preparation for 2012.
The Tea Party Express, a Sacramento-based political action committee that put $7.7 million behind conservative candidates in the 2010 midterm elections, has set up a political nonprofit, an increasingly popular tax-exempt entity that can raise unlimited sums from undisclosed donors for political purposes.
The group's new fundraising vehicle, on top of its two existing PACs, could allow it to play an even larger role this cycle, reaching out to donors who are willing to secretly write big checks. For donors who prefer to remain anonymous, the nonprofit arm, dubbed State Tea Party Express — organized under Section 501(c)(4) of the tax code — could provide another option for their donations, alongside more establishment Republican enterprises such as American Crossroads and its associated nonprofit, Crossroads GPS, which former White House political director Karl Rove helped launch.
So far this cycle the Tea Party Express has raised $1.4 million through its two PACS, just less than one-fifth of what American Crossroads, a super PAC, has pulled in, according to data released Wednesday by the Federal Election Commission.
Sal Russo, the veteran Republican operative behind the Tea Party Express, said secrecy was not the reason for creating this third fundraising vehicle. He blamed current campaign finance laws for driving political money away from candidates into outside groups like his own, but he would not say whether the nonprofit would disclose its donors.
PACs are required to report donations and disbursements to the FEC, and individual contributions cannot exceed $5,000.
Russo's decision to use multiple fundraising vehicles is one of several signs that the tea party movement — untamed and raucous in its first two years — is increasingly playing by the rules of the political establishment. The Tea Party Patriots, another well-known tea party group, is also organized as a 501(c)(4) but does not engage in federal elections. FreedomWorks operates a charitable arm and a political nonprofit but spends relatively little on paid advertising. The group also launched a super PAC in June.
Russo said the purpose of setting up the nonprofit was to differentiate state and federal activity, but he acknowledged that not having a cap on individual donations would be beneficial.
"We wanted to keep the federal PAC focused on the federal elections," he said. "We created the State Tea Party Express for when things come up in one of the states."
But the nonprofit's first move was a $500,000 TV advertising buy targeting President Barack Obama's jobs bill, which failed Tuesday night to pass the Senate. The 60-second spot, called "The Perry/Walker Way," compares Obama's proposal to the jobs agendas of Wisconsin Gov. Scott Walker (R) and Texas Gov. Rick Perry (R), a presidential contender.
And when asked what the nonprofit's next target would be, Russo left very little doubt that funds donated to the organization would be directed toward the 2012 presidential race.
"I don't know what stupid ideas this administration will come up with next, but I have no doubt they'll have one," he said.
Until now, right-leaning organizations held a near-monopoly on the use of nonprofit 501(c)(4) organizations, which emerged as powerful players during the last election cycle after a January 2010 Supreme Court decision rolled back limits on corporate and union spending in election campaigns.
Unlike their charitable 501(c)(3) counterparts, which are barred from political activity, and 527 political organizations, which have enhanced disclosure requirements, 501(c)(4) groups can shield donor identities and still participate in campaign activity so long as it's not the organization's primary purpose.
But the IRS has never explicitly defined the acceptable level of political involvement, prompting concerns among government watchdog groups that many of the organizations might have little else going on.
"There is this fiction that they are a lobbying outfit and not a political committee," said Meredith McGehee, policy director at the Campaign Legal Center, which wrote a letter in September asking the IRS to investigate the activities of nonprofits such as Crossroads. "As long as they can say it's not the primary activity and [the] IRS does nothing, they basically can define what they are."
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