David Koch Seeded Major Tea-Party Group, Private Donor List Reveals

Exclusive tax documents confirm the conservative billionaire provided start-up funds for Americans for Prosperity.

David Koch, executive vice president of Koch Industries, attends a meeting of the Economic Club of New York, Monday, April 11, 2011. 
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Alex Seitz Wald
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Alex Seitz-Wald
Sept. 24, 2013, 7:41 a.m.

Tax doc­u­ments ob­tained ex­clus­ively by Na­tion­al Journ­al con­firm that con­ser­vat­ive bil­lion­aire Dav­id Koch, along with a hand­ful of ma­jor cor­por­a­tions, provided the seed money a dec­ade ago to start the found­a­tion be­hind Amer­ic­ans for Prosper­ity, a con­ser­vat­ive group that played a key role in help­ing to or­gan­ize the tea-party move­ment in­to a po­tent polit­ic­al force.

Koch’s re­la­tion­ship with the group is no secret — he’s the chair­man of the board of the Amer­ic­ans for Prosper­ity Found­a­tion — but he down­plays his in­volve­ment in a way that crit­ics charge is disin­genu­ous. An of­fi­cial Koch web­site states that AFP is merely “among the hun­dreds of or­gan­iz­a­tions that have re­ceived mon­et­ary sup­port” from Dav­id Koch, his broth­er Charles, or the com­pany they own, Koch In­dus­tries. “AFP and AFP Found­a­tion op­er­ate in­de­pend­ently of Koch In­dus­tries. We are not in­volved in their day-to-day op­er­a­tions and we do not dir­ect the activ­it­ies of either or­gan­iz­a­tion,” the com­pany’s web­site con­tin­ues.

But a donor list filed with the IRS labeled “not open for pub­lic in­spec­tion” from 2003, the year of AFP’s first fil­ing, lists Dav­id Koch as by far the single largest con­trib­ut­or to its found­a­tion, donat­ing $850,000. And an earli­er doc­u­ment also ob­tained ex­clus­ively by Na­tion­al Journ­al lists mil­lions more in fin­an­cial con­tri­bu­tions from the con­ser­vat­ive in­dus­tri­al­ist to AFP’s pre­de­cessor.

Fol­low­ing Koch on the AFP Found­a­tion donor list are a num­ber of cor­por­a­tions, in­clud­ing State Farm, which gave $275,000, 1-800-Con­tacts, which donated $80,000, and John­son & John­son and Shaw In­dus­tries, which each gave $50,000. Shaw, a car­pet and floor­ing man­u­fac­turer, is a wholly owned sub­si­di­ary of Berkshire Hath­away, the com­pany con­trolled (iron­ic­ally) by pro-Obama bil­lion­aire War­ren Buf­fett. Also lis­ted are a num­ber of well-known and deep-pock­eted con­ser­vat­ive found­a­tions, in­clud­ing the Pennsylvania-based Sarah Scaife Found­a­tion and the North Car­o­lina-based John Wil­li­am Pope Found­a­tion.

The doc­u­ment, a Form 990 Sched­ule B, is es­sen­tially list of the largest con­trib­ut­ors to a non­profit or­gan­iz­a­tion, filed an­nu­ally with the IRS. It’s meant to be kept private, with only re­dac­ted ver­sions re­leased to the pub­lic, but a source re­trieved the AFP Found­a­tion Sched­ule B from a pub­licly ac­cess­ible state at­tor­ney gen­er­al’s web­site, where it had been ap­par­ently up­loaded in er­ror, as has been known to oc­cur on oc­ca­sion. AFP, a 501(c)(4) group, and its found­a­tion, a 501(c)(3), are leg­ally sep­ar­ate, but they op­er­ate func­tion­ally as two parts of the same or­gan­iz­a­tion, in an ar­range­ment com­mon among polit­ic­al non­profit or­gan­iz­a­tions.

AFP was star­ted in 2004 after it split “due to philo­soph­ic­al dif­fer­ences” from a pre­de­cessor called Cit­izens for a Sound Eco­nomy, which also spun off Freedom­Works, one of the groups cur­rently lead­ing the charge against Obama­care. A sep­ar­ate pre­vi­ously un­re­por­ted Sched­ule B from Cit­izens for a Sound Eco­nomy Edu­ca­tion­al Fund lists a num­ber of big cor­por­ate and found­a­tion dona­tions, but re­cords Dav­id Koch as the largest fun­der.

That doc­u­ment, from 2001, states that the Dav­id H. Koch Char­it­able Found­a­tion provided the single largest con­tri­bu­tion, $2.35 mil­lion, while Dav­id Koch per­son­ally donated $1 mil­lion, and Koch In­dus­tries chipped in an­oth­er $952,500, for a total of more than $4 mil­lion.

Cor­por­ate dona­tions in­clude $750,000 from Gen­er­al Elec­tric, $275,250 from Ex­xon Mo­bil, $255,000 from State Farm, $100,000 from Philips Light­ing, and $350,036 from the law firm Wilmer, Cul­ter, & Pick­er­ing, now known as Wilmer­Hale. There are also nu­mer­ous found­a­tion grants, in­clud­ing a $450,000 con­tri­bu­tion from the Charles G. Koch Char­it­able Found­a­tion.

State Farm, the only com­pany lis­ted on both firms, has a his­tory of ag­grav­at­ing lib­er­als, from its re­fus­al to pur­chase ad­vert­ising on the now-de­funct pro­gress­ive talk-ra­dio net­work Air Amer­ica, to its sup­port for the Amer­ic­an Le­gis­lat­ive Ex­change Coun­cil. But in the years since its $275,000 dona­tion to AFP, a spokes­per­son said, the in­sur­ance com­pany has giv­en only an ad­di­tion­al $3,500 to Amer­ic­ans for Prosper­ity. “We sup­port a vari­ety of groups across the polit­ic­al spec­trum in the in­terest of en­cour­aging thor­ough dis­cus­sion of is­sues of con­cern,” State Farm’s Anna Bry­ant said. The oth­er com­pan­ies did not re­spond to or de­clined re­quests for up­dated con­tri­bu­tion in­form­a­tion.

AFP spokes­per­son Levi Rus­sell re­viewed the donor list and said his group doesn’t main­tain re­cords on site from that far back, but said the Sched­ule B is most likely au­then­t­ic, giv­en its proven­ance. He con­firmed that since the or­gan­iz­a­tion was foun­ded in 2004, the first tax fil­ing would have been for 2003.

Lisa Graves, the ex­ec­ut­ive dir­ect­or of the Cen­ter for Me­dia and Demo­cracy, a pro­gress­ive watch­dog group and long­time Koch ant­ag­on­ist that has re­leased nu­mer­ous leaked doc­u­ments from con­ser­vat­ive groups, but was not the source on these doc­u­ments, said the donor lists of­fer some new clues about the Koch Broth­ers’ shad­owy donor net­work.

“To my know­ledge, a Sched­ule B from AFP or CSE has nev­er been made pub­lic,” she said. Cam­paign fin­ance re­port­ers and watch­dog groups closely track grants made by non­profit groups, but con­tri­bu­tions dir­ectly from in­di­vidu­als or private com­pan­ies like Koch In­dus­tries are kept private — “It’s all off-book, ba­sic­ally,” Graves said — so cur­rent es­tim­ates likely vastly un­der­count con­tri­bu­tions. The new doc­u­ments, she said, “re­veal that there’s a high like­li­hood of lots of Koch fund­ing that hasn’t been re­por­ted.”

In­deed, just this month we learned that the Koch broth­ers cre­ated a group that quietly spent over $250 mil­lion dur­ing the 2012 elec­tion with zero pub­lic no­tice, thanks to a fairly nov­el use of a tax des­ig­na­tion nor­mally re­served for cham­bers of com­merce and trade as­so­ci­ations. That group, Free­dom Part­ners, con­trib­uted $32.3 mil­lion to Amer­ic­ans for Prosper­ity.

Un­for­tu­nately, it’s im­possible to know how much more money is float­ing around out there un­til someone else hits the wrong but­ton and ac­ci­dent­ally up­loads an oth­er­wise hid­den doc­u­ment to a pub­lic data­base. It says a lot about the cur­rent cam­paign fin­ance dis­clos­ure re­gime that we must rely on cler­ic­al er­rors for a glimpse at how mil­lions of dol­lars are spent to in­flu­ence the polit­ic­al sys­tem.

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