Tag Archives: State Policy Network

Another batch of lies from the Koch factory

The black sheep of Vermont’s journalism family, Vermont Watchdog, took a short break from its incessant anti-renewable campaign and pooped out a single-source article alleging that Vermont is a fiscal disaster.

A new report from a government accounting watchdog group finds that Vermont has a debt of $3.9 billion, despite claims of having a balanced budget.

The Financial State of the States 2015 report, released this month by Chicago-based Truth in Accounting, debunks the myth that states balance their budgets.

Okay, first of all, any “accounting” group that doesn’t know the difference between a balanced budget and long-term indebtedness ought to be drummed out of the bean-counter fraternity. Every large entity, government or private sector, carries a certain amount of debt on its books. Routine.

So, who are these incompetent clowns at “Truth in Accounting”?

Three guesses, and the first two don’t count.

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Disclaimer over here, boss?

Recently, an opinion piece by the doughty and redoubtable John McClaughry made the rounds. It appeared in some newspaper op-ed pages, and in the Commentary column of VTDigger.

And it involved a significant, undisclosed, conflict of interest.

McClaughry’s missive was a big sloppy wet kiss on the feet of Charles Koch, one of the infamous Koch brothers. McClaughry regurgitated a few nuggets of wisdom from Koch’s recent book, Good Profit. The book is a self-serving explication of why the Koch brothers are fine, principled businessmen with a strong focus on customer service and an aversion to big gummint.

Except when they can profit from it, of course. Curiously, one Kochbit highlighted by McClaughry concerns Koch Industries’ production of ethanol, which is almost entirely a creation of government subsidy. McClaughry writes with evident approval:

… out of principle, Koch opposes the present government mandate to blend ethanol into gasoline as a political scheme that produces “bad profit.”

Which has not prevented Koch Industries from continuing to enrich itself with this alleged “bad profit.” But somehow McClaughry overlooks the evident hypocrisy and praises Koch for a principle he never acts upon.

But I digress. The point isn’t that McClaughry has blessed the world with a few hundred words of free-market rhetoric, but that his own conflict of interest was not disclosed by VTDigger.

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Ethan Allen Institute: Follow the Money

Back on March 25, the Senate Natural Resources and Energy Committee held a public hearing on S.R.7, the “climate change resolution.” The only witness who stood in opposition was Vermont’s favorite crank, John McClaughry, founder and former President (now Vice President) of the Ethan Allen Institute.

You're being watched, Mr. McClaughry.

You’re being watched, Mr. McClaughry.

During his testimony, he said S.R.7 was part of a campaign by national climate advocacy groups “to put the skeptics on the defensive” and serve as a fundraising tool. By passing this resolution, he said, the Legislature would act as a “pawn” of those national groups.

Okay, well, since he brought up the idea of a national campaign and national organizations influencing Vermont politics, resolution sponsor Sen. Brian Campion asked him about the Ethan Allen Inistitute’s ties to the Koch brothers and their national network. McClaughry acknowledged a $50,000 grant from the Cato Institute “six years ago,” and he noted Cato’s ties to the Kochs. But otherwise?

I have never been aware that we got any money from the Koch Brothers or the Koch Foundation or Koch Industries, anything like that. And I’ve never had communication from any of those people urging me to, or urging our organization to fight against the climate change advocates. Never.

He went on to deny receiving funds from the State Policy Network, an umbrella organization with strong ties to the Kochs. SPN provides guidance and funding to free-market “think tanks” in each of the 50 states.

There’s a small problem and a big problem with McClaughry’s professions of independence.

The small problem: According to IRS filings, SPN gave EAI $24,930 in 2013.

I’ve been told, second-hand, that McClaughry later wrote to Campion apologizing for his misstatement. If I find out more about that, I’ll let you know.

That kinda-sorta takes care of the small problem. But it fails to address the big problem, which is:

Between 1998 and 2013, EAI received at least $572,260 from out-of-state donors with ties to the Koch brothers’ sprawling network of right-wing foundations. This network is designed to limit public disclosure and provide tax breaks for “charitable donations” that promote the political interests of wealthy conservatives. The network is also designed to give donors plausible deniability by laundering their donations while still giving them control over how their money is used.

Over the past ten years, EAI’s annual revenues have fluctuated between $132,000 and $201,000. So $572,280 is a whole lot of money by EAI standards.

My figures come from Conservative Transparency, a database that ” tracks the flow of money among conservative donors, advocacy groups, political committees, and candidates.”

It’s likely that EAI has received even more money from national conservative organizations, but legal disclosure standards are woefully weak. From the Conservative Transparency website:

Although most nonprofit organizations are required by law to report their outgoing grants to the Internal Revenue Service, they do not have to disclose the sources of their funding. As a result, the transactions in Conservative Transparency are based on information reported by the donors and exclude “dark money” raised by the recipients from unknown donors that are not in the database. The totals in each recipient’s “financial record” are based on a review of the recipient’s publicly available tax documents filed with the IRS.

CT lists 36 donations to EAI from out-of-state conservative groups between 1998 and 2013 (the most recent year for which filings are available), totaling $572,280. A lot of that money came, indirectly, from the Kochs, their organizations, and their fellow members of this broad conservative network.

These donations came from a handful of national foundations, all with strong alliances to the Kochs and their nonprofit empire. This network is designed to provide an appearance of independence, but there’s no doubt that the Ethan Allen Institute is in the Kochs’ orbit.

Here’s a list of EAI benefactors, with dollar figures from Conservative Transparency and descriptions from Sourcewatch.org.

Donors Capital Fund: $298,500. DCF and a related entity, DonorsTrust, “create separate accounts for individual donors, and the donors then recommend disbursements from the accounts to different non-profits. They cloak the identity of the original mystery donors because the funds are then distributed in the name of DT or DCF.

“The Koch brothers and other ultra-wealthy industrial ideologues appear to be cloaking an untold amount of their donations to conservative political outlets through DT and DCF.” One of Charles Koch’s big funds has given “only to Donors Capital Fund since 2005.”

The modus operandi of DCF provides plausible deniability to EAI and other recipients; they can assert with a straight face that they don’t get money from the Kochs. But they do benefit from the largesse of a money-laundering operation created by, and generously funded by, the Kochs.

The Roe Foundation: $95,000. Private foundation started by the late Thomas Roe, former chairman of the State Policy Network, a key cog in the Koch machine. (See below.) His foundation “continues to provide financial support to free-market policy groups across the country.”

The Jaquelin Hume Foundation. $63,000. The Foundation “‘supports free-market solutions to education reform’ and funds many conservative and libertarian organizations.” It has strong ties to the American Legislative Exchange Council (ALEC) and the State Policy Network.

The Cato Institute: $50,000. A “libertarian think tank founded by Charles Koch and funded by the Koch brothers.” Over the years, “the Koch family has donated more than $30 million to the organization.”

The State Policy Network. $24,930. SPN “has franchised, funded, and fostered… a web of right-wing ‘think tanks’ in every state across the country. It is an $83 million right-wing empire as of the 2011 funding documents from SPN itself and each of its state ‘think tank’ members.” SPN had its origins in the 1980s, but dramatically stepped up its activities in 1998.

“Fueled by robust funding from right-wing funders including the Koch brothers… SPN has grown rapidly in recent years. There were 12 original think tanks when SPN was founded. In 2013, there were 64 SPN member think tanks in all 50 states.”

Although SPN insists its members are “fiercely independent,” The New Yorker’s Jane Mayer has reported that SPN head Tracie Sharp “compared the organization’s model to that of IKEA.” Like IKEA, SPN “would provide the raw materials along with the services needed to assemble the products. …’Pick what you need,’ she said, ‘and customize it for what works best for you.’

“…  Sharp ‘also acknowledged privately that the organization’s often anonymous donors frequently shape the agenda. ‘The grants are driven by donor intent’ ..  [and] often ‘the donors have a very specific idea of what they want to happen.'”

The Chase Foundation of Virginia. $24,830. “the private foundation of investor Derwood Chase.” It gave nearly $900,000 to right-wing groups in 2011 alone. Its beneficiaries have included many of SPN’s state-based organizations.

The JM Foundation. $15,000. According to its own website, it was created by Jeremiah Milbank, who “was an ardent believer in individual liberty, limited government, and free markets.” It lists its top activity as “supporting education and research that fosters market-based policy solutions, especially at state think tanks.” Like, for instance, the Ethan Allen Institute and its SPN cohorts.

That’s it. The Ethan Allen Institute may be able to deny knowingly receiving money from the Kochs, but there’s no doubt that it is significantly dependent on out-of-state “foundations” with very strong Koch ties, and with Koch dollars providing much of their lifeblood.

Last time I wrote about EAI, I mentioned a Tweet that accused me of lying about its ties to the Kochs. I expect I’ll get an apology about the time Hell freezes over.

Let’s go to the 990

Okay, so I spent part of Monday (maybe five, ten minutes all told) in a slow-motion Tweetchat with the fine folks at the Ethan Allen Institute. At one point, whoever Tweets on behalf of EAI accused me of lying about its connection with the Koch empire. And I pointed out that it wasn’t a lie, just a mistake.

Then came the following exchange:

Dunno what they mean by “solution” there, but the whole Tweet is kind of inartful. Anyway, @EAIVT asked if I had consulted its IRS Form 990, the annual filing required of nonprofit organizations.

Well, I hadn’t checked the 990 because I knew it was irrelevant to my assertion. Nonprofits aren’t required to disclose revenue sources, so nothing in EAI’s form would prove or disprove any Koch connection.

But hey, I’m open to suggestion, so I found EAI’s latest 990 — for tax year 2013 — as posted by the journalistic nonprofit ProPublica. (Where you can find the last several years’ worth, in fact.)

And as I thought, there’s no information about where the money comes from. But there are some interesting numbers to be found, and here’s a sampling.

In 2013, EAI took in $140,690 in “contributions, gifts, grants and similar amounts received,” plus another $60,000 in membership dues. Add in a bit here and there, and EAI revenue was $201,018.

Not bad, not bad. There’s no further information about the sources of that $201, 018, nothing to prove or disprove any financial dependence on the Kochs or the State Policy Network or other out-of-state corporate interests.

Unfortunately, EAI was a deficit spender in 2013. It racked up expenses of $224,290. Fortunately, it began the year with a positive balance of $43,021, so it ended the year in the black.

Yay!

On to Part III, “Statement of Program Service Accomplishments,” a.k.a. EAI’s nonprofit fig leaf. The IRS requires a list of the organization’s three primary programs. Here’s the EAI list:

— $72,200 for “Two daily radio programs on WDEV Radio Vermont.” This includes John McClaughry’s Daily Diatribe (I think that’s what they call it); and the hour-long “Common Sense Radio,” which causes massive tuneout at the end of the Mark Johnson Show every weekday at 11.

Well, now we know why the folks at WDEV put up with that drivel. They are well paid to put up with that drivel. And they get a better deal than we do; thanks to EAI’s tax-exempt status, we are all paying, indirectly, for the glories of “Common Sense Radio.”

— $44,205 for something called the Energy Education Project, which “promotes intelligent energy choices in Vermont through a daily blog, a website and educational events.” Gee, I’d never heard of this endeavor before. So I searched for “Energy Education Project Vermont,” and there it was.

However, it hasn’t been updated in a very long time. The top item on its homepage is entitled “Entergy Announces That Vermont Yankee Will Close in October 2014.” Checking the Google, I see that Entergy made that announcement in August of 2013.

Pretty sad, for EAI’s number-two Service Accomplishment.

— $47,000 for a variety of programs, not a single entry. These include the montlhly Ethan Allen Letter; a series of opinion pieces offered gratis to Vermont media outlets; “public meetings and educational seminars”; and a transparency website jointly maintained with the Public Assets Institute. Now there’s an odd couple.

On to Part IV, a list of officers and key employees. Oh boy, salary disclosure!

EAI President Rob Roper pulled down $50,000 last year, slightly under Vermont’s median income. Hey look, he’s middle class!

Vice President John McClaughry made $24,000 and his wife Anne made $18,000 as Secretary/Treasurer, plus another $5500 combined for “Health benefits, contributions to employee benefit plans, and deferred compensation.”

Bill Sayre, member of the Board of Directors, made $9600, presumably for hosting Common Sense Radio. None of the other directors (Wendy Wilton, Jack McMullen, Catherine Clark, John Cueman, Milt Eaton) was paid.

Finally, the caboose on EAI’s very short gravy train is occupied by Shayne Spence, who was paid $6000 to serve as “Outreach Coordinator.” I don’t know whether this includes the compensation he received as a Koch Summer Fellow in 2013, but that’s a thing that exists.

I’ll skip over several boring pages, which brings me to Schedule A, Part III, which lists total “Public Support” for the five preceding years. During that time, EAI took in a total of $784,910. The totals for 2009 through 2013 go:

$151,775; $155,225; $171,565; $105,345; and $201,000.

Don’t know what happened in 2012, but there you are. In addition to the “public support,” EAI has made a few hundred bucks every year from “interest, dividends” and other non-donor sources.

Well, that was fun. It did nothing to illuminate the sources of EAI’s money or to settle the question of whether it has financial ties to the State Policy Network and other Koch- and Koch-like operations, or whether its ties are purely ideological.

Too bad, as I wrote earlier: we really need more transparency in the nonprofit world. If EAI could show that it really is a home-grown organization that gets the bulk of its financing from Vermonters, that would lend it some credibility.

The hidden world of nonprofit advocacy

Okay, so today I Tweeted this:

It’s something I’ve been thinking for a long time. There are more and more “nonprofit organizations” whose official mission is “educational” or some such, but whose actual purpose is political advocacy, including activity that ought to be classified as lobbying but it’s not.

This is one reason I’m less exercised than some about the proposed cap on itemized deductions: a lot of “charitable contributions” are being spent politically. Many wealthy people set up their own nonprofit foundations for the purpose of spreading their political beliefs. The Koch Empire is the prime example of this, but there are lots of others. In Vermont, their number includes the Vermont Workers’ Center, VPIRG, Campaign for Vermont, Energize Vermont, Vermonters for a Clean Environment, Vermonters for Health Care Freedom, the Ethan Allen Institute, and the late unlamented Vermonters First.

That’s a heavy-hitting list of groups trying to influence our politics, and they range from far left to far right. Nobody’s got a patent on this. Although I will say that the quantity of money on the right is much greater than on the lieft. Although although I will say that Vermont is an exception to this rule; our nonprofits lean leftward.

Some of these groups do report direct lobbying activities, but because they are nonprofits, they are not legally obligated to report the source of their revenue. Some voluntarily report to some extent, but as far as I know, none of them provide full donor disclosure. Which would include name, town and state of residence, and amount of donation. (If any group does so, please let me know and I will amend this post.)

I say “Ive been thinking about this for a long time,” so what made me write about it today? Actually, the inspiration was a mistake I made on Twitter, in replying to a Tweet from the corporate-funded folks at “Stop the Vermont Beverage Tax.”

Which brought a quick response from, well, a ready chorus of right-wingers, but let’s stick with the Ethan Allen Institute, Tweeting as @EAIVT:

They’re right. At least they’re partly right. “SPN” is the State Policy Network, which is part of the Koch nonprofit empire. I didn’t lie, though; I mistakenly believed that EAI is Koch-funded. I picked this up from the Center for Media and Democracy’s “Sourcewatch,” which describes SPN thusly:

The State Policy Network (SPN) has franchised, funded, and fostered a growing number of “mini Heritage Foundations” at the state level since the early 1990s.[1] SPN is a web of right-wing “think tanks” in every state across the country. It is an $83 million right-wing empire as of the 2011 funding documents from SPN itself and each of its state “think tank” members.

Sourcewatch lists the Ethan Allen Institute as the SPN’s Vermont affiliate. There’s where I made my leap of faith. I’ll take EAI’s word for it that they don’t get money from SPN or the Kochs; too bad for them, since a lot of their fellow SPNers are ridin’ that gravy train.

Still, for EAI to pay for the privilege of SPN affilliation… it’s not correct to call them “Koch-funded,” but they’re definitely “Koch-friendly.”

I will freely admit that I sometimes shoot from the hip, as I did in this case. I try to own up when I’m wrong; this isn’t the first time and I’m sure it won’t be the last. But I could have avoided my mistake if we had better disclosure laws; I could have gone to the source instead of poking around for indirect scraps of information.

But the real point isn’t a matter of my convenience. It’s openness and transparency in our politics.

Organized political parties (and the Democrats, haha) will tell you that campaign finance laws are stacked against them. It’s better in a number of ways for donors to go through their own organizations than through parties: there are effectlvely no limits and few disclosure requirements, and they retain control over how their money is spent. That’s why the Kochs and Sheldon Adelson and Foster Friess and all those people don’t give much money to the Republican Party; they funnel their wealth through their own organizations. And when those groups are nonprofits, We, the Taxpayers, are underwriting their political activities. Nice work if you can get it.

The point is, in this modern world of political nonprofits, we need better disclosure rules. We need to know who’s spending money for what political purpose, whether they’re going through the Ethan Allen Institute or the Vermont Workers’ Center.