Left-Wing Billionaires Turn to For-Profit Corporations for Giving
Move allows them to avoid disclosures associated with non-profit organizations
Liberal billionaire donors are exploiting a new way of funneling millions of dollars to left-wing political groups.
In 2015, Facebook founder and Democratic donor Mark Zuckerberg set up a limited liability corporation and moved millions of untraceable dollars to leftist groups. Under the LLC format, he may legally spend unlimited sums in support of Democratic politicians, lobbying groups pushing for radical policies, and far-left activists who advocate for “reforms” that hurt election integrity.
This marks a radical departure from most megadonors’ use of tax-exempt nonprofits to fund political groups by side-stepping the IRS disclosure requirements and the ban on election intervention faced by foundations.
The benefit to Zuckerberg is clear: maximize political spending and minimize public scrutiny, in exchange for forgoing a foundation’s tax exemption. And other ultra-liberal billionaires are following suit, a trend that’s created a black hole for watchdog groups.
Zuckerberg’s LLC, the Chan Zuckerberg Initiative (CZI), is on track to become one of the largest left-wing funders in America, with Zuckerberg and his wife, Priscilla Chan, vowing to donate 99 percent of their stock in Facebook (worth $45 billion in 2015).
CZI has already routed tens of millions of dollars into voter registration nonprofits and ballot initiatives focused on shifting low-income housing policy in California and other states. FWD.us, a group Zuckerberg founded in 2013 to lobby for “criminal justice reform and immigration” policies, has received at least $62 million from CZI since 2018.
CZI has also funneled millions of dollars to immigration advocacy groups including over $1 million to the National Immigration Forum, $550,000 to the Immigrant Legal Resource Center, $200,000 to the American Immigration Council, and $150,000 to the Black Alliance for Just Immigration.
Other ultraliberal donors such as eBay founder Pierre Omidyar and Laurene Powell Jobs, widow of the late tech mogul Steve Jobs, have also adopted the donation model.
According to OpenSecrets, the Omidyar Network spent $451,000 in 2016 in independent expenditures and over $18,000 for Democrats in 2020. It also spent at least $60,000 lobbying Congress last year to introduce paid sick leave and other policies. Omidyar Network employees such as Chris Jurgens, director of the group’s “Reimagining Capitalism” team, also spent heavily in favor of Democrats in the 2019-2020 election cycle.
Although the Omidyar Network lists financial statements on its website, its grant recipients can’t be verified because the LLC doesn’t file Form 990 records with the IRS. But its foundation “sister,” the Omidyar Network Fund, spent over $93 million in 2018 on major pass-through groups that funnel money to liberal activists: NEO Philanthropy, the Tides Center, and the New Venture Fund, part of a $715 million “dark money” network that sponsors “pop-up” activist groups.
Almost all of the foundation’s funds came from Omidyar, a regular donor to the Democratic Party. Omidyar has gifted hundreds of thousands of dollars to left-wing and Democratic-aligned PACs, according to FEC filings, including $200,000 in 2016 to the anti-Trump group Not Who We Are PAC.
Meanwhile, the Palo Alto-based LLC Emerson Collective is on track to spend Laurene Powell Jobs’s entire $28 billion fortune during her lifetime. The organization is so secretive it earned Jobs the dubious title of America’s “least transparent mega-giver” in 2019 from Inside Philanthropy.
In 2016, the Emerson Collective—largely staffed by former officials from the Obama administration—donated $2.5 million to Priorities USA Action, a super PAC associated with Hillary Clinton’s 2016 presidential campaign.
The group has lobbied for a path to citizenship for illegal immigrants and former president Barack Obama’s Deferred Action for Childhood Arrivals program. It also supports “social justice” and voter registration groups targeting Democratic-leaning constituencies.
Emerson Collective and CZI did not respond to requests for comment. The Omidyar Network declined to comment on the ethics of its funding of political groups using an LLC instead of a nonprofit.
The Supreme Court upheld the right of corporations to spend unlimited sums on independent expenditures for political causes under the First Amendment in the 2010 case Citizens United v. FEC. As such, LLCs may take advantage of the right to anonymously support political candidates of their choice via super PACS, while foundations are barred from intervening in elections. Their rapid growth in recent years suggests more major donors on the left could make the jump from foundations to LLCs, viewing the loss of tax exemption as the cost of doing business.
Conservative donors have been slow to adopt the new method of giving through LLCs. If they lag behind this continuing trend—and mega-donors such as Tom Steyer and George Soros make the leap—right-leaning groups could soon find themselves outspent and outgunned by campaign finance restrictions their left-wing counterparts no longer face.
This article first appeared in the Washington Free Beacon on January 12, 2021.