The Koch Brothers have emerged as the left's favorite bogeymen, tied to numerous advocacy groups attempting to influence elections at the state and federal levels, but the brothers' lasting impact won't be the political campaigns they've financed but the institutions and networks they've constructed on the political right. While the Koch name gets all the headlines, in this effort the brothers are not, in fact, alone.
Hiding the shadow of their bigger-name brothers is a group of fellow travelers, tied to one another by their large donations aimed at pushing forward a business-friendly agenda, including rolling back labor and environmental regulations. But the many of the members of this network share something else with the Kansas-based billionaire brothers: they have pursued business ventures that target low-income communities as customers and employees, essentially profiting off poverty.
Americans for Prosperity, a Koch-funded advocacy group that spent $122 million in the 2012 election cycle and was expected to match that amount this season, endorses corporation-friendly positions under the guise of helping the poor. The group promotes the belief that raising the federal minimum wage does “more harm than good” and “does not help low-skilled and unemployed Americans;” it also warns that the White House's proposal to tighten carbon emission regulations “will harm minority and low income communities the most.”
The Koch brothers and the groups they fund have taken both the credit and the heat for these positions, while few of their fellow billionaire donors to Koch-funded institutions rarely make headlines or are asked to explain their support for the extreme right-wing views espoused by the groups they fund.
“[A] lot of the portraits of [the Koch brothers] portray them as reticent or reluctant crusaders, but I think they also have accepted and embrace this role, to their advantage, of being so heavily identified with it,” Chris Kromm, Executive Director of the Institute for Southern Studies, a group that calls attention to the “capacity for progressive change in the American South,” told The Nation. “And it may provide shielding for other people who play this role.”
Earlier this year, a leaked document from one of the brothers' secretive bi-annual meetings revealed the names of more than 40 top conservative donors who were singled out for one-on-one meetings with the brothers and their top strategists. But exact dollar amounts and their connections to Koch-founded institutions remain elusive. Do these donors work in parallel with the brothers or in direct collaboration?
An examination of 501c3 tax filings sheds light on several of the seven-figure donors to the Americans For Prosperity Foundation, the “educational” arm of the brothers' Americans For Prosperity advocacy group, a group of (almost entirely) men who are at the center of the Koch universe. The AFP Foundation is tax-exempt so donations are tax deductible. Only donors who contributed through their personal foundations are traceable, meaning that donors who contribute via personal checks are shielded from all public scrutiny. The majority of the AFP Foundation's approximately $22 million in annual revenue comes from a variety of untraceable sources, where the individuals or families writing the donation and potentially enjoying the tax deduction are hidden from public view.
Indeed, the top identifiable non-Koch donors and the contributions associated with them are likely the tip of the iceberg for these donors involvement in the Koch network. Contributions to Koch funded advocacy groups, such as AFP's 501c4 arm, provide no tax deduction for donors and, as a result, donors contribute almost exclusively through direct contributions, leaving no publicly accessible paper trail.
The biggest identifiable donor to the AFP Foundation is Art Pope, CEO and chairman of Variety Wholesalers, a North Carolina-based discount store chain, a major funder of the Republican Party in North Carolina and nationally, and an invitee at a secretive 2011, Koch-hosted meeting to “develop strategies to counter the most severe threats facing our free society and outline a vision of how we can foster a renewal of American free enterprise and prosperity,” according to a leaked invitation. His foundation, The John William Pope Foundation, contributed $4.17 million to the AFP Foundation between 2003 and 2012. Pope's closeness to the Koch brothers and AFP is exemplified by his seat on the organization's board, an exception to the Koch brothers' tendency to appoint current and former employees of Koch companies and family insiders as directors.
Between 1998 and 2012, Pope also contributed $400,000 to the Mercatus Center, a free market-oriented think-tank whose board of directors includes Charles G. Koch. The Mercatus Center “advances knowledge about how markets work to improve people's lives,” according to the group's website.
While Pope's name is relatively unknown outside of his home state, his reputation in North Carolina is that of a GOP kingmaker and a former director at Americans for Prosperity. “From our analysis, we can't see anyone who has spent as much money or orchestrates the political machine as Pope has in North Carolina,” said Kromm, who noted that Pope has spent more than $50 million in the past decade to influence North Carolina and national politics.
Pope, until this summer, served as Budget Director for North Carolina Governor Pat McRory. “Mr. Pope served on Americans for Prosperity Foundation's board until stepping down to serve in the administration of NC Governor Pat McCrory in January, 2013,” Adam Nicholson, state communications manager at the AFP Foundation, told The Nation.
Pope found himself in the headlines last holiday season when the NAACP urged a boycott of his stores, accusing him of implementing policies that hurt the minority and low-income communities in which his stores are located. Last December, NAACP president Rev. Dr. William J. Barber wrote Pope, saying, “as the Budget Director for North Carolina and one of the architects of the extremist policies and laws adopted this year by the NC General Assembly, you have supported denial of the expansion of Medicaid to 500,000 people, cuts in unemployment benefits to 170,000 people, and many other regressive, mean-spirited policies.”
Pope responded, expressing dismay that Barber and his “allies would demand any public official to support your political positions, by threatening a business which is not part of state government,” and pointing out that “44 percent of Variety Wholesalers and Roses store employees are black.”
This defense — that personal business interests are independent from policy positions supported by business owners — is a popular trope in the Koch brothers' world. Responding to criticism from Senate Majority Leader Harry Reid (D-NV), Koch Industries executive Philip Ellender told Politico that Reid was, “waging war on private citizens.”
Perhaps the most public and outspoken participants in the Koch network are billionaire Richard DeVos, the co-founder of retailing giant Amway, and his extended family. While other big donors like Pope may enjoy the relative anonymity that contributing to the Koch-branded AFP affords, Richard DeVos and his family are well known bankrollers of the evangelical far-right's political agenda (including a 2008 initiative to block same-sex marriage in California and opposing the legality of abortion). That agenda doesn't neatly fit with the Koch brothers' pro-business views, but the family also quietly supports a number of anti-union and Koch-linked projects.
The DeVos family foundation contributed $3 million to the AFP Foundation in 2011. That contribution alone makes them the second-largest overall donor that is identifiable after Art Pope. The DeVos family foundation from 2007-2011 also contributed $800,000 to the Koch-seeded FreedomWorks Foundation, a conservative and libertarian group that promotes “less government, lower taxes and more economic freedom”; in 2012, they wrote a $500,000 “unrestricted grant” to the Mercatus Center according to the DeVos family's foundation's tax filings.
And the DeVos family, now apparently led by Richard DeVos's son, Richard DeVos Jr., bankrolled anti-union campaigns in Michigan and gave serious momentum to Republican backed anti-union “right-to-work” laws across the country, a key policy issue of AFP both in Michigan and nationwide. Michigan, the DeVos families' home state, became the 24th state to pass “right-To-Work” legislation after Gov. Rich Snyder signed the bill into law, following a full court press by AFP's Michigan chapter and DeVos-backed Republican lawmakers to pass the legislation.
As in the case of Pope, and Koch, the government and the family's golden goose, Amway, have not always seen eye to eye on regulatory matters. A 1975 Federal Trade Commission investigation accused the company of operating as an illegal pyramid scheme. Though the agency eventually rescinded the accusation,) and, according to Mother Jones's Andy Kroll, the company magazine has pushed the message that the government stands in the way of free-market enterprise, telling readers, “Entrepreneur DeVos Preaches Self-Help: GOVERNMENT MEDDLING ASSAILED.”
The DeVos family's philanthropy to anti-regulatory and pro-free market institutions could not have hurt Amway's bottom-line. Amway is currently listed as the 28th largest private company in the US by Forbes, generating $11.3 billion in sales in the last fiscal year.
This year, AFP has focused its sights on Obamacare, with one AFP website, Obamacareistooexpensive.com, claiming that 2 million jobs were “killed because of ObamaCare.” That text was part of an attack on Democrat Rick Weiland, who is running against former South Dakota governor Mike Rounds for a seat in the Senate. “We can't afford Rick Weiland's ObamaCare,” the site declared; earlier this month, Americans for Prosperity began running web advertisements attacking Weiland. For their part, the DeVos family contributed approximately $100,000 in direct campaign contributions to Rounds' campaign coffers. Rounds has raised $2.9 million for his campaign and is in favor of the Keystone XL pipeline and, as governor, signed legislation banning most medical abortions, has been the largest recipient of money from the DeVoses, who, according to FEC disclosures, appear to coordinate their political giving across a sizeable extended family, allowing them to give directly to candidates instead of relying exclusively on more tightly restricted contributions to super-PACs. “In aggregate, [the DeVos family] are quite a significant force,” Rich Robinson, Executive Director of Michigan Campaign Finance Network, told The Nation. “They're without peers as political spenders in this state,” he added.
DeVos family members, Koch family members and Koch Industries employees have also joined forces in a number of congressional races, directing significant campaign contributions to anti-regulatory candidates, including Timothy Walberg ($40,800), the incumbent in a Michigan congressional race; William Cassidy ($47,000), the incumbent in a Louisiana congressional race; Cory Gardner, the incumbent in a Colorado congressional race; and Scott Brown ($36,600), running for Senate in New Hampshire.
Richard T. Farmer, chairman emeritus of the uniform and cleaning company Cintas, is another AFP Foundation contributor ($910,000 via the Farmer Family Foundation in 2011) and invitee at the 2011 strategy session in Palm Springs.
A Republican Party heavyweight donor, Richard Farmer was the 15th largest donor to George W. Bush's 2000 presidential campaign and a supporter of Republican efforts in the upcoming November election to gain a majority in the Senate, a key strategic goal of AFP. Farmer is heavily investing in Senate Minority Leader Mitch McConnell (R-KY), contributing $25,000 to Kentuckians for Strong Leadership, a pro-McConnell super PAC. Richard and Scott Farmer both contributed $32,400 to the Republican National Committee.
Cintas's current CEO, Farmer's son Scott, also closely mirrored AFP positions when he wrote a controversial email to his 30,000 employees warning that Obama's Affordable Care Act, among other policies, could ultimately cost them their jobs.
“This uncertainty felt by many of our customers about their ability to run and grow their businesses prevents them from adding jobs which hurts our ability to grow and add jobs,” wrote Farmer, before the 2012 election. “Therefore, I ask all of you to make your voice heard in the upcoming Election on November 6th.”
Farmer has faced accusations that his anti-regulatory public policy positions and his corporate undertakings have been bad for working people in myriad ways, including to their physical safety.
Most prominently, Cintas faced accusations of dangerous working conditions in his factories, exemplified by one horrifying case in 2007 in which an employee died after falling into a dryer at a Cintas facility. (Farmer was chairman of the Cintas board at the time of the accident.) Following the death, Cintas faced a shareholder lawsuit alleging the board of directors' “conscious failure to cause the company to comply with” worker safety regulations and laws. “Cintas has consistently failed to protect its workers from the hazards of the workplace,” said the suit. In 2009, Cintas settled that lawsuit for $475,000 and agreed to improve compliance with policies and laws related to safety. That same year, Cintas paid $24 million to settle a class action suit that alleged the company illegally withheld overtime pay to drivers. Cintas admitted no wrongdoing in either case.
The DeVos, Farmer, and Pope families may have aligned business interests with the Koch brothers, but Elaine T. Marshall stands apart in being an actual insider at Koch Industries. Marshall, worth an estimated $9.1 billion, is the fourth richest woman in America and a member of the nine-person Koch Industries board.
Marshall contributed $1.55 million to the AFP Foundation, $1.5 million to the Mercatus Center, and $1.55 million to the Koch-funded Institute for Energy for Energy Research between 2008 and 2012.
Little is known about Marshall's political views so it is difficult to determine whether she is an ideological force in the Koch brothers inner circle or simply a check-writer to various Koch initiatives. She inherited the fortune accrued by her father-in-law, J. Howard Marshall II, a Texas oil industry executive whose 1950s investment in a refining business developed into Koch Industries. Elaine T. Marshall struggled to control the inheritance when Marshall's third wife, Playboy playmate Anna Nicole Smith, sought to overturn Marshall's will and trust. Smith's case was unsuccessful but offers one of the few examples of Elaine Marshall's name appearing in headlines; she rarely makes public appearances or speaks with the media.
But Marshall's relative anonymity may be the norm, rather than the exception, among the Koch brothers' political allies. As political bogeymen, Charles and David Koch are villainized as the masterminds of a vast right-wing network to undermine unions, repeal Obamacare and lower taxes on the ultra-rich. Indeed, that may all be true. But the Koch name nearly always steals the headlines, leaving billionaire families like the Marshalls, Popes, DeVoses, and Farmers relatively unnoticed by the mainstream media.
And that might be just how the Koch brothers and their allies want it. None of the donors identified in this article responded to requests for comment. AFP, for its part, won't answer questions about the roles played by individual donors. “Our Foundation provides education on a number of issues, such as parental choice and education reform generally, in order to enable more children to have an excellent education,” Nicholson told The Nation. “We appreciate the support of a number of grant-making foundations towards this end.”
This story was reported in partnership with The Investigative Fund at The Nation Institute.