Trade group to FEC: ‘Corporate funds’ financed campaign ads

Introduction

Ahead of the 2012 election, the Direct Selling Association reported spending more than $50,000 on advertisements touting two of its favorite politicians.

And in new disclosures filed Wednesday with the Federal Election Commission, the organization confirmed what’s widely assumed but rarely confirmed about trade associations: that the money it spent on electoral politics came specifically from “corporate funds,” although the group isn’t naming names.

According to a Center for Public Integrity review of federal records, the Direct Selling Association used $32,500 of this corporate cash to make so-called “independent expenditures” supporting the re-election of House Commerce Committee Chairman Fred Upton, R-Mich., in 2012.

And the group also reported spending about $18,000 calling for the re-election of Sen. Robert Menendez, D-N.J.

The expenditures, which could not be coordinated with either candidate, included radio ads, newspaper ads and billboards.

Notably, both Upton and Menendez have criticized the Supreme Court’s 2010 Citizens United v. Federal Election Commission decision, which allowed corporations to use treasury funds to advocate for the election or defeat of federal candidates — either directly or through an intermediary group.

Shortly after the 2010 ruling came down, Menendez said it represented a “dark day for democracy” during an interview on CNN, adding that “the last thing we need is Big Oil, big health insurance companies, big banks being able to spend unlimited amounts of money from their treasury to influence the results of elections.”

Last year, Menendez continued to rail against “unlimited, secret, big-money corporate donations” influencing “elections at every level.”

And during a debate ahead of his 2012 re-election, Upton, who was targeted by a conservative super PAC during the GOP primary, said he was “very disappointed” by the Supreme Court’s Citizens United decision.

Representatives for Menendez and Upton declined to comment for this story.

Such corporation-fueled political activity by the Direct Selling Association would have been illegal prior to the U.S. Supreme Court’s Citizens United decision.

Now, however, companies are free to spend money urging people to vote for candidates — or give to other organizations that do, organizations such as the Direct Selling Association, which is registered as a nonprofit under Section 501(c)(6) of the U.S. tax code.

While political committees, including super PACs, must publicly disclose the names of people who contribute more than $200, federal law only requires nonprofit groups to disclose donors who give contributions earmarked for specific advertising efforts.

Adolfo Franco, the group’s executive vice president, told the Center for Public Integrity that none of its members made such earmarked contributions, adding that the ads were financed using “100 percent of our own resources.”

That reiterates what the trade association told the FEC in two letters Wednesday, which stated that the Direct Selling Association “does not receive contributions from members or other parties for purposes of making independent expenditures.”

Roughly 200 companies are members of the Direct Selling Association, which has posted annual revenues between $6 million and $7 million in recent years, according to filings with the Internal Revenue Service. Few of its members disclose how much they contribute to the trade group.

Avon Products Inc., for instance, voluntarily revealed that it gave the Direct Selling Association at least $100,000 in 2012, according to a Center for Public Integrity review of company documents.

Of that sum, $18,000 was used for “internal DSA lobbying expenses” and about $2,000 went toward contributions to political groups such as the Democratic Attorneys General Association and Republican Attorneys General Association.

It’s unclear whether the Direct Selling Association used any portion of the Avon money to fund its ads supporting Menendez and Upton.

Avon spokeswoman Lindsay Blaker Fox declined to answer questions from the Center for Public Integrity, saying “all I can share with you is a link to Avon’s political contributions.”

Dave Levinthal contributed to this report.