Paul Levy

 

 

FIFTY YEARS OF AMERICA’S 
RADICAL RIGHT-WING MOVEMENT 

 

[Paul Levy © 2019]

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Part 2:  Movement Finances

 

Donor and Recipient Affluence

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The Movement is fueled by the vast support of rich individuals and their companies and foundations.  At the start, this support came largely from the core donors mentioned in Part I – the Scaife, Koch, Smith Richardson, Bradley, DeVos, and Olin foundations.   In the immediate wake of the Powell Memo, donations from this core rose significantly.  But, in addition to increased giving by the core, many other big donors have joined the Movement.  Today, million dollar contributions are the norm, single donations of $10 million or more are common, and some gifts top $100 million.  

 

The practice of targeting favorite recipients and favorite strategies mentioned in Part I as an early method of donors has continued.  The Appendix below provides an example of how the Bradley Foundation uses this method.  

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Expanded Giving

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Since World War II, wealth in America has grown enormously, and since about 1979, the large bulk of that wealth growth has gone to the richest Americans.  For example, the share of total U.S. wealth held by the top 0.5% grew from about 16% in the late 70s to about 32% in 2010, and the share of the top 0.01% grew from about 7% to 20% during that period.  

 

Some original core donors expanded their fortunes immensely and, in turn, expanded their foundation assets and their contributions to the Movement.  For example,  

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•    Assets of the Charles Koch Foundation, the largest of the four primary Koch foundations, grew from $27 million in 2001 to $620 million in 2015, and its donations grew from $4 million to $44 million.  

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•    Assets of the Dick and Betsy DeVos Foundation, the largest of several DeVos foundations, grew from $8 million in 2001 to $68 million in 2016, and its donations grew from $3 million to $10 million.   [The Richard and Helen DeVos Foundation has been reducing assets recently while donating particularly large amounts; e.g. $54 million (2015) and $52 million (2014)].

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•    Assets of the Sarah Scaife Foundation, the largest of several Scaife foundations, grew from $205 million in 2001 to $580 (2017) million largely as a result of its acquisition of the Carthage Foundation in 2015.  Its donations grew from $16 million (2001) to $33 million (2017).

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Many new wealthy donors join the cause through donor networks or donor funds that particular individuals have established.  One such network includes wealthy donors recruited by Charles Koch who established the Koch Donor Network in 2009.

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•    The Koch Donor Network.  The Network holds two closed meetings per year, and only members attend.  Membership requires a pledge to contribute at least $100,000 annually to the cause.  At its first gathering, Koch raised $13 million from participants.  Between then and 2016, the network raised $889 million according to Bloomberg News.  The network now has about 700 very wealthy members. 

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•    Freedom Partners Chamber of Commerce [Founded 2011; Ann. Expenditure: $115 million (2017)].  The Chamber is a Koch creation and its board is dominated by members with close Koch ties.  It operates essentially as a think tank and grant-giving foundation but is organized as a chamber of commerce under a special IRS tax exemption. The Chamber’s mission is:

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… to advance its members’ common business interests by advancing the principles of free markets and a free society.  The organization works to educate the public and policymakers about the business and economic impacts of a broad range of policy issues, including over-regulation, government spending, cronyism and special interests handouts.

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FPCC’s revenue is raised from member companies.  Of its 2017 expenditures, about $46 million went to grants (about $78 million in 2016).  By far the largest grant recipient is Americans For Prosperity, the Koch brothers grassroots movement. [4]

 

Another form of collective giving is Donor Advised Funds (DAFs).  DAFs have existed for a century but have become popular only recently.  Donors make gifts to a DAF which, in turn, makes grants to tax-exempt, charitable organizations such as think tanks, public interest law firms, and colleges.  The donor to the DAF may select the ultimate recipient of their gift or let the DAF administrator select recipients.  An advantage of giving through a DAF is that donations can be made anonymously; that is, Charles Koch can give $5 million to a DAF and earmark it for the Cato Institute, but only Koch, the DAF, and perhaps Cato will know that he was the donor to Cato.  There are about 300,000 DAFs today but the field is dominated by several large ones.  In 2016, all DAFs made contributions of about $15 billion.

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Two Right-Wing Movement DAFs are Donor’s Trust and Donor’s Capital Fund:

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•    Donor’s Trust (DT) is a major conservative DAF.  Created in 1999, its goal is, “to safeguard the intent of libertarian and conservative donors,” and to ensure that funds are used only to promote “liberty through limited government, responsibility, and free enterprise.”[5]  Between 2001 and 2015, its spending on Movement organizations rose from about $800,000 to $86 million per year.  Its affiliate, Donors Capital Fund (DCF), spent an additional $67 million on Movement activities in 2015. The two have been major funders of the Koch Brothers’ Americans for Prosperity and have regularly contributed to the major right-wing foundations (Heritage, AEI, Cato, etc.). 

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•    DT and DCF are especially noted for funding climate change skepticism.  A study of funding for climate change denial found that DT and DCF were the largest funders of that effort.  Between 2002 and 2010, the two funds contributed $120 million to 102 think tanks and action groups committed to climate change denial (including $17 million to AEI, $13 million to Heartland Institute, and $11 million to Americans for Prosperity with respect to this issue.  A recent study was able to trace some of that giving back to the initial donors. [6] 

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As is well-known, the 2010 Supreme Court decision in Citizens United opened up campaign spending by corporations, profit and nonprofit.  As predicted, it led to an immediate and massive explosion of giving by wealthy people and organizations.  The Brennan Center reported that “in 2010, the top individual donors contributed just $73 million to federal candidates, parties, and other committees including to super PACs.  But in 2012, after Citizens, the amount spent increased to $380 million, and by 2016, it reached over $900 million.”[7]  

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Two mechanisms are particularly popular for campaign giving.  Both allow anonymous contributions for partisan political advocacy – to support or oppose particular candidates.  One is called a Super PAC (Political Action Committee) and the other involves funneling what is commonly referred to as “dark money” to social welfare organizations (C-4s).[8] 

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•    Super PACS.  Super PACs are funds that support particular candidates for public office.  The field of campaign finance is complex and various types of giving are tightly regulated; e.g. donations to a candidate’s campaign fund are capped and the donors must be disclosed.  Donors including corporations and labor unions can give unlimited amounts of money to Super PACs to support a candidate, but the money cannot go to or be controlled by that candidate.  Although disclosure by donors is required, it is very easy to maintain anonymity, for example by giving an anonymous donation to a C-4 (see below) which, in turn, gives the money to a Super Pac.

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As of January 8, 2019, 2,259 groups organized as super PACs had reported total receipts of $1.5 billion and total independent expenditures of $818 million in the 2018 cycle (reported receipts and expenditures can come in well after an election).  [9]

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Typically big Super PACS are controlled by a political operative (for example, a major Super PAC, Crossroads, is administered by Karl Rove, a longtime right wing political advisor) who decides which candidates to help and how to help them.  The most common form of help is to run ads for a particular candidate and/or ads opposing a candidate.  Opposition ads are particularly favored by the Right.

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    Opensecrets.org reported that the collection of Crossroads organizations spent a total of $176 million in the 2011-2012 election period of which $159 million was spent opposing democrats. [10]   

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•    Social Welfare Organizations (C-4s).  Social welfare organizations are one form of federally tax exempt organizations.  They are set up under the Internal Revenue Code, Section 501(c)(4) and hence are often referred to as “C-4s.”  Social welfare organizations are allowed to do an amount of “political activity” but are required to “primarily” conduct social welfare activity.  “Primarily” is interpreted to mean “more than half,” so a C-4 could legitimately conduct political activity as 49% of its operation.  In practice, there are ways to disguise political activity by calling it “educational” activity (a legitimate social welfare expense), so a C-4 can spend beyond the 49% cap.  Donors to a C-4 can be anonymous.   Giving to a C-4 is the most popular way to make a big campaign contribution.  

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    EXAMPLE:  Crossroads is a social welfare organization (C-4) that had revenue of $69 million in 2016 and spent $26 million of it on political activity.  Carolina Rising (CR) is also a social welfare agency (C-4).  It was created in 2016 and had revenue of $4.9 million that year.

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In 2016 a single, anonymous gift of $4.8 million was given to Crossroads, earmarked for CR, and passed on to CR by Crossroads.  The amount constituted nearly the entire budget of CR, and it spent all of this money on campaign ads in the U.S. Senate election in North Carolina.  The race, which pitted Republican contender Thom Tillis against incumbent Democrat Kay Hagan, was considered by Republicans to be a pivotal seat in their strong bid to take over the Senate.  Tillis won. [11] 

 

Of course, many wealthy individuals give to the Movement directly rather than through collective funds or networks.  One of many examples is Sheldon Adelson, owner of the Las Vegas Sands Hotel, who has an estimated wealth of $33 billion.  Recently he profited considerably from the Trump tax cut which reduced the tax liability of his hotel by about $700 million.  In the 2016 election, Adelson contributed $83 million to conservatives, and then in the 2018 midterm election, he contributed $113 million.[12]   These were disclosed contributions, and Adelson might also have made additional “dark money” contributions.

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As mentioned earlier, big donors have tended to favor certain Movement organizations with big donations.  The Kochs, for example, have given generously for decades to several Libertarian-oriented centers at George Mason University (GMU) and in 2016 gave $10 million specifically to rename GMU’s law school the “Antonin Scalia Law School”).[13]   Or again, the DeVos and Prince Foundations (Betsy Prince DeVos links the two families) are major donors to Hillsdale College that some rank first among conservative colleges. [14]

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Many Movement organizations are affluent, but here are examples of the size of a few prominent organizations [the dollar figures are recent annual budgets (M = millions of dollars)].  

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•    The Heritage Foundation                            $ 80 M     [conservative think tank]
•    The American Enterprise Institute            $ 56 M     [conservative think tank]
•    The Cato Foundation                                   $ 36 M     [premier Libertarian think tank]
•    The Mercatus Center                                   $ 28 M     [at George Mason University]
•    Americans For Prosperity                           $ 83 M     [includes its 36 state chapters]
•    The State Policy Network                           $100 M     [includes its 64 state think tanks]
•    The Federalist Society                                 $ 27 M     [Bar Assn. of conservative lawyers]
•    Amer. Legis. Exchange Council                 $   9 M     [promotes model state legislation]

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Additional examples are in Part 6 -- Key Movement Organizations.
 

 

 

Appendix 

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Example of Big Foundation Targeting: Bradley
Foundation Priorities and Wisconsin Network

This Appendix provides an example of focused giving by a traditional and major movement donor, the Bradley Foundation.  The Foundation has established clear priority categories for its giving.  These areas relate loosely to the five Movement strategy areas identified in the text.  

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Most giving that Bradley designates as “civil society” and “free markets,” is to think tanks and institutes that focus on idea promotion.  Its “constitutional law” category focuses on law reform and its “informed citizens” category has a strong media emphasis. 

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Bradley also places a particularly major focus on what I have called grassroots development, seeing its most major role at this point as maintaining and growing the so-called “Wisconsin Network” that it has developed for decades.  Features of this Network are identified below.  The Network, together with substantial campaign contributions by the Bradleys, has both supported and guided the success of Scott Walker and his radical right agenda in Wisconsin.  

Profile of Bradley Foundation Grants (2017)

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According to its 2017 Annual Report,  the Bradley Foundation made over 200 grants totaling $37,052,800 that year.  Grants are reported in five categories that reveal their prime focus: 

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Civil Society                                                       $12,605,000
Constitutional Order                                           4,960,000
Free Markets                                                        3,929,800
Informed Citizens                                             14,346,000
National Defense and Foreign Policy:             1,212,000

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The Civil Society category includes grants to some Movement organizations such as the Hudson ($35,000) and Manhattan ($325,000) institutes, Donor’s Trust ($50,000 earmarked for Talent Market whose mission is “to promote liberty by providing talent for critical roles within the free-market nonprofit sector), the Acton Institute ($150,000), and the Freedom of Conscience Defense Fund ($100,000).   Much, however, goes to non-Movement entities such as $100,000 to the Milwaukee Art Museum and $6 million (an unusually large grant) for a new Symphony Center.  

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Most grants in the other four categories went to right-wing entities.  Many were six-figure grants to leading popular national organizations such as the Cato Institute ($200,000), the Tax Foundation ($250,000), the Hoover Institute ($200,000), Encounter Books ($1.1 million), and the Federalist Society ($525,000), however about $4 million in the “Informed Citizen” category went to the Caroline Bradley Scholarship Program that provides promising 7th graders with scholarships to high school (almost all high schools are private ones).  
 
The Foundation also awarded $250,000 Bradley Awards to four noted right-wingers – two academics, a legal scholar and an economics professor; and two fellows at the right-wing Hudson and Hoover institutes.

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A significant share of Bradley grants funded what it calls The Wisconsin Network, a number of think tanks, law offices, media concerns and grassroots organizations located in Wisconsin.  Exhibit #2 profiles that Network

 

The Bradley Foundation’s Wisconsin Network

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A special Bradley Foundation focus has been on establishing and maintaining the Wisconsin Network, a set of think tanks, public law firms, media centers, and grassroots organizations located in Wisconsin.  

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Wisconsin has two state think tanks, the Badger Institute (formerly Wisconsin Policy Research Institute) and the MacGiver Institute.  In 2017, Bradley donated $375,000 and $175,000 respectively to them, and it has given at least $13 million to the Badger Institute over the years.  

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Bradley also liberally funds the major conservative public interest law office in Wisconsin, the Wisconsin Institute for Law and Liberty (WILL).  Botari (2017) reported that Bradley has given $3,655,355 to WILL to defend items in the Bradley agenda.  WILL defends Wisconsin’s first-in-the-nation school voucher system (an initiative originally won with Bradley dollars); and it enforces Scott Walker’s union-busting Act 10. 

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Bradley also promotes private schools in Wisconsin through grants to individual schools.  Their 2017 grants list includes multiple grants to Lutheran, Jewish, Catholic, and other private schools.  It also shows grants to multiple state and federal organizations that continue to promote vouchers.

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