February 15, 2016 News & Press Releases · Press Releases and Announcements

Ed Gillespie’s Dark Money Organization Gains “Social Welfare” Designation; Doesn’t Have to Pay Taxes

by Democratic Party of Virginia

Last week, Karl Rove and Virginia Gubernatorial candidate Ed Gillespie's shadow organization, Crossroads GPS, was granted IRS tax-exempt "social welfare" status on the hundreds of millions of dollars of dark money fueling the anonymous right-wing campaign arm.

Gillespie has been fighting for years to prove Crossroads GPS’ “social welfare” status, even though it spent millions of dollars in the 2012 election cycle with misleading ads against Democratic policies and candidates - like typical Super PACs which are required to disclose donors. According to ProPublica, “During the 2012 cycle, Crossroads reported spending almost twice as much on political ads as the next most-active nonprofit, Americans for Prosperity, which is backed by conservative billionaire brothers Charles and David Koch.”

In a scathing editorial, the New York Times described Crossroads GPS’ tax-exempt status as, “a farcical abuse of common sense and the American taxpayer” whose deception “insults honest taxpayers.”

So, what are Gillespie and Crossroads GPS’ “social welfare” efforts trying to accomplish?

  • Supporting Republican candidates without disclosing its billionaire donors or motives;
  • Avoiding paying taxes at all costs;
  • Dismantling Obamacare which would leave 13 million now-insured Americans in the cold;
  • Giving more tax breaks to wealthy corporations;
  • Cutting social welfare programs; and
  • Rolling back efforts to grow the clean energy economy.

“Ed Gillespie made his career by bolstering the Karl Rove attack machine and dark money organizations, and he should come clean about how he plans to run his own campaign,” said Emily Bolton, Communications Director of the Democratic Party of Virginia. “If Gillespie made his fortune by flooding the airwaves with dark money political attacks, how will he run his campaign for Governor in Virginia?"


The New York Times Editorial Board slams Crossroads GPS’ tax exempt status. “In a farcical abuse of common sense and the American taxpayer, the Internal Revenue Service has granted Crossroads GPS, the dark-money machine of Karl Rove, the Republicans’ guru of attack politics, status as a tax-exempt ‘social welfare’ organization. This means it can keep its deep-pocketed campaign donors secret. The ludicrous I.R.S. finding that the group is not primarily what it so obviously is — a strident G.O.P. operation that should be required to name its donors — is essentially a license for it to run amok in the current federal election cycle with anonymous, unlimited donations.” [New York Times, 2/12/2016]

Despite 501(c)(4) status, Gillespie’s Crossroads GPS was the “most active” dark money player in the 2012 elections. “Crossroads had been the most active of the nonprofits that are funneling cash into politics — often called dark money because the original source of the funds may be kept secret if the organizations have social welfare as their primary purpose. During the 2012 cycle, Crossroads reported spending almost twice as much on political ads as the next most-active nonprofit, Americans for Prosperity, which is backed by conservative billionaire brothers Charles and David Koch.” [ProPublica, 2/9/2016]

Gillespie’s ‘social welfare group’ has no grassroots support and was created to allow big donors remain anonymous. “More than any other group claiming to be a social welfare nonprofit, Crossroads has become a symbol of the current malleability of campaign finance rules. Run by some of the most seasoned political operatives in the country, it has almost no grassroots support — financially or in terms of volunteers — and is represented by some of the finest campaign finance lawyers in the country. […] It was founded specifically to serve as an alternative to its sister organization, a super PAC called American Crossroads, for donors who didn’t want their identities disclosed to the public. As one of its cofounders, Carl Forti, said at the time, ‘You know, disclosure was very important to us, which is why the [super PAC] was created. But some donors didn’t want to be disclosed, and, therefore, the (c)(4) was created.’” [OpenSecrets, 2/9/2016]

American Crossroads, American GPS Were “Associated With… Ed Gillespie.”“American Crossroads and its new affiliate, American Crossroads GPS, hope to raise more than $50 million by Election Day. Both groups are associated with former Republican White House aides Karl Rove and Ed Gillespie.” [AP, 7/1/10]

Gillespie, Rove Launched Crossroads GPS, Which Allowed Anonymous Donations.“Republican strategists Karl Rove and Ed Gillespie have launched a new group that allows U.S. Republicans to give anonymously to discredit Democrats. American Crossroads GPS raised $5.1 million in its first month, Politico reports. The parent group, American Crossroads, has raised only $4.7 million in the months it has been in existence. While the parent group was organized under a section of political fundraising law that requires it to report the source of donations, American Crossroads GPS can promise anonymity as long as it devotes its efforts to “issues.” It has told donors their money would be used for “hardhitting issue advocacy,” including research on “expense account abuses” by Democrats in Congress, making the BP oil spill “Obama’s Katrina” and exposing the “healthcare rip-off.” American Crossroads has spent $600,000 on ads attacking U.S. Senate Majority Leader Harry Reid, D-Nev., believed to be vulnerable in his bid for another term. One Republican source, described as a “veteran GOP operative,” told Politico anonymity has been a lure for donors who do not want open ties to Rove, one of the most controversial figures in the Bush White House. Gillespie became a counselor late in President George W. Bush’s second term when he was trying to rebuild his popularity.” [UPI, 7/21/10]

Huffington Post: Gillespie’s American Crossroads GPS Would Use Fundraising To “Dig Up Dirt On Congressional Democrats Before The 2010 Elections.” “Sam Stein related on the Huffington Post (7/21) that Politico on Wednesday “reported that American Crossroads GPS, the organization formed by operatives Karl Rove and Ed Gillespie, hauled in an impressive $5.1 million in June” and “was poised to use that” cash “to dig up dirt on Congressional Democrats before the 2010 elections.” The report, says Stein, “has reignited a debate about how the Obama administration has structured the Democratic Party’s own political operations.” During Barack Obama’s 2008 campaign, “Progressive Accountability, a 501c(4) group that produced issue-oriented material,” and “Accountable America, an organization” that dug “up dirt on major Republican donors...played important roles.” However, “Progressive Accountability is now fully incorporated under the umbrella of two more mainstream Democratic institutions -- Media Matters and the Center for American Progress. Accountable America has been focused on financial regulatory reform.” And “the prevailing fear among operatives is that there simply is no alternative force to what Rove and Gillespie have built.’” [The Frontrunner, 7/22/10]

Rove, Gillespie “Helped Form” American Crossroads, Crossroads GPS. “Their personal and corporate money – as well as that of other donors who have not been identified -- has gone to a collection of outside groups Rove helped form with Gillespie, including American Crossroads and Crossroads GPS, which in turn are affiliated with similar groups staffed or backed by other operatives and donors with ties to Rove. With $32 million and counting, they are now filling the void created by the diminished condition of the Republican National Committee, which has faced fundraising difficulties under its embattled chairman, Michael Steele.” [Chattanooga Times Free Press, 9/26/10]