As Missouri legislators roam the state Capitol, they frequently run into familiar lobbyists. More and more, though, these lobbyists are working for groups financed by unfamiliar donors. In fact, their identity is secret.
Such groups are nonprofits officially known as 501C4s, a designation that refers to a provision of the IRS’ tax code. Since the U.S. Supreme Court ruling in 2010 known as “Citizens United,” these organizations can get involved in politics in favor or opposition of candidates, just like political action committees.
But 501C4s don’t have to report their donors or file detailed reports on their spending, as PACs must do. Even so, some nonpartisan groups that track campaign money estimate that 501C4s have doubled their political spending since the Citizens United ruling.
The one caveat in protecting their nonprofit status is that 501C4s must spend at least 51 percent of their money on issues or other “social welfare’’ matters-- not campaigns. But documenting that spending can be difficult.
In any case, that national explosion in the creation of 501C4s is spreading to Missouri.
New 501C4 opposes Medicaid expansion
Among the state’s newest 501C4s is the Missouri Century Foundation, a fiscally conservative group that was founded by several of the state’s best-known Republican consultants.
The chairman is Gregg Keller, a St. Louis native who previously was executive director of the D.C.-based American Conservative Union. Keller had worked for Mitt Romney during his first 2008 presidential campaign and has served for several Missouri politicians, most notably former U.S. Sen. Jim Talent, R-Mo.
Talent's former spokesman Rich Chrismer is the foundation’s communications director. Other key posts are held by Jim Gwinner, Mike Hafner and Holly Gogel – all respected conservatives with strong credentials.
The Missouri Century Foundation’s key mission over the next several months will be to lobby against any expansion of Medicaid in Missouri and to promote restrictions on the political activities of public-employee unions.
“Our No. 1 issue, with a bullet, is to stop Medicaid expansion and Obamacare,” Keller said. He explained that conservatives were concerned that some Republican legislators in the Missouri General Assembly last session appeared more receptive to Medicaid expansion.
Keller didn’t mention that one reason for that concern may be the pro-Medicaid lobbying by certain business groups, such as the Missouri Chamber. The chamber has hired former U.S. Sen. Christopher “Kit” Bond, R-Mo., who’s also a former two-term governor, to help make the pro-expansion case.
In any case, the foundation plans to issue "white papers'' and lobby legislators to make its case. There are no plans to run TV or radio ads, Keller said.
Seek to keep donors’ identities a secret
Another key concern for the foundation is preserving the anonymity of its donors, who hail from inside and outside the state. That means it opposes any state legislation that would require 501C4s to identify their donors.
“That’s very central to what we’re trying to accomplish,” Keller said. “We’re partnering with the American Center for Law and Justice, the nation’s premier First Amendment law firm” for a possible court fight.
“What we’re building a case on now, is a constitutional question,” Keller said.
He added later, “"Freedom of speech, including anonymous speech, has a long and proud history in the United States, from the revolutionary pamphleteers to the civil rights supporters in the South. So long as there are public controversies there is a need to protect speakers from punishment and retaliation, and anonymous speech is often the only means of protection."
Critics say other issues are at stake. “501C4s are really a threat to democracy because they hide the identity of who’s trying to influence campaigns,” said Terry Jones, political science professor at the University of Missouri-St. Louis.
“They enable one or more wealthy interests to influence elections, but the public cannot know it and the media cannot uncover it.”
State Rep. Caleb Rowden, R-Columbia, is sponsoring a bill to require 501C4s to identify their donors if more than a quarter of their spending in Missouri is political. But it’s unclear if that provision will get any legislative traction this session.
Missouri Attorney General Chris Koster, a Democrat running for governor, also has called for requiring 501C4s that engage in politics to identify their donors. If the General Assembly acts, said Koster spokeswoman Nanci Gonder, “We stand ready to defend legislation requiring disclosure of donors.”
Such possible actions, and the Missouri Century Foundation’s commitment to fight, reflect how some Missouri politicians in both parties are beginning to pay closer attention to 501C4s.
Last fall, for example, the 501C4 arm of the Missouri Club for Growth (which also has a regular PAC) spent $1.5 million to help pass Amendment 10, which restricts the governor's powers when it comes to crafting the state budget.
The group used its regular PAC to pay for $250,000 on ads to help Jay Ashcroft, the Republican candidate for state Senate in the 24th District in St. Louis County, as he competed against Democrat Jill Schupp.
The money spent by the PAC can be tracked. The source of Club for Growth’s 501C4 money couldn’t be tracked.
In the summer of 2012, a 501C4 called Better Government for Missouri emerged and gave $100,000 to a political action committee, which in turn used it as part of an effort to defeat Lt. Gov. Peter Kinder, who was facing a Republican primary challenge from then-state Sen. Brad Lager, R-Savannah. Kinder still won the primary.
Again, there was no way to determine who put up the anti-Kinder money in the quest to help Lager.
Some insiders in both parties contend that wealthy financier Rex Sinquefield, the state’s top political donor, has helped bankroll some of the conservative 501C4s operating in Missouri. But he hasn’t said and there’s no way to verify it.
Progressive 501C4 makes its mark
Although most of the 501C4s engaging in Missouri politics are conservative, one of the most active is a liberal one: Progress Missouri, a Democratic-leaning group that is believed to be funded in part by labor and teacher groups. But as with other 501C4s, Progress Missouri does not identify its donors.
Progress Missouri executive director Sean Nicholson said the group has a 501C4 arm because that classification gives it more flexibility when it comes to lobbying and engaging in political activity.
“We want to be aggressive advocates to change the way the state does business,” he said.
For example: Progress Missouri monitors lobbyists’ spending and regularly releases its findings. It also makes videos of many of the proceedings in the state Capitol, which lately has prompted a fight with some Republican legislators over how to interpret the state’s Sunshine Law.
Progress Missouri often has become the state’s prime group jabbing Republicans.
On Tuesday, for example, Progress Missouri was filling social media with links to the national magazine Salon, which had posted a disparaging story -- and video -- of 2016 Republican gubernatorial candidate Catherine Hanaway's recent appearance at a conservative conference in St. Louis.
In a speech to the group, Hanaway appears to link “liberal sexual permissiveness’’ to child pornography. Hanaway maintains that the Salon article misrepresents what she was trying to say.
States seek more 501C4 transparency
Maryland recently joined several other states – including Idaho, Montana, Maine, Utah, New York and California – that have passed laws requiring that 501C4s identify at least some of their donors.
That growth in regulation is among the reasons Michael Wolff, a former state Supreme Court justice and now dean of St. Louis University’s School of Law, doesn’t buy Keller’s argument that 501C4s can’t be regulated in Missouri.
“If money is speech, as the U.S. Supreme Court as said, then the state has the right to know who’s speaking,’’ Wolff said.
Wolff added that the no-regulation reasoning could prompt candidates to set up their own 501C4s and use their own money or that of their allies to fund them anonymously. The groups, in turn, could spend money to help the candidate’s campaign – and nobody would know of the candidate’s financial ties.
Wolff said such a move would allow candidates to circumvent state or federal campaign-finance limits or disclosure requirements.
Unless states or the federal government step in, Wolff said, “What’s to stop them?”