Out of Darkness, Cash: Pop! Goes the Protest

Out of Darkness, Cash
A Consultancy Hides “Dark Money” | Pop! Goes the Protest | Sixteen Thirty in Action

Summary: With key conservative victories in the Supreme Court have come a host of new left-wing activist groups. But while most of these groups try to pass themselves off as independent organizations, many in the mainstream media fail to look behind the curtain at the professional paid activists who specialize in fake grassroots activism. Meet the Sixteen Thirty Fund, the “dark money” mega-funder behind dozens of “pop-up” protest campaigns propping up Obamacare, backing government control of the Internet, and attacking Trump’s judicial nominees.

Pulling Strings

But funding is only half the picture, and the Sixteen Thirty Fund’s real value to the Left is in its fiscal sponsorship services. At a glance, these campaigns are spontaneous or “grassroots” groups of concerned citizens rallying together to protest the policies of the Trump administration and the Republican Party. But a closer inspection reveals these groups for what they really are: facades meant to disguise the cabal of wealthy and influential special interests quietly pulling the strings.

“Fiscal sponsorship” is less arcane than it sounds. Why would an organization or campaign want to use a fiscal sponsor? Take it from Chris Hobbs, managing director for the Fund:

Fiscal sponsors facilitate collaboration by providing an immediate, yet reputable and established, vehicle for different constituencies . . . provid[ing] infrastructure and expertise including financial management, compliance, disbursement of funds, grants management, reporting, and human resources.

In other words, organizations like the Sixteen Thirty Fund—an IRS-compliant and tax-exempt nonprofit in operation for a decade—are a way for donors to launch a new nonprofit entity while waiting to obtain IRS tax exemption, a process that can take months or even years to complete. In exchange, the sponsoring nonprofit is paid a fee for administering the startup group. Most of these fiscally sponsored projects eventually spin off as independent nonprofits once they receive their much-coveted “IRS determination” letter.

There’s nothing necessarily nefarious about fiscal sponsorship in and of itself, and groups that perform this service for donors and foundations are often called “incubators.” As the National Network of Fiscal Sponsors puts it, the process “has evolved as an effective and efficient mode of starting new nonprofits, seeding social movements, and delivering public services.” A number of conservative charities provide such services, such as DonorsTrust, which advertises the handful of liberty-minded nonprofits it’s helped to grow.

But the Sixteen Thirty Fund offers a unique take on fiscal sponsorship: creating websites designed to fool the casual viewer into thinking they’re standalone activist groups.

Unlike DonorsTrust—or even the left-wing Tides Foundation, which was founded in the 1970s to incubate new activist groups—the groups that Sixteen Thirty Fund sponsors are arguably never intended to become standalone nonprofits. Instead, Sixteen Thirty specializes in “pop-up” groups featuring a slick website and a targeted appeal designed to make the most of the latest policy scandal: reject hate! stop Brett Kavanaugh! don’t take my Obamacare!

These “pop-up” groups further act as a veil hiding the Fund’s involvement in each supposedly “grassroots” group. That’s certainly the case with the 45 groups that CRC has identified as fiscally sponsored by the Fund, 44 of which don’t appear to be IRS-registered nonprofits as of early 2019.

These “pop-up” groups are perhaps best described as Potemkin projects—like the eponymous phony mobile villages built for Russian Empress Catherine II to make her 1787 trip to the Crimea feel like home. Sixteen Thirty Fund’s projects pop up out of nowhere then vanish almost as quickly as they appeared.

So the Sixteen Thirty Fund—along with its three 501(c)(3) sister groups New Venture Fund, Hopewell Fund, and Windward Fund—serve as “mercenary” nonprofits for Eric Kessler and Arabella Advisors, creating “pop-ups” tailed to specific left-wing causes. They’re so closely connected that all four Funds share Arabella’s address on Connecticut Avenue in Washington, D.C.

All that wealth has proved highly profitable to Arabella Advisors. The Sixteen Thirty Fund paid the company nearly $1.6 million between 2009 and 2016 to oversee its operations—$790,000 of which it paid out just in 2016. The Fund also paid $435,000 to the Democratic consultancy Precision Strategies and another $400,000 in consulting fees to the Democracy Alliance—a complex network created by high-ranking Democratic influencers like George Soros to coordinate funding to hand-picked campaigns and causes.

Between 2009 and 2016, the even larger New Venture Fund paid Arabella a whopping $50.5 million—nearly 49 percent of the $112.7 million it paid in total contractor fees in that period.

Each of four Arabella-run Funds plays a slightly different role. The New Venture Fund, for instance, provides millions of dollars each year to a vast range of left-wing nonprofit groups such as the Sierra Club Foundation and Center for American Progress as well as fiscal sponsorship services akin to those of Sixteen Thirty Fund. The Windward Fund receives huge grants from the Walton, Rockefeller, and Kellogg Foundations to fund climate change “education” initiatives. And the Hopewell Fund, launched in 2015 with an $8.4 million grant from the Susan Thompson Buffett Foundation, runs groups like Equity Forward, which attacks the Department of Health and Human Services under the Trump administration for overturning Obamacare provisions that “compel religious dissenters to pay for birth control and abortifacient drugs,” according to CRC’s Michael Watson.

Taken as a bloc, Arabella Advisors’ four Funds represent a major part of the Left’s political infrastructure. Altogether they raked in a staggering $417 million in 2016, according to their latest tax filings. Were they combined into a single organization, the Funds would be the 29th-wealthiest public charity in the United States, according to Forbes’ 2016 figures, earning more than the Planned Parenthood Federation of America, American Civil Liberties Union Foundation, and the Clinton Foundation.

The boards managing each of these nonprofits reflect this tightknit relationship. Sixteen Thirty Fund’s board, for example, consists of Kessler, Arabella Advisors chief financial officer Wilbur Priester, and Andrew Schulz, the firm’s general counsel. Its remaining two board members further tie the Fund to the Democratic Party: Douglass Hattaway, spokesman for Hillary Clinton’s 2016 presidential campaign, and Michael Madnik, a senior adviser to the Albright Stonebridge Group, a consultancy co-founded by former Clinton administration Secretary of State Madeleine Albright.

In the final installment of Out of Darkness, Cash, see some of the Sixteen Thirty Fund’s handiwork in action.