The first annual tax return filed by pro-Trump “dark money” group America First Policies and reviewed by the Center for Responsive Politics reveals that the 501(c)(4) nonprofit spent even more on political activities than previously reported in campaign finance disclosures.
As a 501(c)(4) “social welfare” nonprofit, is not allowed to have politics as its primary purpose despite spending millions on politicking.
Disparities between the new tax documents submitted to the Internal Revenue Service (IRS) under the penalty of perjury and earlier disclosures to Federal Election Commission (FEC) indicate that millions of dollars in political spending may have been left undisclosed for many months.
America First Policies told the FEC that it spent $1.97 million in independent expenditures and $245,404 on electioneering communications in its first year of operation. But the “political campaign activities” spending it reported to the IRS for the same period was around twice that amount – $4.3 million – and its total spending reported for that period was even more.
While discrepancies in political expenditures reported to the IRS and FEC by politically active nonprofits are not uncommon – nor necessarily indicative of a false statement to either federal agency – dark money groups often try to mitigate their spending in tax returns’ descriptions of their political activities.
The IRS’ most recent Form 990 instructions note that “any expenditures made for political campaign activities are political expenditures. An expenditure includes a payment, distribution, loan, advance, deposit, or gift of money, or anything of value. It also includes a contract, promise, or agreement to make an expenditure, whether or not legally enforceable.”
The broader coverage of the IRS definition of political campaign activities combined with groups’ equivocal descriptions of those activities often makes it difficult to compare the amounts reported in tax returns to what was reported to the FEC. Due to lack of communication between the IRS and FEC, this kind of discrepancy is often left undiscovered.
America First Policies, however, describes what the group’s political campaign activities entailed in detail.
Unlike many other politically active nonprofits that describe vague or varnished versions of their political activities to the IRS, the only activities America First Policies lists that the $4.3 million it spent on “political campaign activities” went to are “independent expenditures and advertising costs to support (or oppose) political candidates who agreed (or disagreed) with the organization’s policy initiatives” – despite the group only reporting $1.97 million in independent expenditures to the FEC for that period.
State-level campaign finance disclosures only show America First Policies’ $115,000 in-kind payment to its affiliated super PAC covering shared costs like payroll and office space, with no additional reported outside spending, according to National Institute on Money in Politics data.
Without additional information, it might appear that America First Policies failed to report what that $4.3 million was actually spent on to the IRS or failed to report that spending to the FEC entirely.
Despite the potential implications of a group misreporting political spending to the IRS or FEC, any substantial consequences are unlikely. The FEC has habitually deadlocked on whether to even pursue some of the most brazen “dark money” cases and a recent Inspector General report on nonprofit political activity found that IRS did not “adequately document research related to the allegation, tax-exempt laws evaluated, or the rationale,” failing to forward more than 1,000 cases of impermissible activity to the appropriate oversight committee.
But that $4.3 million only skims the surface of America First Policies’ spending.
In total, the 501(c)(4) spent $14.2 million during its first year of operation.
Of that, America First Policies reported $7.4 million of its “program services expenses” went to “lobbying” – though no corresponding records could be identified at the state or federal level.
America First Policies did not respond to multiple requests for comment.
Close ties, deep pockets
America First Policies reported an additional $245,404 to the FEC in electioneering communications – targeting vulnerable Democrats Senators Joe Donnelly (D-Ind.), Joe Manchin (D-W.Va.) and Heidi Heitkamp (D-N.D.) in 2018.
America First Policies’ sister super PAC, America First Action, spent another $28.9 million on 2018 elections according to its most recent campaign finance records. The super PAC arm raised less than $4 million during its own first year of operation in 2017 but dramatically picked up fundraising this year, raking in over $32.7 million in the 2018 election cycle.
The America First groups have a cozy relationship, sharing workers, a phone number and other resources. The operation’s payments include big money to close allies of President Trump.
America First Policies new tax return reveals a $2.7 million payment to Parscale Strategy LLC, the firm helmed by Brad Parscale, the campaign manager for President Trump’s 2020 re-election campaign. The Polling Company, the polling firm started by Trump’s White House counselor Kellyanne Conway, received an additional $661,988 from the group.
Its super PAC arm paid even more to Conway’s polling firm, Parscale’s digital firm, President Trump’s former campaign manager Corey Lewandowski and campaign spokeswoman Katrina Pierson, according to FEC disclosures.
America First Policies’ payments also include $4.9 million to NMRPP LLC, a reference to National Media Research, Planning, and Placement LLC, a firm that has been accused of potentially being part of an illegal campaign coordination scheme for the National Rifle Association.
In some FCC filings, the two groups’ names are used almost interchangeably with at least one contract listing the advertiser as the super PAC on the first page of the invoice at its 501(c)(4) arm on a later page.
Both of the America First groups continued to air ads during the leadup to 2018 midterm elections.
President Barack Obama’s Organizing for Action (OFA) pioneered the use of 501(c)(4) nonprofits closely tied a president’s campaign and administration supporting their agenda. But the America First operation has taken that premise to the next level.
Unlike OFA, which did not operate as a 501(c)(4) until after President Barack Obama’s 2012 re-election, political nonprofits have been active since the onset of President Trump’s first term. President Trump’s unprecedented move to register as a candidate for the 2020 presidential election on his first day in office has blurred the line between groups spending in support of the administration’s agenda versus those supporting his re-election as he negotiates dual-roles as president and candidate.
New tax documents filed by another pro-Trump 501(c)(4) nonprofit, Great America Alliance, show it raised and spent around $3.4 million during that period.
Its 2017 spending included $955,382 to Frontline Strategies for “management services,” $618,859 to RRT Media for “issue advocacy TV,” $369,306 to Campaign Solutions and $221,937 for “on-line issue advocacy,” and $124,435 to Apex Strategy Group for “issue advocacy TV.”
Great America Alliance reported just $291,181 that went to political campaign activities, claiming that it “educated voters through direct and indirect political advocacy messaging nationwide within the scope of applicable laws and regulations.”
Corporate disclosures reveal secret donors
Though America First Policies’ newly reported spending is larger than previously disclosed, the group’s fundraising may strike some as surprisingly low since reported millions less to the IRS than the $26 million the group told Axios it had raised earlier this year.
Although America First Policies itself does not reveal donors’ identities, corporate disclosures and tax records reveal the sources behind three of its five biggest donations — accounting for over a quarter of its funding.
America First Policies’ known six and seven-figure donors include some major corporate players, including Reynolds American giving $1.5 million, Southern Company with $1 million, CVS Pharmacy with $500,000 and Dow Chemical reporting $100,000.
Three of those companies – CVS, Dow Chemical and Southern Company – announced they would stop donating to America First Policies earlier in 2018 when donations came to light after CNN discovered that multiple staffers made comments decried “racist, sexist, anti-LGBT, and anti-Muslim” and another reportedly “praised” Nazis.
Topping America First Policies’ known donor list for its first year of operation is the Pharmaceutical Research and Manufacturers of America (PhRMA), a trade group representing the drug company industry’s lobbying interests, which disclosed giving $2.5 million to America First Policies in a new tax return obtained by the Center for Responsive Politics and first identified by Maplight.
PhRMA also disclosed $1.5 million to American Action Network (AAN), a dark money group closely aligned with GOP House leadership, in 2017 on top of around $6 million the prior year for a total over $13.5 million since AAN first became active in 2010.
The prior president of AAN and Congressional Leadership Fund, Brian Walsh, is now president of America First Policies and America First Action.
America First Policies’ tax returns report a total of $22 million received from 33 donors in 2017, with gifts ranging from $5,000 to $5 million, as first reported by Politico.
The identity of America First Policies’ biggest donors remains a mystery, leaving the source of more than $16.5 million from secret donors — including a $5 million donor, $4.5 million donor, and multiple million-dollar donors — unaccounted for.