Nonprofits Exist in a Culture of Co-Optation

My last post provoked a heated response from a reader who argued that 501(c)(4)s don't necessarily accept huge donations from billionaires just because they can.

That is of course true, but it's also true that since such organizations are under no legal obligation to disclose the donations they receive, the only way for ordinary people to know how much of their funding comes from special interest groups is through voluntary disclosures.

Unsurprisingly, however, even 501(c)(4)s that claim to be dedicated to transparency are reluctant to disclose that data. OurRevolution became a notorious example of this problem when eight of fifteen staffers resigned en masse because "the group can draw from the pool of 'dark money' that [Bernie] Sanders condemned for lacking transparency."

Jeff Weaver defended the 501(c)(4) structure of OurRevolution on the basis of the organization's intention to campaign for specific political candidates who seemed sympathetic to Sanders' agenda.

Within the perverse taxonomy of 501(c) organizations, Weaver's explanation makes sense. Ordinary charities tend to organize as 501(c)(3)s--but are prohibited from attempting to influence election outcomes. Unions can organize as 501(c)(5)s and pursue certain political objectives, but they face stringent membership requirements that a nationwide political nonprofit could not satisfy. In Weaver's defense, a nonprofit that intends to support (or oppose) specific political candidates is in many ways compelled to organize as a 501(c)(4) or a 501(c)(6). As Lee Fang explains:

Like 501(c)(4) issue advocacy organizations, 501(c)(6) trade groups may take unlimited donations and engage in unrestricted partisan or election activity. Trade groups are often formed industry associations or politician coalitions of like-minded businesses. One of the largest of the new Koch groups, called Freedom Partners, is a 501(c)(6) trade association.

If Weaver had intended to receive support from Chambers of Commerce, then OurRevolution would be a 501(c)(6). Instead, he intends to recruit impassioned Berners, so OurRevolution is a 501(c)(4). These are essentially his choices if he wants to run a politically partisan nonprofit--and either way he can take unlimited money from undisclosed donors. That's simply one of the corrupt rules governing nonprofit organizations in the U.S.

In other words, our 501(c)s are set up such that a nonprofit that seeks to be politically active will be vulnerable to the influence of dark money as an organizational principle. This doesn't mean that every 501(c)(4) is influenced by dark money, but it does mean that every 501(c)(4) can legally accept as much money as it wants from an undisclosed source without having to tell anyone about the donation.

Of course, organizations can always choose to be transparent about the sources of their funding even if the law doesn't require them to do so. But Weaver has been talking about voluntary disclosures from OurRevolution since September without volunteering any information. Had he been serious about clearing this transparency hurdle from the outset, he would presumably have found a way to clear it before his staff mutinied. Instead, as the LA Times reports, the board of OurRevolution continues to talk about half-measures of transparency:

Responding to earlier controversy over the group being founded as a 501(c)(4) nonprofit, which critics said ran counter to Sanders’ opposition against allowing unlimited money in politics, its board has promised to disclose all donors giving more than $250. It also plans to create a political action committee that would allow more direct coordination with down-ticket candidates.

So if your neighbor Brenda Gates scrapes together $300 to send to OurRevolution, the board can satisfy this promise by listing her alphabetically right after Bill Gates, who might have given $300,000--without indicating any disparity between the donations. By doing so, the 501(c)(4) would indeed be going above and beyond what the law requires. But such a gesture would fall well short of transparency.

Since I don't mean to pick on OurRevolution or any other 501(c)(4), allow me to illustrate the vulnerability of all 501(c)(4)s to dark money by focusing on a hypothetical organization dedicated to combating the problem of predatory lenders. Let's call it the People's Bank.

The People's Bank decides to establish itself as a 501(c)(4) not because it expects to receive a huge infusion of dark money, but because it intends to become involved in partisan politics. The People's Bank opposes Debbie Wasserman-Schultz, a longtime cheerleader for the predatory lending industry. One mission of the People's Bank is to get Tim Canova elected in a 2018 rematch against Wasserman-Schultz.

But that's only a minor part of the agenda of the People's Bank. It's primarily focused on opening small offices in economically distressed communities throughout the country to provide low-interest loans to people who have spent their entire lives at the mercy of the local Payday Loan branch.

Small donations from concerned and compassionate citizens allow the People's Bank to open offices in three major cities. Since the people who receive these loans have never borrowed money at anything less than usurious rates, far more of them are able to pay back their loans ahead of schedule than anyone anticipated.

With this new infusion of cash, the People's Bank decides to open offices in a dozen more cities.

This is bad news for the predatory lending industry, so it acts quickly--before the new offices can be opened.

The People's Bank suddenly receives an offer of $2 million from a donor who claims to be very supportive of everything the 501(c)(4) has been doing--but the donor has an idea concerning even more important work the People's Bank can do by educating consumers about how to manage their money more effectively.

To be clear, there is roughly a zero percent chance that this donor will approach the folks in charge of the People's Bank by saying, "I would like to bribe you into abandoning your current mission because it threatens the industry I represent."

Instead, he will praise them before acquainting them with the research of a think tank secretly sponsored by predatory lenders. The research will make a strong (but bogus) case that the lending centers already established by the People's Bank would do more good for people by offering free tutorials on how to balance their checkbooks and file their taxes than by actually lending them money at low interest rates.

The CFO and CEO of the People's Bank will be deeply skeptical of this information, of course. But they will also be thinking about the $2 million donation and how much good they can achieve with it. Let's say that at this point in their development, they've never received a single donation of more than $10,000. The People's Bank has struggled financially since its inception. The CEO and CFO haven't even been reimbursed for the mileage they put on their cars or the hotel stays they covered at their own expense to meet with various legislators and functionaries. They've stretched themselves to the limit just to achieve what little success they've enjoyed thus far. And this posh donor is now talking about setting up a foundation from which they will both draw an annual salary--as long as they focus less on lending money and more on educating people about checkbook management.

Might that have any influence on the way they scrutinize the data from the bogus think tank? Is it possible that the posh donor could wine and dine them, over the course of months, into giving his proposal ever more serious consideration?

The obvious answer is that different people would react in different ways, and there's no way we can know how the CEO and CFO of the People's Bank would respond in this scenario.

But what we do know is that everything about this negotiation with the donor could happen under the veil of secrecy in a 501(c)(4). If the folks in charge of the People's Bank suddenly decide to focus on education instead of low-interest loans, there's no way for their supporters to know that a huge donation influenced that decision.

That's a problem.

It's not the kind of problem that will taint every single 501(c)(4), but it's a vulnerability that is woven into the DNA of any dark money-eligible nonprofit. In Fang's estimation, "most 501(c)(4) nonprofits are community groups that have little resources and exist to promote genuine nonpartisan advocacy," so there's no reason to assume that every 501(c)(4) is bankrolled by a billionaire. However, there is good reason to suppose that every 501(c)(4) that threatens the bottom line of a particular interest will receive money from that interest group that comes with strings attached. The money won't be disclosed. The strings won't be discussed. But the influence will have an impact. Otherwise how did an environmental advocacy group such as the Sierra Club (currently a 501(c)(4)--with "The Sierra Club Foundation" serving as its 501(c)(3) affiliate) end up supporting the earthquake-inducing and water-poisoning practice of fracking through 2012?

You can object (as Hillary Clinton supporters were fond of objecting) that the appearance of corruption isn't evidence of corruption.

For the sake of argument, let's grant that contention.

So what's your explanation for the fact that the current state of nonprofit-based activism in the US has failed to combat climate change, failed to prevent police brutality, failed to prevent the overturning of a key component of the Voting Rights Act, failed to achieve any semblance of transparency in our elections, failed to prevent our armed forces from invading any of the countries that General Wesley Clark warned us we were going to invade, and failed to provide clean water in Flint and other communities?

If activism in the US doesn't exist in a culture that steers activists towards systematic co-optation by the moneyed interests that benefit from pollution, war profiteering, and the repression of communities of color, then what's your explanation for all these failures?

Is it that concerned citizens need to do a better job of supporting dark money-eligible nonprofits?

Seriously? 

When the Message Is Controlled Despite the Messenger

If you're convinced it's possible to win populist concessions with billionaire money, this post will be as much a waste of your time as all of your activism on behalf of 501(c)(4) organizations has been and will continue to be.

Overt brainwashing is done through advertising campaigns and distracting slogans. Covert brainwashing involves purchasing silence from some critics and co-opting the messages of others. We've all seen movies that depict these transactions as direct negotiations between the person who wants to expose corruption (e.g. Frank Serpico) and the people who want to keep the corruption concealed (e.g. the NYPD). Invariably, the reporter/private investigator/district attorney faces a moral crisis when s/he is bribed/threatened/blackmailed by the amoral powers that be. One purpose of such films is to give the audience faith in the integrity of individual human beings (from Jimmy Stewart's Mr. Smith to Julia Roberts' Erin Brockovich) who refuse to be persuaded/bullied/frustrated into silence.

But sometimes the integrity and dedication of the truth teller simply doesn't matter, as in the case of Phil Donahue.

In the run-up to the 2003 invasion of Iraq, Donahue was one of few media pundits who tried to explain why the pending war was unjustifiable. He was right, and he had the integrity to stick to his position. But that didn't matter because the network that aired his show (MSNBC) belonged to the RCA holding company, which was owned by General Electric, which stood to profit immensely from the war in Iraq and therefore wanted conflict regardless of whether Saddam Hussein posed a threat to US security.

When it was time for MSNBC to start pushing the pro-war propaganda GE wanted, memos drifted down from GE to RCA to MSNBC. As Jeffrey St. Clair explains:

Nothing sums up this unctuous approach more brazenly than MSNBC’s firing of liberal talk show host Phil Donahue on the eve of the war. The network replaced the Donahue Show with a running segment called Countdown: Iraq, featuring the usual nightly coterie of retired generals, security flacks, and other cheerleaders for invasion. The network’s executives blamed the cancellation on sagging ratings. In fact, during its run Donahue’s show attracted more viewers than any other program on the network. The real reason for the pre-emptive strike on Donahue was spelled out in an internal memo from anxious executives at NBC. Donahue, the memo said, offered “a difficult face for NBC in a time of war. He seems to delight in presenting guests who are anti-war, anti-Bush and skeptical of the administration’s motives.”

The memo warned that Donahue’s show risked tarring MSNBC as an unpatriotic network, “a home for liberal anti-war agenda at the same time that our competitors are waving the flag at every opportunity.” So, with scarcely a second thought, the honchos at MSNBC gave Donahue the boot and hoisted the battle flag.

If Donahue's story can't affirm our faith in individual integrity, it's because the silence GE executives imposed on him was never his to sell. The war profiteers never had to offer him a briefcase full or cash or threaten to break his legs. Instead, they muted him by high-jacking the network upon which he relied for dissemination of his anti-war message.

If we learn nothing else from "The Day the News Died" (as Chris Hedges refers to Donahue's firing), it should be that in our mass media culture, individual integrity isn't enough to shield us from the depredations of corrupt, concentrated wealth.

Remaining committed to one's principles may be morally laudable, but it is often logistically meaningless. Certainly Donahue's resolute opposition to the war made no difference in the outcome for Iraqi citizens or GE shareholders.

Strangely, even those who are willing to accept this critique of the corruption inherent in the capitalist marketplace are often reluctant to see how it applies to non-profit 501(c)(4)s. "How is the lesson of Donahue in the for-profit world of television," such readers may wonder, "applicable to outfits such as OurRevolution or MPACT?"

For many of us, the integrity of people like Bernie Sanders and Nina Turner is something that we must be willing to count on in order to get anywhere. Such people are like Serpico--putting their necks on the line to make the world better for all of us. We have to trust them to do what's right--and if that means letting them accept dark money from billionaires in order to advance the agendas to which they are committed, then we just need to trust that their hearts are in the right place.

But how much carbon has been kept out of the atmosphere because 350.org activists have their hearts in the right place? How many black lives have been protected from police brutality because the hearts of Black Lives Matter activists are in the right place? How many casualties have been prevented because Code Pink activists have their hearts in the right place?

Let's say that in all three cases, the integrity of those involved is 100% beyond reproach.

What has that integrity achieved? And isn't it reasonable to suspect that it hasn't achieved more because the NGO/non-profit culture in which these organizations exist is funded and shaped by the very donors who profit from corruption?

It's reasonable to suspect that PBS doesn't cover climate change more aggressively because the Koch family contributes to PBS funding. And it's equally reasonable to suppose that when Soros family hedge funds will profit from the disruption of certain economies through war, particular purse strings for Code Pink get cut.

Sanders lovers are the first to laugh at the idea that billionaires donate to the Clinton Foundation out of the goodness of their hearts, but Jeff Weaver expects us to believe that it's important for OurRevolution to accept money on precisely that premise.

This post isn't meant to suggest that the fecklessness of activist culture in America is specifically attributable to 501(c)(4)s, but such non-profits are particularly vulnerable to corruption because they are set up in such a way as to conceal donors and donations from public scrutiny. Weaver was so heavily criticized for making OurRevolution a 501(c)(4) that in September he promised to formulate "a disclosure policy so that we disclose larger contributions that we receive" even though such disclosures aren't required by law. In December, the organization "promised to disclose all donors giving more than $250," but no disclosures have been made to date. Worse yet, it's not even clear how useful such information would be, since OurRevolution could honor this promise by releasing a list of names without distinguishing between Donor A (who gave $300) and Donor B (who gave $300 million).

Most Sanders supporters trust his team so much that they're willing to let Weaver and Turner and others associated with OurRevolution raise and spend money in whatever ways they deem most effective.

But trusting in the OurRevolution team to do the right thing with dark money is like trusting Donahue to use his show to prevent the invasion of Iraq. The big money in charge of MSNBC always had control of Donahue's platform. And the big money funders of OurRevolution will always have control over that outfit's ability to realize its agenda.

It doesn't matter how much integrity Weaver and Turner have if someone else is in charge of whether they can rent meeting spaces or buy airline tickets for staffers to coordinate activities. And in dark money organizations, it's impossible for supporters to know who's in charge of the purse strings (even if we get some lame list of everyone who donated over $250).

This is why I urge Turner to distance herself from organizations such as OurRevolution and MPACT and focus on grassroots groups that are completely transparent about their fundraising procedures.

I understand that in economically distressed times (such as ours), it seems suicidal for political figures to cut themselves off from billionaire angel investors.

But the times are so economically distressed precisely because those billionaires almost invariably prove to be devils in disguise. If your 501(c)(4) is opposed to big pharma and big oil and Wall Street, then it could be almost entirely dependent on big pharma and big oil and Wall Street for funding--without anyone in the general public having a clue about it.

To understand how bonkers that is, answer this question honestly: Would you trust Jordan Chariton's coverage of Energy Transfer Partners if Chariton's expenses were covered by a 501(c)(4) funded by Kelcy Warren? Does your faith in Chariton's integrity make you think such an arrangement would have no effect on his coverage? If not, then why is your faith in Sanders and Turner so strong that they get "integrity exemptions" for associating with non-profits whose doors remain open to precisely such arrangements?

We, the grassroots, need to form something like a non-party-based citizen's union with monthly dues--an organization in which everyone agrees to chip in the same amount on a regular basis so that operatives know they will be able to cover their expenses without having to worry about stepping on the toes of bigwig donors.

Even if Turner couldn't raise as much money through such an organization as she might through a dark money outfit like OurRevolution, the enthusiasm and volunteer support that she could count on would make it much more nimble and dare I say impactful than she could ever hope for OurRevolution and MPACT to be.

The failure of the Democratic Party to understand how and why it failed voters may be the most disappointing phenomenon of 2016.

But the second-most disappointing phenomenon is the failure of luminaries such as Turner and Weaver to recognize that people-powered movements (such as the Reddit-based phonebanking done by volunteers on behalf of the Sanders campaign) are more important assets for politicians than billionaire cash. Until that lesson sinks in, professional progressive operatives appear doomed to continue servicing the donor class instead of the voters they purport to care about.