Big $$ for Progressive Politics

On December 13, 2004, a month after the re-election of George W. Bush,
twenty-five of the wealthiest donors in the progressive community
gathered at the Four Seasons Hotel in Washington for an important
strategy session. The group had collectively poured hundreds of
millions of dollars into the effort to defeat Bush--and had nothing to
show for it. Yet the despair of John Kerry's defeat provided an urgent
call to arms. "The US didn't enter World War II until Japan bombed Pearl
Harbor," Erica Payne, a New York political consultant who helped
organize the gathering, told the donors. "We just had our Pearl Harbor."

The time had come for the donors to think differently about how to spend
their money, just as conservatives had done forty years earlier when
they launched a counteroffensive against liberalism and pushed the
Republican Party far to the right. The meeting was led by Rob Stein, a
former official in the Clinton Administration, who'd spent the last year
and a half developing a PowerPoint presentation vividly mapping the rise
of the conservative movement. He'd convened the meeting to encourage
progressives to emulate the conservative funders by investing in the
"guts" of politics--leaders and ideas and institutions that would last
beyond one election. A month later the Democracy Alliance officially
came into existence, as an exclusive collective of donors and one of the
progressive community's most ambitious undertakings yet.

Almost two years along, the Alliance's 100 donors have distributed
more than $50 million to center-left organizations and activists--a lot
of money, yet still largely symbolic given the deep pockets of its
members. Even as the donors pour millions into a new political
infrastructure, however, problems have emerged that mirror many of the
problems of the Democratic Party today and the progressive movement in
general.

The first is determining what, exactly, the group stands for and wants
to accomplish. 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. The right-wingers developed a core set of principles
and stuck to them with an insurgent sense of persistence and
aggressiveness. The wealthy liberals, in contrast, are still
debating among themselves how to spend their money. Do Alliance members
just want to be in the club or do they intend to change it? Do they want
to stick with the party's stars--Bill and Hillary Clinton and their
cadre of influential aides, who are preaching "moderation"--or are they
ready to listen to new voices? Are they really committed, and prepared,
to fund long-haul change?

To its credit, the Alliance has largely ignored the 2006 elections in
favor of developing a five-to-ten-year strategy. But the much bigger
presidential election season just around the corner will test the
donors' long-term resolve. 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. Rob Johnson, an early
board member, says the tension in the Alliance is between "party
subsidizers" and "climate changers"--those who want to fund
organizations that work toward more effectively electing candidates
versus those who aspire to change the fundamental nature of political
debate with a stronger set of governing principles.

A secondary problem is the struggle these well-meaning wealthy Democrats
have had in getting their own house in order. Since its inception, the
Alliance has been unabashedly elitist, while also poorly run. The
criteria for choosing winners have been maddeningly opaque and the
grants themselves contradictory. Far from speeding up the funding of
progressive organizations, the Alliance has slowed certain things down.
To stabilize the organization internally after almost a year of early
stumbles, the partners chose as its managing director Judy Wade, a
member of the elite firm McKinsey & Company, consultants to
multinational corporations. The appointment perhaps reflected
the group's uncertainty about its goals as well as the economic
proclivities of its members. Wade normalized the Alliance operationally
but further blurred its identity, increasing the likelihood that it will
uphold the economic and political status quo.

"There's a cautious pathway that traditional Democrats take, and it's
been hard to break that," says Johnson. If partners propose to fund the
liberal Campaign for America's Future, they must also support its
archrival, the DLC's Progressive Policy Institute (neither has received
funding so far). A newly elected board led by members of the Alliance's
progressive wing could make the group more adventurous. But an emphasis
on collegiality indicates that risk aversion may well be the order
of the day.

It's too soon to draw any conclusions about the Alliance. But sixty
interviews conducted over the past five months suggest that it's not too
early to worry that what began as a bold initiative may end up with as
little to show as the earnest but largely ineffective philanthropy it
was meant to supplant--which did good but didn't alter power. Indeed,
the Alliance could bolster a timid Democratic Party establishment
instead of transforming it. Of all the lessons from the right, the
Alliance has forgotten arguably the most important: It takes both money
and conviction to achieve victory. "It doesn't make sense to develop a
strategy without a vision," says James Piereson, longtime executive
director of the John M. Olin Foundation, which was one of the key
half-dozen funders on the right. "It's a mistaken analogy that
conservatives succeeded because of our tactics. I always thought
conservatives were successful because of the ideas we were trying to
sell."

It Started With the Phoenix

The Democracy Alliance began in the offices of the New Democrat
Network (NDN) and on the computer of Rob Stein, who'd served as chief of
staff to Clinton's Commerce Secretary Ron Brown. In 2002 and 2003
NDN, a creatively centrist Washington think tank, undertook a strategic
review to figure out what the "higher purpose" of the organization and
larger progressive movement should be. It called the effort the Phoenix
Group, named after the mythical bird that rises from its own ashes and
inspired by a character in a Harry Potter book. In the spring of 2003,
NDN president Simon Rosenberg and Payne saw Stein's PowerPoint
presentation, which he'd titled "The Conservative Message Machine
Money Matrix."

"The narrative was not new," Rosenberg says. "But the degree of research
and how he pulled it all together was the best explanation I'd seen of
how we are where we are today." Namely, out of power. It wasn't a
question of money--the five largest liberal foundations outspent their
conservative counterparts annually by a 10-to-1 ratio--but rather how it
was being spent. Back in the 1960s and early '70s, a handful of wealthy
conservative businessmen like John Olin and Richard Mellon Scaife began
generously bankrolling an array of policy centers, grassroots mass-based
organizations, leadership institutes and intellectuals to beat back what
the funders viewed as liberalism's assault on traditional structures
like the family, the free market and the military. Major Democratic
Party fundraisers and large foundations like Ford and Rockefeller
mounted no similar coordinated defense of liberalism. It was
this problem that Stein hoped to address through his presentation.

Payne set up a series of meetings for Stein on the East Coast with
prominent Democratic Party donors. Stein presented his research using a
lexicon the millionaires and billionaires understood. He called the
largest conservative donors "philanthropic venture capitalists." The
leaders of the conservative movement, such as Paul Weyrich and Grover
Norquist, were "political investment bankers." The
presentation helped convince the wealthy liberals that the
Republican Party's recent successes were a logical
outcome of determined movement building, not an accident of history.

During the fall of 2004, big donors were consumed with trying to oust
Bush from office. But after Kerry's defeat, the nascent Alliance moved
full speed ahead, officially beginning its existence in January 2005.
Only the most committed and well-to-do donors were accepted into the
high-priced club. Those joining included billionaires George Soros,
Peter Lewis and Herb and Marion Sandler; major Clinton fundraisers Mark
and Susie Buell and Bernard Schwartz; New York venture capitalist and
longtime Clinton supporter Alan Patricof; Hollywood celebrities Rob
Reiner and Norman Lear; wealthy high-tech Californians such as Working
Assets founder Michael Kieschnick; and the AFL-CIO and the SEIU.

Joining the Club

Members, known as "partners," were required to pay a $25,000 entry fee,
$30,000 in annual dues and a minimum of $200,000 per year to
organizations recommended by the Alliance. The Alliance would not dole
out money itself, but collectively the partners would meet twice a year
through its auspices to decide which organizations to fund, forming
working groups based on four priority areas: ideas, media, leadership
and civic engagement. The working groups would present their
recommendations to an investment committee made up of members of the
board, who would pass them on to the entire group. Partners could then
give money to the organizations they favored, voting with their
checkbooks. An Alliance recommendation meant a valuable gold star for
prospective progressive organizations. (The Alliance also put a premium
on secrecy to protect the anonymity of its donors, actively discouraging
members from speaking to the media and forcing grantees to sign
nondisclosure agreements. Thus, of the dozens of partners and heads of
organizations interviewed for this article, only a small number agreed
to speak in detail on the record.)

In April 2005 fifty-plus partners arrived in Phoenix for a three-day
conference. Stein, who announced at the outset of the 2004 Washington
conference that he didn't want to run the organization, led the meetings
on an interim basis. Even before Phoenix it had been decided that the
Alliance would represent an ideological big tent of centrist Democrats,
progressive Democrats and even a few disaffected Republicans. As a
result, partners and staff, few of whom had known one another before or
had a long track record in politics, downplayed their differences and
agreed to govern by compromise--never an easy thing, especially among
the rich. "We need infrastructure," says Rodger McFarlane, an adviser to
Colorado multimillionaire Tim Gill, describing the views of the
Alliance. "The right has taken over. That we agree on. Everything else
is in play."

In those early days, much of the focus--and most of the problems--were
internal, as chairman of the board Steven Gluckstern, a retired
investment banker from New York, searched for a leader of the group.
Meanwhile, for would-be recipients, the process of applying for money
was bewildering: completely secret and seemingly changing all the time.
Four days before the first round of funding, the board offered the plum
$400,000-a-year title of managing director to Robert Dunn, president
emeritus of Business for Social Responsibility. When Dunn declined they
turned to Judy Wade, who'd been encouraged to run by former Clinton
chief of staff John Podesta, although she had no prior
experience in politics.

At an October 2005 meeting at the Château Élan Winery &
Resort in Atlanta, Alliance partners agreed to give $28 million to nine
groups. A few were smaller, edgier, more progressive
organizations, like Citizens for Responsibility and Ethics in
Washington, a legal watchdog that made headlines by drafting an ethics
complaint against Representative Tom DeLay. But the bulk of the money
went to familiar names on the DC circuit, like the Center for American
Progress (CAP), a think tank run by Podesta, and Media Matters for
America, which monitors right-wing media and media bias, headed by
former conservative journalist David Brock.

The small number of groups chosen, some of whom were already well
funded, and the secrecy of the process infuriated organizations excluded
from the club. No one knew exactly why the nine groups had been picked.
Funding progressive infrastructure was all well and good, but no one
bothered defining precisely what "progressive" meant. The partners
themselves, with their business backgrounds, focused on the process by
which groups were funded, not what they would do with the money. "There
was an almost complete lack of actual substance," one adviser to a major
donor said of the Atlanta meeting. The groups were selected to mirror
the right but were far less anti-establishment than their conservative
counterparts.

In preparation for the second round of grants, the Alliance began to
open up. Wade normalized the selection process so that groups could
apply for grants. To appease angry partners, she decided that funding
would be determined by a changing menu of issue areas, not based on gaps
compared with what the right has funded.

From a morale perspective, the next gathering, in Austin, Texas, the
following May, was notably more successful than the one in Atlanta.
Leaders of the progressive movement, like labor leader Andy Stern, were
invited for panels on economics, foreign policy and media. Heads of
organizations mingled freely with partners. And the groups themselves
were noticeably more diverse than the initial gathering in Phoenix,
where sixteen of seventeen presenters were white males. "I've made it a
mission to hate the Democracy Alliance," the head of one prospective
organization told me, "and I was pleasantly surprised."

The funding choices themselves presented more of a mixed bag. As a
result of inside maneuvering by partners to fund their favorites, less
money went to more groups--$22 million to sixteen organizations, with
much of it only for one year. Grassroots organizations working on racial
and economic justice issues that probably would have been
overlooked in the first round, such as the Center for Community Change,
USAction and ACORN, made the cut. On the other hand, the issue
areas targeted for spring funding--voter mobilization (known as "civic
engagement"), youth outreach, Hispanic media and religious left
activism--while all deserving, seemed chosen specifically to coincide
with upcoming elections. And some of the larger groups funded, such as
EMILY's List and the Sierra Club, hardly needed the money. The
Alliance was created to think long-term and to fund gaps in
progressive infrastructure. But with two major elections coming up,
short-term electoral needs were bubbling to the surface.

Asurprise guest at the meeting was Bill Clinton, whose agenda seemed to
be protecting his wife. But things didn't work out quite as planned.
When Guy Saperstein, a retired lawyer from Oakland, asked Clinton if
Democrats who supported the war should apologize, the former President
"went fucking ballistic," according to Saperstein. Forget Hillary,
Clinton said angrily during a ten-minute rant; if I was in Congress I
would've voted for the war. "It was an extraordinary display of anger
and imperiousness," Saperstein says.

The willingness to challenge Clinton at least temporarily
reassured progressive Democrats that partners in the Alliance
had a spine and wouldn't be a front group for "Hillary '08." But
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. Hillary herself has had a number of one-on-one
sit-downs with members of the board, as has Howard Dean.

A month after the Austin meeting, a group of partners from the
Alliance's progressive wing were elected to the board on an informal
reform slate. They included Gara LaMarche of Soros's Open Society
Institute, Anna Burger of SEIU, Drummond Pike of the Tides Foundation
and Rob McKay, Taco Bell heir and president of the McKay Family
Foundation. Many of these foundations have been at the forefront of
funding progressive initiatives, like the campaign in California to pass
a living wage. At a July retreat in Boulder, Colorado, McKay and Burger
were elected chair and vice chair of the board. "This is the first
really elected board," says Burger, a longtime union organizer. "It
gives it legitimacy. People will feel more comfortable acting."

Unclear Priorities

But if McKay and Burger are to move the Alliance toward more effective
progressive funding, they will have to rethink its priorities, starting
with how many groups it funds and for how long. For the first round of
grants, Alliance staff repeatedly stressed the importance of following
four basic funding principles: Give organizations enough money to
compete with conservatives; fund organizations over the long haul so
they can achieve financial security and give them flexibility about how
they use the money; make sure the groups work together; and
urge the groups to use the money to affect public policy or engage with
the political process.

In the second round of funding, however, the Alliance fell into the
common liberal trap of needing to be all things to all people. After two
grant cycles the Alliance is overextended. Wade says she hopes the
Alliance, in conjunction with other funding coalitions, will
eventually be able to direct an ambitious $500 million annually in
grants. But with twenty-five 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 in Miami this November.

Of these, the media cutbacks are the most problematic.
Conservatives have aggressively recruited and funded an array of
authors, scholars and publications who have formulated
controversial ideas. Then they marketed those ideas, through media,
to wider audiences with the goal of changing public policy. To date the
Alliance hasn't been deeply involved in idea creation in the same way
conservatives have been, but at least initially it expressed interest in
funding better ways of getting a progressive message out.

At the first meeting in Phoenix, Alliance partners agreed that funding
media would be a front-and-center priority. Instead, says one
early member of the media committee, "it keeps getting shuttled to the
back, over and over." Partly that was because at the beginning of the
process few members were familiar with progressive media. In time, the
media committee developed a plan to fund bloggers, investigative
reporting and media reform efforts. Now, in the run-up to Miami, says
another media committee member, that plan has been slashed in half.
Media Matters did receive an $11 million commitment over three
years--but it only tracks right-wing media rather than producing
original content. Air America Radio was supposed to receive between $5
million and $8 million from the Alliance, but after months of
negotiations it still has received no money. Other efforts, such as The
American Prospect magazine and the start-up Progressive Book Club, are
also in limbo.

A funding shortfall only partially accounts for the Alliance's
inattention. There are philosophical reasons as well. Idea creation
takes time, media development is expensive and both are risky. And the
Alliance is highly risk-averse.

Many of the right's premier ideas--welfare reform, rolling back
détente with the Soviet Union, school vouchers--started off as a
"riverboat gamble," as former Senate majority leader Howard Baker
labeled Ronald Reagan's massive 1981 tax cut. "We did a lot of things at
the beginning that we didn't know would work," says the Olin
Foundation's Piereson. "If we needed a consensus it would've never
gotten done." A conference of law students and professors partly
underwritten by Olin in 1982 launched the Federalist Society, the
right's premier legal organ. A $25,000 grant to the obscure social
scientist Charles Murray led to his influential book on welfare reform,
Losing Ground. And so on.

Risk aversion is also reflected in the Alliance's preference for
underwriting organizations that won't upset the economic status quo.
Podesta's CAP has been keen to avoid trade and globalization issues that
separate the party elite from the rank-and-file Democratic base. While
CAP won a $5-million-per-year commitment from the Alliance over three
years, the unabashedly progressive Economic Policy Institute received a
small, $250,000 planning grant. (The other economic organization funded
generously by the Alliance, the Center on Budget and Policy Priorities,
does research on issues like poverty in a nonpartisan fashion.)

The same topics that are off-limits in the Democratic Party--US policy
on Israel, the bloated military budget, the role of big money in both
parties, the grip of corporations--are shunned by the Alliance. Groups
like MoveOn.org that target corporate Democrats, as the Club for Growth
does to moderate Republicans, are brushed aside. "MoveOn.org scares
a lot of these people," says an important partner.

Alliance staff originally conceived of an "innovation fund" to funnel
smaller amounts of money (between $25,000 and $250,000) to newer
ventures, such as the blogs and MeetUp-type gatherings, at the
discretion of the managing director. That concept, too, has yet to get
off the ground. Instead of directing the fund Wade, with her McKinsey
background, appointed yet another committee to oversee it, reinforcing
the inside joke that the Alliance at times resembles a "let's have a
meeting about having a meeting" self-parody. The inability to move
quickly and take risks in areas like media has persuaded a number of
progressive donors to stay out of the Alliance, most notably Silicon
Valley venture capitalists Andy and Deborah Rappaport, whose New
Progressive Coalition is specifically aimed at finding and funding
under-the-radar policy entrepreneurs and down-ballot candidates at
the state and local levels. Joining the Alliance, Deborah Rappaport
says, "would have constrained our ability to jump on new things as
they appear."

McKay says he'd like the Alliance to be more decisive, but it's hard to
tell whether that's possible. Taking a chance isn't easy when you need
to get approval from 100 millionaires and billionaires. "It's tough to
herd cats," former Alliance chair Steven Gluckstern liked to say, "but
herding fat cats is harder."

Between 1972 and 1999, conservatives created at least sixty new
organizations with mission statements modeled after that of the Heritage
Foundation, a radical think tank at the time of its founding: "free
enterprise, limited government, individual freedom, traditional American
values, and a strong national defense." When pollster Celinda Lake asked
a group of white Midwestern swing voters in 2004 what conservatives
stood for, most of them repeated those catchphrases. When she asked the
same question about liberals, half the voters responded, "I don't know."

In its early stages the Alliance, following the lead of Heritage,
attempted to hammer out a mission statement for the
organization. A year later the document is still a work in
progress. Wade says the goal of the Alliance is to strengthen democracy.
"That means an actively engaged citizenry...real solutions to critical
issues...and a democracy not dominated by the far right," she says.
Laudable goals, but hardly a road map for changing public policy.
"There are pragmatists and there are activists," partners say Wade
frequently tells them, "and I'm a pragmatist and that's where this
organization should be." Needless to say, the early conservative
activists, whether at National Review or on Barry Goldwater's
1964 campaign, couldn't have disagreed more.

The irony is that as the Alliance attempts to articulate its agenda, the
old phase of conservative philanthropy--rich families like Olin and
Scaife funding political change--is coming to an end and the
conservative movement and Republican Party are running empty on ideas.
Signature proposals, such as privatizing Social Security (and everything
else) or eliminating the Education Department, have been widely
discredited. "Obviously the left, if they can get themselves in
position, can make a move," says Piereson.

The Bush era has jolted liberal philanthropists into action. No matter
what the Alliance does, the impetus behind it will find other outlets.
State-based donor collectives modeled after the Alliance have started in
Washington, California, Ohio, Wisconsin and Colorado. Donors
disaffected with the Alliance, like the Rappaports, have created their
own organizations. Together these endeavors can create a
market for entrepreneurs shopping ideas, just as conservatives did forty
years ago. The notion of doing what wasn't getting done--thinking
broadly, taking gambles, going beyond electoral politics and
cultivating ideas and institutions and leaders--drew many of the
partners to the table in the first place. Perhaps the best plan for the
Alliance's future is remembering why it was started--and why
conservatives won.

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