Inside the Left’s Web of ‘Dark Money’ - WSJ

The fight over Amy Coney Barrett’s nomination to the Supreme Court is only the beginning of judicial battles to come. If President Trump is re-elected, he will nominate more judges, and Democrats will attack them. If Joe Biden wins, his allies will keep demanding he pack the Supreme Court by adding seats to fill with liberal activists.

Glance at the Twitter feed of Brian Fallon, leader of Demand Justice, the left’s top judicial pressure group. Mr. Fallon was the spokesman for Hillary Clinton’s 2016 presidential campaign; Demand Justice is less well known. Its origin story cuts against the left-wing trope that conservative “dark money” has “captured the courts.”

Mr. Fallon sowed the seed of Demand Justice by speaking at a 2018 meeting of the Democracy Alliance, a secretive donor group co-founded by George Soros, who pledged millions in support. But the money didn’t go to a new nonprofit. It went to an empire managed by Arabella Advisors, a for-profit consulting firm founded by a Clinton administration alumnus who previously worked at the League of Conservation Voters—a “dark money heavyweight,” as the Center for Public Integrity puts it.

Arabella long flew under the radar, even though its in-house nonprofits raked in $1.2 billion in the 2018 electoral cycle alone, compared with $502 million raised by the Democratic and Republican National Committees combined. Its new prominence arises from its aggressive role in Supreme Court nominations. A colleague of mine discovered it during the Brett Kavanaugh controversy, and during Judge Barrett’s hearings Arabella was cited by Republican Sen. Ted Cruz.

Mr. Cruz highlighted Arabella because it belies complaints by Democratic Sen. Sheldon Whitehouse and others who pretend that “dark money” only exists on the right. Arabella’s revenues dwarf those of Mr. Whitehouse’s bêtes noires like the Federalist Society and Judicial Crisis Network. What’s more, Arabella’s cash winds through a legal structure that darkens its donors and their dollars far more than normal nonprofits can achieve.

By law, a nonprofit need not reveal its donors, and very few do. But a normal nonprofit, like Mr. Whitehouse’s targets, must disclose revenues, assets, board members, salaries, largest vendors, total expenses (broken into categories like fundraising and travel), lobbying, grants to other nonprofits and much more.

The Arabella empire avoids those disclosures. Imagine a pyramid with Arabella Advisors at the apex. Arabella is a for-profit entity and thus has no disclosure obligations. The middle layer is four nonprofits. At the base are hundreds of projects, fiscally sponsored by the four nonprofits, that make up the supposedly grass-roots groups the public sees. These projects fight all sorts of political battles, from judicial nominations and climate policy to abortion and ObamaCare. Their financial backers include some of the wealthiest liberal philanthropies, including Bill Gates’s and Warren Buffett’s family foundations.

But these hundreds of projects reveal neither their donors nor any details a genuine nonprofit must disclose. Nor can you try to pressure their board members, because they don’t have any. Each is merely a website and an accounting code at one of the four umbrella nonprofits in the middle of the pyramid: “pop-up” groups that often exist while useful and then disappear. Although the four umbrella nonprofits file the usual disclosures, each one amalgamates data from dozens of pop-up groups, which obscures the details of any particular project.

No major newspaper has ever exposed this pyramid, despite the $2.4 billion Arabella ran through its nonprofits from 2006-18, or the considerable overlap in board membership of those four supposedly independent nonprofits—which share the same address, general counsel (Andrew Schulz) and chief financial officer (Wil Priester) as Arabella itself.

One of the nonprofits, the Sixteen Thirty Fund, is such a political powerhouse that it’s finally receiving some press. Politico calls it a “liberal secret-money network” that was “one of the biggest players in the 2018 political landscape” as it spent $141 million on TV ads and “projects” like Floridians for a Fair Shake and Michigan Families for Economic Prosperity.

The Washington Post editorial board read Politico’s reporting and decried Sixteen Thirty as catering to “big campaign donors who want to have impact but hide their identity.” The Post was especially incensed that Sixteen Thirty’s top three donors anonymously gave $51.7 million, $26.7 million and $10 million. The paper should also know that Sixteen Thirty was set up with seed money from two groups notorious for partisanship and election irregularities: Acorn and Americans United for Change.

Such politicized nonprofits defy the average American’s understanding of philanthropy, but left-wing donors have for years invested $100 million or more in 501(c)(3)s every cycle to register Democratic-leaning voters. Arabella CEO Sampriti Ganguli admitted in a February interview that her company’s nonprofits provide a “work-around” for liberal donors to bypass “the tax regime” and its “constraints” on charitable giving, presumably including limits on political activity and financial disclosure requirements.

Recently, the Trusted Elections Fund, an Arabella pop-up, was cited in a legal brief filed against Michigan’s secretary of state, because the secretary had urged donors to send money via that fund to election officials who, the lawsuit claims, will steer it to Democratic-leaning precincts. Welcome to the left’s brave new “nonprofit” world.

Mr. Walter is president of the Capital Research Center.