Pro-Obama nonprofit boosted by undisclosed donors

Introduction

A nonprofit organization started by two former Obama White House staffers received $5 million — or most of its $8.4 million in revenue last year — from four unnamed donors, new disclosures obtained by the Center for Public Integrity indicate.

Priorities USA used the big-money contributions to advocate for “public policies that advantage the middle class“ and help a president in Barack Obama who prides himself on transparency and the small-dollar donors who have supported his political campaigns.

The organization’s new tax filing offers the first official glimpse of how Priorities USA spent the money it raised last year.

Where did its funds go? Mostly to other politically active nonprofits — and also to the leadership team behind the organization that incessantly advocated for Obama’s re-election in other capacities.

In 2012, Priorities USA awarded $4.7 million in grants to Democratic-aligned groups organized under Sec. 501(c)(4) of the U.S. tax code that are not required to disclose their donors. Its biggest beneficiary: Planned Parenthood, which received $2.25 million.

Other beneficiaries of these grants for “social welfare” work at “groups that share similar missions” included the Unity Fund ($750,000), the League of Conservation Voters ($650,000), People for the American Way ($550,000) and America’s Voice ($500,000).

It also contributed $255,000 to two “Occupy Sandy” groups in New Jersey and New York that provided relief efforts after Superstorm Sandy struck the region.

Priorities USA further told the Internal Revenue Service that it did not spend money on “direct and indirect political campaign activities” or lobbying.

But it did report spending about $1.8 million for “printing and mailing,” $630,200 for “media consulting” and $119,900 for “research.” It also reported that it engaged in polling and paid for a mailing sent to households nationwide “on the issue of the fiscal cliff.”

Both Priorities USA and its affiliated super PAC, Priorities USA Action, were launched in 2011 to help Obama compete with the conservative super PAC and nonprofit fundraising juggernauts co-founded by GOP strategist Karl Rove.

Unlike Rove’s network, where both the American Crossroads super PAC and the nonprofit Crossroads GPS have publicly taken to the airwaves, Priorities USA remained largely behind the scenes during the 2012 election, while its related super PAC played the role of the relentless attack dog.

Meanwhile, Priorities USA Action became the top Democratic super PAC in 2012, raising $75 million. But both Priorities groups were dwarfed by the $325 million American Crossroads and Crossroads GPS raised during the 2012 election cycle.

Priorities USA Action’s top donors included hedge fund manager James Simons, media mogul Fred Eychaner, trial lawyer Steve Mostyn, Hollywood executive Jeffrey Katzenberg and several national labor unions.

Fully 100 percent of Priorities USA Action’s $65 million in ad spending last year came in the form of negative ads against GOP presidential nominee Mitt Romney.

One of its ads linked Romney to the death of a woman who lost her battle with cancer. Another spot featured a worker describing how constructing the stage on which officials announced his plant’s closure (after Romney’s firm, Bain Capital, bought it) was like building his “own coffin.”

Priorities USA paid Bill Burton and fellow co-founder Sean Sweeney $95,100 and $79,900, respectively, for 20 hours of work a week, according to the new filing.

Records filed with the Federal Election Commission show that Burton was paid an additional $130,700 by Priorities USA Action in 2012, while Sweeney was paid $125,700 by the super PAC.

Both the nonprofit and super PAC also paid Democratic strategist Paul Begala large sums in 2012.

Begala earned $241,300 from Priorities USA and $265,800 from Priorities USA Action for “communications consulting.” The super PAC payment also included expenses for several trips he took.

Other unpaid advisers listed in Priorities USA’s new filing include longtime Democratic fundraiser Jay Dunn, EMILY’s List founder Ellen Malcolm, Democracy Alliance Chairman Rob McKay and Jonathan Mantz, who served as Hillary Clinton’s national finance director during her 2008 presidential campaign.

In all, Priorities USA, the nonprofit, had just 21 donors that gave it $5,000 or more, according to the group’s 2012 tax return. More than half of them donated six-figures or more.

Watchdog groups such as Democracy 21 and Campaign Legal Center have argued that Priorities USA, as well as Crossroads GPS, are abusing their tax-exempt status by keeping their donors secret while substantially engaging in elections activities.

Burton, who previously served as Obama’s deputy White House press secretary, did not immediately respond to requests for comment.