If you’ve got fundraising muscle, it pays to be tea party.
That’s the takeaway from recently released financial reports for five of the biggest conservative groups that latched onto the small government movement.
The groups – Americans for Prosperity, FreedomWorks, Club for Growth, Leadership Institute and Tea Party Express – raised $79 million last year. That’s a 61-percent increase from their haul in 2009, when the tea party first started gaining traction, and an 88 percent increase over their tally in 2008, according to a POLITICO review of campaign reports and newly released tax filings.
And the two biggest groups – Americans for Prosperity and FreedomWorks – tell POLITICO they’re planning to raise and spend a whopping $156 million combined this year and next, laying the groundwork for what could be a massive tea party organizing push against Democrats and the occasional moderate Republican in 2012.
It’s an entirely different story for the rag-tag local groups that form the heart of the tea party, which struggle to raise cash.
The imbalance is worrisome to some grassroots tea party activists, who warn that the movement is at risk of becoming dependent on the type of centralized, top-down political structure that contributed to tea partiers’ distaste for both political parties, as well as Washington’s conservative establishment.
“There isn’t an unlimited pool of cash in the conservative movement, and my concern is that some of these big national groups are sucking up money that could otherwise go to the local tea party leaders who are the ones really making things happen on the ground,” said Ned Ryun, president of American Majority, a Washington area non-profit group that helps local tea party leaders set up groups.
American Majority, which itself has seen its fundraising soar from $1 million when it was established in 2008 to $3.3 million last year, expects that it and its affiliate American Majority Action will have handed out a total of $500,000 in grants to local tea party groups by the end of the year.
Some local tea party organizers privately told POLITICO that national groups have requested their member lists to send fundraising pitches. Others grumbled that the mega-groups’ spending seems more geared towards supporting Washington’s political industry than boosting the grassroots.
POLITICO’s analysis of disclosures filed with the Internal Revenue Service and Federal Election Commission found that the large groups spend big bucks on salaries, like the $500,000 that FreedomWorks paid its chairman Dick Armey, endorsements from radio hosts like Glenn Beck and Mark Levin and speaking fees to movement heroes like Sarah Palin and Samuel “Joe the Plumber” Wurzelbacher,not to mention millions more on consultants and ad buys.
But the mega-groups reject the suggestions that they’re part of the Beltway Political Industrial Complex, or that they’re cannibalizing smaller, grassroots groups. Rather, they point out that they were backing small government policies and candidates before the tea party came along, and they describe a symbiotic relationship that makes both the movement’s grassroots and the national groups stronger.
“The test for a national group in this decentralized world is whether or not we’re adding value, because these activists are like consumers in a market, and groups that don’t respond to their needs and demands become obsolete,” said Matt Kibbe, president of FreedomWorks. “I view myself as their servant at this point and, if I don’t view FreedomWorks that way, I think we go away.”
The seven-year-old group has seen its influence and membership skyrocket since affiliating with the tea party, with its fundraising nearly doubling between 2009 and last year, when it raised $13.7 million, according to filings with the IRS and the FEC. It intends to raise $45 million this year and next, including funds for a super PAC it started this month called FreedomWorks for America, which can accept unlimited individual and corporate donations. Its first expenditure – $12,000 – is on a web ad bashing Obama. The super PAC complements the group’s regular political action committee and a pair of non-profits that can accept unlimited, anonymous donations from people and corporations.
Americans for Prosperity, which was founded in 2004 with funding from the billionaire industrialist brothers David and Charles Koch, has seen its fundraising numbers rise steadily from its inception, with increases from $14.5 million in 2008 to $26.7 million in 2009 to $38.6 million last year, according to tax filings released this month, which are not required to reveal the group’s donors.
Tim Phillips, president Americans for Prosperity pointed out the his group’s fundraising had been rising sharply before the tea party came along, but also conceded that “financial supporters, whether it’s $20 or $100,000, look at what the tea party is doing across the country, and we’re part of that movement at AFP, and I think it spurs them on.” Phillips went on: “They see the tangible public policy successes, and how the attitudes of the America people are changing, and some of the electoral things that are happening, as well.”
Americans for Prosperity last year spent $5.4 million on payroll, including Phillips’s $363,000-a-year salary (FreedomWorks paid Kibbe $321,000 in 2010), and $6.5 million on “communications, ads (and) media,” though its ads do not explicitly urge voters to vote a specific way on a candidate, even as they were often highly critical of Democratic candidates. The group intends to raise at least $50 million this year, and more than $61 million in 2012.
The Tea Party Express – which, unlike the other big groups, is entirely funded by limited and disclosed PAC donations – raised $1.4 million in 2008, $2.1 million in 2009, $5.6 million last year and $1.4 million in the first half of this year. It was launched in 2008 by the Sacramento-basedGOP consulting firm Russo Marsh, with the name “Our Country Deserves Better PAC,” but was rebranded when its tea party efforts, including cross-country bus tours and mega-rallies, began attracting more attention and cash.
The PAC, which has drawn activist criticism as a slush fund for Russo Marsh, has paid out at least $2.8 million to the firm for consulting fees and expenses related to ads aired supporting tea party candidates, and also has spent millions more on rallies, tours, meals, lodging and travel (including $103,000 for Holland America cruise line tickets).
The PAC’s efforts have all been undertaken with the goal of making the movement stronger from the grassroots up, said Sal Russo, Russo Marsh’s founder and the Express’s chief strategist.
“The most important thing for the local tea party groups is to be engaged in the political process, which is why we did our bus tours,” he said, dismissing the suggestion that the Express or any of the national tea party groups might be siphoning off cash that otherwise could have gone to grassroots outfits.
“There is this erroneous belief in political fundraising that there is this fixed pie that has to get divided up,” he said. “I’ve never believed that. I’ve always believed that it’s a question of making the pie bigger.”
The tea party-fueled surge in conservative activism has, in fact, increased the pie, asserted David Keating, executive director of the Club for Growth, which supports fiscally conservative candidates, a group that of late has been dominated by tea partiers. Fundraising by the Club’s component groups more than doubled last year to $13.5 million last year, according to IRS and FEC filings.
“My impression is a lot of the [tea party] people are new to politics, so a lot of that money would be potentially new money, and, yes, we are getting more members and more donors, and I imagine a lot of the other groups are too,” said Keating. “But I think it’s sufficiently large that it’s far more than the increase in whatever we or the other groups have been able to raise from new donors.”
Yet, Steven Sutton, an executive at the Leadership Institute, said there is a competition for donor dollars between big and small tea party groups, and he cast it as a bit of political Darwinism.
“Does the Heritage Foundation make it more difficult for state think tanks to raise money? Does the NRA make it more difficult for local gun clubs to raise money? Does the Sierra Club make it more difficult for local environmental groups to raise money?” Sutton said. “It’s not a pro or con.”
His group, a conservative movement stalwart established in 1979 to offer activist and media training, launched a tea party training initiative last year with Tea Party Patriots, a national coalition of local groups that at times has struggled to raise cash, though it accepted an anonymous $1 million donation in the weeks before the 2010 election.
“There are people who want to donate to large, national groups because they believe that by having significant resources, if used effectively, they can be more effective by benefitting from economies of scale,” said Sutton, who handles fundraising for the Institute. It increased its contribution intake by more than $2 million in 2009, when it raised $8 million for a capital campaign, but saw a decline to $7 million last year, despite what Sutton said was an increased demand for tea party training.
While none of the big groups donate directly to local tea parties, Americans for Prosperity does fund its own local chapters in more than 30 states.
All the groups say they provide training, yard signs or help planning rallies and booking speakers. The Express has held dozens of rallies around the country, and in April reported paying a $750 honorarium to Joe the Plumber, while Americans for Prosperity in 2010 spent $1.9 million on event planning, and $253,000 on honoraria including a $128,000 payment to the speakers’ bureau that represents Palin, with whom AFP had contracted to speak at its Defending the American Dream Summit in Clarkston, Mich., in May, 2010.
“I can’t remember the last time that one of the grassroots activists actually asked me for money to support something, but I do get requests almost daily for training materials or yard signs or this or that,” said FreedomWorks’s spokesman Adam Brandon, who added that his group has actually counseled local tea partiers against incorporating their groups, which is usually necessary to raise money. “If you want to get a bunch of people together to go walk neighborhoods, do you really need a legal structure? You get lawyers involved, it gets expensive. So, a lot of groups rely on us to take care of the backbone infrastructure, so they can focus in on the activism.”
That’s not a sustainable model, asserted Chris Littleton, who helped found the Cincinnati Tea Party, the Ohio Liberty Council, the Ohio Tea Party PAC and Ohioans for Healthcare Freedom – all of which have incorporated and have tried to raise their own money (including a $20,000 grant from American Majority).
“If the liberty movement does not professionalize and does not build infrastructure – and not just for the sake of professionalizing like the parties – it’s just going to spin its wheels, burn itself out and be over,” he predicted. “Money equals impact. There’s no way around it. Especially sustainable impact.”