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From Social Welfare Groups, A River Of Political Influence

The Au Sable River in Michigan is a popular place for fly fishermen and the heart of a debate unexpectedly influenced by largely invisible social welfare organizations.
Christine Arrasmith
The Au Sable River in Michigan is a popular place for fly fishermen and the heart of a debate unexpectedly influenced by largely invisible social welfare organizations.

Part one of the two-part "Secret Persuasion" investigation, reported with the Center for Responsive Politics.

Bruce Pregler, a lawyer in the Detroit suburbs, is president of the Anglers of the Au Sable.
Christine Arrasmith / NPR
Bruce Pregler, a lawyer in the Detroit suburbs, is president of the Anglers of the Au Sable.

Bruce Pregler walks down the slope from his cabin, eases into the Au Sable River and casts his line; fishing takes his thoughts away from his downstate law practice.

He stands in the flowing water, holding his fishing rod, and gazes at the river around him. "You can't look at it from the bridge or a lodge," he says of the Au Sable, one of Michigan's prime spots for trout fishing. "You need to float it, walk it, wade it, fish it, enjoy it. And my wife and I thought so highly of it, we had our daughter baptized right here at this spot."

But the Au Sable represents more than just Michigan fly-fishing at its best. As Pregler knows, it's also a setting that reveals powerful and secretive new influence in American political campaigns.

Three years ago the river was caught in an environmental battle, and a local conservation group called the Anglers of the Au Sable sued Michigan's environmental agency. Pregler, president of the Anglers, watched as the case became subsumed in a state supreme court election financed in large part by nationally funded advocacy groups. Money came from unions, corporations and tax-exempt social welfare organizations.

Social welfare groups — known as 501(c)(4)s, after their designation in tax law — are becoming a vehicle of choice for big donors to hide large donations in politics. Unlike donors to political committees, those who give to social welfare groups can give unlimited amounts while remaining private and bypassing public disclosure laws.

NPR and the Center for Responsive Politics investigated the world of these secretive social welfare groups, using tax records to track money not otherwise reported and found that millions of dollars is traded between groups. CRP data show that their federal political spending increased more than 80-fold between the 2004 and 2012 election cycles. It's an abrupt swing in campaign financing.

We also found that significant sums of money are moved around within networks of social welfare groups, as some organizations finance others. Overall, transfers among the groups have exceeded $386 million since 2008.

Conservative groups are better financed and more numerous than liberal groups — at least so far. For example, CRP data show that in the 2012 presidential, Senate and House campaigns, conservative groups constitute five of the six 501(c)(4)s that spent more than $10 million in explicitly political advertising.

But none of this affected the Au Sable until the 2010 elections.

The Appointment Of Alton Davis

Back in 2005, an energy company wanted to pump treated — but still polluted — water into the Au Sable watershed. When the state approved the plan, Pregler says the Anglers "looked at this and said, 'Why are you transferring contaminated water from one watershed to a clean, pure water?' " And they sued.

The case wound up at the Michigan State Supreme Court, where, as Pregler says, it took some real twists. The first twist: One justice abruptly resigned, and Democratic Gov. Jennifer Granholm appointed a new one. Incoming Justice Alton Davis tipped the court's balance from conservative to liberal, and he sympathized with the Anglers' arguments.

But even as Davis was taking his seat, he had to run in an election to stay there. The race became a magnet for out-of-state ideological money.

That November, Davis lost. In 2011, with Davis off the bench, the court reconsidered his decision and reversed it, ruling against the Anglers.

Davis had run for judgeships before, usually unopposed, and hardly ever having to raise serious money. This time was different. "I was well behind the curve," he said in an interview on his pontoon boat at Lake Margarethe, near the Au Sable. Outside money was pouring in, mostly against him.

Right off, an attack ad started running on radio stations in Detroit and Grand Rapids, Michigan's two dominant media markets. It said the resignation of Davis' predecessor and his appointment were a "sleazy deal" that was "designed to pack Alton Davis on to the Supreme Court."

The ad came from a social welfare group called the American Justice Partnership.

Davis didn't pay much attention. He had a campaign to run — "such as it was," he says ruefully — and he was on the road, driving himself from one campaign event to the next. "I just plugged the iPod in," he recalls. "I didn't want to hear all that stuff."

And now, three years later, he says of the 2010 supreme court election, "When I look back at the whole deal, I think it was a disgusting exercise."

After the election, the new court's conservative majority took charge.

A New Way Of Doing Politics

Was this something the American Justice Partnership had in mind when it ran the attack ads against Davis?

Alton Davis lost his seat on the Michigan State Supreme Court after an attack ad — funded by the American Justice Partnership — influenced his re-election.
Christine Arrasmith / NPR
Alton Davis lost his seat on the Michigan State Supreme Court after an attack ad — funded by the American Justice Partnership — influenced his re-election.

It wasn't on the group's radar, says Dan Pero, president of AJP. "My brother didn't like that decision either, actually, because he fishes the Au Sable," Pero says, referring to the reversal of Davis' decision. But Pero then adds: "The law's the law. So change the law. And don't ask the court to do it for you."

AJP's slogan is "Tipping the scales for legal reform." In practice over the years, that has meant targeting liberal judges for defeat.

Pero says AJP's donors are mainly corporations and businesspeople.

"Business, frankly, got tired of getting slapped around on these activist courts and decided to support candidates that they thought were more rule of law and they started contributing to those endeavors." he says.

And not just in Michigan, where Pero lives and works. "People who support us don't give for a specific state. You really can't target your contributions that way anyway. You believe in our goals and where we want to play." In 2010, Pero's list of states to play in included Ohio, Georgia, Oklahoma, Wisconsin, Alabama and Michigan.

"We were involved in all of those areas," he says.

But what is the "we" in the American Justice Partnership? As a social welfare group, it doesn't have to say who gives it money.

When other social welfare groups donate money to one another, however, the donor groups must disclose that information to the IRS. So CRP and NPR used those IRS records to map out the finances of AJP and more than 100 other social welfare organizations.

We traced nearly $2.5 million going to AJP in 2010 alone, coming from largely invisible groups seeking to influence political issues around the nation. Among them: the Wellspring Committee, based in the Washington, D.C., suburbs.

Asked about Wellspring, AJP's Pero says he doesn't remember them. "I mean, it's been three years," he says. "If they support us, thank God. God bless them if they supported us, because it means they support our agenda."

Pero is describing a new way of doing politics.

Donors give to groups like Wellspring because they believe in an ideology. Wellspring gives to groups like the American Justice Partnership because its ads can sway voters. Candidates like Alton Davis win or lose at the hands of funders who might not even know who they are.

It's all invisible to voters. And it happens far away from places like the Au Sable River.

This story was reported by NPR's Peter Overby, together with Viveca Novak and Robert Maguire from the Center for Responsive Politics. Read part two here.

Copyright 2023 NPR. To see more, visit https://www.npr.org.

Peter Overby has covered Washington power, money, and influence since a foresighted NPR editor created the beat in 1994.
Viveca Novak
Robert Maguire