Who Runs Philly Part 15: Who are the people behind the PACs?

Who Runs Philly? is an ongoing project from Philly Power Research focused on highlighting the powerful people, organizations, businesses, and interest groups that shape Philadelphia. This is the second post in which we are exploring the role of Independent Expenditure PACs in local politics. Read the previous post here.

Since the Supreme Court’s decisions in Citizens United v. FEC and SpeechNOW.org v. FEC, Independent Expenditure PACs have been able to raise and spend unlimited amounts of money as long as their spending is not coordinated with candidates’ campaigns. In our previous post, we looked at the history of these PACs’ involvement in Philly elections. In this post, we take a closer look at who the people are who supplied the money for independent political spending this year and suggest ways in which the power of these types of PACs could possibly be challenged.

Several candidates benefited from especially large amounts of support from Independent Expenditure PACs during this year’s primary, including Jamie Gauthier in City Council District 3 (from Philadelphia 3.0 PAC), Maria Quiñones-Sánchez in City Council District 7 (from the American Beverage Association), and Mayor Jim Kenney (from unions and Michael Bloomberg). A handful of City Council At-Large candidates also received support from Independent Expenditure PACs.

An important difference between Independent Expenditure PACs and more traditional PACs that donate directly to candidates’ campaigns is that Independent Expenditure PACs can raise and spend unlimited sums of money. We don’t always know who is providing this money, since sometimes these groups funnel the money through a nonprofit, like Philadelphia 3.0’s nonprofit arm. These are the funds that are sometimes referred to as “dark money,” since the nonprofits do not have to disclose their donors.

In 2015, about 72% of Philadelphia 3.0's PAC funds were funneled through their nonprofit. However, so far in 2019 no funds have moved through the non-profit, and only 14% of their funds since the start of 2018 have done so. This year, Philadelphia 3.0 PAC has received the majority of their funding from two venture capitalists: Richard Vague and Josh Kopelman.

City Council Races Breakdown

The chart below shows the highest-spending Independent Expenditure PACs in this year’s City Council primaries, and where their funding came from. Each bar represents the amount of spending by the PAC listed in the top row in support of the candidates listed below the bar. The bars are color coded by donor, to show the breakdown of where each PAC’s money came from.

Color coded by donor; click on the image for an interactive version

Vague and Kopelman stand out as having given far more money as individuals ($175K and $160K respectively) in support of Philadelphia 3.0’s pro-Gauthier efforts than they could have donated directly to her campaign. It’s worth noting that they also each donated the maximum $3,000 directly to Gauthier’s campaign in both 2018 and 2019, as did Kopelman’s wife Rena in both years and Vague’s wife Laura in 2018.

Philly for Growth, which supported Council At-Large candidates Allan Domb, Katherine Gilmore Richardson, Derek Green, and Eryn Santamoor, had a more spread out donor base than 3.0, however 91% of its money came from the real estate industry, including major developers OCF Realty (run by Ori Feibush) and Leonidas Addimando, who have both been outspoken supporters of the ten-year tax abatement. OCF Realty alone gave $50,000 to this PAC.

The American Beverage Association brought together $2.78 million from Keurig Dr. Pepper, PepsiCo, Coca-Cola, and Red Bull, and spent about half of that on ads, mailings, phone banking, and canvassing criticizing the soda tax and supporting candidates with similar views. This included over $600,000 attacking Mayor Kenney and $631,390 supporting Quiñones-Sánchez in the Council District 7 race.

Finally, the Alliance for a Better Pennsylvania spent about $200,000 from the National Association of Realtors on mailings and phone calls in support of Domb’s successful campaign for a Democratic Council At-Large nomination. The National Association of Realtors also donated an additional $103,075 to the Alliance for a Better Pennsylvania PAC two days after the primary, which has not yet been spent. This suggests that this PAC may be intending to spend money in the general election in the fall as well. Since there are Working Families Party and independent candidates trying to defeat the Republican candidates for the two non-majority party Council At-Large seats this fall, it will be interesting to watch whether any independent expenditure PACs spend money to support Republican candidates.

The following bar chart is similar to the previous one, except the color coding is by sector rather than by donor.

Color coded by sector; click on the image for an interactive version

Mayoral Race Breakdown

In the relatively uncompetitive Democratic mayoral primary, building trades unions supported Kenney via the Philly 2019 super PAC, while teachers unions (AFT and PFT) and Michael Bloomberg joined forces in the Forward Together Philadelphia super PAC to run commercials championing Kenney. Bloomberg, who has demonstrated a strong interest in soda taxes and has made similar interventions in Chicago, donated $1 million to this super PAC.

Click on the image for an interactive version

In addition to the Independent Expenditure PACs shown in the charts above, state campaign finance data shows that the IBEW Local 98 union made some independent expenditures in support of Mayor Kenney (about $24,000) and various candidates for other municipal offices (less than $8,000 per candidate). Unions are able to support candidates via both direct contributions to campaigns and independent expenditures.

What Next? Fighting the Power of Independent Expenditure PACs

Putting limits on independent political expenditures would require action at the federal level such as a constitutional amendment to overturn Citizens United. However, there have been some attempts by cities to increase the relative weight of small donors, such as public matching of small donor dollars (e.g. in New York City) or small vouchers for voters to donate to candidates (e.g. in Seattle). Some have suggested that laws that guarantee discounted rates for ad buys by candidates could be expanded, which would make independent expenditures less cost-effective in comparison.

Residents of New York state have recently been pushing to expand small donation matching to state level elections. Fair Elections for New York writes, “Following the Supreme Court’s Citizens United decision, small-donor matching funds remains the most powerful way to counter the unlimited, secret money flowing into our elections.” The group has also been advocating for closing the “LLC loophole,” which allows wealthy donors that control multiple Limited Liability Companies (LLCs) (often real estate companies tied to individual properties) to donate maximum amounts of money to campaigns from each LLC, and thereby get around individual donation limits.

Given the success that some Independent Expenditure PACs had in getting their preferred candidates elected this year, it seems likely that we may see more spending from pro-business and pro-real estate development groups like these in the future in local politics. We believe that we will need to keep a watchful eye on these groups going forward if we intend to effectively fight their agendas of tax cuts for the wealthy, privatization, and policies that speed up gentrification and displacement in our communities.