Kochs brothers' plan for 2012: raise $88 million

POLITICO
By KENNETH P. VOGEL & BEN SMITH

In an expansion of their political footprint, the billionaire Koch brothers plan to contribute and steer a total of $88 million to conservative causes during the 2012 election cycle, according to sources, funding a new voter micro-targeting initiative, grass-roots organizing efforts and television advertising campaigns.

In fact, as the annual Conservative Political Action Conference meets this week in Washington and conservatives assess the state of their movement, the Koch network of nonprofit groups, once centered on sleepy free-enterprise think tanks, seems to be emerging as a more ideological counterweight to the independent Republican political machine conceived by Bush-era GOP operatives Karl Rove and Ed Gillespie before the 2010 midterm elections.

The aggressive embrace of political activism by the Koch brothers, Charles and David, has cheered fiscal conservatives, who hope they will reorient the conservative political apparatus around free-market, small government principles and candidates, and away from the electability-over-principles approach they see Rove and Gillespie as embodying.

But not everyone on the right is happy about the brothers’ increasing political profile. Some conservatives complain that the political operatives who work for the Kochs don’t play well with others in the movement and worry that their efforts to steer big money to favored groups undermines other, potentially valuable conservative efforts.

Among leaders of conservative groups “there is the impression that there is a lot of favoritism, not necessarily from the Kochs, but from those the Koch brothers rely on to administer the money, and there are concerns about whether the best groups are being helped, or whether it’s just the groups that they happen to play favorites with,” said Erick Erickson, founder of the influential Red State blog and a CNN political analyst.

Erickson has spoken at events organized by the Koch brothers’ primary political vehicle, a nonprofit group called Americans for Prosperity, which he called “a very worthwhile organization,” but he said the Kochs “need to broaden the diversity of their grass-roots apparatus. … People want to get in on the action and have a hard time getting in on the action.”

Charles and David Koch reportedly have a net worth of $21.5 billion each, thanks to their stakes in Koch Industries, their privately owned oil, chemical and consumer products company.

For decades, they’ve been generous donors to academic institutions and public policy think tanks – some of which they founded – that promote small government and free-market conservatism. But in recent years, they have increasingly focused their giving on more activist groups, and, perhaps more significantly, they have used their influence to help guide millions more in contributions from other major conservative benefactors, primarily through twice-a-year donor summits the Kochs have been organizing since 2003.

The conferences, which are sponsored by Koch Industries, bring together roughly 150 wealthy conservative business titans or their representatives to hear presentations from handpicked Republican politicians and thought leaders, as well as the heads of conservative groups hoping to secure big checks to fund their nonprofits.

At the most recent summit, held in January at a Rancho Mirage, Calif., resort, the Kochs and their invited donors pledged to contribute $49 million toward an $88-million budget goal for policy and political projects planned for the 2012 election cycle, which were sketched out at the conference, according to a source with knowledge of the summit.

To put that in perspective, the twin political groups conceived by Rove and Gillespie – Crossroads Grassroots Policy Strategies and American Crossroads — raised $70 million for their efforts in the 2010 midterm campaign, during which they were among the most active of the independent political operators.

Unlike the fundraising for those groups — and most political nonprofits, for that matter — most of the donations pledged at the Koch summits goes into a pool, which typically include a mix of cash from invitees as well as a healthy share from the Koch brothers themselves. The brothers’ political advisers distribute the money at their discretion to political and policy groups featured at their conferences.

Groups with tighter Koch ties tend to reap more money from the pool than others, according to sources familiar with the Kochs’ philanthropy and meetings, one of whom said the Koch brothers typically invited a handful of groups less closely linked to them “to create an illusion of spreading the wealth.”

The Kochs swear summit attendees to secrecy and few will talk publicly about the meetings or the brothers’ philanthropy for fear of jeopardizing relationships with — and potentially funding from — the Kochs, who have a reputation in conservative circles for retaliating against allies and former allies deemed insufficiently loyal.

Technically, the Kochs don’t control any groups, rather they exert significant influence through their contributions, board positions and patronage of the leaders of outfits that have been prominently featured at their donor conferences, such as Americans for Prosperity and Themis, a fledgling voter micro-targeting initiative spearheaded by former Koch staffer Karl Crow that in some ways seems designed to compete with an effort launched last year by the Rove and Gillespie-backed Crossroads Grassroots Policy Strategies.

Sean Noble, another top Koch operative, has been hired by Americans for Limited Government, another group that sources say received donations from Koch conference attendees for its efforts to attack Democrats during the 2010 midterm campaign.

Bill Wilson, president of Americans for Limited Government, said he met Noble, a former House chief of staff who now runs his own consulting shop, during the effort to stop the Democratic health care overhaul from passing into law. He said he did not know whether sought contributions from the Koch conference, but did say his group did not get any direct donations from the Kochs or their company.

Wilson said personal connections won’t get you very far raising money from the Kochs, who — he said — make their political investment decisions based on business-like calculations about potential impact.

“They’ve been aggressive in their business, and they’re going to be aggressive in their politics,” Wilson said. “They know what they want and what they believe, and they move aggressively to advance those beliefs. You didn’t build that size of a business, and you can’t be that successful, unless you’re decisive — and they’re decisive.”

It’s difficult to determine how much of their own money the Kochs have directed or contributed to political efforts in recent years because most of the groups to which they’ve steered cash don’t have to report their donors, or even most details of their political spending.

Take Americans for Prosperity — which is comprised of two separate nonprofits, both of which the Kochs helped found and fund, and one of which, Americans for Prosperity Foundation, is chaired by David Koch.

Americans for Prosperity is chaired by Art Pope, a North Carolina businessman and major donor who has attended a handful of Koch donor seminars, including this year’s, and who characterized the Kochs’ political philanthropy as merely an effort to keep up with Democratic-leaning groups funded by major liberal donors who similarly meet in private to divvy up cash.

The Prosperity groups are separately registered under sections 501(c)3 and 501(c)4 of the tax code, which don’t require them to disclose the donors or much detail on their political spending. Their tax returns show their contribution intake nearly doubled between 2008 and 2009, when they reported receiving $26.8 million in donations and emerged as a key organizing group behind the populist tea party movement, helping drum up grass-roots opposition to the health care overhaul pushed by President Barack Obama and his Democratic allies in Congress.

Last year, Americans for Prosperity pledged to spend $45 million on rallies, canvassing and hard-hitting radio and television ads, criticizing Democrats in 50 swing House districts and half a dozen targeted Senate races. Though spending by the groups and their allies has been credited with helping the GOP retake the House, Americans for Prosperity’s ads ran throughout the year and didn’t expressly support Republicans or oppose Democrats, requiring only some of them to be reported to the Federal Election Commission.

Pope, the Americans for Prosperity chair, said some big donors regard as safe bets groups that the Kochs support, because “they have very high standards for their business that they apply to the non-profits that they support.”

But Pope, whose own foundation has given $775,000 to Americans for Prosperity since Obama took office, dismissed the idea that the Kochs discriminate against groups to which they don’t have strong ties.

“In the donor community at large that I am involved in, most of them are very well informed and independent-minded donors.” While he said donors often “exchange ideas about ‘do you think this is a good organization?’” he said “the donors pretty well make their own decisions” and he added “I don’t know of any blacklist.”

And, he said Americans for Prosperity was more than happy to coordinate with other conservative political groups.

While Koch-linked operatives communicated with representatives of the Crossroads groups and affiliated outfits during the midterms, an anonymous Republican fundraiser complained to NBC’s Michael Isikoff that during regular conference calls between the groups to coordinate midterm election spending plans, representatives of Koch-backed groups were reluctant to share information.

At the January 2010 Koch donor meeting, though, Noble and Gillespie sat on a panel together analyzing the coming midterm elections. Entitled “the opportunity of 2010: understanding voter attitudes and the electoral map,” the panel also featured the AFP director Pope and veteran GOP operative Jim Ellis, who had been indicted in 2005 on campaign finance charges , for which he is awaiting an April trial, in connection with his work for ex-House Republican Leader Tom Delay, who this year was convicted of campaign violations.

In the weeks before this year’s Rancho Mirage meeting, Ellis crafted a 501(c)4 proposal for Noble seeking $4.75 million for a group that would spread anti-Obama messages in key states in the run-up to the 2012 presidential race.

Ellis told POLITICO the proposals were merely “draft internal documents from my private computer” and contended they “weren’t sent to anyone, including Sean Noble.”

Noble did receive a proposal from Ellis, but never submitted it for consideration by Koch donors, said a Koch source. The source added, though, that Koch-affiliated donors were providing seed funding to similar projects.

“President Obama is planning on spending $1 billion in 2012, and is giving a green light to Democrats to support outside groups with no disclosure and no oversight,” said the source, though, in fact, Obama political aides have stressed that they’d like any Democratic spending efforts to disclose donors.

“Conservatives aren’t likely to come close to matching that number but we’re determined to try,” said the source.