Steeped in Overhead: A Look at the Expenses of Tea Party Groups
Posted at 5 a.m. on March 25, 2014
Chocola runs the Club for Growth. (Tom Williams/CQ Roll Call File Photo)
Updated, 5:20 p.m. | Republican leaders are stepping up their campaign to discredit tea party activists who are challenging them on Capitol Hill and on the campaign trail, accusing conservatives of lining their own pockets at the expense of the GOP.
A recent radio ad for Senate Minority Leader Mitch McConnell, R-Ky. — who is under attack from the right in his own primary — blasts the Senate Conservatives Fund for spending its money “on a luxury townhouse with a wine cellar and hot tub in Washington, D.C.” House Republicans joke privately about the “conservative-industrial complex.” Even Ann Coulter has warned of “con men and scamsters” infiltrating the tea party movement.
Such claims hold more water for some groups than others in a movement with no clear leader. The tea party, loosely defined, is scattered among more than a dozen multimillion-dollar organizations, from the Club for Growth to FreedomWorks, to the Tea Party Express and the conservative startup Madison Fund, all with different bottom lines and spending patterns.
Some of the groups that have come in for the most criticism, such as the Senate Conservatives Fund — which calls the McConnell radio ad inaccurate — actually do spend most of their money on candidates. Others, such as the Tea Party Patriots Citizens Fund, have spent exactly zero in this election cycle on candidates, even as they raise millions from low-dollar donors.
Whatever their overhead, tea-party-aligned groups are spending tens of millions collectively, sometimes with little or no board oversight. Such groups tend to operate multiple fundraising entities, simultaneously pulling in checks for a 501(c)(3) charity, a 501(c)(4) advocacy group, a conventional political action committee subject to contribution limits and an unrestricted super PAC. Public records filed with the IRS and the Federal Election Commission revealed some unusual expenditures.
- Club for Growth President Chris Chocola earned $510,786, from mid-2012 to mid-2013, tax records for the group’s advocacy arm show, pushing his election-cycle earnings to more than $1 million. Club spokesman Barney Keller called that “a pretty good deal,” given that U.S. Chamber of Commerce President Thomas Donohue earns $5.5 million a year. “I would argue we have exactly the same effect on policy as the chamber does,” Keller said.
- The Tea Party Express PAC raised $10 million in the 2012 cycle, more than three-quarters of it from donations of less than $200. But the group made only $259,500 in campaign contributions and $686,124 in independent campaign expenditures in that election, public records show. In the meantime, one of its lead organizers, political consultant Sal Russo, handled the bulk of the group’s fundraising, travel, consulting, direct mail and ad production — earning his California consulting firm Russo Marsh & Associates a cool $2.3 million, according to Political MoneyLine.
- FreedomWorks paid its president and CEO, Matt Kibbe, $470,000 in 2012, or about $940,000 for the full election cycle. The group’s advocacy arm pulled in $15 million in 2012, according to its most recent tax disclosures, and spent $5 million on “advertising and promotion,” $1.4 million on “office expenses,” $1.3 million on “conferences, conventions and meetings,” and $74,285 in severance to a departing employee. A FreedomWorks board member also reportedly paid former House Majority Leader Dick Armey an $8 million settlement following his departure as chairman amid a FreedomWorks shakeup.
- The Madison Project, a conservative PAC that has spent $51,884 opposing McConnell, spent $1.8 million in the 2012 election cycle. Some $97,500 of that was donated to candidates, FEC records show. But still more went to pay the group’s top organizers, according to the Center for Responsive Politics. Chairman and ex-Rep. Jim Ryun, R-Kan., earned $66,540, according to the CRP, while his son, political director Drew Ryun, made $67,932.
Conservative organizers say they spend their money efficiently and employ relatively few staff while making a major impact. They take credit for helping elect such conservatives as Republican Sens. Ted Cruz of Texas, Mike Lee of Utah, Marco Rubio of Florida and Rand Paul of Kentucky. When McConnell told The New York Times recently that the GOP would “crush” conservative activists “everywhere,” tea party organizers turned his warning into a fundraising pitch.
“They are the ones who subvert the platform of the party in order to placate moneyed interests,” Madison Project Policy Director Daniel Horowitz said in an email. He added that his group’s organizers “are entering politics, often for the first time, specifically not to make money.”
FreedomWorks Executive Vice President Adam Brandon said his group’s advocacy arm has earned Charity Navigator’s top four-star rating for sound fiscal management and commitment to accountability and transparency two years running.
“We’ve always been able to keep our fundraising costs very, very low,” Brandon said, adding that slightly more than 90 percent of the group’s income last year went to “programmatic support.” The group’s mission “is not to get Republicans elected,” he said. “That’s never been our goal. Our goal is to build the most fiscally conservative majority that there is. Our goal is to hold people accountable.”
At the Senate Conservatives Fund, Executive Director Matt Hoskins has born the brunt of GOP complaints and scrutiny following reports that his group spent tens of thousands for a costly remodeling at the Capitol Hill townhouse where the PAC is headquartered, including for the “wine cellar and hot tub” cited in McConnell’s ad. Hoskins said the ad is misleading because the group rents the space.
“We don’t even have a hot tub,” Hoskins said. “It has a whirlpool bath tub, and I’m told that it doesn’t even work.”
In the previous election, the group’s super PAC, known as Senate Conservatives Action, made $1.3 million in independent campaign expenditures. Its conventional PAC, the Senate Conservatives Fund, bundled $6.4 million on behalf of GOP candidates.
Since its 2010 inception through Jan. 31 of this year, the Senate Conservatives Fund has doled out some $640,000 to Bold Colors, a consulting firm run by Hoskins. That works out to about $240,000 a year — a healthy sum, but far less than some other tea party organizers are making. In this election, the group’s super PAC has spent close to $600,000 on primaries aimed at ousting McConnell and GOP Sen. Thad Cochran of Mississippi.
Hoskins says conservatives are good for the party.
“We want a Republican majority. But we believe that it needs to be a conservative majority, or it won’t change the country in a meaningful way,” he said.
But GOP leaders are finding new ways to vent anger over the large sums conservatives spend attacking incumbent Republicans. Ex-Rep. Steven C. LaTourette, R-Ohio, who runs the Defending Main Street super PAC, recently accused the Club for Growth of helping install California Democratic Rep. Nancy Pelosi as speaker, because the club spent three times more assailing Republicans in the 2006 election cycle than opposing Democrats.
“My chief frustration with these groups is that they seem to have made the determination that the weaker the Republican Party is, the stronger they are,” said Brian Walsh, a GOP strategist who consults for the National Republican Senatorial Committee, where he previously was communications director. “And I think that hurts the advancement of conservative principles, instead of helping it.”
The GOP complaints, Walsh predicted, are just getting started: “You are seeing a concentrated effort to expose one, their hypocrisy, and two, the financial motives that are guiding many of them.”
Ed. note: This story has been updated to clarify that Armey’s $8 million severance from FreedomWorks in 2012 was paid by a FreedomWorks board member, not by the organization itself.