Despondent after George W. Bush won re-election, a small group of billionaire Democrats met in San Francisco in December 2004 to reflect on John Kerry’s failure to capture the White House. George Soros, Progressive Insurance Chairman Peter B. Lewis, and S&L tycoons Herb and Marion Sandler were angry and depressed. They felt they had been taken—seduced by the siren song of pollsters and the mainstream media who had assured them that the capture of the executive mansion was theirs. But despite giving millions of dollars to liberal candidates and 527 political committees, the donors came away with nothing. At about the same time, another group of wealthy Democratic donors was meeting at a hotel in Washington, D.C., feeling the same way. “The U.S. didn’t enter World War II until Japan bombed Pearl Harbor,” political consultant Erica Payne told the meeting. “We just had our Pearl Harbor.”
Determined to bring the Democratic Party back from the political wilderness, Soros and the others decided they needed a long-term strategy to regain power. Former Clinton official Rob Stein urged them to copy conservatives who had spent four decades investing in ideas and institutions with staying power. Over the next year, Stein would become well known for a PowerPoint presentation called “The Conservative Message Machine’s Money Matrix.” He used graphs and charts to show how the conservative movement comprised an intricate network of organizations, funders and activists. Stein’s presentation was apparently convincing. In 2005, the Democracy Alliance (DA) was born. It was an odd name for a loose collection of superrich donors committed to building organizations that would propel America to the left.
In April 2005, Soros gathered together an even larger group. Seventy millionaires and billionaires met in Phoenix, Ariz., to firm up the details for their fledging political financing clearinghouse. The attendees heard presentations on why all the pro-Democratic Party 527 groups on which they lavished millions of dollars failed to deliver the election to Kerry. But now they had a new strategy to make a difference.
To join the Democracy Alliance, there is one requirement: You must be rich. Members, who are called “partners,” pay an initial $25,000 fee and $30,000 in yearly dues. They also must pledge to give at least $200,000 annually to groups that Democracy Alliance endorses. Partners meet two times a year in committees to decide on grants, which focus on four areas: media, ideas, leadership and civic engagement. Recommendations are then made to the DA board, which passes them on to all DA partners. The alliance discourages partners from discussing DA affairs with the media, and it requires its grant recipients to sign nondisclosure agreements.
As a result, it is hard to learn much about the alliance’s grant making. There were no grants voted on at the DA’s April 2005 organizing meeting in Phoenix. However, when the group met in October of that year at the Chateau Elan Winery & Resort in Atlanta, Ga., it decided behind closed doors to dole out $28 million to nine grantees. Most of that money went to well-known groups, including the Center for American Progress and Media Matters for America.
Representatives of smaller, less prominent groups were reportedly miffed at the process. “No one knew why the nine groups had been picked. Funding progressive infrastructure was all well and good, but no one bothered defining precisely what ‘progressive’ meant,” wrote Ari Berman, a writer for the leftist Nation magazine. “There was an almost complete lack of actual substance,” Berman quoted one attendee as saying.
After the negative feedback from the Atlanta meeting, DA leaders changed the process and allowed groups to apply for grants. The next meeting, held in Austin, Tex., in May 2006, was better received in left-wing circles. Progressive leaders such as Andy Stern, who is president of the Service Employees International Union, spoke during panel discussions, and grant-seekers were allowed to network with DA partners. “I’ve made it a mission to hate the Democracy Alliance,” Berman quoted one attendee who heads a grant-seeking group, “and I was pleasantly surprised.”
With an eye on the approaching November elections, the alliance decided to give another $22 million to 16 groups focused on electoral politics. These groups included the Center for Community Change, USAction, ACORN, EMILY’s List and the Sierra Club. Former President Bill Clinton dropped by the Austin meeting for a friendly greeting, but when one DA partner asked why Democrats don’t apologize for supporting the Iraq war, Clinton went on a 10-minute tirade, yelling that if he had been in Congress, he would have voted to authorize the war. “It was an extraordinary display of anger and imperiousness,” said partner Guy Saperstein, an Oakland, Calif., attorney. “Clinton’s response was a not-so-subtle warning to partners to avoid divisive issues, like the war, that might harm his wife in the next presidential election,” wrote Berman.
The DA’s third round of funding was expected to be decided at a Miami, Fla., meeting scheduled for November 2006. Details of the meeting were not available for this report.
DA’s managing director, Judy Wade, said she hopes the alliance will work with other funding groups and eventually give out $500 million in grants each year.
Selected Grant Recipients
We can identify a number of left-wing groups that have gone through the DA’s vetting process and received funding. Some grant amounts have been reported in the press, but there is no official tally.
- Media Matters for America: Erstwhile conservative journalist David Brock’s group claims to expose right-wing news bias. The Internet-based media watchdog, launched in May 2004, describes itself as “a Web-based, not-for-profit, 501(c)(3) progressive research and information center dedicated to comprehensively monitoring, analyzing and correcting conservative misinformation in the U.S. media.”
- Center for American Progress: Former Clinton White House Chief of Staff John Podesta heads the think tank that received $5 million from the DA. The organization aspires to be the Heritage Foundation of the left. Spin-offs include Campus Progress and the Center for American Progress Action Fund, a 501(c)(4) lobby group. The Action Fund’s “Kick the Oil Habit” campaign is led by actor-environmentalist Robert Redford.
- Citizens for Responsibility and Ethics in Washington (CREW): This Soros-funded group sees itself as a left-wing version of Judicial Watch, the conservative legal group that filed a barrage of lawsuits against the Clinton Administration in the 1990s. CREW executive director Melanie Sloan is a former U.S. attorney and Democratic counsel for the House Judiciary Committee. However, CREW was one of the first liberal groups to blast incoming House Speaker Nancy Pelosi (D.-Calif.) for endorsing the ultimately unsuccessful campaign of Pennsylvania Rep. John Murtha to be majority whip in the 110th Congress. Sloan called Murtha “one of the most unethical members of Congress,” and noted that Pelosi’s endorsement “shows that she may have prioritized ethics reform merely to win votes with no real commitment to changing the culture of corruption.”
- Center for Progressive Leadership (CPL): This organization wants to mirror Morton Blackwell’s Leadership Institute. The center’s website describes the group as “a national political training institute dedicated to developing the next generation of progressive political leaders. Through intensive training programs for youth, activists and future candidates, CPL provides individuals with the skills and resources needed to become effective political leaders.” CPL President Peter Murray acknowledged in July 2006 that donations from alliance members boosted the group’s budget to $2.3 million, compared with $1 million the year before.
- Association of Community Organizations for Reform Now (ACORN): ACORN is a radical activist group active in housing programs and “living wage” campaigns in inner-city neighborhoods in more than 75 U.S. cities. In recent years, it has been implicated in a number of fraudulent voter-registration schemes.
- EMILY’s List: While this political action committee boasts that it is “the nation’s largest grassroots political network,” it is essentially a fundraising vehicle for pro-abortion-rights Democratic female political candidates. Donations to the organization are not tax-deductible. EMILY, according to the group’s website, “is an acronym for ‘Early Money Is Like Yeast’ (it helps the dough rise).” The group’s president is veteran political fundraiser Ellen Malcolm.
- America Votes: Another get-out-the-vote 527 organization, it is headed by Maggie Fox, a former deputy executive director of the Sierra Club. The group received a $6-million funding commitment from George Soros despite the billionaire’s protestations that he has turned his back on political campaigns.
- Air America: The struggling left-wing talk radio network filed for bankruptcy protection on October 13, after it reportedly had received a funding commitment of at least $8 million from the alliance. The network touted by comedian Al Franken is said to have lost an astounding $41 million since 2004. Longtime radio executive Scott Elberg is Air America’s chief executive officer.
- Sierra Club: The influential environmental organization—No. 7 on Greenwatch.org’s “Gang Green” list of the worst environmental activist groups—has entered into a “strategic alliance” with the United Steelworkers union. Led by executive director Carl Pope, the club successfully targeted property rights champion Rep. Richard Pombo (R.-Calif.), who was defeated in November.
- Center for Community Change: This long-time group dedicated to defending welfare entitlements and leftist anti-poverty programs was founded in 1968. Activist Deepak Bhargava is its executive director.
- USAction: This group works closely with organized labor. It is the successor to Citizen Action, the activist group discredited by its involvement in the money-laundering scandal to re-elect Teamsters President Ron Carey in the late 1990s.
- Data Warehouse: This group was created by Clinton aide Harold Ickes and Democratic operative Laura Quinn. Ickes is critical of the Democratic National Committee under Chairman Howard Dean and aims to create a sophisticated get-out-the-vote operation that rivals the Republican Party’s. Ickes proposes to build detailed voter lists that will be made available to Democratic Party candidates and to advocacy groups. According to a report in the Washington Post, George Soros put $11 million at Ickes’s disposal because he distrusts Howard Dean.
Does It Have a Mission?
Obviously, Democracy Alliance participants have the capacity to make big grants to leftist groups, but are George Soros and his friends doing anything different that will transform America? That’s what the alliance is promising. After the Phoenix meeting, Sarah Ingersoll, a de facto spokeswoman for the alliance, said the group was still ironing out details. “Primarily, we’re looking at making recommendations and thinking through with these donors on how they can form an alliance. This is about creating a network of individuals to share information to be effective in whatever they do going forward.”
Ingersoll said the alliance intended to make details of its grant making publicly available. But that promise has not been fulfilled. Indeed, the group invites critics to charge it with sinister motives because it has revealed so little about itself. Conservatives David Horowitz and Richard Poe, co-authors of The Shadow Party: How George Soros, Hillary Clinton and the Sixties Radicals Seized Control of the Democratic Party, refer to the Democracy Alliance as probably one of the “most active Shadow Party groups today.”
Since December 2004, the Democracy Alliance has given away about $50 million to left-wing organizations and activists. However, as journalist Andrew Ferguson recently observed (New York Sun, Oct. 25, 2006), that amount is paltry compared to the combined wealth of the alliance’s donors. Moreover, DA is still struggling to define its core mission. “Unlike the money guys who underwrote the right, members of the alliance seem to lack strong ideological conviction about what the future ought to look like. And they do not have the militant perspective of outsiders eager to disrupt and overrun the party establishment,” wrote the Nation’s Berman.
Rob Johnson, a former Soros protégé active in the alliance, has said that its members can be divided into two groups: “climate-changers” and “party-subsidizers.” That suggests only some DA members genuinely want to transform America’s political and social climate of opinion. Others are just interested in helping Democrats. Moreover, many donors exhibit a strange pessimism about the group’s mission and long-term prospects. “When the alliance took an informal survey, the greatest fear among partners was that if a Democrat captured the presidency the organization wouldn’t survive,” wrote Berman.
Bereft of New Ideas
Conservatives scoff at the DA’s ambitions to reshape the political landscape. Liberals are hardly short of well-funded institutions: Universities, labor unions, television networks, PBS. Is there any lack of well-heeled groups, many of them taxpayer-subsidized, to carry the liberal message? Conservatives also note pointedly that liberals have done poorly at the ballot box because they are bereft of new ideas.
Feminist Camille Paglia, a liberal Democrat, also criticizes the Democratic Party for its lack of ideas. “What’s broadened the appeal of conservatism in recent years is that Republicans stress individualism—individual effort and personal responsibility. They’re really the liberty party now—I thought my party was! It used to seem as if the Republicans were authoritarians and the Democrats were for free speech and for the freedom to live your own life and pursue happiness. But the Democrats have wandered away from their own foundational principles. The Democrats have to start fresh and throw out the entire party superstructure,” Paglia told Salon.com in October. “When the American economy was still manufacturing-based, the trade unions were viable, and the Democrats stayed close to their working-class roots. But now the Northeastern Democrats, with their fancy law degrees and cocktail parties, have simply become peddlers of condescending bromides about ‘the people,’” she said.
The most left-wing liberals are also dubious. Insurgent progressives who subscribe to the Howard Dean/Michael Moore school of politics are suspicious of the DA because they do not believe that the left needs more think tanks. Instead, they believe the left needs genuine grassroots activists and self-funded institutions. Kim Klein, a guru of grassroots fundraising and publisher of Grassroots Fundraising Journal, observes that the left “suffers from an over-reliance on large institutional donors. The Heritage Foundation has 275,000 individual donors. The right-to-life organizations have thousands of small donors. The grassroots of the right wing is actually funded by the grassroots, and the grassroots of the left wing is funded by foundations, and I think it’s an enormous problem.”
After years of electoral setbacks, the MoveOn.org activists and others on America’s left want a new strategy that relies less on fat cats, less on institutions (Democratic Party, labor unions), and less on single-issue advocacy groups (pro-abortion-rights groups, the National Education Association and other teacher unions). However, like the billionaires in the Democracy Alliance, they turn green with envy when they see the interlocking organizations of the right. They too want to build idea-based coalitions mobilizing powerful political constituencies.
How dependent is the left on big donors? In his recent book, The Big Ripoff: How Big Business and Big Government Steal Your Money, Timothy Carney itemizes left-wing political contributions in 2004: “The top four donors to 527s in 2004—and the only donors to spend in the eight figures on that election—all gave exclusively to pro-Democrat groups. Of the top 25 individual donors—all billionaires or multi-millionaires—15 of them gave to pro-Democrat groups, and 10 gave to Republican-supporting groups. From this elite group of super-rich donors, the Democratic side got $108.4 million, compared to the Republican side’s $40 million. Soros and Lewis together spent more to defeat Bush than the 10 most prolific Republican fat cats combined spent supporting the President.”
The ostensible leaders of the Democracy Alliance are an odd lot, which may explain why the organization has had a hard time making much of a dent in politics.
Rob McKay, president of the McKay Family Foundation, is the new chairman of the DA. He was elected at the group’s July 2006 meeting in Boulder, Colo. Heir to the Taco Bell fortune, the 42 year-old McKay is also a director of Vanguard Public Foundation, co-chairman of Mother Jones magazine, a board member of the Ms. Foundation for Women, and a blogger on the Huffington Post website. He was born in conservative Orange County California, and his parents were Republicans. However, like many on the left, he had an awakening.
The vice chairman is Anna Burger, sometimes known as the “Queen of Labor.” Burger is secretary-treasurer of the Service Employees International Union (SEIU), the militant union that walked out of the AFL-CIO last year and started the six-million-member Change to Win Federation, an alternative labor coalition. After she was elected chairman of Change to Win in 2005, Burger was hailed by Gannett News Service as arguably “the most influential woman in the U.S. labor movement.”
The first managing director of the Democracy Alliance was Rob Stein, once chief of staff to the late Ron Brown, Bill Clinton’s first Commerce secretary. Stein dazzled the billionaires with his PowerPoint presentation but he turned out to be a poor manager. Early in 2006, the board offered the $400,000-a-year job to Robert Dunn, a former president of Business for Social Responsibility, a group promoting the concept of corporate social responsibility. When he declined it, the board turned to Judy Wade, a management consultant at McKinsey & Company. Wade holds a Master of Public Policy degree from Harvard University’s Kennedy School of Government.
McKinsey’s in-house newsletter, the McKinsey Quarterly, listed Wade as a contributor to a recent article titled, “When social issues become strategic: Executives ignore sociopolitical debates at their own peril.” The paper argues that “business leaders must become involved in sociopolitical debate not only because their companies have so much to add but also because they have a strategic interest in doing so.”
The designated spokesman for the DA is supposedly Mike McCurry, the former White House press secretary for Bill Clinton. But little has been heard from McCurry about the alliance. Lately, his public relations talents have been devoted to attacking “net neutrality” legislation regulating the Internet. That has led some left-wing activists to accuse him of helping the big telecommunications companies. McCurry “represents a sickening breed of operative” and is the agent of a “hostile takeover” of the Democratic Party, charges activist David Sirota, a former press aide to Socialist congressman Bernie Sanders and recently a consultant to the Ned Lamont Senate campaign in Connecticut. That sort of vitriol suggests the problems billionaires face when they pass themselves off as leaders of the left.
Despite Democrats’ capturing both houses of Congress, no Democratic victory seems complete without back-biting and rancor. Key Democratic strategists have complained bitterly about George Soros’s decision to cut off funding for 527 political committees. This year, Soros donated only $4.1 million to 527s, according to media reports. His spokesman, Michael Vachon, put the financier’s 2006 contributions in perspective. In 2004, the financier “felt it was extremely important to defeat President Bush,” but 2006 is not “the historic moment that 2004 was,” Vachon said.
In 2004, Soros was a big believer in large-scale get-out-the-vote drives. According to most estimates, he spent more than $27 million on 527 committees to get out the anti-Bush vote. Soros’s decision to stop funding the 527s has not gone unnoticed. Illinois Rep. Rahm Emanuel, head of the Democratic Congressional Campaign Committee, has been particularly incensed: “These guys—where are they?” A newly penitent Soros responds, “You can’t buy elections with just money,” as he told a New America Foundation audience in September.
Democracy Alliance leaders are tight-lipped about future plans. The Nation magazine’s Berman believes that following the first two rounds of grants, the DA is “overextended.” “With 25 groups under its tent, the alliance will have to keep growing, by either recruiting new partners or convincing existing ones to give more, to be able to continue to fund those groups it has already agreed to assist. As a consequence, alliance partners have cut back on some key priority areas, such as foreign policy, economics and media, in preparation for its third round of funding,” Berman wrote in October.
This article is reproduced from the December 2006 edition.