45Committee, Inc, a nonprofit organization ostensibly dedicated to “promoting solutions to the issues that will confront the United States” during the 45th president’s term, spent more than $21 million boosting President Trump during the final month of the 2016 election. Though the group’s big spending helped push President Trump into the White House, it also presented a significant challenge: how would the group spend enough money on non-political activities to avoid being declared a political committee?

45Committee was established as a social welfare organization under section 501(c)(4) of the tax code, meaning it is not required to disclose its donors and can spend money to influence elections. Politics, however, cannot be its primary purpose. Given that 45Committee reported spending $21 million on politics in 2016 to the Federal Election Commission (FEC), the group needs to have spent at least the same amount on non-political activity in the fiscal year that includes the election (i.e., April 1, 2016 – March 31, 2017) to keep its political spending under 50 percent of its total spending.  

If the FEC were to rule that 45Committee is an explicitly political organization, the group would have to disclose its secret donors. Many of those donors reportedly gave to 45Committe instead of its connected super PAC, Future45, because they were uncomfortable having their names associated with then-candidate Trump.

45Committee’s fiscal year (FY) 2015 tax return may offer a clue to how the group will offset the millions it spent to influence the 2016 election. Between April 23, 2015 and March 31, 2016, 45Committee spent a little more than $1 million while raising $2.2 million. Only a small portion, $99,001, was spent on explicitly political activity. Most of the group’s spending, $655,000, was dedicated to grants to other organizations. 45Committee may use a similar strategy in 2016 to keep itself on the right side of campaign finance and tax law.

As the Center for Responsive Politics has noted, making large grants to other nonprofits, often coalitional allies, is a common strategy for boosting overall expenditures in order to balance out political spending. Recipients of these grants may subsequently use the money for political purposes, potentially maximizing the ability of the groups to spend money on politics without donor disclosure.

45Committee’s grants in its first year went to two social welfare organizations, the Alliance for Freedom, which received $505,000, and the John Hay Initiative, which received $150,000. It is unknown what the intent of the grants was, however, as 45Committee only described them as being made “to further the organization’s exempt purpose.” The Alliance for Freedom has deep ties to Republican political operatives and has spent money in the past to boost politicians, while the John Hay Initiative is a network of right-leaning foreign policy and defense experts who sought to be a foreign policy resource for Republicans running for president in 2016.

Money commonly moves back and forth among allied politically active nonprofits as part of their strategy to offset political spending. In FY2015, 45Committee was the recipient of grants from at least two nonprofits. In FY2016, 45Committee could reciprocate by directing its own non-political spending to these organizations. As Robert Maguire and Anna Massoglia reported for the Center for Responsive Politics in March, the group received $750,000 in 2015 from the Wellspring Committee, a nonprofit infamous for funnelling anonymous money to politically active nonprofits. 45Committee also got $75,000 from Ending Spending, Inc., a politically active nonprofit run by Chicago Cubs co-owner Todd Ricketts. Ricketts reportedly raised significant sums for 45Committee ahead of the 2016 election and Brian Baker, a political advisor for the Ricketts family, sits on the boards of both 45Committee and Ending Spending.  

Grant-making isn’t the only way 45Committee can balance out its election spending. The nonprofit has also invested in two additional types of activities it can report to the IRS as non-political. First, some of 45Committee’s communications during the 2016 election were framed as issue ads, which do not explicitly advocate for or against a candidate. These types of ads are often put together in such a way that they can still have a political impact while avoiding triggering political disclosure requirements.

For example, one of 45Committee’s ads, which debuted in October 2016 and has over 14 million views on YouTube, featured former President Bill Clinton criticizing the Affordable Care Act and calling on viewers to contact President Obama about it. Another ad, launched around the same time, encouraged the impeachment of IRS Commissioner John Koskinen. 45Committee will almost certainly put the spending behind both these ads in its non-political bucket when the group files its tax return covering the period.

Second, since 45Committee’s fiscal year ends on March 31, the group’s efforts to promote President Trump’s Cabinet nominees in early 2017 can also work towards offsetting the millions it spent to get President Trump elected. The group ran ads promoting the confirmation of Attorney General Jeff Sessions, Health and Human Services Secretary Tom Price, and Education Secretary Betsy DeVos, spending around $4 million on the effort by early February 2017. The group also spent money on ads pushing for Judge Neil Gorsuch’s confirmation to the Supreme Court, but the campaign was announced on March 31, the last day of 45Committee’s fiscal year, suggesting that spending will be included on its 2017 tax return.

Additional details about 45Committee’s political spending during the 2016 election — and efforts to offset it with other, non-political activities — likely won’t be available until the middle of February 2018 (the latest the group can file its tax return). This filing will show how much the group raised and spent overall, how much it claims was aimed at influencing elections, and how much it gave away to other groups. One thing it won’t show? Who actually contributed the more than $21 million 45Committee spent to help put President Trump in the White House. That information would only become public if the FEC determined the group is, in fact, a political committee. And this is precisely why a strategy for offsetting political spending is so important to politically active nonprofits like 45Committee: their ability to keep secret donors secret depends on it!