Money to the Dems... Danger?

A New Alliance Of Democrats Spreads Funding
But Some in Party Bristle At Secrecy and Liberal Tilt

By Jim VandeHei and Chris Cillizza
Washington Post Staff Writers
Monday, July 17, 2006; A01

An alliance of nearly a hundred of the nation's wealthiest donors is
roiling Democratic political circles, directing more than $50 million
in the past nine months to liberal think tanks and advocacy groups in
what organizers say is the first installment of a long-term campaign
to compete more aggressively against conservatives.

A year after its founding, Democracy Alliance has followed up on its
pledge to become a major power in the liberal movement. It has
lavished millions on groups that have been willing to submit to its
extensive screening process and its demands for secrecy.

These include the Center for American Progress, a think tank with an
unabashed partisan edge, as well as Media Matters for America, which
tracks what it sees as conservative bias in the news media. Several
alliance donors are negotiating a major investment in Air America, a
liberal talk-radio network.

But the large checks and demanding style wielded by Democracy Alliance
organizers in recent months have caused unease among Washington's
community of Democratic-linked organizations. The alliance has
required organizations that receive its endorsement to sign agreements
shielding the identity of donors. Public interest groups said the
alliance represents a large source of undisclosed and unaccountable
political influence.

Democracy Alliance also has left some Washington political activists
concerned about what they perceive as a distinctly liberal tilt to the
group's funding decisions. Some activists said they worry that the
alliance's new clout may lead to groups with a more centrist ideology
becoming starved for resources.

Democracy Alliance was formed last year with major backing from
billionaires such as financier George Soros and Colorado software
entrepreneur Tim Gill. The inspiration, according to founders, was a
belief that Democrats became the minority party in part because
liberals do not have a well-funded network of policy shops, watchdog
groups and training centers for activists equivalent to what has
existed for years on the right.

But the alliance's early months have been marked by occasional
turmoil, according to several people who are now or have recently been
affiliated with the group. Made up of billionaires and millionaires
who are accustomed to calling the shots, the group at times has gotten
bogged down in disputes about its funding priorities and mission,
participants said.

Democracy Alliance organizers say early disagreements are first-year
growing pains for an organization that has decades-long goals. Judy
Wade, managing director of the alliance, said fewer than 10 percent of
its initial donors have left, a figure she called lower than would be
expected for a new venture. And she said the group's funding
priorities are a work in progress, as organizers try to determine what
will have the most influence in revitalizing what she called the
"center-left" movement.

"Everything we invest in should have not just short-term impact but
long-term impact and sustainability," she said. The group requires
nondisclosure agreements because many donors prefer anonymity, Wade
added. Some donors expressed concern about being attacked on the Web
or elsewhere for their political stance; others did not want to be
targeted by fundraisers.

"Like a lot of elite groups, we fly beneath the radar," said Guy
Saperstein, an Oakland lawyer and alliance donor. But "we are not so
stupid though," he said, to think "we can deny our existence."

This article is based on interviews with more than two dozen Democrats
who are members of the alliance, recipients of their money or familiar
with the group's operations. None would speak on the record about
financial details, but all such details were confirmed by multiple
sources.

Democracy Alliance works essentially as a cooperative for donors,
allowing them to coordinate their giving so that it has more
influence.

To become a "partner," as the members are referred to internally,
requires a $25,000 entry fee and annual dues of $30,000 to cover
alliance operations as well as some of its contributions to start-up
liberal groups. Beyond this, partners also agree to spend at least
$200,000 annually on organizations that have been endorsed by the
alliance. Essentially, the alliance serves as an accreditation agency
for political advocacy groups.

This accreditation process is the root of Democracy Alliance's
influence. If a group does not receive the alliance's blessing, dozens
of the nation's wealthiest political contributors as a practical
matter become off-limits for fundraising purposes.

Many of these contributors give away far more than the $200,000
requirement. Soros, Gill and insurance magnate Peter Lewis are among
the biggest contributors, but 45 percent of the 95 partners gave
$300,000 or better in the initial round of grants last October,
according to a source familiar with the organization.

Democracy Alliance organizers say they are trying to bring principles
of accountability and capital investment that are common in business
to the world of political advocacy, where they believe such principles
have often been missing.

Wade declined to discuss the donors or the groups they fund. But, in
an interview, she described how the groups were chosen. Alliance
officials initially reviewed about 600 liberal and Democratic-leaning
organizations. Then, about 40 of those groups were invited to apply
for an endorsement -- with a requirement that they submit detailed
business plans and internal financial information. Those groups were
then screened by a panel of alliance staff members, donors and outside
experts, including some with expertise in philanthropy rather than
politics. So far, according to people familiar with the alliance, 25
groups have received its blessing.

The goal was to invest in groups that could be influential in building
what activists call "political infrastructure" -- institutions that
can support Democratic causes not simply in the next election but for
years to come.

Those who make the cut have prospered. The Center for American
Progress (CAP), which is led by former Clinton White House chief of
staff John Podesta, received $5 million in the first round because it
was seen as a liberal version of the Heritage Foundation, which
blossomed as a conservative idea shop in the Reagan years, said one
person closely familiar with alliance operations. CAP officials
declined to comment.

Likewise, a Democracy Alliance blessing effectively jump-started
Citizens for Responsibility and Ethics in Washington (CREW). It bills
itself as a nonpartisan watchdog group committed to targeting
"government officials who sacrifice the common good to special
interests." Alliance officials see CREW as a possible counterweight to
conservative-leaning Judicial Watch, which filed numerous lawsuits
against Clinton administration officials in the 1990s. A CREW
spokesman declined to comment.

The Center for Progressive Leadership and its president, Peter Murray,
are getting funding from the alliance and are seen by some as a
potential leader in training young activists on the left. While the
center is still dwarfed by conservative groups such as the Leadership
Institute, alliance donors have helped increase Murray's budget to
$2.3 million, compared with $1 million one year ago, he said.

But Democracy Alliance's decisions not to back some prominent groups
have stirred resentment. Among the groups that did not receive backing
in early rounds were such well-known centrist groups as the Democratic
Leadership Council and the Truman National Security Project.

Funding for these groups was "rejected purely because of their
ideologies," said one Democrat familiar with internal Democracy
Alliance funding discussions.

Officials with numerous policy and political groups in Washington said
they have reservations about the group's influence. Several declined
to talk on the record for fear of alienating a funding source.

But Matt Bennett, a vice president at Third Way, a centrist group that
did not receive funding in the first wave of endorsements, said he
believes that Democracy Alliance has merit. "It will enable
progressives, for the first time ever, to build a permanent
infrastructure to beat the conservative machine," he said.

Philanthropist David Friedman, an alliance partner and self-described
centrist, said that "as our portfolio grows, we will fund a broader
range of groups."

But some consider Democracy Alliance's hidden influence troubling,
regardless of its ideological orientation. Unlike election campaigns,
which must detail contributions and spending, most of the think tanks
and not-for-profit groups funded by the alliance are exempt from
public disclosure laws.

"It is a huge problem," said Sheila Krumholz, the acting executive
director of the nonpartisan Center for Responsive Politics. She noted
that for decades "all kinds of Democrats and liberals were complaining
that corporations and individuals were carrying on these stealth
campaigns to fund right-wing think tanks and advocacy groups. Just as
it was then, it is a problem today."

The exclusive donor club includes millionaires such as Susie Tompkins
Buell and her husband, Mark Buell, major backers of Sen. Hillary
Rodham Clinton (D-N.Y.), and Chris Gabrieli, an investment banker
running for the Democratic gubernatorial nomination in Massachusetts
this September. Mark Buell estimated that about 70 percent of alliance
partners built their own wealth, while 30 percent became wealthy
through inheritances.

Bernard L. Schwartz, retired chief executive of Loral Space &
Communications Inc. and an alliance donor, said the group offers
partners "an array of opportunities that have passed their smell
test." This is most helpful, he said, for big donors who lack the time
to closely examine their political investment options.

Trial lawyer Fred Baron, a member of the alliance and longtime
Democratic donor, agreed: "The piece that has always been lacking in
our giving is long-term infrastructure investments."

There also are a few "institutional investors" such as the Service
Employees International Union (SEIU) that pay a $50,000 annual fee and
agree to spend $1 million on alliance-backed efforts.

Some Democratic political consultants privately fear that the sums
being spent by alliance donors will mean less money spent on winning
elections in 2006 and 2008.

But Rob Stein, co-founder of Democracy Alliance, said the party will
become ascendant only if it thinks beyond the next election cycle.

Stein has closely studied the conservative movement -- often with
envy. Armed with a PowerPoint presentation for potential donors, he
argues that Republicans dominate the federal and many state
governments because they methodically made investments in groups that
could generate new ideas, shape public opinion, train conservative
activists and elected officials, and boost voter turnout among
conservatives -- aware that there was no near-term payoff. Liberals
have done nothing comparable, he said.

"It is not possible in the 21st century to promote a coherent belief
system and maintain political influence without a robust, enduring
local, state and national institutional infrastructure," Stein said.
"Currently, the center-left is comparatively less strategic,
coordinated and well financed than the conservative-right. These
comparative disadvantages are debilitating."

Cillizza is a staff writer for washingtonpost.com.
(c) 2006 The Washington Post Company