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