ROBERT SIEGEL, HOST:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
MELISSA BLOCK, HOST:
And I'm Melissa Block. One of the biggest advertisers in the presidential campaign is a group that says it doesn't do political advertising. It's called Crossroads Grassroots Policies Strategies, or Crossroads GPS. It was co-founded by Republican strategist Karl Rove.
As NPR's Peter Overby reports, groups like this one allow wealthy donors to finance attack ads and avoid public identification.
PETER OVERBY, BYLINE: Republican campaign ads have been taking aim at Solyndra. That's a solar panel maker that got loan guarantees from the Obama administration and then went bankrupt. Here's a Web video from the campaign of presumptive GOP nominee Mitt Romney.
UNIDENTIFIED WOMAN #1: More than $15 billion have gone to companies like Solyndra that are linked to big Obama and Democrat donors.
OVERBY: And this ad comes from American Crossroads, a superPAC that is a political committee.
UNIDENTIFIED MAN #1: Obama invested our tax dollars in Solyndra, lost half a billion, 1,100 workers laid off without fair warning.
OVERBY: No surprise here. Republican strategists see Solyndra as a ripe target. But here's another shot at the same target earlier this year from a group called Crossroads Grassroots Policy Strategies.
UNIDENTIFIED WOMAN #2: Then he gave his political backers billions. A big government fiasco infused with politics at every level. Five hundred million to Solyndra, now bankrupt.
OVERBY: This advertiser, Crossroads GPS, is a tax exempt organization under Section 501(c)(4) of the tax code, which makes it a social welfare organization. Other social welfare organizations include Rotary International and the Lions Clubs, the NAACP and your local volunteer fire department.
But lately, it's been political strategists, not community activists or issue advocates, who are launching 501(c)(4)s. Crossroads GPS was set up to complement the superPAC American Crossroads. It's the same with Priorities USA, which is tied to a superPAC supporting President Obama, although they've spent just a fraction of what the Crossroads groups have spent.
GREG COLVIN: There is, I would say, an escalating experiment in pushing the envelope.
OVERBY: Greg Colvin is a tax attorney whose specialty is tax exempt organizations.
COLVIN: The problem comes when the driver behind the advertising is the election itself rather than a particular policy that is in the public interest.
OVERBY: 501(c)(4)s like these can use money in a way that isn't available to candidates and superPACs. Under election law, campaign committees are limited in the size of the contributions they can accept. SuperPACs are not limited, but either way, the money is disclosed. As for 501(c)(4)s, there are no contribution limits and no disclosure.
NPR examined the finances of the superPAC, American Crossroads, and the 501(c)(4), Crossroads GPS. When they started out two years ago, donors gave almost evenly to both groups, but since then, the donors have flocked to the secret side. In the first three months of this year, nearly 80 percent of the incoming cash went to Crossroads GPS and it wasn't coming from ordinary campaign donors. In 2010 and 2011, nearly 90 percent of the Crossroads GPS money came in chunks of a million dollars or more.
Most of this money ends up on TV. Dan Backer is a campaign finance lawyer whose client base includes candidates, superPACs and 501(c)(4)s mostly on the right.
DAN BACKER: A lot of the communications from the superPACs and from the (c)(4)s and the campaigns are essentially interchangeable. If you didn't have outside groups, I think campaigns would be running a lot of these same ads.
OVERBY: One legal hurdle is that the Internal Revenue Service says 501(c)(4)s can not intervene in political campaigns as their primary activity. Now here's the loophole. If an ad doesn't tell voters how to vote, it can count as an issue ad, not political, so 501(c)(4) ads use taglines like this one, which comes from Americans for Prosperity.
UNIDENTIFIED MAN #2: Tell President Obama American workers aren't pawns in your political games.
OVERBY: Adam Strasberg is a media consultant on the left and has produced plenty of issue ads like these.
ADAM STRASBERG: You know, if you spend 25 seconds bashing a candidate or bashing a position he holds and then say, call this candidate up and tell him not to do this bad thing that they're doing, you know, it's a lawyer's line that they're setting up. So, at the end of the day, there is no difference in my book.
OVERBY: If this seems like a case of modern realities leaving the old rules behind, that's right. The last time the IRS issued definitive rules on 501(c)(4) political activity was 2004, years before a series of Supreme Court rulings and the subsequent rise of the million dollar donor.
Now, neither the IRS nor Congress seems eager to tell a bunch of powerful political operatives what they can and can not do.
Peter Overby, NPR News, Washington.
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