The big business of Newt, Inc.
One of GOP presidential candidate Newt Gingrich’s favorite lines is that he is “running on ideas.” And indeed, he has a reputation as an ideas man in Washington, D.C.
Gingrich has an opinion on — and a plan for — everything from offshore oil drilling and immigration to infrastructure spending and spaceflight.
But ideas alone don’t fund presidential ambitions. They can’t buy plane tickets and tour buses, much less Greek cruises or a $500,000 credit line at Tiffany’s.
Gingrich’s total assets were valued at between $6.7 million and $30.7 million in 2010. He has written 23 books and produced eight documentaries with his wife. He commands between $40,000 and $50,000 per speech.
So how does Gingrich do it?
The former Speaker of the House has financed his operations by creating a large network of for-profit and nonprofit organizations which directly and indirectly spread the gospel according to Newt. All told, the former Georgia Republican congressman held no fewer than 25 titles, positions and occupations before running for president, according to a CNN report.
The majority of Gingrich’s assets come from his numerous name-branded, for-profit groups: The Gingrich Group, Gingrich Communications, Gingrich Productions and Gingrich Holdings. He uses these companies to produce, distribute and supplement his prolific output of books, documentaries and public speeches. (RELATED: What exactly is a ‘gotcha’ question?)
Relations between the corporations are cozy. For example, in his July financial disclosures Gingrich declared a “promissory note” from the Gingrich Group, LLC to Gingrich Productions, Inc., valued somewhere between $5 million and $25 million.
The former Georgia congressman is CEO and chairman of the Gingrich Group, a communications and consulting firm he founded in 1999 after leaving office. One of the company’s first clients was Freddie Mac. A spokesperson for the mortgage lender said Ginrgich was hired “to provide strategic counsel on a range of issues that we’re facing related to policy and the industry.”
Gingrich later criticized the bailouts of Fannie Mae and Freddie Mac, saying it was “a tragedy” that the lending giants “had so many politicians beholden to them.”
Gingrich Productions, which “provides talent for audio, video and photographic productions,” paid its namesake more than $2.4 million in distributions last year and is valued at between $500,000 and $1 million. Gingrich’s wife, Callista, heads the company and is the creative force behind its many documentaries, all of which feature her and Newt.
The films have been financed in part by Citizens United, the conservative nonprofit group that last year won the Supreme Court case establishing corporations’ right to free speech through political contributions. (RELATED: Gingrich says scrap super committee, extend payroll tax holiday)
Gingrich also collected approximately $72,000 last year from a Florida talent agency, The Lubbers Agency, Inc., which also lists him as a director. Lubbers, presumably, refers to his daughter Kathy Gingrich Lubbers, who also leads Gingrich Communications.
Gingrich Communications is the marketing and media arm of Gingrich’s operations. It publishes The Americano, an online news site offering “a more balanced view on all the issues that concern American Hispanics today.” The Americano’s editor-in-chief, Sylvia Garcia, also works on Hispanic inclusion issues for Gingrich’s presidential campaign.
And then there are the think tanks, nonprofits and political organizations that Gingrich either founded or supports.
The largest is American Solutions for Winning the Future, a “527” political action committee he founded in 2007. There are no limits on the fundraising of such organizations, but they may not advocate for specific candidates or coordinate with any candidate’s campaign.
Gingrich’s 527 group works “to create the next generation of solutions that will ensure that the United States remains the safest, freest, and most prosperous country in the world.”
Its first major campaign called for increased offshore oil drilling and energy production. It raised $28.2 million in 2010, including money from its donors: energy companies like Las Vegas Sands, Peabody Energy and American Electrical Power.
American Solutions spent all the money it raised — $28.4 million, to be exact. In fact, it was the single biggest spender among 527 groups in the 2010 election cycle.
But more than half the money the group collected went to soliciting more donations and paying staff. It spent $15.6 million on fundraising and $9.6 million on administrative costs. Much of the rest paid for travel and events featuring Gingrich. For example, $3.2 million went to Moby Dick Airways, a charter jet company based near Washington, D.C.
That would be the same Moby Dick Airways the Gingrich campaign dropped nearly half a million dollars on, according to its July FEC report. Gingrich blamed his consultants when it was revealed his campaign was about $1 million in debt. Since then, he claims to be flying commercial.
According to American Solutions’ IRS publicly available tax return for 2010, Gingrich worked 16 hours per week there but didn’t draw any salary.
The Center for Responsive Politics said American Solutions’ spending habits were not out of the ordinary, considering the group’s likely goal.
“That’s not highly surprising or unusual because this might have been the vehicle to build name recognition for a presidential run,” said Sheila Krumholz, CRP’s executive director.
In May, after Gingrich left the organization to pursue his presidential aspirations, American Solutions filed papers to change its status from a 527 group to a 501(c)(4) organization. The change would mean the organization can continue to raise unlimited amounts of money, but would no longer be required to disclose its donors.
Krumholz said the change would make it “just a lot easier to fly under the radar.”
After a mass resignation of many key staffers in June, Gingrich restocked his campaign with American Solutions employees. His press secretary, R.C. Hammond, was formerly the group’s spokesman. Campaign coordinator Michael Krull served as national director. American Solutions’ fundraising coordinator and policy director also left to work on the campaign.
Which might explain why the American Solutions website is down, and no one is answering the phone. A receptionist in the lobby of the K Street office building in Washington, D.C. that houses American Solutions said no one was there. Gingrich spokesman R.C. Hammond directed an inquiry to American Solutions vice president and comptroller Paige Bray, who so far has not responded.
In the same building as American Solutions, one can find the offices of Gingrich Holdings, Gingrich Productions and Gingrich Communications. That building also houses the Center for Health Transformation, a for-profit think tank Gingrich founded in 2003. The Center pushes for free-market reforms to American health care system, and has been critical of President Obama’s health-sector overhaul.
In its own words, the Center is “a high-impact collaboration of private and public sector leaders committed to creating a 21st Century Intelligent Health System that saves lives and saves money for all Americans.” The organization doesn’t lobby, but its clients — big names like Blue Cross Blue Shield and GE Healthcare — pay fees ranging from $10,000 to $200,000 per year for access to its policy ideas.
Gingrich also founded and helped fundraise for Renewing American Leadership, a nonprofit organization formed to “preserve and promote America’s history and America’s Godly heritage.”
Launched in 2009, that charity aimed to build a united front of social and fiscal conservatives. It prominently featured Gingrich on its website and in its fundraising letters, which were written on Newt Gingrich letterhead and signed by the former speaker.
Gingrich got in hot water when an ABC investigation revealed the charity paid $220,000 over two years to Gingrich Communications. It also purchased cases of Gingrich’s books and copies of DVDs produced by Gingrich Productions.
Long-time Gingrich spokesperson Rick Tyler ran Renewing American Leadership. He also said he was the recipient of the six-figure payments the charity made to Gingrich Communications. ABC also learned that the list of people who sent checks to that charity was provided to Gingrich for future use.
The Gingrich campaign released a statement saying the ABC News report “did not find any activity that was not fully supported by the law.”
“That’s because both [Renewing American Leadership] and Gingrich Communications took great care to make sure all resources were being used legally and ethically,” the statement reads.
After the ABC report broke, Renewing American Leadership stopped using Gingrich in its promotional materials. Tyler did not return calls for comment.
It wasn’t the first time Gingrich has been accused of playing fast and loose with his finances. In the late 1990s, the House Ethics Committee censured and fined the then-speaker for allegedly drawing money from a tax-exempt organization to help finance his political activities. The IRS later cleared him of the charges; the House, however, still ordered him to pay a $300,000 penalty.
But never let it be said Gingrich doesn’t have a charitable streak. The Gingrich Foundation, an Atlanta-based charity, has donated almost $700,000 to charities since 2004. The foundation has given $2,500 to the Atlanta Ballet, $10,000 to the Atlanta-based Arthritis Foundation and $100 to the Birthplace of John Wayne in Winterset, Iowa.
And in the midst of this all, the idea machine rolls on, as steady as ever. Gingrich released his twenty-third book this summer, and he took time off the campaign trail to screen his and Callista’s latet documentary.
He also made time to announce his newest project: drafting and introducing a bill in Congress strictly enforcing the Tenth Amendment.
The project is called Team 10 and will be, in typical Newt-speak, “a crowd-sourced, participatory effort meant to listen, learn and work with the American people, both online and in person, to develop ideas for enforcing the 10th Amendment and returning power back home.”