The Laura and John Arnold Foundation is changing its structure so its billionaire founders can rely more heavily on political advocacy as they work toward goals such as reducing the cost of health care and overhauling the criminal-justice system.
The Houston couple is forming Arnold Ventures, a limited-liability company, which will spend through their nearly $2 billion private foundation, their existing donor-advised fund, and a 501(c)(4) organization, which permits greater lobbying.
Today’s announcement adds to the list of billionaire donors who have decided they can’t achieve their philanthropic goals only through traditional grant making. Other prominent donors using the LLC structure include Laurene Powell Jobs (the Emerson Collective), Pierre Omidyar (Omidyar Network), and Mark Zuckerberg (the Chan Zuckerberg Initiative).
Charities fear they’ll see less grant making from LLCs than from traditional foundations, and advocates for transparency say LLCs can make it harder to track how the ultrawealthy are spending to meet their social-change goals.
Broader Impact
Kelli Rhee, the Arnold Foundation’s president, said the eight-year-old foundation decided that its grants for research and projects weren’t doing enough to create lasting change.
“We can’t outspend these problems,” Rhee said. “We have to be thinking about driving change at scale. We’ve come to the realization that we have always been and will always be about affecting policy change.”
She said the concerns expressed about other LLCs won’t be an issue at Arnold Ventures. The amount the Arnolds give through their private foundation — which dispersed $208 million in 2018 and committed $257.4 million more — will stay the same or grow, she said.
And she insisted the change was not an attempt to conceal any spending.
“We will continue to hold ourselves to the highest standards of openness and transparency,” she said.
Early Success
John Arnold was a highly successful energy trader, first at Enron and later at his own hedge fund. The couple are only in their mid-40s and have already made grants totaling more than $1 billion through their foundation.
Some philanthropists, such as Pierre Omidyar, argue that an LCC provides greater flexibility by allowing donors to invest in the best organizations driving social change — regardless of whether they’re organized as charities or for-profit corporations.
The Arnold Foundation recently made a $10 million investment — a combination of grants and loans — in a nonprofit generic-drug company. But Rhee said the creation of the LLC is “not driven by a desire to do more impact investing.”
The Houston-based foundation’s focus areas have included reducing crime and ensuring the criminal-justice system is fair, supporting the creation of evidence-based policies, improving school performance, reducing health-care costs, creating sustainable public finance systems, and improving the reliability of scientific research so it can better inform philanthropy decisions and public-policy choices.
Arnold Ventures will unveil a new logo and website today. Rhee hinted that the organization may be narrowing its scope slightly: She named criminal justice, health, public education, and public finance as ongoing “large areas.”
“We’re aiming to get more clear about where we do focus,” she said.
Correction: A previous version of this article said the Laura and John Arnold Foundation is 10 years old instead of eight.
