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Dark money under spotlight as campaign finance law changes right before Philly primary

Philadelphia 3.0, an advocacy group with a "dark money" nonprofit arm, is an is sue in 3rd District Council race. A new city law aims to make such groups disclose donors in city elections.

The PAC Philadelphia 3.0 has been investing heavily in materials to promote the campaign of Jamie Gauthier, right, who is challenging incumbent city Councilwoman Jannie Blackwell, left. A new law may require 3.0 to reveal more of its donors.
The PAC Philadelphia 3.0 has been investing heavily in materials to promote the campaign of Jamie Gauthier, right, who is challenging incumbent city Councilwoman Jannie Blackwell, left. A new law may require 3.0 to reveal more of its donors.Read more--- Steven M. Falk, Heather Khalifa

Philadelphia 3.0 — an independent political action committee — has focused most of its efforts this election cycle on getting Jamie Gauthier elected to City Council. The group has circulated thousands of fliers in West Philly supporting Gauthier and accusing longtime incumbent Jannie L. Blackwell of being too cozy with developers and holding the seat for too long.

But the group’s support has proved somewhat polarizing in the 3rd District race.

This week, a rebuttal flier landed in mailboxes across the district, accusing 3.0 of being a billionaire-backed secret-money group with ties to President Donald Trump, and encouraging residents to “Re-Elect Jannie Blackwell.”

“Three Point Zero (3.0) is a hidden Republican/Donald Trump plan," the fliers read.

“It wouldn’t surprise me,” Blackwell said of the alleged but unexplained Trump connection. The councilwoman said she had no idea who circulated the fliers, but had seen them in the neighborhood. There was no attribution, which is a violation of campaign finance laws.

Ali Perelman, the executive director of 3.0, called the claims “absurd."

“There is no Trump connection. It’s absolutely preposterous. It’s ridiculous. We spent basically a year recruiting and training mostly Democrats — almost entirely, exclusively Democrats — to run for low-level Democratic office in Philadelphia."

But the more lasting backlash against 3.0 has been that it doesn’t legally have to publicly identify many of its donors. In 2015 it spent more than $500,000 on Council races but kept secret the origin of seven out of every 10 dollars transferred from its nonprofit.

A change to the city’s campaign-finance law taking effect this week aims to make sure anyone who pays for political communications is named.

More transparency coming?

Under Philadelphia’s existing law, Philadelphia 3.0 already has had to disclose the source of money used for political activity through its political action committee.

Legislation that Mayor Jim Kenney signed into law Wednesday adds language making it explicit that the law requires disclosure of money spent “whether directly or through another person” on electioneering — think mailers, fliers, public advertisements on behalf of candidates.

The new law requires PACs like 3.0 to disclose all donors who contribute to political activity that costs more than $5,000, whether the funding originated from a nonprofit or a political action committee. Philly 3.0 has both a nonprofit and a PAC.

In 2015, the nonprofit arm gave the PAC $375,000 in two donations but kept the identities of the donors to its nonprofit secret.

“The effect of this amendment is to ensure that when people spend large amounts of money to influence city elections, there will be disclosure of the actual funders of that activity, regardless of whether it is done through a nonprofit or a PAC or whatever kind of entity," said Michael Cooke, acting General Counsel for the Board of Ethics.

The law, which takes effect immediately, could also mean more transparency in the critical days before the May 21 primary. In the past, one way to get around disclosing last-minute purchases was to pay for some ads after they’ve aired and then file reports later, sometimes after an election. The bill requires disclosure based on when the communication is distributed, rather than paid for.

Councilman Derek Green, who is endorsed by 3.0 in his reelection bid this year, sponsored the bill, which also clarified several other sections of the city’s campaign-finance law.

“This bill provides more transparency so that we as voters and others, as we’re going into the political season, who want to influence the outcome of elections, should have information," Green said. "That’s to me something that was needed as a result of federal case law that had impacted us.”

Perelman said her group has made all required disclosures and would continue to do so. She said that since a first round of changes to the law in 2015, the PAC has exclusively funded the group’s electioneering activities and disclosed its donors. The not-for-profit is free to do “issue advocacy” and fund administrative costs without disclosures.

Perelman said some of the backlash against 3.0 in the 3rd District race shows a “misconception” about what the group is about.

Philadelphia 3.0 was started in 2014 in the boardroom of Parkway Corp., a parking-facility operator and real estate developer, and has since accepted big-dollar donations from developers. Despite those close ties to the industry, 3.0 mailers have consistently targeted Blackwell for building “strong relationships” with developers.

Philadelphia 3.0′s most recent campaign finance report showed just one contribution of $50,000 from Richard Vague, a venture capitalist who was considering a run for president. About $68,000 was transferred from the nonprofit to the PAC in September. City law allows transfers without donor disclosure that far in advance.

In addition to Gauthier, Philadelphia 3.0 is backing Judy Moore, who is challenging Brian O’Neill in the 10th District; Eryn Santamoor, running as a Democrat at large; and incumbents Green, Allan Domb and Maria Quiñones-Sánchez.

“Our core mission is to support smart and qualified city candidates, mostly challengers," Perelman said.

Backfiring on Gauthier?

In an already uphill battle for Gauthier, backlash over the PAC’s endorsement has been an unforeseen and problematic issue.

It’s eroded support for her among some young, vocal progressives in the city. Reclaim, a progressive grassroots organization that has protested against Blackwell in Council, opted not to endorse a candidate in the 3rd District, partly because Gauthier was endorsed by 3.0. Gauthier was also initially chosen for endorsement by the Liberty City Democrats’ political committee until 3.0′s backing was raised as an issue and club members present for the meeting voted to not endorse anyone.

Gauthier’s campaign manager, Trevor Maloney, said being competitive as a challenger means seeking a broad base of support. “We wish that it were easier and cheaper to run against an incumbent, but it’s not,” Maloney said.

He said Gauthier’s support for reining in so-called councilmanic prerogative, term limits, and ending the 10-year tax abatement amount to a “pretty progressive platform.”

"If 3.0 or any other group that supports us are supporting us, they support us with the full understanding that Jamie’s going to do what she says she’s going to do. There are several interests, I’m sure, that Philly 3.0 would like Jamie to support that Jamie doesn’t support and isn’t going to support.”