Hospitals, beer distributors give to Deal funds that shield donors

Gov. Nathan Deal’s political team has set up big-money funds to push his agenda during his final few years in office, similar to the $1 million Real PAC it used leading up to his re-election.

The difference: This time, his backers can legally keep the names of the deep-pocketed donors secret.

The Atlanta Journal-Constitution nonetheless learned the identities of contributors who gave about $150,000 — probably a fraction of what one of the funds, Georgia Leads, has raised — and they include several major special-interest groups with business before the state.

At least some of the money will be used to promote the governor’s proposed constitutional amendment this fall to allow the state to take over failing schools. Opponents object to the idea that the public may not get to know who is paying for at least part of the pro-amendment campaign.

“If the governor truly believes in his ‘reform’ agenda, then he should be open and transparent in who is funding it and who stands to benefit from it,” said John Palmer, a Cobb County schools band director and spokesman for the teacher advocacy group TRAGIC.

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More and more politicians and political advocacy groups are creating “social welfare” or other “nonprofit” funds that allow them to collect money without having to disclose who gave it to them. In turn, the money is often used to push a candidate or a politician’s platform.

The money can come from hospital or nursing home companies hoping for more state Medicaid spending, beer distributors working to maintain current state laws limiting direct sales by brewers, or education management businesses wanting to expand school choice.

Unless the information is voluntarily released, the public is never the wiser. And some say the mountain of secret political money is only growing.

“It’s everywhere and it’s everybody,” said Rick Dent, a former aide to Gov. Zell Miller and a Democratic operative who has worked with numerous 501(c)(4) “social welfare” organizations. “What you have now is a system awash with money and less accountability than ever before.”

Big donors with big interests

The pattern of donors the AJC could identify pretty much matched that of the other funds created by Deal backers: Contributors were people and businesses with a big stake in legislation.

There was $10,000 from AT&T and $25,000 from the Georgia retail store lobby.

McGuireWoods, one of the best-connected lobbying firms at the statehouse, contributed $5,000, and Hospital Corporation of America, which runs more than a dozen hospitals and surgical centers in Georgia and received more than $80 million from the state for medical services in 2015, gave $25,000.

The beer distributors lobby kicked in $25,000, and Georgia Crown Distributing, an alcoholic beverage distributor led by mega-Deal donor Donald Leebern, gave $50,000.

Beer distributors have been locked in a battle with Georgia’s craft beer brewers over the past several years at the statehouse.

Distributors want to maintain the state’s existing so-called “three-tier” system, which says beer manufacturers can sell their produce only to wholesalers/distributors, who then sell to retail stores and restaurants.

Craft brewers, however, say the system puts them at a business disadvantage since it has prevented them from selling their beer directly to customers who visit their breweries.

Even a relatively minor tweak in the law last year proved to be a major legislative fight, and the Department of Revenue — whose commissioner is appointed by the governor — was criticized last year when it came out with new rules after agency officials met with wholesalers.

The AJC reported in April that Deal backers created a similar fund — Real Georgia — to raise $1.4 million after his 2014 re-election to pay for his inaugural celebration.

Such events are typically funded by lobbyists, businesses and special-interest associations with a keen interest in what goes on at the statehouse. Past governors have released the information, and Deal did as well after his first inaugural. This time his team didn’t.

The governor’s office declined to comment, saying his staff had nothing to do with the filings.

His team’s new organizations, called Georgia Leads and Georgia Leads on Education, began raising money late last year.

Deal’s re-election campaign manager, Tom Willis, was the CEO of Real Georgia — the now-dissolved inaugural fundraising arm — and heads Georgia Leads.

When asked the goal of Georgia Leads, Willis said it was “created as a 501(c)(4) issue advocacy organization to push for public policies across Georgia that will advance a pro-jobs and pro-family agenda.”

Citizens United helped foster groups

That was pretty much the same language used to describe Real PAC, which supporters created to push Deal’s agenda leading up to his re-election.

Real PAC disclosed its donors, mostly businesses and lobbyists with a keen interest in state legislation and funding and in seeing Deal re-elected. A sizable chunk came from nursing homes and other health care providers who receive billions of dollars in state funding each year.

The governor later backed a special rate hike for select nursing homes, including those owned by one of his campaign’s and Real PAC’s top contributors.

The fundraising/advocacy groups Deal backers created since then — Real Georgia and Georgia Leads — were filed as nonprofits under the federal Internal Revenue Service tax codes that cover so-called “social welfare” organizations.

The groups can participate in politics as long as that isn’t their primary focus. Unlike Real PAC, which was created as a state political action committee, the new organizations don’t have to disclose donors.

Such setups were aided by the U.S. Supreme Court’s Citizens United decision, which cleared the way for unions, businesses and others to raise unlimited amounts of money to use the designation. The Washington Post reported that after the decision, the IRS was flooded with applications to form such committees.

The Washington-based Center for Responsive Politics said spending by groups that don’t have to disclose donors tripled from the 2008 elections to the 2012 elections. Such spending is setting records again this presidential campaign season, the center said.

‘Impossible not to work with them’

Both ends of the political spectrum use the rules to avoid disclosing donors. Deal staffers have long complained, for instance, that the liberal advocacy group Better Georgia, a thorn in the administration’s side, doesn’t disclose donors.

Better Georgia has a 501(c)(4) as well as an “independent” state political committee. The state committee reported money donated by unions and teacher groups in 2014 to support the campaign of Democratic state school superintendent hopeful Valarie Wilson. Wilson lost the general election that year to Republican Richard Woods.

Bryan Long, the executive director of Better Georgia, said his group needs the 501(c)(4) to compete politically since conservative groups with deeper pockets use the “social welfare” code.

“We don’t like that law, we wish it would change,” Long said. “We wish all donations would be transparent. The network of (c)(3)s and (c)(4)s …. the intent is to hide the donors, the intent is not to have open scrutiny.”

Dent, the Democratic operative, said his company has created 501(c)(4)s, staffed and managed the organizations, consulted with them and provided media services to them in Georgia and throughout the South.

“They are everywhere in politics now, and it is impossible not to work with them,” he said. “Since Citizens United, raising money in the political process is easier than it has ever been.”

Dent laughed when asked whether raising money is easier for such groups because they don’t have to disclose where the money comes from.

“You have to play under the rules as they are,” he said, “not as you would like them to be.”

‘Trying to educate people’

Rick Thompson, a Deal campaign consultant, has been involved in more than 100 “social welfare” 501(c)(4)s. He was also treasurer of Deal’s Real PAC.

Thompson’s company files paperwork and handles disclosures for candidates and causes, and he said 501(c)(4)s are “a part of our business that has steadily grown.”

“It’s more of a popular thing because more people are coming to understand this is a mechanism they can use,” he said. “It’s beneficial for people who have a true social welfare mission and want to accomplish it through the political arena.”

As executive secretary of the state ethics commission during the 2000s, part of Thompson’s mission was to ensure candidates and political action committees filed reports disclosing how they raised and spent campaign money. Thompson audited filings to make sure they were accurate and went after politicians who didn’t follow the law.

Now, he said: “My opinion since I got out of the regulatory industry has changed somewhat. I truly see the benefit of 501(c)(4)s that are trying to educate people about issues. There is a difference between supporting a candidate and educating an audience on an issue.”

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