The Koch Machine

The Kochs’ war on poverty

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The political operation created by the billionaire conservative mega-donors Charles and David Koch is quietly investing millions of dollars in programs to win over an unlikely demographic target for their brand of small-government conservatism ― poor people.

The outreach includes everything from turkey giveaways, GED training and English-language instruction for Hispanic immigrants to community holiday meals and healthy living classes for predominantly African American groups to vocational training and couponing classes for the under-employed. The strategy, according to sources familiar with it and documents reviewed by POLITICO, calls for presenting a more compassionate side of the brothers’ politics to new audiences, while fighting the perception that their groups are merely fronts for rich Republicans seeking to game the political process for personal gain.

The efforts include a healthy dose of proselytizing about free enterprise and how it can do more than government to lift people out of poverty.

“We want people to know that they can earn their own success. They don’t need the government to give it to them,” Koch network official Jennifer Stefano told activists and donors during an August rally in Columbus, Ohio, at which she introduced one such project, Bridge to Wellbeing.

Housed within the foundation arm of Americans for Prosperity, the Koch network’s largest group, the program represents “the new way to advance freedom,” Stefano boasted. “And so that’s why, today, you’ll see Americans for Prosperity Foundation reaching out to new communities offering not just classes on the Constitution, and knowing your rights, but on couponing and how to turn your passion into profit by helping other people be successful, to not just tell them about the economy and economic freedom, but to show them that we want them to economically thrive, and how to do it.”

Bridge to Wellbeing last week served hot dinners to crowds of dozens of primarily African American attendees at a church in Miami and a community center in Orlando. A chef offered tips on how to prepare “dinner on a dime,” while attendees were guided into “learning about freedom,” according to the Twitter feed of one AFP staffer.

The Koch efforts can seem at times almost like a post-Citizens United version of turn-of-the-century political machines like Tammany Hall ― part privatized social-service agency, part voter mobilization. But liberal critics see it as a craven and patronizing gambit to bribe the disadvantaged into supporting a de-regulatory agenda that helps the haves at the expense of the have-nots.

“It won’t work. They can’t hide their agenda of lower wages, no unions and no health care, which would be devastating to these communities, merely by trying to ‘help’ them with a food coupon,” said David Brock, who founded a liberal non-profit group that tracks the Koch network. He added, “It’s also creepy. It sounds like something Hezbollah would do to get recruits.”

Like most else in the Kochs’ expansive network, which plans to spend as much as $889 million from the industrialist Koch brothers and hundreds of allied mega-donors in the run-up to the 2016 election, the so-called well-being efforts, as they are known within the network, are only partly about electing Republicans.

Charles Koch has long argued ― mostly privately until recently ― that government welfare and regulation actually hold back many of its ostensible beneficiaries. His network’s goal, he told hundreds of ultra-rich conservatives he had summoned to a tony Southern California resort this summer, “is to remove the shackles preventing all Americans, especially the disadvantaged, from pursuing their dreams. That’s what’s happening in this country. We are crushing ― these policies are crushing peoples’ dreams,” including by making “it nearly impossible for the poor to start a small business or, in many cases, even work.”

Koch went on to call his network “the most effective movement in history for helping people improve their lives and making the world a better place.”

In addition to Bridge to Wellbeing, Koch-backed wellness efforts include the Hispanic-focused LIBRE Initiative, which has given away holiday turkeys and toys, as well as Spanish-language training for drivers’ licensing, GED exams and tax-preparation. Another network group, Concerned Veterans for America, is expected to begin offering similar well-being programs for veterans, according to sources. There are also initiatives aimed at the homeless, developmentally disabled and mentally ill. And there’s a new group called Stand Together for America focused partly on using well-being-related outreach to appeal to what network officials call “the middle third” ― persuadable voters who are mostly disengaged. And the Charles Koch Institute in 2013 launched a “Well-Being Initiative” to provideintellectual firepower for the overall network effort.

“Sometimes, we have not been as good at explaining the virtues of economic freedom and individual liberty to people who are struggling,” said Americans for Prosperity’s president Tim Phillips. He also conceded that well-being initiatives could help AFP’s main arm satisfy an Internal Revenue Service requirement that the group spend most of its money on educational or charitable purposes, not political or policy advocacy. “Part of it is we are a social welfare organization. And, so, yes, we do try to help folks live more prosperous lives. That’s not related to direct policy.”

“Could come off as not being genuine”

The well-being push includes causes that defy easy partisan typecasting ― such as a major criminal justice reform push and a fledgling fight to reduce occupational licensing ― on which Koch allies have worked with liberal groups and even lately with President Barack Obama’s administration. But messages about reining in government and empowering the private sector undergird all of the efforts ― even pitching in to help emergency victims.

After a chemical spill polluted the water supply in nine West Virginia counties last year, AFP Foundation gave away more than 100,000 gallons of bottled water to affected residents. Some environmentalists bristled, pointing out that Koch-backed groups have fought against stricter environmental regulations. But sources say that Stefano, the Bridge to Wellbeing leader, in a presentation to AFP staff, argued that charitable efforts like the one in West Virginia “allow us to demonstrate our values of individual responsibility and the private sector stepping up in times of need, instead of waiting for government.”

Inside the network, the well-being initiatives are viewed as a legacy project for Charles Koch and his longtime lieutenant Rich Fink. An executive at the brothers’ multinational industrial conglomerate Koch Industries, Fink advocated for the creation of Stand Together for America, and has sat on the boards of Charles Koch Institute and Americans for Prosperity Foundation, though he left the AFPF board at the end of last month. Sources familiar with the network tell POLITICO that, in weekly meetings of top officials from across the expanding network, groups are urged to pursue outreach to disadvantaged groups.

“They’re trying to reshape the country, and they realize they can’t do that without changing the perception of conservatism,” said one operative who works with Koch-backed groups, who requested anonymity. In an internal network memo reviewed by POLITICO, though, in which AFP sought additional program funds, it predicted that the Bridge to Wellbeing initiative would allow the group and its foundation to “go on the offense against the current suggestions that AFPF is extreme, an arm of a political party or the front group for wealthy donors.”

Still, there’s a fair amount of concern inside the network that the efforts could be a costly boondoggle that is unlikely to yield any progress towards the Kochs’ goals, and more likely risks backlash.

Stefano privately addressed those concerns during Bridge to Wellbeing’s formative stages, according to sources familiar with the discussions, who said she warned network officials on multiple occasions that “capitalizing on these types of events could come off as not being genuine.”

And one former network executive said, “There are a lot of high-up lieutenants who roll their eyes when they talk about this and question whether it’s getting any bang for the buck. How does teaching people how to clip coupons or giving them free turkeys translate into convincing them that conservatives or Republicans have the best interests of the disadvantaged at heart? Is this really changing people’s minds or are they just showing up for the free turkeys?”

The calculation, according to AFP spokesman Levi Russell, is that new audiences might be more receptive to the message if it’s presented in a less-political context. “If we’re only engaging people on the latest piece of legislation being debated, we’re starting too late in the process,” Russell said.

‘Care and intent’

After spending more than $400 million boosting conservative candidates and causes in the run-up to the 2012 election, only to see Democrats retain the White House and the Senate, the Koch network commissioned a forensic analysis to determine where their efforts had fallen short.

It identified a number of needed tactical and strategic adjustments. But it also concluded that its efforts were hampered by the widespread perception that conservatives don’t care about the plight of regular folks struggling to make ends meet ― let alone the underprivileged.

Sources tell POLITICO that, in post-election strategy sessions, Charles Koch and his inner circle fixated on an exit poll finding that highlighted a so-called “empathy gap” that plagued GOP presidential nominee Mitt Romney. Among voters seeking a candidate who “cares about people like me”, Obama clobbered Romney 81 percent to 18 percent ― by far the widest gap among the four traits commonly measured (the others are vision for the future, shares my values and strong leader).

“All we talked about post-2012 was that statistic,” said a former executive with one network group. “How Romney won on economics or national defense but lost like 80 to 20 on who cares about you. It spoke to a larger problem with the conservative movement. Romney just embodied that.”

Koch and Fink concluded that winning over empathy-seeking voters could help them tilt the electoral map in their favor.

“If we are successful, there will be enough … support to not only drive state policies, but also to elect a majority of freedom advocates in the House of Representatives and the U.S. Senate, and we need 317 electoral votes to elect a president who will advance” economic freedom, Fink argued to donors at a closed-door 2014 session. In his remarks, which were secretly recorded and posted online by a liberal blogger, he stressed that “intent matters to this middle third,” and pointed out “Mitt Romney won on leadership. He won on the economy. He won on experience. What did he lose on? He lost on care and intent.”

He conceded that the Koch network’s efforts to reach the coveted middle third have been clumsy. The focus has been on “telling them what’s important — what we think is important should be important to them. And they’re not responding and don’t like it, okay? Well, we get business — what do we do? We want to find out what the customer wants, right, not what we want them to buy.”

The network commissioned focus groups done by veteran GOP pollster Frank Luntz, a Koch favorite, to assess the concerns of the middle third, and determine how best to reach them, sources told POLITICO. On top of that, Fink told the donors the network gathered “20 years of objective research of left, right, middle scientists, and we’ve looked at 170,000 surveys of people around the world, in the United States — they were all people in the middle — and what they think is important.”

The result was an index of “six dimensions demonstrated to be key factors of well-being,” according to documents from the Charles Koch Institute. Among them were increasing the standard of living by providing for basic necessities, offering opportunity through strong job markets and entrepreneurship, bolstering personal freedom, encouraging family and community bonds, promoting physical and mental health and providing safety from war and crime.

It’s difficult to assess how much of the network’s $889-million budget for the 2016 cycle is slated for well-being initiatives, both because the efforts are spread across multiple groups and because the groups aren’t required to disclose detailed financial information.

But sources tell POLITICO that Fink has directed that a greater percentage of AFP’s overall budget be allocated to its foundation, which runs Bridge to Wellbeing and which tax filings show had a 2014 budget of $23 million (as compared to $82 million for AFP’s main arm). And leaked documents reveal that the Koch network has pitched donors on well-being projects and concepts since at least last year.

At a June 2014 network gathering, donors were given the option of attending breakout sessions entitled “Well-Being: What It Is and Why It’s Important” and “Value-Added Events: Engaging the Middle Third.” The latter session, which refers to the precursor program to Bridge to Wellbeing, featured presentations by Stefano and Fink’s daughter Justine Fink, who helps run Bridge to Wellbeing. Stefano was listed as the “VP of Value Added Events” on AFP’s 2014 tax filings, which show she received an annual salary of $184,000.

“Not politics”

The Bridge to Wellbeing pilot program was launched in key swing states like Colorado, Florida, North Carolina and Virginia. And insiders profess that the hope is that some of those helped by the network’s social services will embrace free-enterprise conservatism and possibly even join the ground troops that Koch-backed groups deploy to get out the vote.

Yet, publicly, the Kochs and their allies downplay political motivations.

In a promotional video shot at a Bridge to Wellbeing turkey giveaway, an “instructor” named Nicole Thorton, who previously worked as a high school history teacher and now teaches courses for AFP Foundation about the Constitution and individual rights, explained that the purpose “is not politics. It’s to help citizens to have a better quality of life and that is something that everybody wants, regardless of your political affiliation.”

There’s an almost evangelical undercurrent to the group’s efforts, which came across during Stefano’s speech in Columbus this summer.

“We have to go out and we have to embrace people for who they are. We have to meet them where they’re at. We must personalize freedom so that it’s meaningful to them and not just to us,” Stefano said, after taking the stage to the Rocky theme song. “There is no community, no group of people, no barrier that the six states that have agreed to a test of this model would not overcome to advance this new way of introducing Americans again to freedom,” she said. “We have gone in to shelters, rescue missions. We have gone and taken our message to people with intellectual disabilities, those with mental illness.”

Bridge seeks to cultivate relationships with potential activists by holding smaller-group events that bring in “aligned but unengaged” people, according to sources familiar with the planning. A particular focus is women. An AFP survey found women would be more likely to attend events if childcare or child-friendly entertainment is offered, sources said. It also found that events using words like “everyday affordability” were popular with “aligned but unengaged women.”

Bridge’s events are typically held at churches or community centers. They offer “coaches” in areas including “budgeting and finance” and “health and lifestyle, nutrition” and “constitutional and personal rights.” Free workshops are geared towards teaching “how to save money and have economic freedom.” Specific skills have included couponing, healthy and affordable eating and tips for answering the question “Is My Child’s School Any Good?”

It held a “Business, Budgeting and Money Saving Tips” event at a conservative church in Richmond, Va., and a healthcare event in Phoenix, Ariz., where a local doctor discussed how women can lead healthier lives while also criticizing Obamacare as hindering healthcare delivery and medical advances.

One event attendee explained in a promotional video he’s “learned how to flip furniture” and use coupons, as well as better time management.

During the turkey giveaway featured in the video, a participant identified as Alyssa thanked Bridge to Wellbeing for helping her family recover from her husband’s lay-off.

“If it wasn’t for you guys, I don’t know how we would have made it the past few months, if you guys hadn’t offered that couponing class, because I didn’t even know how I was going to put groceries in my cabinet,” she said. “And I am incredibly grateful and I really appreciate all the hard work that you guys do and you put into it.”