The Right-Wing Think Tanks Spinning Disinformation and Pushing the ALEC Agenda in the States
by Rebekah Wilce
The Center for Media and Democracy (CMD)
April 4, 2013
New Resource Details “Think Tanks” Tanking Americans’ Rights
In this new online resource, the Center for Media and Democracy (CMD, the publisher of the award-winning ALECexposed.org investigation) documents the more than $80 million that right-wing billionaires and corporations are spending each year to fuel Tracie Sharp’s State Policy Network (SPN) and its 59 state “think tank” members, along with the controversial Heartland Institute, a SPN ally like the American Legislative Exchange Council (ALEC), that tries to change both state and federal law.
CMD’s three-month investigation uncloaks some of the major funders of these expanded advocacy and news spinning operations in the states and raises major concerns over whose agenda these groups are advancing in the states:
- Mystery Funds. This investigation identifies hundreds of thousands of dollars, and perhaps much more than that, which Sharp distributes to these organizations but that is not disclosed to the IRS as passing through SPN’s books. It is possible that Sharp is distributing or designating funds made available via the Koch-connected “DonorsTrust” and “Donors Capital Fund” or some other stream of cash for the state operations she helps grow. However, some of the big bucks at her disposal did not show up in SPN’s IRS 990 form in the same year it was distributed to an SPN group. See the SourceWatch article on SPN Funding for more.
- Even More Koch Money than Previously Known. This guide also flags that substantial funding for SPN state operations has come from Koch Industries itself and not only the Koch family foundations. That is, hundreds of thousands of dollars, at least, have been spent by the privately held energy conglomerate controlled by two of the richest billionaires in the world, Charles and David Koch. The total amount is secret because it is not passing through the Koch foundations, which are required to disclose their disbursements. The total amount of Koch money spent on SPN-related efforts to change state laws and spin the news is understated by analysis of their foundation spending alone. See the SourceWatch article on SPN Funding for more.
- Trying to Change the Law, but Reporting Little or No Lobbying. Like ALEC, SPN and its affiliates seek to change state laws, but report little or no lobbying. That means that corporations and individuals (like Koch Industries and others) that fund their operations can get a tax write-off for funding SPN efforts. See the SourceWatch article on the SPN Agenda for more.
- SPN Funders Help Some Interests Get Multiple Votes on ALEC Bills. The relationship between SPN affiliates and ALEC is strong and is funded by some of the same donors. That means that some corporate interests like the Kochs get, in effect, multiple votes to change the law on ALEC task forces, where corporate lobbyists and special interest groups like SPN operations vote as equals with elected officials behind closed doors. A particular ALEC task force may have multiple Koch-funded operations — including a lobbyist from Koch Companies Public Sector, a special interest representative from an SPN operation like the Goldwater Institute, and reps from national Koch-controlled or fueled groups like David Koch’s Americans for Prosperity (AFP) and the Charles Koch-founded Cato Institute, along with the Heritage Foundation, a long-time ally of the Koch agenda. Through ALEC, SPN helps draft templates to change state laws; then ALEC’s public sector and private sector members vote in secret for those bills; and then SPN supports the introduction or adoption of those bills as law, sometimes with help from David Koch’s AFP echo chamber in a state.
- SPN Funders Have Included Some of the Richest and Most Ideological Families in the Country. Fueling SPN-related efforts is a bevy of right-wing billionaires and foundations beyond the Koch brothers and including the Bradley Foundation, DonorsTrust and Donors Capital Fund (large donor-directed funds), the Olin Foundation, the Richard and Helen DeVos Foundation (the Amway fortune), the Coors-related Castle Rock Foundation and the Adolph Coors Foundation, the McCamish Foundation, the JM Foundation, and the Smith Richardson Foundation. SPN-related activities are also funded by the Roe Foundation, the charitable arm that is part of the legacy of Thomas Roe, the man who helped launch SPN over two decades ago, after telling one of his allies, “I’m going to capture the states,” just like Ronald Reagan was going to capture the U.S.S.R.
- SPN’s Legislative Agenda Is Frequently Buttressed by Its Forays as “Press” and the Echoes of Its Allies in the Growing Right-Wing State “Press” Corps. As CMD was one of the first to document, SPN groups like the Goldwater Institute are hiring people to act as reporters, and the legislative agenda of SPN is increasingly echoed by the growing right-wing infrastructure of groups that pose as press. Some even get their stories or “reports” picked up as news and delivered to state newspapers as a “wire” service like the Associated Press, as with the Franklin Center‘s Watchdog.org groups and the Ryun brothers-allied “American Majority” and “Media Trackers” operations. (The Ryuns are the sons of former Kansas Republican Congressman Jim Ryun, whose entry into office in Koch Industries’ home state was aided by a prior Koch-related electoral initiative involving dark money groups, which was known as the “Triad” operation and was the subject of a bipartisan Senate investigation in 1997. CMD has called for a Senate investigation of federal election laws and of the various Koch operations to influence the results of the 2012 elections for both federal and state offices.)
This Reporters’ Guide details how SPN works, who funds it, what the network’s groups do, and looks at some of their legislative goals, including undermining workers’ rights and weakening unions as well as undoing renewable energy laws and expanding ways in which tax dollars are redirected to the private sector, for example through funding so-called “virtual schools.” Key resources include:
- Documentation that exposes the close funding connections between SPN, its members, and the controversial ALEC.
- Highlights of the significant and previously unknown Koch brothers’ funding for SPN groups, demonstrating that prior estimates of Koch funding have been understated. (These materials were discovered by CMD and researchers in materials filed with the IRS by two of the SPN groups.)
- Entries about every SPN member think tank on CMD’s SourceWatch.org.
Introducing One of the Key Echo Chambers of the ALEC Agenda: Tracie Sharp’s SPN
The controversial ALEC has a little known but influential partner in its effort to — in the words of Bill Moyers — rewrite the nation’s laws one state at a time: SPN. Funded by many of the same right-wing billionaires and foundations that also fund ALEC (including the billionaire Koch brothers), SPN and its member think tanks provide the appearance of “independent” intellectual voices advocating for much of the agenda promoted by ALEC. But the reality is that a highly organized and intricately woven network of funders and personnel has been constructed.
SPN officially launched in 1992 with 12 members and money from South Carolina billionaire Thomas Roe to franchise, fund, and foster a growing number of in-state “mini Heritage Foundations” (with the influence of the DC-based Heritage Foundation that Roe helped underwrite). Today, SPN has 59 member think-tank groups, and a presence in every state capitol in the nation. Some of these — like the Texas Public Policy Foundation and Arizona’s Goldwater Institute — have growing notoriety, but many others, despite their influence, are barely known by those other than state capitol insiders.
Its purpose? To produce reports, create statistics, draft talking points and “expert” testimony in support of bills, and disseminate videos along with a raft of other materials to advance a right-wing legislative agenda in the states, under the guise of being a nonpartisan, nonprofit charitable organization full of neutral scholars and academics.
But these are not academics in an ivory tower. These think tanks actually write legislation; they write materials to support their legislation; and they work closely with legislators and sometimes throw their voice through legislative talking points. They also often take to the airwaves and the Internet to give purportedly objective analysis. Their legislative agenda, often ratified via ALEC, is frequently adopted as law by states controlled by ALEC majorities — often with little or no disclosure of their role in the process. Some think tanks, like Wisconsin’s MacIver Institute, engage in activity that looks an awful like electoral politicking. For example, MacIver engaged in an intensive TV ad campaign and other activities along with David Koch’s AFP arm in the state, defending Gov. Scott Walker’s budget in the run up to the June 2012 gubernatorial recall election. Walker survived the election with more help from out of state benefactors than any Wisconsin governor in history, as CMD has helped document.
This resource guide includes four main parts: 1) a review of the history, goals, form, and function of the SPN network; 2) a discussion of the overlap between the SPN and ALEC agendas; 3) a review of what is known about the sources of SPN funding, including a stream of Koch money and a recently discovered source of money at the disposal of SPN’s leader, for which there is no accounting in her SPN tax filings; and 4) additional research, including an article in SourceWatch on each think tank, a chart of some of their specific ALEC ties, a review of the revenues and expenses of SPN and each think tank in 2009, 2010, and 2011, and a roundup of the connections of each think tank to the conservative media organization that calls itself the “Franklin Center for Government and Public Integrity.”
The Right-Wing Roots of SPN, ALEC, and Heritage
After a burst of citizen awareness and advocacy in the 1960s led to the Clean Air Act, the Occupational Safety and Health Act (OSHA), and other progressive consumer and environmental reforms, the U.S. Chamber of Commerce’s chief lawyer, Lewis Powell, wrote a now infamous manifesto in 1971 claiming that corporations did not have enough influence on public policy and calling for the creation of a policy infrastructure to reverse these trends and increase corporate power over the law. In essence, Powell’s complaint was that not even Republican President Richard M. Nixon was “conservative” enough, in that his administration purportedly did not protect corporations enough.
Powell, however, was chosen by Nixon for a seat on the U.S. Supreme Court, where he went on to concoct the notion that corporations were entitled to “commercial speech” protection under the First Amendment. He wrote the discredited Buckley v. Valeo decision that is known by the popular shorthand phrase “money is speech,” a hypothesis that has undermined the protection of the integrity of U.S. elections. The issue of corporations “speaking” through money has been amplified by the recent Citizens United decision, which unleashed more dark money, including corporate money, to influence the 2012 elections than in any election in recent history.
The Powell memo spurred corporations and CEOs to fund a series of institutions at the federal and state level, including ALEC and the Heritage Foundation, which were both created by right-wing ideologue and “Moral Majority” activist Paul Weyrich. Heritage, which is literally just steps from the Capitol in DC, is widely considered to be America’s most influential “think tank.” “No policy shop has more clout than the conservative Heritage Foundation,” said the Wall Street Journal — which has also been actively involved in ALEC through some of its editorial board members, as CMD has helped document.
In the following decade, reportedly at the suggestion of President Ronald Reagan, South Carolina building supply magnate Thomas A. Roe was inspired by the success of the Heritage Foundation to create “mini-Heritage Foundations” across the country to push policy changes at the state level, reinforcing the ALEC corporate and “conservative” agenda to change America’s laws.
In a 1996 interview, Roe recounted a conversation he had with Robert Krieble (at a mid-1980’s Heritage Foundation trustees’ meeting) in which Roe told Krieble, “You capture the Soviet Union — I’m going to capture the states.”
SPN: Form and Function
SPN says its purpose is to “assist in organizing, developing and raising funds for institutes throughout the United States whose purpose is the promotion of authoritative ideas and research studies on state and local public policy issues in the public interest.” SPN’s founding executive director, Byron S. Lamm, put it more bluntly, calling SPN activities “constructive troublemaking.”
Lamm discouraged think tanks from classifying themselves as “state-based Heritage Foundation[s]” because “[t]he labels are misleading, and they cause more harm than good.”
From 1992 to 1998, SPN operated in a relatively limited organizational capacity. Then, according to SPN, its “Board of Directors realized the need for a stronger organization that would provide additional services.”
The “broader range of services” this change was intended to provide was not publicly set forth by SPN, but below CMD details its efforts to franchise new think tanks, network information, change state laws, train legislative candidates, advance a Republican legislative agenda, create political cover for right-wing candidates, provide public relations plans and assistance, and create litigation centers:
1) FRANCHISING THINK TANKS & BUILDING THE ECHO CHAMBER
Like a fast food corporation, SPN has worked hard to grow and franchise state-based think tanks, expanding that number from 12 to 59 since 1992, with some states now having multiple operations. And they continued to develop new and existing think tanks in 2011, receiving several directed, start-up grants from funders for groups in Florida and Arkansas. It also received a grant of $165,000 from Donors Capital “for 2011 Start-ups,” which did not specify in the publicly-discovered spreadsheet which states those funds may have been designated to help.
SPN also facilitates networking and information sharing. One requirement of SPN member think tanks, according to the National Review, is that they share their publications with each other, “We trade information all the time and borrow ideas from each other,” says the Alabama Policy Institute‘s Gary Palmer.
Sometimes this sharing looks like cookie cutter academics frosted with a different think tank’s logo. According to the New York Times, Lawrence Reed of the Mackinac Center for Public Policy:
“has a standard speech he calls the ‘Seven Principles of Sound Public Policy.’ [Christopher J.] Derry [of the Bluegrass Institute for Public Policy Solutions] added the words ‘for Kentucky’ and took it on the fund-raising trail. The Evergreen Freedom Foundation, in Olympia, Wash., is known for its guide to paring state budgets. Mr. Derry distributed it under the Bluegrass name. A Maryland paper on excessive lawsuits, republished in North Carolina, gained a third life as ‘Preparing for Tort Reform in Kentucky.'”
SPN groups also coordinate national pushes in particular policy areas. Starting in 2007, the Texas Public Policy Foundation (TPPF) launched a national effort to change criminal laws in the states. Within four years, at least nine other state think tanks were involved, echoing research and talking points, including in Delaware, South Carolina, Colorado, Georgia, Pennsylvania, North Carolina, New Mexico, Ohio, and Nebraska.
2) “APPLIED POLICY” — WRITING AND PUSHING LEGAL CHANGES
At one point, Darcy Olsen, the highly-paid leader of SPN member think tank the Goldwater Institute, told the National Review, “We’re in the business of applied policy.” Applied policy appears to translate to changing the law. Although they do not usually register as lobbyists, many SPN members advance legislation through ALEC and outside of ALEC. The SPN groups are in frequent communication with the legislature and have exerted strong influence on state laws.
As CMD documented in March, the Goldwater Institute routinely reports to the IRS that it spends nothing or almost nothing on lobbying, even though emails obtained through open records requests show its staffers urging that bills be introduced or adopted, along with efforts to make what a layperson would consider lobbying comport with a state law loophole for providing “technical” assistance to lawmakers. In that report, CMD also documented how Goldwater’s staffers routinely propose legislation through ALEC task forces where “private sector” members, like Goldwater, vote as equals with legislators on templates to change state law and urge those bills to become law. Goldwater has some staff registered as lobbyists, while others who routinely contact state lawmakers about changes to the law are not registered.
Think tanks in Arizona, along with SPN affiliates in Colorado, Illinois, Kentucky, Michigan, North Carolina, Texas, and Washington have all drafted state legislation that hamstrings worker and environmental protections and more, and some were even the “sponsor” of the bill through the process of becoming an ALEC “model” bill for the states (which is discussed in more detail below).
SPN think tanks also push their own model legislation. For example, Arizona’s Goldwater Institute has a section of its website devoted to 16 “model” bills “to expand liberty,” including three bills to undermine health insurance reforms in the federal Affordable Care Act and a bill to form a compact or contract among states in an attempt to make enforcement of any federal gun control legislation the “equivalent of a federal crime.”
(Additional details about some of these efforts are discussed below.)
3) FOLLOW THE MONEY – A BIG MONEY FUND CONNECTED TO SHARP THAT IS NOT ON SPN’S BOOKS
SPN appears to be a significant source of funding for the SPN member groups, but how much funding SPN or its head, Tracie Sharp, really controls or directs is unknown. SPN gives some of its member think tanks anywhere between $9,000 and $122,000 a year, according to the organization’s 2011 IRS filing. But in 2012, a list of 2010 funders of the SPN member the Texas Public Policy Foundation (TPPF) became public (it was not “leaked,” but was filed publicly and discovered by researchers). That accounting revealed some inconsistencies between what Sharp tells the IRS SPN gives a think tank like TPPF and what TPPF accounts for as coming at the direction of Sharp. It is possible, of course, that the money is from some other enormous pot of funds Sharp has at her disposal, but there is little information about how that is accounted for.
According to SPN’s 2010 IRS Form 990, it gave TPPF $19,500 in fiscal year 2010 (which is reported to be the calendar year). But according to Schedule B of TPPF’s 2010 IRS Form 990 (which also uses the calendar year), SPN gave TPPF $49,306.90.
Even more eye-opening: that amount was dwarfed by a figure nearly ten times as large that TPPF disclosed came to it by way of SPN’s executive director, Sharp. She was listed as the contact person for an additional combined total of $495,000 from two unknown funds in fiscal year 2010 (which is also reported to be the calendar year for TPPF’s filings). (Please see below for more details, and additional funders revealed by this document, such as Koch Industries.)
4) NONPARTISAN “SCHOLARS” ADVANCING PARTISAN AGENDAS
SPN members also spend time producing reports, creating statistics, talking points, “expert” testimony, videos, and a raft of other materials to advance what often corresponds with the Republican legislative agenda in the states. Yet SPN and its affiliates are described as “nonpartisan,” “charitable” organizations that donors can get a tax write-off for supporting. Time and time again, the mainstream media interviews SPN “experts” as though they are objective scholars and not as the partisan players they sometimes appear to be.
The National Review says that the individual SPN member think tanks “develop many of the ideas that rightward candidates can run on.” But this effort goes far beyond generic talking points.
In Wisconsin, for instance, the MacIver Institute ran a joint project that was fueled and funded by the Koch brothers’ Americans for Prosperity group in support of Scott Walker’s recall election. In a $3 million “It’s Working!” TV ad campaign with an accompanying website and townhall-style events, the two organizations touted the successes of Walker’s administration, including legal changes harming workers, local governments, public education, and social programs. The website echoed many of the claims on Walker’s taxpayer-funded “Reforms and Results” website, which had resulted in a complaint to the state ethics board. Many of these claims were debunked in November 2011 by CMD’s PRWatch.
Additionally, in many states there is a revolving door between SPN groups and the Republican establishment. For instance, the staff at the Massachusetts-based Pioneer Institute for Public Policy has extensive ties to Mitt Romney presidential campaign, as CMD has documented here.
5) EDUCATE AND TRAIN (INDOCTRINATE) LEGISLATORS
Through ALEC, SPN think tanks plan and conduct hundreds of “educational” workshops for legislators that often result in legislative push for a specific agenda. For example, Colorado’s Independence Institute gave a report on “public pension reform” at ALEC’s 2011 annual meeting, which was followed by renewed efforts to privatize and otherwise alter pensions being introduced in 29 states in that year.
Moreover, many SPN think tanks hold “legislative forums,” seminars, “policy previews,” “policy orientations,” etc., when their state’s legislature begins a new session. Whether called lobbying or not, these events present state legislators with the policy priorities and bills being pushed by the think tanks for that legislative session. Such events have been held by the Montana Policy Institute, the Idaho Freedom Foundation, the Freedom Foundation of Minnesota, the Texas Public Policy Foundation, and Oregon’s Cascade Policy Institute, the Mississippi Center for Public Policy, Louisiana’s Pelican Institute for Public Policy, North Carolina’s John William Pope Civitas Institute, New Jersey’s Common Sense Institute, the Oklahoma Council of Public Affairs, and the Illinois Policy Foundation, according to “SPN News.”
Such events advance corporate interests like privatizing American infrastructure, but are re-framed as “show[ing] lawmakers how to fund transportation infrastructure with private money.” Such a framing avoids words like “convince,” “persuade,” and “lobby.”
6) MEDIA MESSAGING AND SUPPORT
Participants in SPN’s predecessor organization, the Madison Group, “were active in assisting new state-based think tanks with public relations plans designed to garner press clippings from right-wing publications, along with state, local, and national newspapers and magazines. These state-based think tanks were trained to speak to the media and politicians in populist terms like ‘Welfare Reform,’ ‘Empowerment of the Poor,’ ‘School Choice,’ and now of course ‘Paycheck Protection,” according to a report.
Today, SPN think tanks are hooking up with right-wing media outlets to push out their message. The Franklin Center for Government and Public Integrity is a national non-profit organization that exploits a void in state capitol reporting caused by the loss of a third of the nation’s journalism jobs since 1992. The Franklin Center funds state news websites and wire services in more than 40 states. Despite their non-partisan description, many of these “news” websites have been criticized for their biased claims and unreliable assertions. A majority of SPN think tanks (at least 36) host Franklin “reporters” or publish a Franklin-affiliated publication, according to a review by CMD.
As an example of how these outfits operate, New Hampshire’s Josiah Bartlett Center for Public Policy (JBCPP) runs the Franklin site ”NewHampshire.Watchdog.org”. The think tank’s staffer Grant Bosse edits the publication. Not only does he use the platform to spin disinformation — such as publishing “news articles” on how the Regional Greenhouse Gas Initiative (RGGI) is “all about money” while the publication and JBCPP strive to repeal it — but he testifies to the state legislature against policies like RGGI without disclosing his ties to the JBCPP or the Franklin Center, as shown by the video footage obtained by the organization Granite State Progress (at left).
Several SPN members have created “litigation centers.”
For example, Clint Bolick, who runs Goldwater’s litigation center, told the National Review, “We realized that on some issues we needed to go to court or we wouldn’t be able to change anything.” (Goldwater is just one of the right-wing enterprises Bolick has aided. He is very involved in efforts that weaken public schools and has connections to the school privatization effort. For example, Bolick defended the Wisconsin school voucher program when he was with the Landmark Legal Foundation, co-founded the “Institute for Justice,” and previously led the “Alliance for School Choice.”)
Many of the SPN groups also submit amicus curiae briefs. Several, for example, filed briefs challenging the Patient Protection and Affordable Care Act in the Supreme Court case National Federation of Independent Business v. Sebelius. Litigation is, of course, a tool used by groups across the political spectrum.
SPN’s focus includes lawsuits that make it harder to deal with the influence of money that in the view of many Americans, on the right and the left, is corrupting our democracy. For example, as CMD has documented, through Goldwater, Bolick and his colleague Nick Dranias have worked to strike down Arizona’s clean election laws. And, then as CMD and Arizona Working Families exposed, Goldwater paid them enormous bonuses, of $35,000 and $50,000 respectively, the year Goldwater got a million dollars in public taxpayer funds for attorneys’ fees. Goldwater also raised the salaries of Bolick, Dranias and its executive director in Phoenix to DC-type salaries. (One SPN document reveals that one of the services Sharp provides is a salary review and comparison to help the think tanks set their executive pay; meanwhile, many SPN affiliates are heavily critical of how much public workers are paid, but groups like Goldwater pay their top staff exponentially more, as CMD has shown.)
Goldwater was the first of the SPN member think tank to open a litigation center as a permanent part of its organization. But, as of 2013, the Freedom Foundation of Minnesota and the Nevada Policy Research Institute have litigation programs, as do some of SPN’s associate members, like the North Carolina Institute for Constitutional Law.
Delaware’s Caesar Rodney Institute launched a special fundraising campaign at the beginning of 2012 to pay for a lawsuit against the state of Delaware to challenge its practice of awarding state construction jobs only to contractors paying union scale wages, charging that the methodology used to figure out the prevailing wage rates was flawed. When legislation drafted by the think tank to address the perceived issue failed at the committee level, the group told SPN that it would take to the courts. CMD has also documented the misleading statistics routinely used by Goldwater to peddle its anti-union agenda, which is echoed by other SPN groups.
8) TRAINING A NEW GENERATION OF ACTIVISTS
Together, SPN and the Koch-funded Institute for Humane Studies at George Mason University sponsor the “Charles G. Koch Summer Fellow Program.” This program coordinates internships at SPN member think tanks for an “intensive ten-week program begins in June” that “includes a $1,500 stipend and a housing allowance.”
This program trains hundreds of young right-wing political activists each year and connects them to other parts of the right-wing infrastructure that has been created to change American law and society and that the billionaire Koch brothers have helped build. (CMD, in conjunction with the Nation, has detailed the long relationship between the Kochs’ ideological agenda and ALEC.)
Together with its ties to ALEC, the Heritage Foundation, and major right-wing funders like the Bradley Foundation, SPN’s alliances and “troublemaking” activities enable it to be a major force for privatization and pro-corporate ideology in all 50 states.
9) “A SPECIAL-INTEREST, BIG BUSINESS LOBBING GROUP?”
Although many SPN affiliates do not register key employees who contact legislators about bills as lobbyists, many SPN members advance legislation through ALEC and outside of ALEC. Open records documents obtained from legislatures shows how some SPN-affiliates employees are in regular communication with legislators and have exerted a strong influence on state laws.
The way in which some of these laws do not advance a “socially” conservative agenda but instead push forward a legal agenda consistent with the wish list of some of the biggest corporations in the country has raised concerns among some.
For example, Susan Goldwater, the wife of Barry Goldwater, the namesake of Arizona’s Goldwater Institute, expressed concerns it was becoming “a special-interest, big-business lobbying group.”
As of 2013, according to CMD’s special report on the Institute, “Goldwater has one registered lobbyist, its Executive Vice President Starlee Rhoades, and although senior staffer Nick Dranias is not registered as a lobbyist, many of his communications would strike a layperson as lobbying, but Arizona law has loopholes for providing ‘technical’ advice about legislation defining that not as lobbying. . . . Despite a steady stream of communication with Arizona state legislators about bills, referenced by number or popular name, that it wants to become law, the Goldwater Institute told the IRS that it spent only $184 on grassroots lobbying and $17,445 on direct lobbying, for a total of $17,669 in lobbying expenses in 2011, well below the permissible ceiling for such expenses as a 501(c)(3).”
Furthermore, as detailed below, SPN groups frequently support the corporate-backed agenda of ALEC on numerous legislative items sought by the huge multi-national corporations that fund ALEC.
SPN Works Inside and Outside ALEC to Advance Changes to the Law
Tracie Sharp winning an ALEC award.
SPN itself is a dues-paying “private sector” ALEC member and has paid an additional premium to be one of the top-billed sponsors of ALEC conventions, as 44 major corporations have dumped ALEC in the wake of controversy over its role in spreading controversial gun bills, union-busting legislation, and bills to suppress voter rights – after CMD helped reporters and concerned citizens connect the dots between ALEC corporations, bills, and legislators after a whistleblower provided its executive director with the nearly 1,000 bills that were secretly voted on by private sector members voting as equals with state elected officials.
Sharp’s role in promoting the ALEC agenda has been recognized by ALEC. It gave her one of its “Private Sector Member of the Year” awards in 2009. Others given the same recognition that year included the ALEC rep from the huge tobacco firm Altria.
In fact, all of SPN’s member think tanks push parts of ALEC’s agenda in their respective states and, according to a recent review by CMD, 34 of SPN’s 59 member think tanks have additional direct ties to ALEC (such as sitting on ALEC task forces, speaking at ALEC conferences, or sharing personnel with ALEC). Legal changes in which SPN affiliates are particularly active include clamoring for expansion of school vouchers, charter schools, and other forms of education privatization; hamstringing labor unions and urging wage suppression; privatizing pensions; pre-empting paid sick leave; fighting health care reform; and repealing renewable energy standards and denying climate change.
Of these 34, at least 19 SPN-connected think tanks are known to have participated in ALEC task forces, where state legislators give an equal vote to corporate lobbyists and other special interests at closed door meetings about templates to change state laws. SPN think tanks have participated in each of ALEC’s task forces, including the now-disbanded Public Safety and Elections Task Force, which adopted Florida’s NRA-written “Stand Your Ground” law and the “Voter ID Act” as “model” bills.
Additionally, SPN affiliates sponsored at least 41 ALEC “model” bills between the summer of 2010 and the spring of 2012, according to a CMD review of ALEC documents that CMD and/or Common Cause have obtained. For example, Michigan’s Mackinac Center sponsored a set of bills strongly resembling sections of Wisconsin Governor Scott Walker’s controversial collective bargaining bill, Act 10, at ALEC’s 2011 Spring Task Force Summit.
(A tabulation of SPN ties to ALEC and a list of recent bills known to have been sponsored or spearheaded by SPN think tanks, see the SourceWatch article here.)
SPN’s role in ALEC is multi-faceted. It is a member and a funder, and its member think tanks sit on many ALEC task forces and plan ALEC workshops and trainings. SPN members also regularly write bills and bring them to ALEC to be pushed as legislation in the states with great success.
But it is back in the states where the real synergy happens. When ALEC bills are introduced in state legislatures, the SPN think tanks are often standing by to write the studies, spin the most favorable data, provide the expert talking points, put out the media releases, do the press interviews that give an aura of academia to the efforts – or they may already have these in the can or in the works before the bill is even introduced in the legislature by an ALEC lawmaker.
Among their various objectives to change state law, SPN think tanks have written, presaged, pushed, and promoted ALEC’s effort to:
1) ATTACK UNIONS
ALEC’s “Right to Work Act” seeks to limit union rights. SPN member state think tanks have published articles and reports supporting “right to work” legislation in at least Alabama, Kentucky, Ohio, Delaware, Oregon, Minnesota, Indiana, Michigan, Maine, New Mexico, and Pennsylvania.
SPN think tanks have also joined ALEC in pushing a broad agenda to undermine other worker protections including tearing down collective bargaining, prohibiting paid union activity in the form of “release time,” and ending the ability to deduct union dues from paychecks for private and public employees (so-called “paycheck protection“). (See, for example, Michigan’s Mackinac Center and Arizona’s Goldwater Institute.)
2) PRIVATIZE EDUCATION
SPN think tanks have joined ALEC in pushing a broad education agenda to privatize public schools, including pushing for-profit online schools, for-profit charter schools, using taxpayer dollars for vouchers to for-profit schools, and even so-called “parent triggers” to allow a small group of parents to close a public school for current and future students, and turn the school into a charter school or require a voucher system. (Although it appears to be part of the convergence of the SPN-ALEC agenda across the board, recent examples of SPN activity in support of one or more of these changes include Texas, Arizona, California, Florida, Illinois, Maine, Massachusetts, Alaska, Arkansas, Delaware, Georgia, Wisconsin, Hawaii, Maryland, Mississippi, Nebraska, Nevada, North Carolina, South Carolina, Tennessee, Vermont, Virginia, and Wyoming.)
3) PRIVATIZE PUBLIC PENSION SYSTEMS
SPN think tanks have joined ALEC in pushing to privatize public employee pension systems, reducing retirement security and changing agreements that many workers negotiated for years ago, by making them 401(k)-style defined contribution type accounts rather than defined benefit plans. Such 401(k)s operate as fee-taking enterprises by the corporations administering them, which can result in reduced retirement income for workers. (See, for example, Connecticut, Wyoming, Washington, and Illinois.)
4) ROLLBACK ENVIRONMENTAL INITIATIVES
ALEC’s “State Withdrawal from Regional Climate Initiatives” would allow states to pull out of the Regional Greenhouse Gas Initiative or the Western Climate Initiative, cap-and-trade programs to cut greenhouse gases and carbon-dioxide emissions, and uses language that denies climate change. SPN state think tanks have published articles and reports supporting states’ withdrawals from these regional initiatives in Alabama, Arkansas, Tennessee, Delaware, Oregon, New Jersey, Montana, Virginia, Connecticut, and possibly other states.
5) DISENFRANCHISE PEOPLE OF COLOR, THE ELDERLY, AND STUDENTS THROUGH MAKING IT HARDER FOR AMERICANS TO VOTE
ALEC’s “Voter ID Act” makes it more difficult for American citizens to vote. It would change identification rules so that citizens who have been registered to vote for decades must show certain kinds of ID in order to vote. As some courts have found, such legislation can have the effect of disenfranchising college students and many low-income, minority, and elderly Americans who do not have driver’s licenses but have typically used other forms of ID, groups often considered to include large numbers of Democratic Party voters. Such legislation could adversely affect more than five million people and such bills are being promoted by Republican legislators based on spurious claims of systemic voter fraud, which is virtually non-existent. SPN state think tanks have published articles and reports supporting voter ID bills in at least Arkansas, Washington state, North Carolina, and Wisconsin.
SPN Member Think Tank Funding Sources Include Koch Money and Mystery Funds
SPN and its member state think tanks do not disclose their donors to the public, but CMD and Common Cause have reviewed donation information from IRS filings of major foundation funders in order to compile a partial list of funders. Among them are some of the most ideological extreme families in the nation. SPN itself has received funding from the Claude R. Lambe Foundation (which is controlled by Charles Koch and his right-hand man, Richard Fink), the Olin Foundation, the Richard and Helen DeVos Foundation, the Bradley Foundation, the Castle Rock Foundation (from the Coors family fortune), the Adolph Coors Foundation, the McCamish Foundation, the JM Foundation, the Smith Richardson Foundation, and the Roe Foundation (Thomas Roe’s family foundation), among others.
Funding for SPN has increased rapidly. In 2007, the nearly $40 million in combined revenue of the then-52 SPN member think tanks in 45 states was less than the Heritage Foundation‘s budget that year of $50 million. SPN president Tracie Sharp announced a plan to expand revenues for SPN’s state members by $50 million by 2012. For the calendar/tax year 2010 (the most recent for which information is available for SPN and all its member groups), the total revenue had risen to $76.1 million and the number of state think tanks in SPN to 59, according to a review of the groups’ IRS filings. When the Illinois-based Heartland institute is added in, which is not a state think tank but a hybrid state and national one, the total revenue for these related organizations that year was $82.2 million. As noted earlier, the total spent in 2011 and 2012 is likely significantly higher.
HOW THE KOCH FORTUNE FUNDS SPN THINK TANKS: A CASE STUDY
For decades, the billionaire brothers Charles and David Koch have financed scores of right-wing groups and causes via their charitable foundations. (Their personal fortune is estimated to be $68 billion.) Grants from foundations are public information, which means the public can know just how much money Koch foundations give to organizations like ALEC ($748,858 between 1998 and 2011; in addition the Kochs approved a nearly $500,000 loan to ALEC in the late 1990s, when ALEC was in financial straits).
However, it has long been believed that the Kochs also bankroll their ideological agenda through personal contributions in addition to via checks from their various corporate interests, like Koch Industries, none of which is required to be publicly disclosed – unless a check is made out directly to a candidate or a PAC.
Documents discovered by researchers now show how Koch Industries, one of the biggest privately held corporations in the U.S. and the world, use some of its corporate revenue to fund its owners’ ideological agenda in the states, and also how the Kochs may use their personal checking accounts to fund their agenda.
The detailed list of funders of two SPN members — the Texas Public Policy Foundation (TPPF) in 2010 and the Massachusetts based Pioneer Institute for Public Policy Research (PIPPR) in 2007 – was included in public materials relating to their annual IRS form 990 filings.
The TPPF list of funders for 2010 included a grant from one of the Koch foundations, the Claude R. Lambe Charitable Foundation, for $69,788. But it also included a much larger $159,834 grant from Koch Industries. This grant was the seventh largest TPPF received that year, on a published list of 129 funders giving more than $5,000. This contribution, which dwarfs the publicly disclosed Koch family foundation grant, would have remained secret forever but-for the filing.
Similarly, PIPPR did not receive a publicly disclosed grant from the Koch foundations in 2007, which would mean there were no visible dots to connect back to Koch money for that year. But PIPPR did in fact receive a very large, previously unknown, personal check for $125,000 from David Koch, the largest of any contribution it received that year.
It is possible that these two instances were anomalies, but it seems unlikely given the Kochs’ commitment to advancing their ideological agenda through spending money. It is not known if either TPPF or PIPPR received similar unreported money from the Kochs in previous years or since then, and we also do not have any evidence of other SPN think tanks, or of SPN itself, receiving similar personal or corporate cash from the Kochs. The total amount spent by Koch Industries to advance the Koch brothers’ personal ideological objectives through donations to tax-exempt groups organized under sections 501(c)(3) and 501(c)(4) of the IRS Code are not known, even though such groups are playing an increasingly influential role in both lobbying and elections.
DIPPING INTO THE “DARK MONEY ATM OF THE CONSERVATIVE MOVEMENT” — FUNDING FROM DONORS TRUST
SPN also received $10 million between 2006 and 2011 from two closely-related funds — Donors Trust (DT) and Donors Capital Fund (DCF) — spin-offs of the Philanthropy Roundtable, run by SPN board member Whitney L. Ball. These entities are also connected to Koch money, and the Philanthropy Roundtable even gave Charles Koch an honorary award last year in the midst of public criticism of the role he and his brother have played in funding the controversial ALEC and attempting to influence elections through an array of groups.
DT and DCF are what are called “donor-advised funds,” which means that the funds create separate accounts for individual donors, and the donors then recommend disbursements from the accounts to different non-profits. Very little was known about them, and they had received scant media coverage until late 2012 and early 2013, when the Guardian and others published extensive reports on what Mother Jones called “the dark-money ATM of the conservative movement.”
Funds like DT and DCF are not uncommon in the non-profit sector, but they do cloak the identity of the original donors because the funds are typically distributed in the name of DT or DCF rather than the original donors.
Thomas A. Roe
What’s more, the two funds exist for “donors dedicated to the ideals of limited government, personal responsibility, and free enterprise[,] . . . always with the goal of advancing the philosophy they share with their donors.” This echoes the mantra of ALEC and various other enterprises funded by the Koch Brothers, Thomas Roe, and other right-wing CEOs that have cultivated this right-wing infrastructure.
Much of the anonymous billionaires’ money funnels through DT and DCF to fund a “vast network of climate denial think tanks,” according to The Guardian. “The money flowed to Washington think tanks embedded in Republican party politics, obscure policy forums in Alaska and Tennessee, contrarian scientists at Harvard and lesser institutions, even to buy up DVDs of a film attacking Al Gore.”
In 2011, “the nearly $2 million in grants from Donors Trust made up about 40 percent of SPN’s revenue for the year,” according to CPI. To be clear, that was funding for Sharp’s SPN itself, and does not include more direct funding for its member think tanks.
In addition, during the same time period, DT and DCF also gave big sums to SPN member state think tanks — $1.8 million to Arizona’s Goldwater Institute, $1.2 million to Washington State’s Evergreen Freedom Foundation, and $1 million to New York State’s Manhattan Institute (the SPN member Empire Center for New York State Policy is a project of the Manhattan Institute), for example. This cloaked money has gone to at least 51 of SPN’s member think tanks in the past five years, according to CPI.
Fueled by robust funding from right-wing funders like the Koch brothers, the Bradley Foundation, and by large anonymous grants from DonorsTrust, Donors Capital, and others, SPN has grown rapidly in recent years. There were 12 original think tanks when SPN was founded. As of 2012, there are 59 SPN member think tanks in all 50 states.
According Lee Fang’s recent article in the The Nation, “Financial support for SPN-affiliated think tanks has increased by tens of millions of dollars over the last four years, disclosures show. In areas with the most concentrated investments, particularly the Midwestern states . . . , budgets for state-level political groups have doubled, outpacing their counterparts on the left.”
Some of the money SPN receives from DT and DCF is granted specifically for creating new state groups. For example in 2011, DCF provided a $35,000 grant for “start up activities in Florida,” a $10,000 grant for “start up activities in Arkansas,” and a further $165,000 [to whom?] for “2011 start-ups.”
MYSTERY FUNDS: A CASE STUDY ON TRACIE SHARP’S POWER
The TPPF documents reveal an even more intriguing financial connection to Sharp than the direct funding by Koch Industries discussed above.
SPN itself gave TPPF $49,306.90 in 2010, according to its IRS filing, but that’s not the only way in which Sharp helped fuel TPPF’s agenda.
Three of the top ten largest grants received by TPPF in 2010 — of a total reported 129 grants that year – were from mysterious sources: the “State Think Tank Fund”, the “Government Transparency Fund” and the “Paul Revere Fund.” A fourth mysterious grant was received from something called the “146 Group”.
The first two of these — $300,000 from the “State Think Tank Fund” and $195,000 from the “Government Transparency Fund” — list SPN President Tracie Sharp as their primary contact, along with the mailing address for SPN. But these grants are not from SPN directly, at least not according to SPN’s own IRS filings for that year.
SPN does make grants to member think tanks, as noted elsewhere in this resource, but these grants are typically smaller than these two grants — for example, SPN gave TPPF $19,500 directly in 2010. The total of all grants from SPN in 2010 amounted to $766,175/$664,250 (there is a discrepancy in SPN’s 2010 IRS Form 990). The combined total of these two mysterious grants — $495,000 — to a single SPN member, apparently under the control or direction of the SPN president, raises some important questions about the role Tracie Sharp plays in directing funds to SPN members. CMD reached out to SPN for comment, but the organization did not respond by press time.
The only other public reference to the “State Think Tank Fund” is as a partial funder of a 2006 report released by another SPN member, the Yankee Institute, titled “The Coming Crisis in Suburban Schooling.” There is no record of these funds as tax-exempt entities on the IRS website, and no records in numerous other searches we conducted.
IS SPN’S PRESIDENT WORKING WITH DONORS CAPITAL FUND TO HELP FUND THE NETWORK?
A close review of all publicly reported grants from the “dark money ATM,” Donors Capital Fund, shows that it sent combined grants to TPPF in 2010 totaling $667,508. These grants, however, were not — nor were any from Donors Capital — listed in the information TPPF provided to the IRS. This raises the question of whether the Donors Capital grants include the mysterious funds under the control of SPN’s President Tracie Sharp. It is inconceivable that grants of this size would be inadvertently omitted by TPPF.
As described above, DCF is a “donor-advised fund,” allowing wealthy individuals who want to give $1 million or more to 501(c)(3) organizations (such as SPN think tanks) to have that money invested and distributed for them, even after they die if they choose. DCF gives these high-roller investors a range of options about their account. They can choose to dictate exactly how, when, and to whom their money will be distributed, or they can nominate a DCF board-approved “account advisor” to make these decisions for them. They can also choose from a range of options about how they want the source of the grant to be described, from full disclosure to total anonymity. And if they choose, a grant can be listed as being from an account name instead of from a person. None of these account names are usually made public, and there is no way to trace them back to DCF, let alone the individual high-roller.
There are similarities between the amounts listed by DCF in their IRS filings and the $300,000 from the “State Think Tank Fund” and $195,000 from the “Government Transparency Fund” in TPPF’s 2010 list of donors. This might indicate that DCF is the source of the funding. In this case Tracie Sharp (as the contact person) would likely be the fund-designated “account advisor.” We asked Tracie Sharp, SPN, Donors Capital Fund, and TPPF each to comment, but all refused even to confirm or deny the funding data that has been uncovered.
Tracie Sharp is the contact person for what appear to be at least two very significant sources of money. These two combined grants were easily the largest source of funding for TPPF in 2010. And, because the other SPN groups did not disclose their IRS form 990 Schedule Bs detailing their donors, the public may never know the full extent of her influence and financial control in any other disbursements of such funds at her disposal.
There is no indication in SPN’s own IRS filings, in which re-grants to other organizations are required to be disclosed, that SPN itself gave grants of this size to TPPF. (SPN’s 2010 IRS filing lists only a grant of $19,500 to TPPF that year).
As Fang noted in his recent Nation article, SPN’s influence is on the rise and Sharp is widely being credited with the right-wing’s victories in the states. How much money she will spend or direct this year to advance the Koch brothers’ agenda and the agenda of the corporate-fueled ALEC may remain a mystery, but the influence of the state operations she has cultivated will no longer be as secretive as it once was, given the spotlight now being focused on SPN.
CMD’s Reporters’ Guide on SourceWatch includes the following resources:
- State Policy Network Main Portal
- SPN Funding
- SPN Ties to ALEC
- SPN Members
- SPN Agenda
- SPN History, Founders, and Staff
CMD’s Lisa Graves and Nick Surgey contributed to this report.