Complex Koch Network Cloaks Sources of Election Funds

Billionaires Charles and David Koch saw early on the political potential of social welfare groups and trade associations—which can finance election candidates without revealing their donors—and created a sophisticated and far-reaching organization to do just that, according to a detailed analysis by ProPublica.

The operation, singular in American politics for its resources and complexity, used at least a dozen nonprofits to spend more than $383-million just in the 2012 election. Tracing the money is challenging. Funds are swapped back and forth, protecting the donors and allowing the groups to claim they are spending on “social welfare” activities to qualify for 501(c)(4) tax-exempt status.

To avoid discovery, nonprofits in the coalition installed Koch allies as leaders, used the same set of lawyers, and set up LLCs—“disregarded entities” whose activities are obscured because their tax returns are filed as part of the parent nonprofit. “Their level of degree to which they insist on control is truly spectacular,” a nonprofit employee said of the Koch brothers.