AJS Revenues Plummet in 2013 While Leader’s Salary Quadruples

A new IRS filing from Americans for Job Security, a Republican dark money organization that spent heavily in the last election, foreshadows a likely theme of 501(c) groups’ financial reports covering the year 2013 as they are sent to the IRS in coming weeks. Many of the groups that were awash in funds in 2012 — spending hundreds of millions of dollars without disclosing their donors in the 2012 elections — will report steep drops in revenues for 2013.

AJS’  most recent Form 990 tax return, obtained by OpenSecrets Blog, shows that the group raised just $817,975 — a very steep fall from the more than $51 million it brought in during the preceding year, and the second lowest revenue figure AJS has reported in the last 10 years. The 990 covers the period Nov. 1, 2012 to Oct. 31, 2013, which is AJS’ fiscal year; 501(c) organizations have 11 months after the end of their fiscal year to file their reports.

Despite this year’s precipitous tumble in fundraising, the group’s president, Stephen Demaura, has reason to celebrate. AJS upped his salary from $134,490 in 2012 to $535,392 in 2013. For comparison, consider that Demaura’s combined salary over the preceding three years — when AJS brought in nearly $65 million — was just under $430,000.

Another way to look at it: DeMaura’s salary took up 65 percent of the funds AJS raised last year, and that’s not even his only source of income. As we reported in July, Demaura has joined a polling firm called Vox Populi Polling with Mary Cheney and her colleagues in another network of politically active nonprofits.

AJS had a very big year in 2012, and not necessarily in a good way. The money was flowing like never before, but the group was a participant in a series of transactions that California authorities referred to as “campaign money laundering.” The case ended in a settlement and record fines for two AJS grantees — one of which received tax exempt status from the IRS despite its heavy political spending and its involvement in the scheme.

AJS itself spent nearly $15.9 million on political activity, the bulk of which went towards ads opposing President Obama’s re-election, according to reports filed with the FEC.

In all, of the nearly $48.2 million in spending AJS reported to the IRS in 2012, about $42 million of it went out the door as grants to other organizations — the majority of which would ultimately end up in California — or as direct political spending at the state and federal level.

After bringing in more than $51 million in 2012, AJS revenues plummeted to just $817,975

With the elections all wrapped up, AJS spent the off-year in a fundraising desert, but this isn’t new for AJS, which always has raised and spent the vast majority of its funds in election years. Over the last 10 years, in fact, more than 91 percent of the nearly $95 million that AJS has brought in was raised during election years. The group’s average election year revenues come in at about $17.3 million, ten times higher than the $1.7 million it raises, on average, in off years.

Election year fluctuations aren’t unusual for organizations seeking to mobilize the public and make their pet issue a part of the election debate, so the ebb and flow itself isn’t remarkable. But the magnitude of the gyrations suggests AJS’ core activities are more tied to elections than to the general promotion of any particular trade or business sector.

And AJS isn’t alone. While most nonprofit organizations struggle to maintain a steady level of funding or rejoice at an increase of a few percentage points, some organizations see boom and bust years with revenues wildly divergent from one year to the next. These groups also happen to organizations that engage in significant political spending during election years, all without disclosing their donors to the public.

American Future Fund’s cashflow

Take the American Future Fund. OpenSecrets Blog showed last year that this group, which has no employees and uses a mailbox in Des Moines as its address, has raised $103 million in the five years since 2008. Ninety-six  percent of those funds were raised during election years.

AFF has ranked among the top spending nonprofits active in federal elections for the last three cycles, reporting more than $25.4 million in political spending to the FEC in 2012. But it has never raised more than $2.6 million in an off year.

Neither 501(c)(4) social welfare organizations nor 501(c)(6) trade associations disclose their donors to the public. Unlike their (c)(4) counterparts, though, (c)(6) organizations such as AJS don’t even report their funders to the IRS. Technically they don’t have donors, but dues-paying members. Demaura has said his “number-one promise” to members of AJS is keep their names out of the public eye.

The definition AJS uses for membership is loose. Any individual or organization that gives money to AJS is a member, and all members, Demaura told California investigators, “state their level of giving that they would like to take part in.”

Tax experts contacted by the Center for Responsive Politics said that the expanding and contracting membership revenues of a group like AJS is not something that the IRS would see as a violation of 501(c)(6) status on its face. The group simply must be able to make a compelling case that the majority of its activities in on- and off-years — regardless of fluctuations in its revenue stream —  went towards non-political activities, it is probably safe.

Though AJS describes all of its donors as dues paying members, it’s important to note that none of the group’s known donors, uncovered by the Center for Responsive Politics, have ever described their grants to the group as “dues.” For example, when Crossroads GPS gave AJS $2 million in in 2012, it listed the purpose of the grant as “social welfare.” Other donors like the Center to Protect Patient Rights, the Wellspring Committee, and Freedom’s Watch, which have provided millions of dollars over the years, have described their contributions as general support.

Oddly, the filing also seems to relegate the group’s 2012 grants to the memory hole. The $26.3 million it passed along to groups like the Center to Protect Patient Rights and the Taxpayer Protection Alliance appeared as “0” on the line of the Form 990 that requests summary information from the previous year.

Demaura has not responded to requests for comment from the Center for Responsive Politics.