‘Grass-roots’ group financed by only 11 checks

May 25, 2011

A Washington advocacy group that spent millions of dollars on Republicans in the 2010 election and claimed to have broad grass-roots support actually drew all of its first-year revenue from fewer than a dozen well-heeled donors, according to a recent tax filing.

American Action Network, a Washington group formed by Republican power broker Frederic V. Malek and run by former senator Norm Coleman (R-Minn.), collected $2.75 million from July 2009 to June 2010 in just 11 checks, the filing shows. The largest were two checks for $1 million apiece, and the smallest were two checks for $25,000.

Due to its tax-exempt status as a 501(c)(4) advocacy group, the Network is not required to reveal the donor names. The same is true of similar groups credited with supporting Republican gains in the election, such as Crossroads GPS, housed in the same office space near the White House.

The anonymity of donors to such groups has become a major irritant to election reform organizations, which are pressing the Federal Communications Commission and the Obama administration to force additional and more timely disclosures beyond the spare Form 990 tax forms submitted by all tax-exempt groups.

These groups have complained that the millions of dollars raised by the Network and other conservative advocacy groups just before the election — and mostly spent on attack ads against Democratic lawmakers — need not be reported in tax filings until next year.

Melanie Sloan, executive director of the nonprofit group Citizens for Responsibility and Ethics in Washington, said the Network’s initial tax filing showed “it isn’t a network at all. It is a couple of rich people who can hide their identity behind a c-4” tax status.

She noted that 82 percent of the group’s initial revenues came from three donors – the two unnamed millionaires plus an unidentified donor who gave $250,000 -- illustrating, she said, how “very few people are having a disproportionate impact on our country’s elections.”

Brian O. Walsh, the Network’s new president, responded that the initial filing reflected revenues needed for the group’s “start-up,” and that its donor base expanded as the group collected another $24 million or so in the four months preceding the election. He declined to discuss how many additional donors it had.

Jim Landry, the group’s spokesman, said that donating funds is not the only test of support, noting that more than 215,000 people had indicated they liked the group’s Facebook page.

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