Hybrid PACs generating few greenbacks

Introduction

There’s a certain irony that Ready for Hillary is probably the nation’s most renowned hybrid political action committee, since this curious kind of political group likely wouldn’t exist but for a Supreme Court decision sparked by a roundly anti-Hillary Clinton movie.

Late Saturday night, the group, which is dedicated to supporting a Hillary Clinton presidential run, reported raising $8.9 million during 2014 — among the biggest hauls for any political group that publicly discloses its funders.

That includes about three-quarters of a million dollars raised during the year’s final five weeks.

But Ready for Hillary is an anomaly: Hybrid PACs, legalized in 2011, haven’t really caught on in American politics.

While it may be premature to deem hybrid PACs utter failures like the New Coke or Edsel, they’re turning out to be a specialty product heading into Election 2016.

The result is surprising because hybrid PACs can offer one stop shopping to eager political donors. Like the more popular super PACs, they can raise and spend unlimited amounts of cash to advocate for and against candidates, while at the same time they can operate a traditional political action committee, collecting limited amounts of money to give to politicians’ campaigns. All they need to do to keep it legal is maintain separate bank accounts for the different pools of money.

However most political donors, it appears, are happy to keep those activities separate.

Perhaps the one person who’s benefited from hybrid PACs more than any other is Dan Backer, a conservative attorney and the driving force behind Carey v. Federal Election Commission, the 2011 federal court case that led to the creation of hybrid PACs.

Backer himself works as treasurer for 13 of the 86 existing hybrid PACs — better than one in seven, according to FEC records.

Three years ago, he declared that any super PAC — like Ready for Hillary — that didn’t morph into a hybrid PAC was “run by idiots.”

“My thought is that we’ll never say ‘super PAC’ again in 10, maybe five years,” Backer said at the time.

Backer had reason for such confidence, as numerous hybrid PACs winked into existence during late 2011 and early 2012.

But their popularity soon waned, and super PACs and politically active nonprofit groups evolved into far more popular vehicles for those looking to influence elections in the post-Citizens United v. FEC era of politicking.

Today there are 919 super PACs, according to FEC records, compared to 86 hybrid PACs — most of which have raised little money.

“’Hybrid PAC’ — it’s just not as cool and catchy a name as ‘super PAC,’” Backer mused.

Adam Smith, a spokesman for campaign finance reform group Public Campaign, agreed.

“Hybrid PACs make a lot of sense in a way, because they offer the ease of one-stop shopping,” he said. “But most people have never heard of them. I don’t think you’ll see too many of these hybrid PACs in the future.”

Like Ready for Hillary, a few other hybrid PACs posted impressive cash hauls this weekend, the deadline for all federal political committees to release their end-of-year fundraising numbers. Those groups include:

• Patriot Voices PAC, a pro-Rick Santorum hybrid PAC, reported more than $437,000 cash on hand going into this year. Much of that comes from a $250,000 contribution on Dec. 31 from investor Foster Friess, who spent millions of dollars supporting Santorum during the 2012 presidential election. Two corporations — Martin’s Famous Pastry Shoppe Inc. of Pennsylvania and the North Dallas Honey Company LP of Texas — also made sizable donations.
• The Tea Party Leadership Fund, a Backer group, which ended the year with more than $166,000.
• Texans for a Conservative Majority, which helped beat back a Republican primary challenge against Sen. John Cornyn, R-Texas, from ex-Rep. Steve Stockman, R-Texas, ended 2014 with more than $1.1 million left over.

It made sense for two-year-old Ready for Hillary to change from a super PAC to hybrid PAC in May, said Seth Bringman, the group’s spokesman.

That’s because the group in part wanted to give money directly to political candidates and party committees who did or might support Clinton.

It ultimately helped several dozen such groups, according to data compiled by the Center for Responsive Politics. It also spent millions of dollars promoting a still-undeclared Clinton candidacy through a variety of means — including more than $2 million on web advertisements alone.

“Becoming a hybrid PAC allowed us to broaden our set of tactics to achieve our goal” of supporting Clinton, Bringman said. “We wanted to use Citizens United in a completely unprecedented way.”

Despite its financial success, don’t expect Ready for Hillary to remain a hybrid PAC for long.

The group plans to disband and divest its assets when Clinton formally announces her presidential intentions.

Ready for Hillary will make some of those assets — supporter information and certain financial data, for example — available to Clinton’s presidential campaign, if there is one, Bringman said. Such a move would be legal, so long as Ready for Hillary doesn’t directly coordinate political efforts with a future Clinton campaign committee.

As for Ready for Hillary’s money and physical assets, will it give them to a pro-Clinton super PAC such as Priorities USA Action or American Bridge 21st Century, the latter run by prominent Clinton ally David Brock?

Perhaps a liberal “dark money” nonprofit group such as Patriot Majority USA, or American Bridge 21st Century’s sister nonprofit, the American Bridge 21st Century Foundation?

Bringman wouuldn’t say. “We will look at all the options available to make sure the work of all of our supporters of the past two years is used most effectively … and is not lost,” Bringman said.

As of Dec. 31, Ready for Hillary reported having more than $748,000. But it also must pay back a $1 million loan it took out on Oct. 6 from Amalgamated Bank in Washington, D.C., by Feb. 28. Going into 2015, it still owed $741,000.