What the Koch brothers’ spending tells us

The Investigative Reporting Workshop's in-depth report, "The Koch Club," underscores a shift in political giving

Few political donors have drawn greater scrutiny than the Koch brothers, the chemical manufacturing moguls whose lucrative support of conservative causes has made them poster children of how megadonors influence politics.

The ample coverage of the Koch brothers’ activities got a boost last week with one of its most exhaustive entries to date: a new report entitled “The Koch Club,” by Charles Lewis and the Investigative Reporting Workshop. Lewis and his colleagues reviewed five years of political and charitable donations by the Kochs, Koch Industries and the wide network of related foundations and charities that critics have dubbed the “Kochtopus.” Their most striking finding is not the quantity of spending—$134 million is hardly chump change, but megadonor Sheldon Adelson spent about $100 million in 2012 alone—but the way the money was targeted.

The vast majority of the Kochs’ political spending was not sent directly to political parties or candidates, found Lewis and his colleagues, but instead toward nonprofits, lobbying and universities. The discrepancy is striking: only $8.7 million went directly to political parties and candidates, while $53.9 million went to lobbying, $41.2 million to nonprofit organizations and an annual libertarian conference, and $30.5 million to US colleges and universities. Combined, the Kochs spent more than $14 on lobbying, nonprofits and education for every $1 they gave directly to politicians.

Of course, its hardly breaking news that the world of campaign finance has been upended in recent years, with its center of gravity shifting away from political candidates and parties. But the overwhelming preponderance of donations to nontraditional sources by two of the country’s most sophisticated political donors sends a clear signal that journalists—and good government watchers—would do well to note.

Perhaps the most crucial lesson of “The Koch Club” is this: that its authors’ painstaking work of untangling complex donation structures is becoming a bread and butter element of money in politics reporting, along with tracking contributions to candidates. The Koch brothers’ vast wealth does not make them outliers: as an eye-opening report by the Sunlight Foundation found last week, fully 28% of disclosed political contributions in 2012 came from elite donors who constitute “the 1% of the 1%” of contributors. While other megadonors may lack the Kochs’ wide infrastructure and desire for secrecy, a number of them are likely to start catching up.

To make matters even more daunting, both the Sunlight Foundation and “The Koch Club” note that a significant part of the money directed toward nonprofits is “dark money” that can hardly be tracked through public disclosures. “The Koch Club” cites news reports that the Kochs are currently setting up two new nonprofit groups whose 501(c)6 tax status will allow them escape disclosure requirements almost entirely.

For campaign finance reporters, this may be the most enduring and under-recognized legacy of Citizens United, related court decisions, and the ongoing financing shift away from political parties and candidates. It’s not just that individuals can spend more, but, increasingly, that Herculean efforts like the Investigative Reporting Workshop’s two-year-long Koch investigation are necessary to determine where their money is going.

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Sasha Chavkin covers political money and influence for CJR's United States Project, our politics and policy desk. He has written for ProPublica, the Center for Public Integrity, and The New York World. Follow him on Twitter @sashachavkin.