The conservative activist group credited with building the tea party has turned into a nearly broke wingnut welfare slush fund, according to former staffers.
Sources told BuzzFeed that FreedomWorks was forced to take out a $1 million line of credit to keep extra cash on hand earlier this year.
The nonprofit organization raised more than $40 million last year but has taken in as little as $3 million so far this year, the site reported Friday, and staffers are reportedly fleeing the group as morale plummets.
The group had fallen on hard times since co-chairman Dick Armey tried to gain control of FreedomWorks in September 2012 from top executives Matt Kibbe and Adam Brandon, the sources said.
Armey agreed to drop his coup attempt and leave the organization in exchange for $8 million that will be paid over 20 years by FreedomWorks’ primary donor, Chicago businessman Dick Stephenson.
The former Republican House Majority Leader had been with the group since its 2004 inception as a splinter group of the Koch brothers-funded Citizens for a Sound Economy, which Armey had joined the year before as chairman.
Two sources with close knowledge of the organization’s finances told Buzzfeed that FreedomWorks had raised less than $2 million in the first quarter of 2013, although a former employee said it may have raised as much as $10 million so far this year.
But the group’s financial troubles were less related to raising money in an off-cycle year and had more to do with extravagant spending, including a craft beer bar in the office and $80,000 Las Vegas hotel bills, by FreedomWorks’ top-heavy management structure, sources said.
They also questioned the value in spending a reported $1 million a year to prop up Glenn Beck’s network, The Blaze.
FreedomWorks also faces competition for potential donors from other conservative groups, including the Senate Conservatives Fund and Heritage Action.
Beck discussed Armey’s coup attempt Thursday on his radio program, saying he’d been waiting for the right time to reveal that libertarians such as Kibbe were escorted out of the building by armed guards.
Details of the power struggle had been reported at the time in other media, but the conservative talk show host said Armey’s coup attempt was part of an ongoing effort by establishment Republicans to diminish the influence of activist groups such as FreedomWorks and the Senate Conservatives Fund.
But Armey insists that he was angered over a book attributed to Kibbe that was written using FreedomWorks resources.
A spokeswoman for FreedomWorks dismissed the claims reported by Buzzfeed as the complaints of disgruntled former employees.
“They are part of a series of baseless attacks from salty former employees who have decided to spend their days spreading lies rather than working to advance the movement,” spokeswoman Jackie Bodnar told Buzzfeed. “It’s really unfortunate to watch the malice unfold from these nameless accusers who lurk in the shadows of ‘deep background’ interviews.”