Chapter 5: Winning Now
Some public-policy problems can’t wait a generation. They require fast action, with time horizons measured in months, years, or election cycles rather than decades. Can philanthropy contribute to these sorts of issues?
Back in 1955, Dwight Macdonald argued that most public-policy philanthropy was too sluggish to be consequential in pressing cases. “A philanthropoid would deal with the problem of a man trapped in a burning house by subsidizing a study of combustion,” he wrote. In 2015, though, there are many philanthropists who are itchy to send in firefighters. They have little interest in funding long-term studies or nurturing slow-growing careers. These donors are looking for fast-moving action organizations who know how to turn on a hose.
In 1993, Bill Kristol (Irving’s son) founded an action organization that defeated President Clinton’s national health-care plan, a signal accomplishment of the decade. Kristol’s work was not an Olin-style culture-changing marathon, but rather a current-events sprint. There are times, when stakes are high and timetables short, where that is the only way to proceed. Public-policy success or failure must come in months or weeks.
This is tricky work. It requires clever strategies, strong messages, and slick communications. But it can pay off in very consequential ways: blocking or creating legislation, birthing a new social movement, nudging an entire state into a different political position, reviving a downtrodden interest or forgotten issue.
In 1992, Democrat Bill Clinton had won a three-way Presidential race with 43 percent of the vote. Perhaps overestimating his mandate, he launched in his first year a mammoth effort to create a new federal health-care regimen. The venture was led by First Lady Hillary Clinton, and the health-care plan she helped construct came to be known as “HillaryCare.” It was a massive government intervention that critics skewered as a federal takeover of one seventh of the U.S. economy.
Bill Kristol had been hired by the Bradley Foundation in the early 1990s to think through the future of conservative politics and policy, in the wake of electoral defeat and intellectual exhaustion. It was a task straight from the philanthropic playbook for long-term cultural transformation. But after the Clintons signaled their ambition to remake health care, Kristol set up a 501(c)(4) advocacy nonprofit called the Project for the Republican Future. His new goal was to help the GOP develop a reform agenda on a briefer timeline.
“The name ‘Project’ was purposeful,” said Kristol. “We wanted to signal to donors that we weren’t starting an institution. We were short term.” The initial board included Michael Joyce of the Bradley Foundation and New York financiers Virginia James and Thomas Rhodes. “I made clear to everyone that this was a moment of opportunity, and supporting us was like placing a bet,” said Kristol. “Everything was speculative.”
As HillaryCare gained momentum and importance, the group zeroed in on stopping the legislation. Their main weapon was the fax machine—then a leading technology. Every day or so, as the debate grew hotter, they dispatched to journalists, politicians, and interested parties a steady stream of inside-the-Beltway memos deconstructing the Clinton effort. The first memo was dated December 3, 1993.
At a time when many Republicans were dispirited and ready to capitulate, the Project encouraged them to stiffen their spines. It was pointed out that a large majority of Americans were satisfied with their own health-care coverage. Readers were urged to reject the President’s assertion that weaknesses in the existing system required a wholesale reinvention of U.S. health care, overseen by bureaucrats in Washington. The slogan was simple: “There is no health-care crisis.”
Within months, the debate over health-care reform shifted dramatically, as conservatives began to adopt the rhetoric of Kristol and company. Organizations such as the National Association of Manufacturers and the Christian Coalition launched efforts to defeat HillaryCare. The Health Insurance Association of America ran a multimillion-dollar television ad campaign featuring a middle-class couple worried by the implications of national health care.
In the end HillaryCare flopped, and set the stage for the elections of 1994, where Republicans captured not just the Senate but also the House of Representatives for the first time in decades. “Nearly a full year before Republicans would unite behind the ‘Contract with America,’ Kristol provided the rationale and the steel for them to achieve their aims of winning control of Congress and becoming America’s majority party,” wrote Washington Post reporters Haynes Johnson and David Broder.
All of this grew out of a $1.3 million investment in the Project for the Republican Future, made at a time when that future seemed grim. Irving Kristol had advised the Olin Foundation on a long-term strategy to build a counterintelligentsia. Now his son, Bill, was acting as a member of this very counterintelligentsia, and winning a near-term political victory.
The prospect of nationalized health care was pushed off for almost two decades. And Kristol and his associates, as promised, closed shop. The project was a short-lived, single-purpose enterprise. “When we dissolved in 1995, we returned what was left in our bank account to donors, on a prorated basis,” said Kristol.
The reason conservatives found themselves needing to defeat a proposal for nationalized health care was because several years earlier Bill Clinton had benefited from a different creative application of philanthropy to public policy. In 1985, in the wake of Ronald Reagan’s landslide re-election, moderate Democrats decided that their party needed to move away from doctrinaire liberalism and toward the center. Democrat fundraisers like William Crotty, Peter Kelly, and Charles Manatt helped former Congressional staffer Al From launch a new 501(c)(4) called the Democratic Leadership Council. Soon, the DLC was hosting private retreats for donors and politicians seeking to refresh the party of FDR.
Just as Kristol’s Project for the Republican Future initially met with skepticism from a GOP establishment worried about a possible rival to the national party, the DLC was seen by some as a competitor to the Democratic National Committee. In 1988, though, Democrats lost their third Presidential election in a row, and a growing number of activists saw the DLC as an effective ally in an urgent revival mission. One admirer was Bill Clinton, the governor of Arkansas. He tied himself tightly to the group that promised to create a generation of “New Democrats.”
In 1989, the DLC formed the Progressive Policy Institute, a 501(c)(3) think tank charged with developing new policies that the Leadership Council could organize people around. The goal, according to From and his collaborator Will Marshall, was to design “an intellectual counterforce that can fashion progressive alternatives” to right-of-center policies.
Wall Street magnate Michael Steinhardt served as PPI’s board chairman, and pledged hundreds of thousands of dollars to the cause. As a nonpartisan group, PPI developed and promoted policy ideas that any public official could adopt—though the idea, of course, was to push ones that would help the DLC and its New Democrats become a governing majority. By 1992, this “pint-sized think tank” with a budget of just $700,000 had “become a wing of Clinton’s campaign” for President, reported the National Journal.
Once in the White House, Clinton filled positions in his administration with officials plucked from the DLC/PPI orbit. They organized many of the Clinton Presidency’s genuine accomplishments, such as trade liberalization and welfare reform. The debacle over HillaryCare, by contrast, never was associated in a significant way with the DLC or PPI.
Through the 1990s, New Democrats grabbed the reins away from many of the liberals in their own party. They did not hold on permanently, however. During the Presidency of George W. Bush, liberals roared back to life, culminating in the election of Barack Obama. By 2011, the DLC had dissolved, donating its archive to the Clinton Foundation. The Progressive Policy Institute survives as a small group far from the limelight.
Just as the rise of the New Democrats depended heavily on philanthropy to engineer their achievements in public policy, so did the liberal resurgence. Nowhere was this more apparent than in Colorado. In 2004, Colorado was a solidly Republican state, with the governor, both U.S. senators, and five of its seven members of the House belonging to the GOP. That same year, Colorado gave its electoral votes in the Presidential election to Bush.
By the time of the 2008 elections, however, the politics of the state had been turned upside-down. After all the ballots had been counted, the governor, both U.S. senators, and five of seven House members were Democrats, plus Obama carried the state. It was a full-fledged flip.
National political trends explained some of this movement, as the whole country had shifted in a liberal direction. The largest part of this dramatic shift, however, could be ascribed to a group of liberal philanthropists who set out to remake Colorado politics through a mix of public-policy giving and campaign donations. The so-called Gang of Four consisted of Rutt Bridges, a venture capitalist; Tim Gill, founder of the software firm Quark; Jared Polis, an Internet businessman who would win election to Congress as a Democrat in 2008; and Pat Stryker, the heiress of a medical-equipment company.
All were motivated to some degree by gay rights. “Nothing can compare to the psychological trauma of realizing that more than half the people in your state believe that you don’t deserve equal rights,” Gill told the Chronicle of Philanthropy after Colorado voters amended the state constitution to prohibit the government from granting special protected status on the basis of sexual orientation. By the late 1990s, Gill and his allies were determined to elect Democrats to office at all levels of government.
In 1999, Bridges founded the Bighorn Center for Public Policy with $1 million of his own money. The short-lived think tank pushed successfully for new rules on campaign finance, setting the stage for the Gang of Four and its new model of policy philanthropy. Before long, they were funding an infrastructure of nonprofit organizations that issued reports, investigated conservative politicians, and generated controversy. They gave Colorado Media Matters, a left-wing media-pressure group, enough money to keep a dozen people on staff. Citizens for Responsibility and Ethics in Washington, a liberal group that publicizes politicians’ questionable behavior, opened a Colorado field office. A website called ColoradoPols.com set out to influence statewide reporting. “I can’t tell you how often reporters would call 36 hours after something appeared there,” said Bill Owens, who was Colorado’s Republican governor from 1999 to 2007.
Through their combination of public-policy philanthropy and traditional campaign contributions, the Gang of Four built a well-oiled machine whose central purpose was to persuade voters not to vote for conservative candidates. In an investigative story for the Denver Post, reporter Karen Crummy explained how the various pieces fit together: “A liberal group with a nonpartisan name like Colorado First puts out a list of polluters and demands official action. A Republican running for Colorado office is on the list. Paid liberal bloggers chatter. An online liberal publication with a newspaper-like name writes an article about the candidate and his company polluting Colorado’s streams. A liberal advocacy group puts out a news release, citing the group and the pollution, which sound reputable to an ordinary voter. They mass e-mail the release and attach a catchy phrase to it like ‘Dirty Doug.’ At some point, the mainstream media checks out the allegations.”
The overall spending by the Gang of Four and their liberal allies dwarfed that of their conservative rivals. In 2012 the Denver Post estimated that in PAC spending alone, liberals spent 150 times what conservatives did on Super PAC contributions. It was an impressive effort, made even more impressive by the result—a wholesale transfer of Colorado’s political allegiance from one party to the other. Nothing is permanent in politics, and in the deep-red 2014 election Republicans finally reclaimed one of the two U.S. Senate seats in Colorado. But the other Senate seat and three of the seven House seats remained with Democrats, and the incumbent Democrat governor won re-election. Colorado is now a purple state. And the Gill/Bridges/Polis/Stryker donor structure remains in place.
Behind the successes of the Project for the Republican Future, the New Democrats, and the Colorado liberals lay philanthropists who sensed an opportunity to change the terms of a political debate. Through wise investments in skillful policy entrepreneurs, they took ideas that seemed out of favor and filled them with life and promise. In relatively short periods of time, they achieved remarkable swings in governance.
Policy Player Profile: John Kirtley
“I wasn’t involved in philanthropy at all. And I didn’t do anything in politics except vote in presidential elections,” says John Kirtley. For a decade, he had focused on running a venture-capital firm in Tampa Bay. But by the mid-1990s, when he was in his middle 30s, Kirtley was ready to do more. “I woke up to the need to give back.”
After working at a large bank in New York City, Kirtley returned to Florida (where he had attended high school) and founded, at age 25, a venture-capital firm focused on small companies in the Southeast. He made more than enough money to live on, and began to think about giving some of it away. A friend in New York City told him about a program that paired patrons with needy Catholic schools. Even though Kirtley isn’t Catholic, he signed up, because the schools were such lifesavers for children living in neighborhoods with terrible public options.
Before long Kirtley was giving both money and advice to Christ the King Elementary School, near Yankee Stadium in the South Bronx. “It was a rough area at the time,” says Kirtley. “It was like a scene from Tom Wolfe’s Bonfire of the Vanities. At night, you went there in groups because it was dangerous to go alone.”
About 300 students attended the school. “The tuition was maybe $3,300, and the cost to educate was maybe $5,500,” says Kirtley. “Parents took two or three jobs to pay for it.” Donors made up the difference.
The sacrifices of the poor parents forced Kirtley to ask a question: “Why are they doing this, when there’s a free public school just down the street?” He knew the answer: “They understood that it was the right school for their kids.”
While he was involved with this one school, Kirtley read about the efforts of philanthropists Patrick Rooney and Virginia James to launch scholarship funds across the country that would help poor students attend private schools. “It made sense,” he says, “so I decided to start a scholarship program in Tampa Bay.”
Today, Florida is arguably America’s leader in school choice. Its laws already help nearly 100,000 children attend private schools, with the number rising with each passing year. A means-tested tax-credit scholarship program assists 69,000 poor students in the 2014-15 school year. Separately, more than 27,000 special-needs students receive scholarships. This would not have happened without Kirtley’s ingenious blend of philanthropy, which combines old-fashioned charity for low-income students with public-policy activism.
“Florida has come further than any other state in developing a new definition of public education,” says Kirtley. “Under the old definition, we raised tax dollars, gave it all to the school districts, and assigned kids to schools by zip code. Under the new definition, we raise tax dollars but let parents direct them toward providers and delivery methods that best fit their needs.”
At first, Kirtley envisioned a scholarship program for low-income students in Tampa Bay that would offer about 350 scholarships worth $1,500 apiece. “Then I got lucky,” he says. He read a newspaper article about the Children’s Scholarship Fund, a new initiative launched by Ted Forstmann and John Walton to help low-income students attend private schools. “They wanted to find partners for matching grants.”
“I got on a plane the next day, flew to New York City, and went to their offices without an appointment.” When he arrived, the staff was still unpacking boxes. “I’m your guy in Tampa,” he told them. They struck a deal, allowing Kirtley to double the number of scholarships he planned to give away.
Back in Tampa, Kirtley handled the publicity for his scholarships himself—walking around neighborhoods, visiting churches, and talking on radio stations. “I knew the need was out there, but I didn’t know what kind of response we’d get.” When the application deadline arrived, his new fund received about 12,000 applications for 700 scholarships of $1,500 each. “It just blew me away.”
Kirtley felt good about meeting a need, but the experience also troubled him. “We had to turn away a lot of good people,” he says. “Parents kept calling—my phone number was listed—and asking, ‘Don’t you have just one more scholarship?’ Not even Bill Gates could write a check big enough to respond to the need. That’s when I realized that philanthropists must become involved in public policy.”
This was the fall of 1998, when Florida voters elected Jeb Bush as their new governor. Bush had run on education reform, proposing a school-choice law to allow students to escape failing public schools. “I was so out of touch with politics that I didn’t even know he had talked about it,” says Kirtley. The following spring when the legislature considered some of Bush’s ideas, Kirtley bused parents to Tallahassee. “A lot of politicians say that parents want more public-school funding. Our parents got up and said they want choice.”
As they pushed for new alternatives for parents, Kirtley and his allies faced tremendous political resistance. Much of it was motivated by fear and self-defense. “One day, a black legislator who publicly opposed school choice took me into his office.” He handed Kirtley a list of ten things he wanted to accomplish as a legislator. “You’re right about school choice,” he told Kirtley. “But if I put school choice on my list, the teacher’s union will take me out, and I won’t get to the nine other things.”
For Kirtley, the comment was a revelation. “He was making a perfectly logical decision,” he says. “I realized we had to broaden the political support for school choice. We needed more than a traditional nonprofit group that funded scholarships.”
So Kirtley became a political actor. In addition to his 501(c)(3) scholarship fund, he started a pair of campaigning organizations: a 501(c)(4) to focus on communications and lobbying and a 527 group to fund elections. He picked hardball activists to run operations. One was a former public-school teacher, union leader, and lifelong Democrat. Another was a former newspaper editorialist, tasked with the job of winning hearts and minds in the media. A third was a veteran organizer in African-American communities.
Kirtley devoted millions of dollars to these efforts, both his own money and funds he raised energetically from others. In each election cycle his groups spread the word about school choice and ran advertisements educating voters about candidates who favored choice and those who opposed it. “We had a lot of tough days,” says Kirtley. Yet for every step backward, the movement seemed to take two forward.
By 2010, school-choice bills had wide support, including co-sponsors among Democrats. Majorities of both the black and Hispanic caucuses had become supporters of a large expansion of Florida’s school-choice programs. In an historic vote taken on the same day that Kirtley brought thousands of parents and community leaders to march in Tallahassee, the Florida Senate voted to strengthen school choice across the state.
The success helped even students who stayed put. The new schooling alternatives forced public schools to improve. “Our results indicate that private-school competition, brought about by the creation of scholarships for students from low-income families, is likely to have positive effects on the performance of traditional public schools,” concluded researchers David Figlio and Cassandra Hart.
John Kirtley’s philanthropic organizing now serves as a case study in how to bring school choice to the masses. “If others want to do this in their states, the first thing they should do is contact the American Federation for Children, which advises school-choice supporters around the country,” he says. “Then they should be ready to do more than just fund scholarships. You also have to get involved in politics and public policy. If your goal is to change K-12 policy, you’re going to have to change laws. And if legislators refuse to change those laws, then you’re going to have to change those legislators.”
In a bit of personal advice, Kirtley offers that “you need to steel yourself. You will be a target. It’s amazing what the press will print about you. If you’re in it for the accolades or to win political office, get out. This isn’t for you. But if you want to improve the schooling of our children, and if you can handle the pressure, the rewards are so worth it.”
Policy Player Profile: Bill Kristol
Since founding the Washington-politics journal the Weekly Standard in 1995, Bill Kristol has seen increased philanthropic interest influencing policy, including via media outlets. “It’s very hard to predict what’s going to work, but the Internet gives you a much lower startup cost than in the old days. And more ability to quickly modify what you’re doing.”
“The Times of Israel is an excellent example. It’s an online newspaper supported by philanthropists. The idea was to create an English-language website that would be moderate and not biased, with reporting and some opinion on developments in Israel and throughout the Jewish world. It’s very high quality, not that expensive to operate, and gets good readership in America. It’s affecting the coverage of the Middle East.”
“Influencing foreign policy is complicated, but there have been moments when donors have made a huge difference. The Iraq troop surge in 2006 was basically invented at the donor-funded American Enterprise Institute by Fred Kagan and Jack Keane, and sold to the Bush administration as a way to turn the war around. It worked, and it’s an example of a think tank making a huge difference.”
“The lesson I draw from that is you need to have infrastructure in place. Foreign policy investing is investing for the long haul. It’s finding good people and funding them so they’ll be relevant when a rare moment arrives. Most of the time, you’re not going to see a dramatic result. But when there is a crisis, the right person or organization can make a huge difference.”
“It takes patience, but you can make a difference. It’s harder in domestic policy, where there are huge interest groups. Winning arguments against hospitals, energy companies, whatever, it’s pretty hard as a donor to make a difference. Education is probably where the highest percentage of public-policy donors are investing today, and they’re up against teacher unions, bureaucracy, state legislatures and administrators. It’s not easy.”
“In foreign policy, there aren’t as many interest groups. If you can influence a few policymakers and the Defense Department, the State Department, if you can influence a few key senators, you can actually affect foreign policy. A few employees doing two good studies, and a couple people publicizing the work on the Hill and in blog posts and articles can make a wave. You don’t need to be a massive institution putting on conferences and trips with big overhead.”
“I’m someone who thinks we need to spend more on defense. Are we going to affect President Obama’s last budget or two? I don’t think so. But there will be a huge moment when there’ll be a new President and he or she will have to set the defense budget for 2017. So the Foreign Policy Initiative, a small donor-backed group I’m on the board of, is doing a big project which lays out what defense budget we need. It doesn’t have a big staff of its own, but contracts with good people elsewhere to write papers, brief candidates, and so forth. I think it could have influence over the long haul.”
“Donors I respect tend to be somewhat experimental in their efforts. And people shouldn’t kid themselves—we can’t always predict ahead of time that Fred, Jack, and Joe are going to be terrific, while John, Tom, and Mary are not going to work out. You have to be willing to invest in all six of them and then, after a year or two, say, “I’m going to double down on Fred and tell Joe it’s time to move on.”
“Foreign policy isn’t the only place where small investments can make a big difference. Reform of higher education is another area with potential. A donor’s ability to change colleges and universities is very limited—there are a lot of tenured faculty and ensconced administrators and they’re not going to listen to any one donor. But if you go around the professors directly to students, you can educate a new group of leaders. It’s not as good as having a great professor directly teach students, but if you can’t control professors you can at least make material easily available to students. You can put things online. You can set up supplemental seminars. You can get a few professors to recommend these to students.”
“So Roger Hertog has given the money to establish a political studies program in Washington. Forty-five excellent kids, six weeks, very good faculty, very good extracurricular speakers. These kids are brought to Washington and given an intensive course where they read great books, and listen to serious people, and discuss politics and philosophy and literature.”
“There are other groups reaching out directly to students. They post reading lists, curated biographies, video conversations with people like Charles Murray, Harvey Mansfield, Peter Thiel, and others whose thinking extends beyond the liberal conventional wisdom. They create internships and online workshops and summer programs. They fund independent lecture series on campus.”
“It’s a way of going around the established institutions. It’s easier to start the Weekly Standard than to change the New York Times. Does it solve the problem of the New York Times being biased? No. But at least people aren’t stuck with them as their only source of high-quality information.”
“Donors who don’t want to have to deal with the Harvard administration are doing a lot to shape alternatives for students. In addition to Roger Hertog there’s Jack Miller, Thomas Smith, Peter Thiel, and Jim Piereson through the Veritas Fund. In foreign policy, Paul Singer, Roger Hertog, the Smith Richardson and Bradley Foundations, and Marilyn Ware are good role models. They are people who have adopted the long view and invested in content and people.”
Charity, Advocacy, Politics—Where Are the Boundaries?
As this book makes clear, American donors have exhibited a new willingness and desire over the last decade to take up policy reform, and even direct advocacy and politics. It is now common for savvy philanthropists to supplement their charitable giving with some correlated donations that aim to adjust the law and rules of governance, to inform public opinion, or to influence or change occupants of public offices.
The federal rules circumscribing what tax-protected foundations and charitable organizations can do in the areas of governance and elections are extensive and detailed, so care is required in this area. In most cases, only charitable and other qualified nonprofit work can be supported with foundation money. So donors fund direct advocacy and campaign assistance out of their personal checkbooks.
Individuals and foundations that would like to be active in public policy should consult their attorneys, as this book is not written as a legal guide. However: to give a basic picture of the multiple hats that philanthropists may choose to don as they work on social problems that have both charitable and public-policy components, here is a simple sketch of what tax-protected organizations are and are not allowed to take up when it comes to policy advocacy.
Nonprofit organizations that funders can use or create to promote policy change:
501(c)(3) Private Foundation
(example: Bill & Melinda Gates Foundation)
The Crux: Organization is tax exempt. Donations are tax deductible. Contributions and grants are publicly disclosed. Generally cannot lobby (that is, advocate for specific rules or legislation with elected officials or their staff) except in “self-defense.” Can provide funds to charities that lobby with funds from other sources. Can directly inform public opinion and public policies through research and communications. Prohibited from engaging in political campaigns. Main advocacy role is to conduct policy research and run public-awareness campaigns.
501(c)(3) Public Charity
(example: American Red Cross)
The Crux: Organization is tax exempt. Donations are tax deductible. Contributors can be anonymous. Can advocate for public policies. Can engage in a limited amount of lobbying. May engage in nonpartisan election activities like debates, candidate forums, and voter assistance. Prohibited from engaging in political campaigns. Main advocacy role is to push for public policies it believes in.
501(c)(4) Social Welfare Organization
(example: League of Conservation Voters)
The Crux: Organization is tax exempt. Donations are not tax deductible. Contributors can be anonymous. Can advocate for public policies without limitation. Can lobby without limitation on topics related to its mission. Can participate in political activity, including urging particular votes and depicting candidates in positive or negative ways. Also allowed to engage in active electioneering so long as that is not the “primary purpose of the group” and the electioneering is relevant to the organization’s primary purpose. (These same basic rules apply to 501(c)(5) labor organizations, and 501(c)(6) business leagues—which often do similar work in the policy arena.)
527 Political Action Committee
(example: Planned Parenthood Action Fund)
The Crux: Organization is tax exempt. Donations are not tax deductible and they are capped at $5,000 per year. Donors are publicly disclosed. Lobbying can only be a secondary activity of the group. Can make unlimited contributions to political campaigns, including directly to candidates, subject only to federal and state rules and reporting. Main purpose is to directly supply campaign expenses in support of specific candidates, initiatives, or legislation.
527 Independent-expenditure PAC also known as a Super PAC
(example: American Crossroads)
The Crux: Organization is tax exempt. Donations are not tax deductible and they are unlimited. Donors are publicly disclosed. Lobbying can only be a secondary activity of the group. Can make unlimited contributions to political causes, subject only to federal and state rules and reporting, but these cannot go directly to candidates or be coordinated with candidates. Main purpose is to inform voters of the positions of candidates on public issues, or the merits of initiatives or legislation.