April 19, 2016

In Political Philanthropy, We Should All Fear the Dark

Left to right: Rabbani and Solimene Photography, Getty Images; Patrick T. Fallon, The Washington Post, Getty Images
Jane Mayer’s book Dark Money takes a look at the philanthropy of Charles and David Koch.

Publishing a book like Jane Mayer’s highly charged Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right in the midst of the presidential election season guarantees a ready-made audience. Or, actually, two audiences.

In her chronicle of the growth of the "Kochtopus," the network of libertarian and conservative donors led by the Koch brothers, Charles and David, the smell of sulfur suffuses nearly every page.

Unsurprisingly, progressives have greeted Ms. Mayer, a longtime New Yorker political reporter, as a paragon of journalistic probity, while those on the right were primed from the publication date to dismiss her as a partisan hack. Most readers’ minds will be made up before they even crack the cover.

The same can be said for nearly all assessments of political philanthropy: A reviewer’s perspective tends to correlate precisely with his or her ideology. We celebrate the activism of our allies — forgiving small transgressions of regulatory boundaries or democratic norms — while indicting that of our partisan antagonists. One person’s Koch is another’s Soros; or, as you might say, the green is always crasser on the other side.

There are, however, good reasons to push back against that inclination, which the history of philanthropy makes plain.

Wiktor Dabkowski, Picture Alliance, AP Images
George Soros

As the scholar Olivier Zunz has noted, "It is remarkable how much effort lawmakers, regulators, and philanthropists alike have invested throughout the 20th century in the nearly impossible task of maintaining a solid distinction between philanthropy and politics."

Those efforts have ping-ponged between periods in which conservatives have griped loudest about progressive philanthropy’s political bent and in which progressives were the ones doing the most spirited hand-wringing. Both camps have, at times, urged limiting the privileges granted donors to push for political change. But you never know which side of that equation you’ll find yourself on — whether at any given moment your cause will see the scope of those privileges as empowering or threatening. That’s why it’s always prudent to fight the tug of our natural ideological affinities when approaching the question of the proper boundaries between philanthropy and politics.

In the case of Ms. Mayer’s book, doing so requires weeding through many lines of argument that largely depend for their power on the reader and author agreeing that the policies the "Kochtopus" has pushed — lower corporate taxes and the dismantling of environmental regulations, for instance — have been disastrous. (I plead guilty to being in this camp.)

Ms. Mayer assumes that there is something fundamentally suspect about much libertarian philanthropy, no matter how it has been implemented. It always bears the plutocratic taint. Yet looking beyond these claims, though by no means denying them, we can focus on the ways in which the Koch network has structured and implemented its giving — on the means, and not the ends, of its philanthropy. It’s the "darkness" of these methods that should trouble all Americans, whatever their partisan persuasion.

Ms. Mayer’s account takes its place in a long tradition of warning sirens meant to rattle the nonprofit world. Periods of intense philanthropic engagement with politics and governance have tended to come in waves, which, as if obeying some law of physics, are best detected by the opposition they arouse. And that opposition, coming from both conservatives and progressives, has assumed two forms: an understanding of politicized philanthropy as a tactic that should be emulated in order to be countered or as a danger to the nation’s civic health that must be squelched.

In the early decades of the 20th century, some of the first modern foundations sought to shape public policy, largely by boosting state administrative capacity and by supporting pilot projects that later could be taken over by governmental agencies. They were dissuaded from more aggressive advocacy efforts by vigorous Congressional opposition, and by the 1920s, they had staked out territory as champions and purveyors of nonpartisan, disinterested expertise. Foundations were, of course, not apolitical — no institution can be — but they wore their politics discretely and disdained overt partisanship, a stance that accorded with the centrist political persuasion of much of the business elite.

There were stirrings of a challenge to this approach as early as the 1930s.

Edwin Embree, for instance, the head of the Julius Rosenwald Fund, whose assets had been decimated in the stock-market crash, turned to a new form of policy-oriented "advocacy philanthropy" as a means of boosting the foundation’s impact and of distinguishing it from the "timid billions" of the leading establishment foundations.

The real shift came a few decades later when those foundations became considerably less timid on the pressing social and political issues of the day.

In the late 1930s and 1940s, the Carnegie Corporation funded the Swedish economist Gunnar Myrdal’s work on American racial injustice while in the next decades, the Ford Foundation — and a constellation of smaller grant makers around it — poured millions into the fight for civil rights and into early models for the War on Poverty. These efforts were met with howls of protests from conservatives and sparked a series of Congressional investigations of foundations’ "subversive" activities, resulting in increased restrictions on how much time and money grant makers could put into advocacy, building on regulations that had been officially established in the 1934 Revenue Act.

But they also prompted conservative philanthropy to mount a counterattack to beat the liberal-leaning foundations at their own game.

Ms. Mayer notes, for example, that conservatives learned from Ford’s support for public-interest litigation "how philanthropy could achieve large-scale change through the courts while bypassing the democratic electoral process" and sought to create their own legal advocacy outfits. A loose network of conservative donors, self-consciously arrayed against the philanthropic establishment, sought to endow the nascent conservative movement with institutions that would assure its future political dominance. Think tanks became the instruments of choice. Soon money was pouring into the newly created Heritage Foundation, which quickly dwarfed the traditional nonpartisan research centers in the resources at its disposal.

Ping ... pong.

The conservative ascendancy prompted plenty of teeth-gnashing among liberals and laments over the decline of disinterested research, but it also provoked a wave of inquiry into conservative philanthropy to figure out what had made it so successful.

In 1997, the National Committee for Responsive Philanthropy, for instance, published an excellent study that pointed to conservative donors’ willingness to provide general operating support, to fund for the long-term, to coordinate giving among a network of donors, and to cultivate a shared, coherent vision of what their philanthropy would achieve. Even though these investigations made clear that the newfound strength of conservative nonprofits had dire consequences for the nation’s social and economic health, they stressed that conservative donors’ tactics worked — and urged progressives to emulate them to rouse establishment philanthropy out of its technocratic stupor.

In many respects, the push bore fruit. In recent decades, progressive philanthropists have boosted their commitment to advocacy, with Atlantic Philanthropies’ massive donation to secure the passage of the Affordable Care Act a prime example.

Progressives, taking note of the success of the "Kochtopus," have set up their own conclave of wealthy donors, the Democracy Alliance; its head, Gara LaMarche, recently cited the conservative countermobilization of the 1970s as an inspiration.

The pinging and ponging has continued, with innovations in political advocacy bouncing between the ideological poles. The 1970s witnessed the creation of the Tides Fund, a donor-advised fund that channeled resources to progressive causes.

The development caught the attention of conservatives and led to the creation in 1999 of DonorsTrust, which provides a similar service for conservative donors.

Each institution sold the value of anonymity to its donors. It was a progressive think tank, the Center for American Progress, that first created a separate "social welfare" 501(c)(4) arm to handle most of its lobbying. Conservatives were impressed, and soon most of the major conservative and libertarian think tanks had sprouted "social welfare" appendages as well.

It’s difficult to find the partisan high ground from which to survey this historical vista. Yet through her focus on the Koch network — and in particular, on its reliance on secrecy and opacity — Ms. Mayer has done precisely that.

Unlike the last wave of scholarship on conservative philanthropy, her account offers no grudging admiration of its subjects and makes little effort to identify tactics that the right has adopted and that the left could appropriate. In Ms. Mayer’s telling, the Koch network represents a dire threat to the nation not only because of the policies it has promoted but because of how it has perverted and exploited the nation’s voluntary institutions and traditions.

For Ms. Mayer, the roots of the transgression go all the way back to the origins of the modern conservative political movement. She considers the recent Koch-funded campaigns the latest skirmish in "a privately funded nonprofit ideological war that had begun 40 years" earlier.

This is a bold, broad claim, taking in donors from Scaife to Olin to Bradley. It ensures that a whole host of indictments are tangled up in her book. If you are a combatant in that ideological war facing off against the Kochs, you will probably find most of the charges convincing, but they have unsurprisingly been met with countercharges from conservatives of double standards and ideological tribalism. But Ms. Mayer is at her best when she exposes the troubling terms of warfare itself.

Ms. Mayer presents the Koch brothers’ philanthropic campaigns as an illegitimate end-run around the democratic process, pursued after David Koch failed to gain more than 1 percent of the vote when he ran as the libertarian candidate for vice president in 1980.

Yet this line of argument, stripped of its partisan particularities, should give readers pause. One of philanthropy’s key functions has long been to counter majoritarian tendencies, allowing unpopular ideas to come to light. Plenty of honorable movements, after all, have begun on the fringe and have been nourished by patient benefactors until they have taken permanent root. Being initially unpopular cannot alone disqualify the promotion of libertarianism as a legitimate philanthropic project.

Ms. Mayer has a response to this. She suggests that libertarian philanthropy is uniquely suspect because it is not really philanthropy at all but a species of corporate lobbying. Of course, we assume that there is often an element of self-interest intertwined with much philanthropic giving — no one would begrudge a female donor’s support for a women’s-rights organization just because she would benefit herself — but we allow this because of a countervailing belief that the public good will be served as well.

Ms. Mayer argues that with much of the Koch network’s political philanthropy, the intersection between the corporate and individual interests of the donors and the public interest is practically nonexistent.

Her book also raises warnings about the danger of money in politics more generally. It’s impossible to read Dark Money without becoming infuriated at the absolute mockery that recent political giving has made of the system meant to regulate it, with an underfunded IRS cowed into quiescence and a Federal Election Commission paralyzed by partisanship. Ms. Mayer’s account goes even further, though, and seems to take aim at politicized conservative philanthropy itself, even if conducted within such hazy regulatory boundaries. She often invokes martial imagery to describe these efforts: In her telling, the Koch brothers have "weaponized philanthropy" — and she doesn’t mean that in a good way.

Conservatives would likely reply that a war over ideas and policies had been raging long before the emergence of Heritage and the American Enterprise Institute but that progressives tend to complain about the fighting only when their side finds itself under siege.

Moreover, as Steven Teles, Heather Hurlburt, and Mark Schmitt noted in a 2014 Stanford Social Innovation Review article, philanthropy now confronts a terrain in which the assumptions of a previous age regarding the existence of "bipartisan solutions to expert-assessed problems" no longer holds. With the safe middle ground of political neutrality shrinking, nearly all grant makers must consider the prospect of taking up arms.

But one particular example of the martial imagery favored by the Koch network illustrates even more clearly the pith of Ms. Mayer’s critique.

In his famous 1971 memo, often cited as the opening salvo of the conservative countermobilization, future Supreme Court Justice Lewis Powell urged supporters of capitalism to wage "guerilla warfare" against those who sought to undermine the free-enterprise system. The phrase suggested the asymmetry of power between the stalwart defenders of capitalism and its enemies, ensconced throughout the establishment. But it also highlighted the necessity of secrecy and discretion in the campaign. It validated fighting under the cover of darkness.

This darkness — or what Ms. Mayer calls the Koch network’s policy of "stealth" — is the real unifying theme of her book.

She makes clear that from the Koch brothers’ early involvement with the rightwing John Birch Society — which taught them the value of phony front groups, the need for misdirection in releasing information on the funding and control of organizations, and the importance of maintaining strategic obscurity in regard to their groups’ ideological agenda — stealth defined their personal political philanthropy and that of the network of donors they would come to lead.

Take, for instance, libertarian foundations’ support for ideologically slanted research presented in the guise of disinterested scholarly inquiry. Or their support for "Astroturf" campaigns, which manufacture public support for pet issues pushed by the corporate elite. How to differentiate these campaigns from the advocacy and mobilization efforts that characterize broad swaths of the nonprofit world?

Stealth — the deliberate cultivation of a lack of transparency — is Ms. Mayer’s red flag, signaling the suspect nature of these campaigns.

The growth of tax-exempt institutions, sometimes a whole rabbit warren of them, that do not have to reveal their donors enabled this stealth. Ms. Mayer reports that many of the nonprofits through which the funds of rightwing donors travel are nothing but post-office boxes established to muddy the money trail. She estimates that the Koch brothers alone have given over $760 million to "mysterious and ostensibly apolitical nonprofits" to promote policies they favored.

Come election season, this lack of transparency encouraged the emergence of vicious political ads, designed by corporations and untethered from any traditional standards of responsibility and accountability.

The tactic first appeared in the late 1990s and got a significant boost with the Citizens United decision, which allowed unlimited corporate spending on elections, much of which was directed through nonprofit "social welfare " groups (which technically could not make politics their primary purpose, a condition almost entirely ignored). In 2006, only 2 percent of outside political spending came from 501(c)(4)s, which could hide their donors; by 2010, that percentage had climbed to 40 percent — and in this year’s election, it will no doubt rise even higher.

The vast majority of this dark money has come from the right, and Ms. Mayer makes it plain how essential anonymity was to the donors who sought to thwart health-care reform and other parts of President Obama’s agenda. These were, as Ms. Mayer writes, "corporate lobbying campaign[s] disguised as a tax-exempt philanthropic endeavor." If they had been conducted in the light, they might have attracted citizens’ scrutiny — and their scorn. (The Obama administration was also caught flat-footed by their metastasizing.)

As Justice Anthony Kennedy noted with a tragic-comic lack of foresight in his Citizens United majority opinion, arguing that disclosure would counterbalance the money that would be unleashed into the electoral process: "Transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages."

In defending the right to keep political donations confidential, Koch representatives have highlighted the importance of anonymity to the expression of free speech. Invoking a 1958 Supreme Court case, in which the court ruled unconstitutional the attorney general of Alabama’s efforts to secure the membership list of the NAACP, they have cited the danger of retaliation against unpopular donors. It’s a shockingly cynical comparison, given the Kochs’ power.

Of course, it is true that the Koch network faced "retaliation" when the scale and scope of their political philanthropy became more widely known, in part through Ms. Mayer’s reporting. Protesters appeared at the private meetings of donors the Koch brothers hosted; Majority Leader Harry Reid denounced their influence on the Senate floor.

The Kochs used these attacks as a post facto justification of their need for secrecy.

This is a perfect manifestation of what journalist Josh Marshall has termed the "brittle grip" syndrome in which the nation’s wealthy elite react to any criticism or challenge to their political influence as a dire threat to their civil liberties. It isn’t. It’s the price of political philanthropy. Sure, it’s a steep one — and before progressives take too much pleasure in watching the Koch brothers squirm, they should consider how comfortable they’d be watching the same rough scrutiny applied to a donor who supports an immigration overhaul.

But it’s a price that all of us should encourage the nation’s major philanthropists to pay. It’s true that the "Kochtopus" fits into a larger story of the erosion of the boundaries between politics and philanthropy over the last half-century, one that has brought some valuable philanthropic achievements from players on both the right and the left.

But because of the scale of the resources at play, which dwarf those of any precedent, and the scope and sophistication of the operations now aimed directly at elections, the current moment feels more and more like a terminal crisis point in that story. That’s why the stealth of the Koch donor network is so toxic — and why Ms. Mayer’s book is so important. The public needs to understand as clearly as possible that scale and scope, the power that private wealth can have over electoral and policy outcomes to judge the extent to which it is compatible with our democracy.

It may be that, as the full extent of the Koch network’s political philanthropy is brought to light, the left will ultimately offer the latest ping to the right’s pong and determine that the proper response is more funding to push for progressive policies. It’s also possible that citizens across the ideological spectrum will decide that a more robust regulatory regime is desperately needed that would secure the borders of philanthropy and politics from all partisan interlopers.

Transparency is crucial for either decision. What Justice Kennedy wrote in the Citizens United decision with regard to the political realm applies equally to the philanthropic: Transparency enables us to make informed decisions.

Now, however, there seems to be a considerable degree of ambivalence about how cardinal a virtue transparency should be: Witness the growth of donor-advised funds and limited-liability corporations, remarkably opaque instruments of giving.

This presents a problem, since it makes it more difficult to rally to transparency’s cause in the arenas in which we understand it to be essential. For when it comes to philanthropy in the political sphere, all of us should be afraid of the dark.

Benjamin Soskis is a historian of philanthropy at the Center for Nonprofit Management, Philanthropy and Policy at George Mason University and a co-editor of the HistPhil blog.