New ‘dark money’ group devotes multi-million dollar budget to ads helping Democrats

A new “dark money” group funded by secret donors plans to spend almost all of its $10.4 million budget on ads helping Democrats in House races heading into 2020.

House Majority Forward was quietly incorporated in March but operated under the radar until its public launch in July as a new 501(c)(4) arm of House Majority PAC, the Democrats’ flagship super PAC for congressional races that is closely aligned with Democratic House Speaker Nancy Pelosi.

Unlike the super PAC, HMF can keep its donors, as well as many details of its activities and finances, hidden from the public. 

HMF has quickly ramped up its operations with a multi-million dollar ad blitz to boost Democratic House candidates. The group has already spent around half-a-million dollars on ads backing Dan McCready ahead of the expensive Sept. 10 special election in North Carolina’s 9th District, according to Federal Communications Commission records from OpenSecrets’ ad data tool. 

The ads are just the beginning of a planned $10 million ad blitz through the end of the fiscal year. Ad buys account for more than 94 percent of the fledgling dark money group’s planned spending, according to HMF’s estimated budget in a financial statement obtained by OpenSecrets.

The financial statement also confirms reporting by Politico revealing HMF’s ambitious plan to raise $20 million before 2020.

IRS rules allow 501(c)(4) nonprofits claiming to exist for the purpose of promoting “social welfare” to engage in some political activities but prohibit them from having politics as their primary purpose. The IRS does not have a bright-line rule for determining what constitutes too much politicking, but a general rule of thumb is that 501(c)(4) nonprofits are not allowed to devote more than half of their activities to political purposes.

Although HMF’s budget allocates exactly half of its estimated revenue to advertising, ads make up nearly the entirety its planned spending before the end of the year. 

The North Carolina ad does more than just name-drop a candidate, ending with Dan McCready’s name above the word “CONGRESS” and a reminder to “VOTE SEPTEMBER 10TH.” 

A spokesperson for the group told OpenSecrets it will report the ad to the FEC as its first independent expenditure. The FEC did not have any independent expenditures by HMF on file within 48 hours after the ads were slated to air as is required, but the group’s spokesperson says the disclosures will be filed with the FEC shortly. Penalties or other consequences are generally determined by the FEC on a case-by-case basis depending on the amount spent and other factors.

In addition to North Carolina, HMF kicked off an ad blitz in California and New Mexico, giving an early boost to freshmen Reps. Mike Levin (D-Calif.), T.J. Cox (D-Calif.) Harley Rouda (D-Calif.) and Xochitl Torres Small (D-N.M.). Because the ads are framed as issue advocacy praising or attacking candidates using artfully crafted language that stops short of explicitly advocating for or against their election, they are not required to be disclosed to the FEC outside of the window before elections. The spots hurl compliments at the democrats and urge viewers to call their representatives in Congress to thank them. 

HMF is also running digital advertising, spending more than $7,000 on Facebook ads and $54,000 on Google.

Super PAC sharing

The new dark money group and the affiliated House Majority PAC have kicked off a cozy relationship, with HMP’s website even initially including a since-removed disclaimer that it was paid for by the super PAC. The two groups share staff, including dual-roles for executive director Abby Curran Horrell and president Robby Mook, Hillary Clinton’s campaign manager in the 2016 presidential election.

House Majority PAC’s founder, Ali Lapp, serves on HMF’s board alongside Jesse Ferguson and Heather Stone, who worked with Mook on the 2016 Clinton campaign. The nonprofit’s board also includes Brian Wolff, Speaker Nancy Pelosi’s former aide. House Majority PAC reported an in-kind contribution from HMF totaling just over $50,000 for research in its mid-year FEC report.

The new dark money group joins a growing number of political nonprofits closely tied to establishment-backed super PACs. The conservative dark money group American Action Network shares its offices and staff with the Congressional Leadership Fund, the top spending super PAC in 2018. Majority Forward, the top dark money spender in last year’s midterms, is closely tied to Democratic leadership in the Senate. These dark money groups funnel money to the big-spending super PACs, to the tune of $176 million in 2018. 

Dark money groups have spent more than $1 billion on independent expenditures since the 2010 Citizens United v. FEC decision that opened up elections to unlimited spending groups. 

The FEC has tried and failed to fight dark money spending, issuing guidance that all nonprofits spending at least $250 on independent expenditures must report every donor who gave at least $200 for “political purposes” in the calendar year. The guidance has been ineffective, as groups simply tell the FEC that they do not receive funds earmarked for political purposes. 

A spokesperson for HMF said the group would disclose donors who intend their funds to be used for political purposes, but said it has not yet received any such contributions. Despite benefitting from dark money themselves, Democrats in Congress have pushed changes that could shine a light on the secret money groups, passing a comprehensive election bill that would require politically active nonprofits to disclose their donors.

Edit 9/4/19: Phil Schiliro told OpenSecrets he is longer a member of the House Majority Forward board.