Feeling ‘Taken For Granted,’ Koch-Led Donors Turn From GOP

17 minute read

Taking a moment between meetings with super-rich donors in the Rocky Mountains, Mark Holden gave a clipped, three-word response to describe how the network of advocacy groups founded by the Koch brothers is changing.

“More. Better. Faster,” the former Worcester, Mass., prison guard-turned-chief enforcer for Charles Koch said matter-of-factly.

Holden, 55, was discussing an internal audit of the groups’ operations that his 40-year-old retreat co-chair referred to in more technocratic language as part of a “continual transformation,” but his words also applied to the overall direction that leaders hope to steer the powerful network of donors’ ambitions in over the coming months and years.

The network of libertarian-leaning advocacy groups and philanthropies started by billionaire industrialists Charles and David Koch is preparing for a future in which they will play less of a central role, and perhaps their brand of reliably Republican-friendly politics also heads to the wings, if not the exits. David Koch, 78, is in failing health and has already stepped down, while 82-year-old Charles is fighting rumors of his own exit.

The looming change was evident in subtle ways throughout the three-day conference. In one session, slides on four giant broadcast screens in a ballroom mentioning the “Koch Brothers” were rewritten to say “the Koch Network.” Charles Koch kicked off the weekend with a glib denial that he “just to reassure you, in case it looked like I was weakening, I am not getting weak in the knees.” Annie Koch, the wife of potential heir Chase Koch, briefed donors on their work on a private, out-of-the-box school in Wichita, Kansas. And aides insisted the machine the elder Kochs assembled is “built to last.”

The discussion is being spurred by several big shifts: The more liberal attitudes of the newest generation of voters, the continued rise of unaffiliated voters and breaks with the Trump Administration on issues like immigration and trade policy. To win some of the battles on their libertarian agenda, some think the group may now need to move beyond working primarily with the Republican Party.

Charles Koch told a group of reporters that he could work with Democrats in Congress should they prevail in the fall elections.

“I don’t care what initials are in front or after somebody’s names,” he said. That approach would have seemed heretical just two years ago as this group hosted Republican candidates for auditions.

Still, doubts remain about how much the groups can and will change. After 15 years as Democrats’ biggest bogeymen and one of the GOP’s best attack dogs, the reputation of the Koch network is chiseled in stone. In a polarized political environment, it may be hard to remake that image.

But there was an eagerness to try which came through at a high-level.

“The divisions in our country are rapidly turning into conflicts and devolving into destructive factionalism,” Brian Hooks, the co-chairman of the Seminar Network that convenes these twice-a-year confabs, told a packed ballroom on Sunday.

A day earlier, Hooks held court with Holden to brief reporters about the group’s thinking. Hooks is part pep man, part political strategist and part management consultan and shares Charles Koch’s obsession with auditing even things that are working to see if they can be made better even as they look warily at the White House.

“The manner in which people engage public policy matters. It’s gone way beyond tone, way beyond tactic. The divisiveness of this White House is causing long-term damage when in order to win on an issue, somebody else has to lose,” Hooks said. “It makes it very difficult to unite people to solve the problems of this country. … There is a need for someone to step up and show people that it’s possible to achieve things when you unite people together and you bring people together rather than when you divide them.”

Some 500 contributors to the Koch war chest huddled at the Broadmoor Resort for three days of wonky talks about higher education, immigration, social innovation and economic policy. Each turned over a minimum of $100,000 apiece; many gave vastly more. Under federal election law, these donors’ identities do not need to be disclosed. As a condition of attending, TIME has agreed not to identify donors who did not wish their names used.

Among the gathering, 135 were newcomers and 85 were part of their new-leader pipeline. Nothing changes a group’s dynamics quite like the infusion of fresh blood.

The new lens, especially an intentional arms-length approach to the Republican Party, might be more than the first generation of these patrons bargained for, something Charles Koch acknowledged tacitly.

“We’re seeing a rise in protectionism, where countries, organizations and individuals are trying to protect themselves from these changes,” Koch said. “They’re doing whatever they can to close themselves off from the new, hold onto the past and prevent change. This is a natural tendency, but it’s a destructive one.”

For years, it’s been an easy ding: this cohort of the uber-rich is spending, literally, hundreds of millions of dollars to swing American elections to like-minded politicians who will do their will. (And, to be clear, there’s plenty of evidence to prosecute this case. The tab for the Koch network’s 2018 midterms tab could hit $400 million, including a $20 million campaign built around the GOP’s tax cuts. Officials are cagey about the total amount of the whole network but repeatedly stress that politics is not the biggest of five broad areas of focus.)

But the deep-pocketed donors at the retreat weren’t enthusiastic about the Republican-controlled Washington that they helped create.

Hooks acknowledged the contradiction and deep disappointment in what has resulted. “We support the election of some of these guys that just voted for a $1.3 trillion federal spending bill,” Hooks said. “This drives you crazy. … People are taking us for granted.”

That’s why, while politics is perhaps irreversibly intertwined with the Koch network, it’s not the bulk of the spending. So far, the groups are barely a blip on the screens. They’re working on the Senate races in Wisconsin, Missouri, Tennessee and Florida; the races for governor in Michigan, Nevada and Florida. It’s a remarkable retreat from the maps of previous election cycles where they rushed to help Republican candidates.

Then consider the network’s programs in education. This year, donors who work with Koch have sent $90 million to colleges and universities to fund research, professors, centers and lecture series.

Donors are also offering up seed capital for a recovery program that partners with CrossFit-style workouts (a surprise success that is growing rapidly), underwrites anti-gang efforts in Texas run by former gang members and NFL stars (making slow progress) and tracks ex-cons’ needs in Florida, Kentucky, Pennsylvania and Texas (academic research is hard to judge).

“When we help another person, it doesn’t just help them. It helps us and our self-worth,” Charles Koch said.

On a small scale, the project that captured many of these donors’ imagination was a pop-up restaurant on the west side of a lake that divides this resort. Branded as Café Momentum, this temporary outpost of its Dallas brick-and-mortar location was the embodiment of the apolitical efforts many in the Koch network sees as its future and reforming the criminal justice system as its marquee task.

The core of the staff for this non-profit restaurant? Teens recruited from juvenile prison. On staff, some 62% have been homeless at some point in their lives. For many of these young people, the trip to the tony Broadmoor was the first time they’ve been on a plane. Most of the staffers that served reporters a lunch of smoked and fried chicken on a bed of collard greens and mashed potatoes were minorities.

The project, underwritten by donors to the Koch network, goes into Texas’ juvie population, offers internships and mentoring and, as an added fiscal bonus, reduces recidivism rates from 48% to 15%.

“The story sells itself,” said Terry Smith, the former director of juvenile justice in Dallas who approved the pilot project.

For Smith, the numbers don’t hurt, either. For instance, her juvenile offenders cost $13 a day to manage in halfway programs like Café Momentum; housing them in physical prisons cost a minimum of $125 a day and can go as high as $350 a day for inmates with special needs. Chef Chad Houser, who founded Café Momentum and was a breakout star of the Koch retreat, estimates the program has saved jail budgets $26 million by keeping young people from returning to prison on other charges.

The student workers said they appreciated the program and didn’t feel like they were being used as political props.

“If I hadn’t been in this program, I’d have been way off track,” said A.B., a 16-year-old who asked that he only be identified by his initials. He was arrested at age 14 in a car heist and now spends free time slinging dishes at Cafe Momentum. He plans on attending college and launching a fashion line. He calls Houser “a father figure to me.” He goes on: “What’s in the streets is not helping us. The streets are doing nothing but taking from us.”

So far, 86 groups like Café Momentum have been pulled into the Koch orbit. (Officials say 1,500 groups applied.) Representatives from 16 already humming along with Koch investments were on resort grounds to drum up more support. Officials say they’re upfront about the source of support, which get checks for as little as a few thousand dollars and management training to start. Groups, some tied to churches, are operating in 45 states and officials estimate the footprint hits 1 million people who participate in the programs at various states of intensity.

This community initiative, branded Stand Together, had an $8 million budget in its first year, 2016. That grew to $21 million a year later. This year? It’s $40 million, based largely on support from donors whose last names are not Koch, according to an official. Its chief, Evan Feinberg, is among the hardest coffee dates to land at these weekends.

That’s not to say politics or policy are far below the surface, or that the Koch network is ready to retreat from that front entirely. After all, it’s fairly good at that field and political spending could still have a 10-to-1 advantage over groups like those Feinberg funds. It’s just a lot less fun to watch Republicans whom you’ve championed swerve afield and squander an all-GOP Washington in an era of Trump. On trade, protectionist tariffs and tone, most of these donors are fiercely opposed to what Trump is offering.

“Until Trump is gone, it’s going to be hard to bring the country back to normal, and then it’s going to take a while because he’s really damaged a lot of our institutions and just insulted everything and there’s a huge amount of mistrust,” said Paul Jost, a real estate executive who splits his time between Miami Beach and Washington, D.C.

Michael Shaughnessy, a business from the Cleveland area, noted the collapse of civility predates Trump, but notes “all of the division starts at the top and runs downhill. I don’t know that he’s done anything to diminish that. People confuse him with a politician who can say nice things even though he doesn’t want to say nice things.”

While the big wins like tax cuts drive headlines — and more giving to network coffers — the political machine has quietly been chugging along on lesser-known initiatives.

Consider a measure branded Right to Try, a proposal to allow terminally ill patients to take unproven drugs. The measure was largely stalled in Congress, but in January the Koch network re-engaged on the issue, working with patients and families to pressure lawmakers to move.

Matt Bellina, a Navy officer who has ALS, and his wife worked with the Koch team to raise the profile of the legislation. When the House was voting to pass the legislation, two of the Bellinas’ children, ages 4 and 6, were on the House floor with Rep. Brian Fitzpatrick, their congressman.

“I have a real fighting chance,” Bellina says. “Now, at the very least, I’m allowed to make a choice about how I want to live.”

(Critics say the experiments give patients false hope and undercut the role of the Food and Drug Administration. Those like Caitlin Bellina find the phrase “false hope” patently offensive. “Before the law passed we had hope, and now we have reality. It’s concrete,” she says. “When you’re faced with a terminal diagnosis, there’s ‘hope’ and there’s ‘no hope.’ ‘False hope’ doesn’t ring true.”)

Bellina, who lives in Bucks County, Pennsylvania, is due to start experimental treatment in the coming days and received a hero’s welcome when officials showed a mini-documentary about his story. Donors rose from their seats to recognize him — and many immediately wanted to know how they can find other wins like this.

But the big acts — like a presidential campaign, namely — are not in the offing for many. Gone are the doubts about whether going all-in for Mitt Romney in 2012 was a mistake. (It was, in the view of this crowd.) Also largely vanquished are questions about whether Donald Trump would prove an unreliable partner in pushing a regulation-gutting agenda. (For every win at the Environmental Protection Agency, there were a dozen stories about its disgraced director’s dodgy behavior.) While these donors celebrate the tax-cut package that cleared Congress — and disproportionately benefits the crowd that arrived in town on private planes — they stand aghast at how Trump’s Administration is approaching immigration. (Officials led briefings last week to warn Congress that the shenanigans are wearing thin and are spending millions against it.)

That’s not to say Trump doesn’t have his defenders in the ranks of these donors. Doug Deason, a Texas businessman whose family gave pro-Trump groups $1 million in 2016 and is a regular at these Koch meetings, said the Koch network needs to reconsider its criticism of the President.

“You didn’t support him and he won,” Deason said. “Everything that you question him on has turned out good and he’s won. And he’s going to win this. Is there a lesson learned?”

Even so, the party preferences are fading. The most openly political of the groups organized under the Koch banner, Americans for Prosperity, has run ads against Republicans who voted for Trump’s spending bill and for the lone Democrat who helped rewrite the banking regulation bill known as Dodd-Frank. It caused some seat shifting among longtime patrons of the network, but newcomers liked the moxie.

“If you’re a Republican who sits on the committee that wrote the worst spending bill in our country’s history and you voted for it, you’re darned right we’ll hold you accountable,” Americans for Prosperity CEO Emily Seidel told donors Sunday, greeted by applause in the room and some second-guessing the hallways. “Look, the fact that we’re willing to do this during an election year shows that we are dead serious. This network will no longer follow anyone else’s lead or be taken for granted.”

Tim Phillips, the President of Americans for Prosperity, a day later explained why his group decided not to campaign against vulnerable Democratic Sen. Heidi Heitkamp and instead chose to run a low-cost digital ad thanking her for her vote to roll back some bank regulations. Her rival, Rep. Kevin Cramer, is bad on issues core to the Koch ideology, especially his support for the Export Import Bank. “If this were 2016 or ’14, we would likely just have gone ahead and endorsed him,” Phillips said.

To be clear: this crowd is still overwhelmingly conservative. The Wall Street Journal editorial page is their town square. Maybe a handful of these donors punched their ballot for Hillary Clinton in protest but few liked it. A frequent subject of their disdain is Sen. Elizabeth Warren of Massachusetts, a likely 2020 contender for the Democratic nomination.

Still, many of these donors have the same reaction to Fox’s Sean Hannity as they have to MSNBC’s Rachel Maddow. Too shrill. Too partisan. Too extreme. Many of these well-heeled captains of industry are exhausted with the political environment and desperate for a paradigm that rewards ideas over volume. “You can’t mention the President’s name without expecting some blowback. I try very hard to not trigger these discourse problems,” said John DeBlasio, a Chicago private-equity executive. “The rhetoric has risen to a level that doesn’t match the impact.”

Yet, even as these donors toasted their interest in working across the aisle, it’s impossible to ignore that they’re still funding political ads attacking Democrats. In Wisconsin, Koch-backed groups have run almost $3 million in TV ads hoping to oust Sen. Tammy Baldwin. Sen. Claire McCaskill has faced almost $2 million. Looking to pressure other Democrats on the ballots this year, activists have knocked on almost 3,500 doors in Indiana and called 171,000 Hoosiers urging them to contact Sen. Joe Donnelly to tell him to vote for Trump’s nominee for the Supreme Court, Brett Kavanaugh.

So while these donors decry politics, insist that the partisan barriers can crumble and see the country shifting its trajectory, it’s tough to deny their power. After all, in the first 20 days of Kavanaugh’s nomination, Americans for Prosperity has knocked on almost 1 million doors, run more than 2 million digital ads and made 20,000 calls. How they use their clout — and if they can sustain it — remains the unknown. Koch officials, however, herald the potential. “What Charles set out to create 15 years ago has turned into a movement,” Hooks said. “And like the movements that have before us, it can motivate millions of people and can help to propel our country forward.”

Art Pope, a North Carolina mega-donor and influential voice in this circle, had a slightly different notion about movements. “A movement does not mean that everyone is unified on every single issue,” Pope said. “It means they’re heading in the general same direction on the horizon. They may different paths and their paths may vary from time to time, but everybody is still going in the same direction.”

Disclosure: Time Inc., TIME’s parent company, was acquired by Meredith Corp. in a deal partially financed by Koch Equity Development, a subsidiary of Koch Industries Inc.

More Must-Reads from TIME

Write to Philip Elliott / Colorado Springs, Colo. at philip.elliott@time.com