Bloomberg Camp Denies Funding of Flawed Iowa Voting App

Bloomberg Camp Denies Funding of Flawed Iowa Voting App
(AP Photo/Charlie Neibergall)
Bloomberg Camp Denies Funding of Flawed Iowa Voting App
(AP Photo/Charlie Neibergall)
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Add Michael Bloomberg to the list of presidential campaigns and Democratic Party entities distancing themselves from the Iowa vote-tabulation app debacle despite financial links to its creators.

Fallout continues over the caucus voting fiasco — the state’s Democratic Party chairman stepped down Wednesday, and the party will begin recanvassing the caucus results this weekend at the request of both Bernie Sanders’ and Pete Buttigieg’s presidential campaigns.

The Nevada Democratic Party had planned to use the app for its caucuses on Feb. 22, but announced after the Iowa meltdown that it would not do so. “We had already developed a series of backups and redundant reporting systems, and are currently evaluating the best path forward,” a spokesperson said.

Questions remain about the voting app’s funding and creation and exactly which well-connected Democrats are involved and to what extent.

Spokespersons for Buttigieg and Joe Biden have said their campaigns did not help fund the app. Their denials came after critics, including top Sanders’ surrogates, asserted that Shadow Inc., the company that created the app, received tens of thousands of dollars last year from both of their campaigns.

Shadow is owned by the digital consultancy firm Acronym, whose founder and CEO, Tara McGowan, worked for Barack Obama’s 2012 campaign and previously served as the digital director for NextGen America, a progressive organization founded by presidential candidate Tom Steyer.

McGowan and Acronym have tried to downplay their role in the Iowa mess, but that effort has spurred a host of questions and accusations that something more nefarious may be at work. Sanders supporters have suggested that app’s malfunction, along with the canceling of a flagship Des Moines Register poll just before the caucus, were orchestrated to undermine the Vermont senator and promote a more favorable, mainstream establishment candidate, such as Buttigieg.

It doesn’t help that McGowan has openly tweeted her support for Buttigieg and her husband works as a senior strategist for the former South Bend, Ind., mayor.

Democratic Rep. Ilhan Omar, who campaigned for Sanders in Iowa and is part of “The Squad” of far-left congresswomen who have clashed with their party’s leadership, amplified a tweet suggesting that the app’s developer and Buttigieg were in cahoots.

“Not great optics, here, folks,” a tweet from a different Sanders supporter said.

“-Dems paid a company literally called Shadow to create caucus app.

"-Buttigieg campaign also paid Shadow, FEC records show

"-Caucus apps fails

"-Buttigieg declares himself Iowa winner with no results”

The Buttigieg and Biden campaigns explained that their payments to Shadow did not provide funding for the vote-tabulation app, but instead went for use of Shadow’s text messaging technology designed to rack up $1 donations in order to meet donor thresholds for debate qualification.

Now the Bloomberg campaign is denying any role in funding Shadow, even though the Bloomberg Family Foundation contributed nearly $9 million since 2015 to the liberal dark-money group New Ventures Fund, according to the Bloomberg philanthropy’s 990 forms, which the IRS requires all tax-exempt organizations to file.

In 2018, the New Ventures Fund doled out at least $250,000 to Acronym, Acronym’s 2018 990 IRS forms show.

Bloomberg campaign spokesman Stu Loeser told RealClearPolitics that none of the $9 million the family foundation provided to New Venture went to Acronym.

“Not a cent,” he said in emailed statement. “All of the Bloomberg Philanthropies money that was sent to New Venture Fund was directed to other specific projects.” In a follow-up email, Loeser said the money was “earmarked specifically for entirely unrelated K-12 education and environmental projects.”

Matt Canter, a spokesman for the New Venture Fund, also said none of the Bloomberg funding was transferred to Acronym: “Bloomberg Philanthropy partnered with the New Venture Fund to support important charitable work that had nothing to do with Acronym, and New Venture Fund never provided a dollar to Shadow or to Acronym in support of Shadow.”

RCP examined the Bloomberg Family Foundation’s tax forms and found grants directed to New Venture “to improve outcomes for K-12 students in the U.S.” and smaller amounts broadly described as for the “mayors challenge.”

Critics of dark-money political groups argue that all funds donated to these organizations are fungible in the sense that giving money to a group for a specific purpose helps offset the costs of the group’s other activities and overhead.

“At some point the money you’re giving is freeing up resources to spend elsewhere and you are contributing to that – whether you like it or not,” said John Pudner, executive director of Take Back Our Republic, a conservative watchdog group that advocates for more transparency for money in politics.

Pudner pointed to Planned Parenthood as the prime example of how these offsets work. Planned Parenthood says it doesn’t spend any federal funds on performing abortions, but pro-life groups for years have argued that the federal funding helps free up other resources that are, in turn, used to provide abortions.

“When you have all this money coming in the door, you cannot prove that a given dollar you provided did not go to funding an abortion – that’s a nonsensical argument,” Pudner told RCP.

Loeser, Bloomberg’s spokesman, also said New Venture Fund is an entity known as a “fiscal sponsor” for programs that small organizations use. If these organizations don’t have “infrastructure such as tax compliance or human resources, they can use the New Venture Fund to process contributions,” he said.

Loeser didn’t explain why a billionaire businessman such as Bloomberg would need the New Venture Fund to pay for this type of philanthropic overhead.

Among the 2020 presidential candidates, several contenders have taken issue with billionaires and millionaires doling out funds to super PACs and other political entities. Minnesota Sen. Amy Klobuchar also has spoken out against IRS rules allowing tax-exempt organizations to keep the identities of their donors secret. Loeser did not respond to a question about Bloomberg’s position on whether dark-money groups should be required to disclose their donors.

Pudner dismisses the argument that the Bloomberg philanthropic funds aren’t fungible and couldn’t have been redirected to help Acronym launch Shadow.

“I find it concerning that when you’re talking to liberals, they apply the term ‘dark money’ to things they don’t like, but when it applies to them, they want to get technical in their language,” he said of Loeser’s insistence that none of the nearly $9 million the Bloomberg Family Foundation provided helped produce or launch the Iowa app.

Pudner described the New Venture Fund as a “huge pass-through group” to allow donors to conceal their involvement in certain activities. Otherwise, wealthy donors would just fund the activities through their own philanthropy funds.

“You go to the Arabella Advisors because they are the guys that make the political projects happen. You go to them for a specific purpose – to move money around and wipe your hands of it,” Pudner said. “When the funds come out of the Arabella world or you give money to Arabella to create a website, they can stand alone and it doesn’t have to say it was paid for by any individual.”

The New Venture Fund is one of a number of nonprofits controlled by Arabella Advisors —a Washington-based group of liberal sister nonprofits that has been criticized by conservative groups for “blurring the lines between philanthropy and political advocacy.” The groups were all founded by Eric Kessler, who worked in the Clinton administration and served as a member of the now-defunct Clinton Global Initiative.

The Capital Research Center, a conservative watchdog, issued a report last year casting Arabella as a “hydra-like” network that raked in $582 million in 2017 while benefiting from tax laws allowing it to keep many of its donors undisclosed.  

After the Iowa voting problems, several news outlets reported that Clinton and Obama campaign veterans serve in senior roles at Shadow. In the days since the caucuses fiasco, scrutiny has widened to include the money trail between Shadow and a constellation of dark-money liberal groups.

Hayden Ludwig, and investigative researcher at the Capital Research Center, said Arabella’s known for catering to “the Who’s Who of the elite Left,” but there’s no way to tell where the $250,000 that New Venture Fund gave to Acronym originally came from.

“The original donor who granted that $250,000 likely gave it to New Venture to act as a pass-through, masking his or her identity,” Ludwig said.

Correction: This story was edited after posting to reflect that Acronym’s 2018 990 IRS forms did not show that it launched Shadow Inc.

Susan Crabtree is RealClearPolitics' White House/national political correspondent.

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