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When Political Mega-Donors Join Forces: How the Koch Network and the Democracy Alliance Influence Organized U.S. Politics on the Right and Left

  • Alexander Hertel-Fernandez (a1), Theda Skocpol (a2) and Jason Sclar (a3)
Abstract

As economic inequalities have skyrocketed in the United States, scholars have started paying more attention to the individual political activities of billionaires and multimillionaires. Useful as such work may be, it misses an important aspect of plutocratic influence: the sustained efforts of organized groups and networks of political mega-donors, who work together over many years between as well as during elections to reshape politics. Our work contributes to this new direction by focusing on two formally organized consortia of wealthy donors that have recently evolved into highly consequential forces in U.S. politics. We develop this concept and illustrate the importance of organized donor consortia by presenting original data and analyses of the right-wing Koch seminars (from 2003 to the present) and the progressive left-leaning Democracy Alliance (from 2005 to the present). We describe the evolution, memberships, and organizational routines of these two wealthy donor collectives, and explore the ways in which each has sought to reconfigure and bolster kindred arrays of think tanks, advocacy groups, and constituency efforts operating at the edges of America's two major political parties in a period of intensifying ideological polarization and growing conflict over the role of government in addressing rising economic inequality. Our analysis argues that the rules and organizational characteristics of donor consortia shape their resource allocations and impact, above and beyond the individual characteristics of their wealthy members.

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References
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1. See, e.g., Bonica, Adam, “Mapping the Ideological Marketplace,” American Journal of Political Science 58, no. 2 (2014): 367–87; Page, Benjamin I., Bartels, Larry M., and Seawright, Jason, “Democracy and the Policy Preferences of Wealthy Americans,” Perspectives on Politics 11 no. 1 (March 2013): 5173; West, Darrell, Billionaires: Reflections on the Upper Crust (Washington, DC: The Brookings Institution, 2014).

2. For initial investigations, see Hassell, Hans J. G., “Party Control of Party Primaries: Party Influence in Nominations for the U.S. Senate,” Journal of Politics 78, no. 1 (2016): 7587; Jake M. Grumbach, “Campaign Contributions and the Extended Networks of Activist Groups” (unpublished paper, Department of Political Science, University of California, Berkeley, 2016).

3. Democracy Alliance, “Membership Benefits and Participation Options,” Washington, DC: The Democracy Alliance. (Handout obtained by the authors from the Democracy Alliance; shown in full in Appendix C.)

4. Patrick O'Connor, “Donors Who Fund the Koch Brothers’ Causes Say They're Tired of Being ‘Demonized,’” Wall Street Journal, August 3, 2015. See also Kenneth Vogel, “Koch World 2014,” Politico, January 24, 2014.

5. See the lists of twice-yearly Koch and DA meetings in Alexander Hertel-Fernandez, Theda Skocpol, and Jason Sclar, “When Wealthy Political Contributors Join Forces: U.S. Donor Consortia on the Left and Right” (paper presented at the Annual Meeting of the American Political Science Association, Philadelphia, PA, September 2016).

6. O'Connor, “Donors Who Fund the Koch Brothers’ Causes Say They're Tired of Being ‘Demonized.’”

7. Matt Bai, “Fight Club,” New York Times, August 10, 2003.

8. Matea Gold, “Priorities USA Positions Itself as Center of Gravity for the Left in the Trump Era,” Washington Post, December 20, 2016.

9. On conservative political philanthropies, see especially Teles, Steven, The Rise of the Conservative Legal Movement (Princeton, NJ: Princeton University Press, 2008); O'Connor, Alice, “Financing the Counterrevolution,” in Rightward Bound: Making America Conservative in the 1970s, ed. Schulman, Bruce J. and Zelizer, Julian (Cambridge, MA: Harvard University Press, 2008).

10. On the (theoretical) ability of philanthropic foundations to take on risky investments, see, e.g., Rob Reich, “What Are Foundations For?” Boston Review, March 1, 2013.

11. Schlozman, Daniel, When Movements Anchor Parties (Princeton, NJ: Princeton University Press, 2015). See also Bawn, Kathleen, Cohen, Martin, Karol, David, Masket, Seth, Noel, Hans, and Zaller, John, “A Theory of Political Parties: Groups, Policy Demands and Nominations in American Politics,” Perspectives on Politics 10, no. 3 (2012): 571–97; Karol, David, Party Position Change in American Politics (Cambridge, UK: Cambridge University Press, 2009); Krimmel, Katherine, “The Efficiencies and Pathologies of Special Interest Partisanship,” Studies in American Political Development 31, no. 2 (2017): 149–69; Schickler, Eric, Racial Realignment: The Transformation of American Liberalism, 1932–1965 (Princeton, NJ: Princeton University Press, 2016); Skinner, Richard M., More Than Money: Interest Group Action in Congressional Elections (New York: Rowman & Littlefield, 2006).

12. Recently, both the DA and the Koch seminars have set up websites and released a bit more public information about their activities and meetings. The Koch seminars now invite selected reporters to attend the opening sessions of their twice-yearly conferences, on condition that they not release the names of donor attendees who do not want to be identified. But transparency remains strictly limited for both organizations—and neither of them publishes their membership or provides a full historical record of their evolving activities.

13. For Koch conference leaks, see, e.g., Daniel Schulman and Andy Kroll, “The Koch Brothers Left a Confidential Document at Their Donor Conference,” Mother Jones, February 5, 2014. For Democracy Alliance conferences, see, e.g., Lachlan Markay, “Exclusive: Democracy Alliance Network Revealed,” Washington Free Beacon, May 19, 2014.

14. Charles Koch, “Invitation Letter for January 2011 Koch Seminar” (Koch Industries, Wichita, KS). Available along with program and list of attendees from Spring 2010 seminar Understanding and Addressing Threats to American Free Enterprise and Prosperity through ThinkProgress at https://images2.americanprogressaction.org/ThinkProgress/secretkochmeeting.pdf.

15. For hotel room leaks, see Schulman and Kroll, “The Koch Brothers Left a Confidential Document at Their Donor Conference.” For leaked recordings, see Ryan Grim and Paul Blumenthal, “Koch Brothers’ Real Fear Revealed in Secret Audio: Liberal Money,” Huffingtonpost.com, September 9, 2014 (updated September 10, 2014), available at https://www.huffingtonpost.com/2014/09/09/koch-brothers-democracy-a_n_5790896.html; Mayer, Jane, Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (New York: Doubleday, 2016), chap. 14; Lauren Windsor, “Exclusive: Inside the Koch Brothers’ Secret Billionaire Summit,” The Nation, June 17, 2014.

16. Rich Fink, “From Ideas to Action: The Role of Universities, Think Tanks, and Activist Groups,” Philanthropy Magazine (Winter 1996). Daniel Schulman, “Charles Koch's Brain,” Politico, September–October 2014.

17. Bill Wilson and Roy Wenzl, “The Kochs’ Quest to Save America,” Wichita Eagle, October 13, 2012.

18. As quoted in Roy Wenzl, “How to Change a Company and a Country,” Wichita Eagle, October 31, 2015.

19. Mayer, Dark Money, 7.

20. Further information about core organization appears in Appendix A.

21. Schulman, Daniel, Sons of Wichita: How the Koch Brothers Became America's Most Powerful and Private Dynasty (New York: Grand Central, 2014); Wilson and Wenzl, “The Kochs’ Quest to Save America.”

22. As quoted in Schulman, Sons of Wichita, 107.

23. Stephen Moore, “Private Enterprise,” Wall Street Journal, May 6, 2006.

24. For more details on Americans for Prosperity, see Skocpol, Theda and Hertel-Fernandez, Alexander, “The Koch Network and Republican Party Extremism,” Perspectives on Politics 14, no. 3 (September 2016): 681–99.

25. For constituency outreach, see Tim Higgins, “Koch Brothers Nurture Rise of Hispanic Republicans,” Bloomberg.com, March 17, 2016; Alicia Mundy, “The VA Isn't Broken, Yet: Inside the Koch Brothers’ Campaign to Invent a Scandal and Dismantle the Country's Most Successful Health Care System,” Washington Monthly (March/April/May 2016); Peter Overby, “Koch Political Network Expanding ‘Grass-Roots’ Organizing,” Npr.org, October 12, 2015; Ashley Parker, “Koch Brothers Woo Hispanic Voters with Turkeys and Questionnaires,” New York Times, November 25, 2015. For support for conservative candidates, see Kenneth Vogel, “How the Kochs Launched Joni Ernst,” Politico, November 12, 2015. For the Center for Shared Services (now Freedom Partners Shared Services within the Seminar Network), see Kenneth P. Vogel, “How the Koch Network Rivals the GOP,” Politico, December 30, 2015.

26. Matea Gold, “In Major Shift, Koch Consolidates Network of Advocacy Groups into Americans for Prosperity,” Washington Post, September 16, 2016.

27. Kenneth Vogel, “Koch World 2014”; Kenneth Vogel, “The Koch ATM,” Politico, November 17, 2015.

28. See http://seminarnetwork.org. In this and other public-facing presentations, the Koch network splashes pictures of ordinary Americans from diverse racial and ethnic backgrounds to present itself, and especially AFP, as a “grassroots” endeavor. Little to no information is provided about the authoritative, centralized structure and direction of the network or about the very wealthy donors who sustain it. In actuality, the Koch network is not democratically governed; it is structured like a private investment corporation and an ideological cadre-led political party. To attract donors, it issues confidential documents like the Americans for Prosperity Partner Prospectus: January 2017 (Arlington, VA: Americans for Prosperity; available as a leaked document at https://www.documentcloud.org/documents/3457972-Americans-for-Prosperity-Partner-Prospectus.html).

29. Krista Shaffer, “How Vast the Left Wing Conspiracy?” (transcript of session at the Hudson Institute, Washington, DC, November 30, 2006), 8.

30. Bai, Matt, The Argument: Billionaires, Bloggers, and the Battle to Remake Democratic Politics (New York: Penguin, 2007), 9698.

31. Ibid., 99.

32. Shaffer, “How Vast the Left Wing Conspiracy?” 11.

33. Martin, Isaac, Rich People's Movements (New York: Oxford University Press, 2013), 1116. There is also a strong parallel with electoral losses motivating political party investment, too; see especially Galvin, Daniel, Presidential Party Building (Princeton, NJ: Princeton University Press, 2009), chap. 2.

34. Democracy Alliance, The Democracy Alliance: Investment Strategy Conference (conference proceedings, Braselton, GA, October 27–30, 2005), 4.

35. Ibid.

36. Ibid., 5.

37. Bai, The Argument, 117–18.

38. For many of the twists and turns, see ibid., and Vogel, Kenneth P., Big Money: 2.5 Billion Dollars, One Suspicious Vehicle, and a Pimp—On the Trail of the Ultra-Rich Hijacking American Politics (New York: Public Affairs, 2014).

39. Democracy Alliance, The Democracy Alliance Portfolio Summaries [included in confidential partner materials for Fall 2007 conference on The Progressive Equation]; see also Figure 7 in a later section of this article.

40. Gara LaMarche, “Democracy Alliance 2020 Vision” (presented at Democracy Alliance Portfolio Snapshot: Spring 2014 [conference], Chicago, IL, April 27–30, 2014). This is an overview of Democracy Alliance development and planning for next steps, presented to Democracy Alliance partners at their investment conference. A version with full financial details is available through a link at Markay, “Exclusive,” published by the Washington Free Beacon.

41. Koch, “Invitation Letter for January 2011 Koch Seminar.”

42. See Holly Deason and Doug Deason, “What Do the Koch Brothers Want? To Defend the American Dream,” editorial, Dallas Morning News, February 2, 2015; O'Connor, “Donors Who Fund the Koch Brothers’ Causes Say They're Tired of Being ‘Demonized’”; Bill O'Neill, “Defending the Koch Brothers before the Ohio 2016 Campaign Heats Up,” editorial, Cleveland.com, April 26, 2015; Chris Rufer, “End This Corporate Welfare,” editorial, New York Times, March 23, 2015; Ken Yontz, “The Kochs Are Fighting for Your Future,” editorial, Milwaukee Wisconsin Journal-Sentinel, May 1, 2015.

43. For Drutman's analysis, see Lee Drutman, “The Political 1% of the 1% in 2012,” Sunlight Foundation Blog, June 24, 2013, http://sunlightfoundation.com/blog/2013/06/24/1pct_of_the_1pct/.

44. Similarly, as Appendix B shows, 39 percent of Drutman's top political donors in 2012 had fortunes generated from this same sector.

45. Quoted in Shaffer, “How Vast the Left Wing Conspiracy?” 8.

46. Quotation from Koch, “Invitation Letter for January 2011 Koch Seminar.”

47. Bai, The Argument, 110–13.

48. A more complete analysis of the full run of DA conferences, using all of the programs except one in 2006 that has not been located, appears in Vanessa Williamson, Curtlyn Kramer, and Theda Skocpol, “Wealthy Progressive Donors and the Shifting Organizational Terrain of American Politics: The Impact of the Democracy Alliance, 2005 to 2016” (paper presented at the Annual Meeting of the Midwest Political Science Association, Chicago, IL, April 2017).

49. Hertel-Fernandez et al., “When Wealthy Political Contributors Join Forces.”

50. Schulman and Kroll, “The Koch Brothers Left a Confidential Document at Their Donor Conference”; see also Hertel-Fernandez et al., “When Wealthy Political Contributors Join Forces.”

51. Darren Goode and Kenneth Vogel, “Kochs Launch New Super PAC,” Politico, June 16, 2014 (updated June 17, 2014).

52. The table uses data from LaMarche, “Democracy Alliance 2020 Vision”; Democracy Alliance, 2020 Vision Portfolio Snapshot: Spring 2015 (prepared for Spring 2015 Democracy Alliance Investment Conference, San Francisco, CA).

53. Eric Lach, “Meet the Man Who Runs the Koch Brothers’ Secret Bank,” TalkingPointsMemo, September 16, 2013.

54. Wenzl, “How to Change a Company and a Country.”

55. See, e.g., Americans for Prosperity Partner Prospectus: January 2017, which outlines AFP's involvement in the 2016 down-ballot races.

56. Democracy Alliance, 2020 Vision Framework for the Democracy Alliance (prepared for Spring 2015 Democracy Alliance Investment Conference, San Francisco, CA); Democracy Alliance, 2020 Vision Portfolio Snapshot: Spring 2015. Matea Gold, “Wealthy Donors on Left Launch New Plan to Wrest Back Control in the States,” Washington Post, April 12, 2015.

57. “The Koch Network: A Cartological Guide,” OpenSecrets.org, January 7, 2014, available at https://www.opensecrets.org/news/2014/01/koch-network-a-cartological-guide/.

58. Robert Maguire and Viveca Novak, “Koch Group's IRS Report Unlocks a Few Mysteries,” OpenSecrets Blog, September 18, 2013; Robert Maguire, “A Least 1 in 4 Dark Money Dollars in 2012 Had Koch Links,” OpenSecrets Blog, December 3, 2013; Mayer, Dark Money.

59. Maguire and Novak, “Koch Group's IRS Report Unlocks a Few Mysteries.”

60. Lach, “Meet the Man Who Runs The Koch Brothers’ Secret Bank”; Vogel, “Koch World 2014”; Vogel, “The Koch ATM.”

61. Goode and Vogel, “Kochs Launch New Super PAC.”

62. Koch organizations are defined as those listed in Appendix A, plus the Institute for Humane Studies, which the Kochs started supporting decades ago.

63. Andy Kroll, “Exclusive: Read the Koch Brothers’ Plans for Their Upcoming GOP Donor Retreat,” Mother Jones, April 23, 2013.

64. Adam Bonica and Howard Rosenthal, “The Wealth Elasticity of Political Contributions by the Forbes 400” (paper presented at the Annual Meeting of the Midwest Political Science Association, Chicago, IL, April 2015).

65. This landmark argument is developed in Lloyd A. Free and Hadley Cantril, The Political Beliefs of Americans: A Study of Public Opinion (New Brunswick, NJ: Rutgers University Press).

66. Grossmann, Matt and Hopkins, David. A., Asymmetric Politics: Ideological Republicans and Group Interest Democrats (Oxford, UK: Oxford University Press, 2016).

67. Janet Reitman, “Betsy DeVos’ Holy War,” Rolling Stone, March 8, 2017.

68. Gavin Aronsen, “Exclusive: The Koch Brothers’ Million-Dollar Donor Club,” Mother Jones, September 6, 2011. On the Templeton's donations to block gay marriage efforts, see, e.g., David O'Reilly, “$1 Million for Their Own Two Cents Bryn Mawr Couple Are Largest Individual Donors in Efforts to Ban Gay Marriage in California,” Philly.com, October 28, 2008, available at https://web.archive.org/web/20131216130758/http://articles.philly.com/2008-10-28/news/25263219_1_ban-gay-marriage-heterosexual-marriages-proposition.

69. Peter Stone, “How a Network Led by the Billionaire Koch Brothers Is Riding the Trump Wave,” The Guardian, December 7, 2016.

70. Bai, The Argument, afterword.

71. See Rufer, “End This Corporate Welfare.”

72. Teles, The Rise of the Conservative Legal Movement.

73. Deason and Deason, “What Do the Koch Brothers Want?” This op-ed was also cosigned by other wealthy Dallas Koch seminar members, namely, Thomas O. Hicks, Thomas Hicks Jr., Elaine Marshall, E. Pierce Marshall Jr., Sally and Forrest Hoglund, Tandy and Lee Roy Mitchell, and Gayla and Jim Von Ehr, who all said they could be reached through the Freedom Partners Chamber of Commerce, “an organization they support and that organized the Koch brothers’ recent gathering.”

74. The feistiness of wealthy Koch donors who resent being criticized by the left and have decided to “stand up” for what they believe comes through splendidly in O'Connor, “Donors Who Fund Koch Brothers’ Causes Say They're Tired of Being ‘Demonized.’” This article provides a glimpse into social ties and moral solidarity that make the Koch seminars an excellent example of the sort of elite social movement sociologist Isaac Martin featured in his book Rich People's Movements.

75. Hubbard is quoted in Kenneth P. Vogel and Tarini Parti, “Inside Koch World,” Politico, June 15, 2012.

76. Hamilton is quoted in O'Connor, “Donors.”

77. Shaughnessy is discussed in O'Connor, “Donors.”

78. Fettig is quoted in O'Connor, “Donors.”

79. O'Neill is discussed and quoted in O'Connor, “Donors.”

80. Shaughnessy is quoted in O'Connor, “Donors.”

81. Philip Bump, “Americans for Prosperity May Be America's Third-Biggest Political Party,” Washington Post, June 19, 2014.

82. We see the grassroots and elite reactions as somewhat separate, although both aimed to push the GOP. On the Tea Party, see Skocpol, Theda and Williamson, Vanessa, The Tea Party and the Remaking of Republican Conservatism (New York: Oxford University Press, 2012).

83. Perhaps most notable is the rigorous postmortem on the 2012 election that the Kochs commissioned to “re-examine our vision and the strategies and capabilities required for success.” See Paige Lavender, “Koch Brothers Postpone Post-Election Meeting,” Huffington Post, December 11, 2012, available at https://www.huffingtonpost.com/2012/12/11/koch-brothers-_n_2277700.html.

84. On the recent explosion of liberal groups, see Skocpol, Theda, Diminished Democracy: From Membership to Management in American Civic Life (Norman: University of Oklahoma Press, 2003), chaps. 4–6; Berry, Jeffrey, The New Liberalism (Washington, DC: Brookings Press, 1999); Kay Schlozman, Traci Burch, Philip Edward Jones, Hye Young You, Sidney Verba, and Henry E. Brady, “Washington Representatives Study (Organized Interests in Washington Politics)—1981, 1991, 2001, 2006, 2011” (ICPSR35309-v1, Inter-University Consortium for Political and Social Research, Ann Arbor, MI, September 15, 2014).

85. Shaffer, “How Vast the Left Wing Conspiracy?” 13–14.

86. Hertel-Fernandez, Alexander, “Who Passes Business's ‘Model Bills’? Policy Capacity and Corporate Influence in U.S. State Politics,” Perspectives on Politics 12 no. 3 (2014), 582602.

87. Skocpol and Hertel-Fernandez, “The Koch Network and Republican Party Extremism.”

88. Alexander Hertel-Fernandez, State Capture: How Conservative Activists, Big Businesses, and Wealthy Donors Reshaped the American States—and the Nation (in press), chap. 7.

89. David Leonhardt, “In Health Bill, Obama Attacks Wealth Inequality,” New York Times, March 23, 2010.

90. Mayer, Dark Money, 185–97.

91. Eliana Johnson, “Inside the Koch-Funded Ads Giving Dems Fits,” National Review, March 31, 2014; Mayer, Dark Money, 238.

92. Paige Winfield Cunningham, “Meet the Group Blocking Obamacare's Medicaid Expansion,” Washington Examiner, April 8, 2015.

93. Americans for Prosperity, Partner Prospectus: Winter 2015 (Arlington, VA: Americans for Prosperity) available at https://www.documentcloud.org/documents/2035387-merged-document-2.html; Americans for Prosperity Partner Prospectus: January 2017.

94. Hertel-Fernandez, Alexander, Skocpol, Theda, and Lynch, Daniel, “Business Associations, Conservative Networks, and the Ongoing Republican War over Medicaid Expansion,” Journal of Health Politics, Policy, and Law 41 no. 2 (2016), 239–86. Along the line of the work of Frank Baumgartner and his colleagues—Baumgartner, Frank R., Berry, Jeffrey M., Hojnacki, Marie, Kimball, David C. and Leech, Beth L., Lobbying and Policy Change: Who Wins, Who Loses, and Why (Chicago, IL: University of Chicago Press, 2009)—a counterargument could be made that it is always easier for lobbying groups to block legislative steps than to pass new ones. This is true, but the Medicaid expansion struggle was not just about whether GOP-dominated state legislatures would enact bills to expand a social benefit Democrats wanted. It was also about whether ultra-conservative groups could keep other conservatives, usually business groups led by GOP governors, from accepting hundreds of millions to billions of dollars of incremental money from the federal government. Political scientists usually expect massive amounts of fiscally flexible money to carry the day, especially for state governments that must balance budgets annually. That had certainly been the norm in the Medicaid program in the past; see, e.g., Thompson, Frank J., Medicaid Politics: Federalism, Policy Durability, and Health Reform (Washington, DC: Georgetown University Press, 2012).

95. Kirsch, Richard, Fighting for Our Health: The Epic Battle to Make Health Care a Right in the United States (Albany, NY: SUNY Press, 2012), chap. 3.

96. See, e.g., Patashnik, Eric M., Reforms at Risk: What Happens After Major Policy Changes Are Enacted (Princeton, NJ: Princeton University Press, 2008).

97. Harold Pollack, “The Group That Got Health Reform Passed Is Declaring Victory and Going Home,” Washington Post, January 5, 2014.

98. Alexander Hertel-Fernandez, Vanessa Williamson, and Theda Skocpol, “Elite Donor Consortia and the Shifting Landscape of U.S. Political Organizations” (paper presented at the Annual Meeting of the American Political Science Association, San Francisco, CA, August 2017), 30–49.

99. Steven Teles, “Organizational Maintenance, The Funder-Grantee Nexus, and the Trajectory of American Political Development” (paper presented at Conference Honoring the Life and Work of James Q. Wilson, Harvard University, Cambridge, MA, April 4, 2013).

100. See, e.g., Bartels, Larry M., Unequal Democracy: The Political Economy of the New Gilded Age, 2nd ed. (Princeton, NJ: Princeton University Press, 2016); Page, Benjamin I. and Gilens, Martin, Democracy in America? What Has Gone Wrong and What We Can Do About It (Chicago, IL: University of Chicago Press, 2018).

101. Page et al., “Democracy and the Policy Preferences of Wealthy Americans.”

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