Tea party-aligned FreedomWorks fueled by elite donors

Introduction

Tea party-aligned nonprofit FreedomWorks Inc. boasted its largest fundraising year on record in 2012, primarily fueled by a handful of million-dollar gifts, according to previously unpublished documents obtained by the Center for Responsive Politics.

The self-described “grassroots service center,” which is based in Washington, D.C., reported raising $15 million last year — a 50 percent increase above the $10 million it raised in 2011, according to a new annual tax report filed with the Internal Revenue Service.

That’s a larger sum than any year on the books, according to a Center for Public Integrity review of IRS records going back to 2006.

The new IRS filing shows that nearly 60 percent of the money FreedomWorks raised came from four publicly unnamed donors that each gave at least $1 million.

The group’s top donor — who contributed nearly $4.9 million — alone accounted for about one-third of FreedomWorks’ overall receipts.

In all, 106 unnamed donors are listed in the new tax filing as contributing at least $5,000 last year to the nonprofit that describes its mission as fighting for “lower taxes, less government and more freedom.”

The IRS documents detail millions of dollars spent in 2012 on “public education,” “events,” tracking “legislation on Capitol Hill” and alerting “members when issues of interest become relevant.”

Among FreedomWorks’ many recent initiatives was its enthusiastic endorsement of the 21-hour talk-a-thon last month by Sen. Ted Cruz, R-Texas, as he railed on the Senate floor against Obamacare.

Earlier this month, the group urged members of Congress to reject the bipartisan legislation developed that re-opened the federal government last week and raised the debt ceiling until February. It said the bill “allows for more uncontrolled spending and debt, with no reforms to either, [and] does nothing to address Obamacare.”

The IRS documents also show that FreedomWorks made just one grant to another nonprofit organization last year: $30,000 to Indiana Right to Life, an affiliate of the National Right to Life Committee, which is seeking to “make Indiana inhospitable to abortion on demand.”

The revelations about FreedomWorks’ 2012 fundraising come at a time when it is weathering its share of internal — and financial — troubles.

After the November 2012 election, Dick Armey, the former Republican House majority leader who has long served as FreedomWorks’ chairman, tendered his resignation.

Prior to the election, Richard J. Stephenson, who serves on FreedomWorks’ board of directors, arranged an $8 million buyout for Armey, which would be paid in annual $400,000 installments as consulting fees, according to the Associated Press.

Armey told Mother Jones that other FreedomWorks executives were insisting on a “direction” that he believed was “unproductive.”

The new IRS annual report includes a confirmation that Armey and Stephenson entered into a “business relationship” last year.

It also shows that Armey received compensation totaling $489,000 from FreedomWorks and its related organizations.

That was slightly more than the $470,000 in compensation received in 2012 by Matt Kibbe, FreedomWorks’ president and chief executive officer.

FreedomWorks, which is organized as a “social welfare” nonprofit under Section 501(c)(4) of the U.S. tax code, also operates a 501(c)(3) foundation arm and multiple political committees.

Federal law requires all political committees, including super PACs, to reveal their funders. There is no such requirement for 501(c)(4) nonprofits to identify their funders.

According to a report from BuzzFeed earlier this month, FreedomWorks’ fundraising has plummeted since Armey’s departure, and it has even taken out a $1 million line of credit.

FreedomWorks spokeswoman Jackie Bodnar maintained the group was “on track” and “exactly where we anticipated being for the year,” but she declined to provide BuzzFeed with fundraising figures.

Bodnar did not immediately respond to requests for comment from the Center for Public Integrity.

(Update, Oct. 24, 2:20 p.m.: In an email statement, Bodnar attributed the group’s fundraising success to “our donor base of tens of thousands of individuals across the United States.” She added: “We have an organizational policy not to discuss donors, big or small, out of respect for their privacy.”)

FreedomWorks ended 2012 with net assets totaling about $5.4 million, according to the IRS filing.

In 2011, the conservative nonprofit added a super PAC to its stable of advocacy organizations. Its goal: to advocate on behalf of its preferred candidates — and tear into political opponents.

The super PAC — known as FreedomWorks for America — came in addition to the group’s traditional PAC, which, unlike super PACs, can only accept limited contributions.

The super PAC ultimately raised about $23 million during the 2012 election cycle, with about $2.6 coming from the 501(c)(4) nonprofit arm of FreedomWorks itself, including in-kind contributions such as paying staff salaries and administrative costs.

That ranked FreedomWorks Inc. as its affiliated super PAC’s No. 2 donor, behind only a mysterious Tennessee-based limited liability company that was reportedly a conduit for Stephenson, the FreedomWorks board member.

FEC records show the FreedomWorks for America super PAC spent roughly $20 million on advertisements that endorsed or opposed federal candidates. By and large, it worked to defeat Democrats and boost Republicans, although it did push for conservative candidates in multiple, high-stakes intra-party GOP contests.

For instance, FreedomWorks for America spent almost $500,000 to aid Cruz during his contentious GOP primary fight with David Dewhurst, Texas’ lieutenant governor and the favorite of many of the Republican Party’s establishment.

The super PAC also went after incumbent Sen. Orrin Hatch, R-Utah, unsuccessfully, to the tune of roughly $1 million during his 2012 Republican primary.