Secretive New Non-Profit Aims to Upend City Council

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A screenshot from the newly-launched Philadelphia 3.0 website.

A screenshot from the newly-launched Philadelphia 3.0 website.

Dark money—that’s the cash spent to influence elections that comes from anonymous donors—has a rotten reputation. Disclosure is a bedrock principal of campaign finance regulation, and for good reason. Typical voters can’t hope to match the heft of deep-pocketed donors, so don’t they, at minimum, have a right to know who is spending freely to help select the next mayor/governor/president?

But what if the dark money is being spent to shake up an entrenched political class that could use some new blood? And what if the reason the donors are so keen to remain anonymous is because they fear retribution from vengeful public officials?

Those are some of the questions raised by the launch today of Philadelphia 3.0, a new 501(c)4[1] organization—basically a dark money non-profit—that is out to get some of City Council’s incumbents fired.

Consider these bits from the organization’s sleek and tough-talking website[2]:

“Not much has changed in City Council over the past 50 years. The good news? In 11 weeks, everything can.”

and

“Our goal is to create the opportunity for new civil servants to be elected and smart policy to win out.”

and

“We are seeing real change in this city. Let’s create a council that can keep up.”

and

“Our mission is to engage new audiences and bring new voices into the city’s political discussions. To increase civic participation and voting rates.”

That’s some solid messaging around an issue—general dislike of City Council—that seems like it could resonate with a lot of voters. Philadelphia 3.0’s hope is that its populist-seeming message is enough to make the media and voters overlook the inherent elitism of an anonymous donor-fueled campaign.

Will it work? Will Philadelphia 3.0’s likely significant investment in this council race give challengers a fighting chance? Or will the dark money backfire, and tarnish its beneficiaries as tools of mysterious money-movers?

Some quick backstory. Philadelphia has some serious, low-limit campaign finance regulations: individuals can donate just $2,900 to a candidate’s campaign, and PACs can donate a maximum of $11,500. But when talking about dark money or, more broadly, independent expenditures[3], those limits are out the window, courtesy of relatively recent U.S. Supreme Court rulings. That means Philadelphia 3.0 can sink as much cash as it can raise helping out any candidate it likes (or, conversely, into destroying the image of any incumbent it would like to oust).

The non-profit has a young staff of three. Its executive director is Alison Perelman, a former aide to former at-large City Councilman Bill Green. She’s no stranger to City Council. The political director is T.J. Hurst, formerly with the Philadelphia School Partnership. The organization has also put together a carefully-assembled endorsement committee, which, in theory, will determine which council candidates will get Philadelphia 3.0’s support. The committee includes names such as Keith Leaphart, chair of the Lenfest Foundation and Cynthia Figueroa, president of Congreso.

But what makes Philadelphia 3.0 a force to be reckoned with are the names not out front: the donors rumored to be contributing several million dollars to the non-profit. We know that the effort is the brainchild of Joseph and Robert Zuristky, the father-son team that runs Parkway Corporation, the city’s parking and real estate development giant. But we don’t know how much they’ve fronted, and we don’t know who else is in on the action, or for how much.

When I asked Perelman who was bankrolling the operation, she replied: “As an organization it’s our policy; we do not discuss donors. We don’t want to be focused on individuals but on the collective issues.” When I asked how much Philadelphia 3.0 might spend, she demurred again. “We are not talking about any of our fundraising goals, but we are hoping to be a strong voice in this election.”

Perelman didn’t say this, but it seems at least some of the donors worry that if their giving were made public—as it would have to be if Philadelphia 3.0 were a typical PAC, instead of a 501(c)4—they might face retaliation from those sitting council members who fend off challengers. The donors most likely to face that sort of risk are developers, who really are at City Council’s mercy.

But wait, you may be wondering, isn’t that just kind of cowardly? When I put that question to Perelman, she replied: “We are not going to be focused on the labels that people ascribe to our organization, because we do feel so strongly that there is this glaring need for comprehensive and specific conversation over those issues that council has authority.”

Philadelphia 3.0 is asking council candidates that want the organization’s support to fill out a questionnaire (you can see it below). The questions have a business orientation to them, but they are not exclusively focused on economic development. Some samples:

“What specific school funding legislation would you introduce?”
“What specific business tax reform legislation would you introduce?

“Should Council legislate a change to the wages paid to or taxes paid by low-wage workers?”

“What specific approach would you advocate to put the pension funds on the path to solvency?”

“City Council has considered legislation that would institute a three-term limit for incoming Council members. Should Council approve this or similar legislation, thereby creating a Charter change ballot initiative that would set term limits for the office of City Council?”

“Should Council legislate to close the campaign finance loophole?” (Which is pretty rich, coming from an organization driving a multi-million dollar campaign finance freight train through the biggest loophole of all.)

City law prohibits independent expenditure efforts like this one from coordinating with candidates, so I wondered if this sort of questionnaire passes legal muster. It does.

“The City regulations explicitly allow outside groups to invite candidates in to speak, to interview them, and to endorse them,” says attorney and elections law expert Adam Bonin (who is also a Citified insider[4]). “What’s prohibited is coordinating any advertisements or other expenditures that might follow from such an endorsement.”

There’s another legal consideration for Philadelphia 3.0 to ponder. As far as the Internal Revenue Service is concerned, explicit participation in political campaigns should only be a side business for 501(c)4s. Their primary purpose is supposed to be to promote social welfare or a general public policy goal; the IRS suggests these organizations spend 40 percent or less on political activity.

If Philadelphia 3.0 abides by those guidelines—and Perelman says “we as an organization are going to follow all of the guidelines regarding what a 501(c)4 can do—that tells us two things. 1) These donors must really want to stay anonymous, as the impact of their donations will be at least somewhat watered down by spending on social goals 2) Philadelphia 3.0 will have to spin up some apolitical activity pretty quickly.

“That’s where the voter education and registration effort comes into play,” Perelman says, when I ask about Philadelphia 3.0’s primary mission.

And the top target? Millennials, of course.

“Philadelphia has had the largest per capita millennial boom. They punch above their weight in presidential elections but turn out in extraordinary low numbers in municipal races,” Perelman says. “What seems to be really clear about this group of younger Philadelphia is that they’re tremendously civically engaged but they’re not politically engaged, and that ties back to the fact that politics is such an insider game that there’s really no reason to get involved.”

Turning out millennial voters could indeed enhance the odds for City Council challengers, and it probably passes muster as a general public policy goal too.

Philadelphia 3.0 Candidate Questionnaire

Endnotes:
  1. 501(c)4: http://www.irs.gov/pub/irs-tege/eotopici03.pdf
  2. sleek and tough-talking website: http://www.philadelphia3-0.org/
  3. dark money or, more broadly, independent expenditures: https://www.phillymag.com/citified/2015/02/15/dark-money-philadelphia-mayors-race/
  4. insider: https://www.phillymag.com/citified/2015/02/17/inside-take-how-the-philadelphia-nominating-petition-game-is-played/

Source URL: https://www.phillymag.com/citified/2015/03/04/secretive-new-non-profit-philadelphia-3-0-aims-upend-city-council/