Without naming donors, some nonprofits can spend to influence voters in ballot initiatives under Virginia election law; it adds up

A Virginia Beach Connex social media post from 2016 sought “yes” votes in the 2016 light rail referendum in Virginia Beach. The nonprofit Light Rail Now, which raised more than a half-million dollars that year, was behind the effort to persuade voters. [via Twitter]


VIRGINIA BEACH — A nonprofit organization that is not required to identify its backers raised more than a half-million dollars last year and spent much of that money to influence voters to support extending light rail to Town Center in a referendum.

It is uncertain where most of Light Rail Now’s money came from, though The Independent News has identified two contributions from business-friendly political action committees. A 990 form released last week by the nonprofit shows sums given by unnamed contributors. 

That return and a version obtained from the U.S. Internal Revenue Service show what was raised and how it was spent, though not in the detail required by campaign financial disclosure forms.

No names are named in forms citizens can request either from the government or the organization itself. Influencing policy through ballot initiatives while avoiding disclosure has wider implications than advocacy by one nonprofit in a Virginia Beach ballot question. The use of certain nonprofits as vehicles for “dark money,” as the practice is known, could happen again here or elsewhere in the commonwealth.

A return provided to The Independent News by the former head of Light Rail Now on Tuesday, Dec. 12, listed 41 donations of $5,000 or more, representing $455,000, sum total. Two donors gave $35,000 each, the return shows, and others $25,000. 

Overall, Light Rail Now took in $537,299 in contributions in 2016, and it claimed $525,710 in expenses. A statement of program service accomplishments said the group spent $491,601 to “encourage support for light rail as part of Virginia Beach’s transportation solutions”  and to launch a “public information campaign focused on a public voter’s referendum.”

Light Rail Now filed its federal return well after Virginia Beach voters in November 2016 rejected extending The Tide. The city council took the voters’ advice and stopped pursuing expanded light rail here. 

The Independent News last year reported a conflict between state election law and state guidance that said such nonprofit organizations should form referendum committees, which are required to name donors and disclose spending. A state election official gave an opinion that Light Rail Now did not need to form a referendum committee under the law because it is a 501(c)4 social welfare organization. The group acted with that guidance when it chose to withhold names. 

In contrast, No Light Rail Virginia Beach, an organization that opposed extending the Tide and petitioned to place the initiative on the November 2016 ballot, formed a political action committee — it also endorsed candidates for local office — and, thus, was required to disclose donors and spending to the public.

The IRS did not release the Light Rail Now schedule of contributors, and the agency cannot discuss an individual filer. Names and addresses of contributors are not required to be made public, but other information, including the amount of contributions, “is required to be made available for public inspection unless it clearly identifies the contributor,” according to the 990 form instructions. 

Martha McClees, former executive director of Light Rail Now, provided a return on Tuesday, Dec. 12, in response to a request for a copy of the form. Light Rail Now is no longer operating, according to McClees and state corporation commission records. 

The Independent News identified two donors to Light Rail Now because, as PACs, they disclosed the contributions. The newspaper came across this information at the state elections website while researching another story.

A PAC called Real Estate Issues Mobilization reported making a $5,000 donation. 

The PAC also reported spending $49,411 on light rail campaign consulting in December 2016 from a firm in Denver, Colo. Earlier, the PAC reported a contribution in that sum from the Virginia Association of Realtors based in Glen Allen. The PAC could not be reached for comment. To be clear — this spending was not through Light Rail Now.

The Hampton Roads Business Political Action Committee reported donating $5,000 to Light Rail Now in late September 2016, according to a campaign financial disclosure. 

Increasingly, 503(c)4 nonprofit groups are used as a vehicle to influence political processes while shielding the identities of contributors. Such spending is called dark money because voters do not know its sources. When such a nonprofit decides not to disclose sources of funds, they are considered a dark money group, according to the Center for Responsive Politics

State Sen. Bill DeSteph, R-Virginia Beach, introduced a bill meant to remove language in Virginia campaign finance law allowing 501(c)4 organizations to avoid forming a referendum committee. 

The bill stalled in committee during the Virginia General Assembly session earlier this year. DeSteph could not be reached for comment this past week.

Light Rail Now influenced voters under names such as Virginia Beach Connex and Mission Transport VB. It was not always clear to voters that Light Rail Now was behind the advocacy made under those names.

Spending detailed in the Light Rail Now 990 report includes $221,783 for marketing services by the Meridian Group in Virginia Beach and another $153,818 to Applied Mathematics Creative Laboratories in Richmond.

Spending through the Meridian Group included placing television advertising, according to forms filed with ad buys at local stations. Meridian Group could not be reached for comment this past week.

According to its website, Applied Math Labs oversaw Light Rail Now’s Mission Transport VB effort, “an integrated social media counter-messaging campaign.” 

The agency’s work included digital posters and a video series interviewing subjects including “the city’s most well known social and cultural influencers.” 

An official listed as chief executive officer for Applied Math Labs, did not respond to requests for comment. 

The firm’s efforts, such as the poster campaign, were “asymmetric and took the opposition entirely by surprise,” according to its website. 

Vastly outspent, that “opposition” used $38,466 to fund its successful campaign to defeat extending The Tide, campaign financial disclosures by No Light Rail show.

This screen capture of part of a Mission Transport VB digital poster shows work by the Richmond company Applied Mathematics Creative Laboratories that advocated for “yes” votes in the 2016 light rail referendum in Virginia Beach. AP Math Labs, as it is called, was paid through Light Rail Now, a Virginia Beach nonprofit that refused to name its financial backers to the public. The nonprofit did not always make it clear that it was behind such communication seeking to persuade voters.

The 990 form released by Light Rail Now can be reviewed by clicking on this link.

© 2017 Pungo Publishing Co., LLC

The Independent News

One Comment

  1. Good job by PAIN in decoding the PAC activities of one group. Stay with the story as you may find other dots connecting interest groups. This story is a perfect example of a local effect of Citizens United and how dark money influences voting. BTW, such organizations are called Not for Profits not non-profits as the IRS code proscribes.

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