Sins of Omission

ProPublica ‘exposé’ failed to disclose own donors’ lack of disclosure

September 11, 2012

A recent ProPublica investigation into political nonprofits failed to disclose that one of the organization’s donors is a significant player in the world of "dark money" advocacy, while other contributors maintain deep ties to 501(c)4 groups supporting President Obama’s reelection campaign.

While failing to disclose this possible conflict of interest, Pro-Publica also omitted any mention of these donors in its 6,000-word investigative report.

For example, Atlantic Philanthropies, a foundation that pours millions into left-wing groups and also underwrites ProPublica, has funded Health Care for America Now (HCAN), a liberal 501(c)4 that supported the Obama White House during the healthcare reform debate.

Through a quirk of tax law, the Bermuda-based Atlantic Philanthropies can donate without restraint to 501(c)4 organizations such as HCAN and the liberal Center for American Progress. Foreign money is otherwise barred from entering the American political system, including (c)4s.

The ProPublica story also neglected to mention that Jeffrey Katzenberg, the single largest donor to the pro-Obama Super PAC Priorities USA, is a major contributor to ProPublica as well. Katzenberg is the CEO of Dreamworks, a movie studio currently under investigation by the SEC for the alleged bribery of Chinese officials.

ProPublica general manager Dick Tofel defended the article in an email to the Free Beacon.

"As our reporting indicates, conservative social welfare nonprofits very significantly outspent liberal groups of this sort in the 2010 election cycle, and are doing so to an even greater extent so far this cycle," Tofel wrote in an email to the Free Beacon. "We think our story fairly reflected this."

The author of the piece, Kim Barker, wrote that "Democrats and Republicans alike" engage in (c)4 advocacy campaigns, and that according to ProPublica’s investigation, six of the ten nonprofits that have the highest "percent spent on politics" are liberal. However, of the groups mentioned by the author, 21 are conservative—and just six are liberal.

For example, the ProPublica article mentions Crossroads GPS, the conservative organization tied to Karl Rove, no less than 17 times, and features a massive photo of libertarian philanthropist David Koch.

But Atlantic Philanthropies receives no mention at all.

ProPublica, Atlantic Philanthropies, and the Democracy Alliance

"Supporting Health Care for America Now was a risky investment, but it achieved a huge victory," Atlantic Philanthropies’ Antha N. Williams told Politico in 2010.

"While some aspects of HCAN’s work were 501(c)4, there is a lot of 501(c)3 allowable (and fundable) work that organizations and foundations can engage in, and we’d encourage our colleagues to look to public policy advocacy as a way to make a big impact," Williams added.

HCAN pledged to spend $40 million in grassroots organizing and media campaigns during the healthcare debate. It ran attack ads against Rick Scott, now governor of Florida, and helped then-speaker of the House Nancy Pelosi (D., Calif.) fill town hall meetings in 2009.

Both Atlantic Philanthropies and HCAN claim on their tax filings to not directly engage in political activity.

ProPublica has received at least $525,000 from Atlantic Philanthropies between 2008 and 2011. The publication has several board members with ties to the liberal charity and the shadowy group of wealthy liberals known as the Democracy Alliance.

"ProPublica received two grants from the Atlantic Philanthropies, in 2008 and 2010," Tofel said in his email. "It is clear, after a change in leadership and strategic direction at Atlantic in 2011, that further grants are unlikely, and no requests for such grants are pending. We would note that it is well-known that Atlantic is incorporated in Bermuda not for reasons related to section 501(c)(4) but because of its unique relationship with its living donor."

ProPublica board member Gara LaMarche was the president and CEO of Atlantic Philanthropies from 2007 to 2011. He also served as vice president and director of U.S. programs for the Open Society Institute, founded by liberal billionaire George Soros.

LaMarche is also a member of the Democracy Alliance. The invitation-only group, organized by Soros and other liberal billionaires, has funneled hundreds of millions of dollars to an institutional network of progressive organizations.

LaMarche is not the only member of the Democracy Alliance on the ProPublica board. The chair of ProPublica’s governing board, Herb Sandler, is also a Democracy Alliance member.

The Sandler Foundation is ProPublica’s largest donor, giving five grants worth almost $25 million to the news outlet. Sandler co-founded the Sandler Foundation to "strengthen the progressive infrastructure."

Diane Feeney, the daughter of Atlantic Philanthropies founder Chuck Feeney, is also a Democracy Alliance member.

The Dyson Foundation, run by Democracy Alliance member Rob Dyson, awarded ProPublica two grants worth $300,000. Dyson is also listed among the initial contributors to David Brock’s American Bridge 21st Century Super PAC, a Democratic opposition research group.

When asked if ProPublica was a member organization of the Democracy Alliance, Tofel responded, "No."

ProPublica, launched in 2008, has received $36 million in funding since 2007.

The Left’s Dark Money

As extensively reported by the Free Beacon, the left is littered with 501(c)4 organizations that engage in the exact same "dark money" activity they claim to abhor.

For example, Barker’s article cites Democracy 21, "a watchdog group that has filed repeated complaints about 501(c)(4)s to regulators."

"The tax laws are being ripped off and the public is being denied information to which they are entitled—namely, who is financing ads that are being run to influence their votes," Fred Wertheimer, the president of Democracy 21, told ProPublica for the story.

Yet ProPublica did not mention that Democracy 21 is a 501(c)4 nonprofit that also has a 501(c)3 arm, the Democracy 21 Education Fund. The nonprofit discloses several of its major grants on its website, but keeps the identity of its individual donors secret.

When reached by phone, a Democracy 21 employee confirmed the group does not disclose identities of its individual donors.

Other liberal nonprofits such as People for the American Way, the ProgressNow network, and Color of Change—groups that collectively spend millions in grassroots organizing efforts—hide their donors and spending practices.

Why does the right’s undisclosed money garner so much more attention than the left’s? Barker writes in the ProPublica article that the majority of political spending by 501(c)4s comes from conservative nonprofits.

"Liberal groups accounted for only $1.6 million of the total spent by such organizations on TV ads for the presidential race," Barker writes. "By contrast, the two leading conservative 501(c)4s, Crossroads GPS and Americans For Prosperity, founded by conservative billionaire brothers David and Charles Koch, had spent about $60 million."

However, while advertising is one of the few concrete ways to measure political spending by outside groups, it remains an incomplete and skewed metric. Progressives have tended to focus more of their resources on organizing and get-out-the-vote efforts than political advertising.

For example, during the Wisconsin recall incumbent GOP Gov. Scott Walker and outside conservative groups spent about $30 million, while their opponents spent about $4 million. This contributed to a popular media narrative that Walker had outspent his opponent 7 to 1.

What went largely unreported was the $21 million unions spent in their attempt to unseat Walker, which significantly narrowed any supposed "gap."