Koch Spending to Influence Policy and Politics Eclipses Charitable Giving

Editors note: This piece had a miscalculation for AFP Action’s spending in 2021 that has been corrected. For an updated analysis of the Koch network’s financials read, “Assets of Koch-Controlled Organizations Soar to Over $8.1 Billion.”

In 2021, a fleet of 27 organizations controlled by Charles Koch and other Koch Industries executives spent a combined net total of $604.1 million on political and charitable causes.

This represents another consecutive year of record-breaking spending by Koch-affiliated nonprofit organizations exceeding half a billion dollars, $524.9 million in 2019 and $639.4 million in 2020. These net totals account for expenditures between the groups, without double counting.

In this three-year period, Koch groups that are primarily focused on influencing American policy and politics accounted for more than 93% of the spending. Only 6% came from Koch foundations that predominantly support genuinely charitable causes—those that do not explicitly align with Charles Koch’s own economic interests or ideological policy goals. 

An examination of Internal Revenue Service (IRS) and Federal Elections Commission (FEC) filings compiled by the Center for Media and Democracy (CMD) indicates that gross expenditures by Koch-controlled political and policy-focused organizations totaled $2.1 billion in the past three years of available records compared to $138 million in gross expenditures during the same period by organizations primary focused on charitable giving. 

In 2021, the most recent year of IRS filings available, spending by groups CMD categorizes as charitable plummeted to a new low, accounting for only 4.4% of Koch’s overall nonprofit expenditures.

Koch’s fleet continues to expand as well. Last year, staff members at Charles Koch’s organization Stand Together Chamber of Commerce founded a new 501(c)(4) organization called the Stand Together C4 Fund. 

According to its IRS tax-exemption application, the new fund expected to raise $96 million and spend $78.2 million in the final quarter of 2022. The filing estimated that it would continue to raise between $90 and $100 million in both 2023 and 2024, and spend over $80 million each year.

Even before the advent of the Stand Together C4 Fund, Koch’s organizations continued to expand significantly. At the close of 2021, organizations that are ultimately under Charles Koch’s control had combined assets of $4.1 billion. This represents an increase of $1 billion over the previous year, and an increase of $2.7 billion since late 2019.

This marked expansion of Koch-controlled nonprofit organizations indicates that they are being positioned to be ever more major players in the realms of politics and policy. 

Methodology

Revenue, Expenditure, and Asset Totals

Building on CMD’s 2022 report on Koch nonprofit and super PAC spending, the same methods were used to calculate total combined revenue, expenditures, and assets. Researchers tracked grant payments and other expenditures between organizations in order to assess net as opposed to gross totals and to avoid inflating these figures through double counting. 

The resulting data for 2021 is more complete than in CMD’s 2022 series of related articles. In addition to including the most recent IRS 990 filings from 2021, this assessment also incorporates the filings of a previously unknown 501(c)(4) nonprofit called Zero Zero One, which Bloomberg first surfaced.

The full spreadsheet tracking the components used to make these calculations is available to the public, with every line item linking directly to the primary source reference.

Political vs. Charitable Spending

In this context, ”charitable” is defined as organizations CMD assessed as being selfless and altruistic rather than overtly supportive of Charles Koch’s own political or financial goals. Technically, this interpretation matches IRS definitions of “charitable purposes.” However, given the glut of politically motivated nonprofits that advance the financial ambitions of donors, enrich their affiliates, and even engage in outright fraud, the IRS clearly does not enforce its own definition of “charitable.”

The organizations that primarily work to influence policy or political outcomes are categorized and color-coded in red as opposed to organizations that engage primarily in charitable purposes (green), as defined above.

Admittedly, these calculations are imperfect. CMD did not examine each of the thousands of Koch-affiliated grants and hundreds of grantees, and of those reviewed, the evaluation of which payments qualify as politically neutral charitable spending as opposed to self-interested, ideological or electoral expenditures is inherently subjective. These calculations are based on gross totals, which, due to the complexity posed by each group’s varying approach to categorizing revenue and expenses, do not account for money exchanged between organizations.

The leaders of Koch Industries and its affiliated nonprofits likely take issue with some of CMD’s categorization. Entire books have been written that examine how carefully designed Koch’s policy influence strategy is, how tax-exempt philanthropy obscures much of its true intent, how this philanthropy overlaps heavily with the ideological bent of the company and its owners, and how a complementary public relations effort attempts to direct attention away from Koch’s longstanding political motivations.

Certain Koch nonprofits that direct financial support to both policy influence organizations and more charitable causes are categorized based on their predominant behavior, as in the following examples:

• Large 501(c)(4) funds such as CCKC4 and Zero Zero One spend in what appears to be intentionally opaque ways, funneling vast sums of dark money through donor advised funds like the National Philanthropic Trust. This is a clear indication that the expenditures are not charitable.
  
• While Stand Together Chamber of Commerce donates some funds to charities, this is far eclipsed by what it spends on political and policy-influencing efforts such as its $102-million grant to Americans for Prosperity (AFP) in 2021. Groups that are structured as controlled entities of the ST Chamber (such as Capitol Leaders and Believe in People) are also categorized as policy influence groups.
  
• Although the Charles Koch Foundation was formerly the primary vessel for grants to policy organizations, in recent years its spending has shifted to Stand Together Fellowships and Stand Together Trust, both of which have always focused on influencing policy and developing related talent. The Foundation’s remaining focus on universities is part of a longstanding strategy by Koch to influence policy in direct ways, as his own executives have plainly stated. For these reasons, CMD does not consider the Charles Koch Foundation to be a predominantly charitable organization.
  
• While yes. every kid. (YEK) purports to be a charitable nonprofit, its executives have political as opposed to educational backgrounds. When the group was founded in 2019, longtime advocates of public education were quick to challenge its ostensible focus, pointing to Koch’s history of supporting efforts to privatize education. Given the politicians it has since championed and the legal cases it has supported, these initial concerns have been validated, leading CMD to not consider YEK a genuinely charitable venture.
  
• Closely tied to right-wing efforts to privatize education, the VELA Education Fund supports affiliates of bigoted activist groups like the Alliance Defending Freedom and the Christian Law Association, along with the Home School Road Map and the Home School Legal Defense Association, and deceptive school privatization groups like the National Parent’s Union. CMD does not consider VELA a true charitable organization.
• The newly rebranded group Empowered (formerly known as Youth Entrepreneurs) certainly presents itself as a charity focused on supporting high school students’ development. However, its history presents abundant evidence that the organization’s true purpose is to inject Charles Koch’s ideological preferences into high school curricula. Given that, CMD does not categorize Empowered as a charity.
  
• The Koch Family Foundation (previously the Fred C. and Mary R. Koch Foundation) has financed controversial ideological groups like the Bill of Rights Institute and has made problematic contributions to Kansas-based universities. However, since it spends more money on scholarships and efforts that are not in the immediate interest of the Koch family or company, CMD cautiously categorizes this foundation as charitable.
  
• Despite being rooted in Charles Koch’s public relations rebranding, the Stand Together Foundation spends most of its revenue on charitable causes, so it is categorized accordingly by CMD.
  
• In addition, CMD categorizes certain groups that are generally inactive as charitable, including the Charles Koch Charitable Fund and the Chase Koch Foundation.