Growing Koch network tries to shed secretive image

On Jan. 30, the billionaire industrialist Charles Koch stepped onto a stage in Indian Wells, California, to address his network of conservative political donors.

The group has met twice a year for more than a decade, but this crowd was the biggest yet, 500 wealthy Americans from all over the country. The group’s roughly $500 million budget for 2016 is also a record.

Despite the strong numbers, Koch’s message was grim.

After laying out his vision of the kind of free-market paradise he aspires to create in the U.S., he said, “the tragedy is, in my view, that America is moving farther and farther away from this type of society.”

Koch and his brother, David, have been funding libertarian-oriented causes for decades, but the next year will be a particular test for them and their allies, who are members of an organization known as Freedom Partners.

Recent experience in the Republican presidential primary has offered a reminder that even very large piles of money don’t guarantee victory.

Although the Koch brothers themselves haven’t backed a particular candidate, nor has their network issued an endorsement, many members have placed large bets on the race and now have little to show for them.

A super-PAC supporting Scott Walker raised more than $20 million before his campaign collapsed last year; among the biggest donors was Diane Hendricks, a Wisconsin roofing billionaire and a member of the Koch network. Other members wrote seven-figure checks to super-PACs supporting Jeb Bush, Chris Christie, and John Kasich.

The spending failed to propel any of these candidates atop the polls.

Instead, the front-runner has been Donald Trump, whose campaign relies less on money and more on dominating television news coverage. With his calls for mass deportation of undocumented immigrants and his spotty credentials as a fiscal conservative, Trump gets little support from Koch donors. He wasn’t among the five candidates invited to speak at a Freedom Partners summit last year in Dana Point, California.

Marc Short, the president of Freedom Partners, said he was surprised at how ineffective the super-PAC spending has been, and his group has been trying to make sense of the Trump phenomenon.

“Support for Trump is not philosophical. It’s a frustration and even an understandable anger that people feel, that their representatives in Washington don’t represent their interests anymore,” he said in an interview on the sidelines of the conference. “We agree with the frustration, but we just feel like that’s the wrong prescription to solve the problem.”

The Kochs allowed six news organizations to attend parts of the gathering in Indian Wells, on the condition that reporters not approach donors or report on their presence without permission.

The group spent almost $400 million in 2015, officials here said, part of a spending plan of $889 million between last year and this one. Much of that giving takes place through nonprofit vehicles that mask donors’ names.

Only about one-third of Freedom Partners’ money tends to go to electoral politics, and the meetings cover a broad range of projects, from providing scholarships to fighting campus speech codes to building networks of conservative activists.

The group is deeply involved in a push to reduce incarceration of nonviolent offenders, as well as an effort in Congress to abolish the Export-Import Bank.

With the Iowa caucuses Monday, no presidential candidates went to Indian Wells. Among the elected officials who were in attendance were Gov. Greg Abbott of Texas; U.S Reps. Jeb Hensarling, Ron DeSantis and Tom McClintock; and Sen, Ben Sasse of Nebraska.

After lunch on Jan. 31, Charles Koch spoke at length about his personal philosophy, which he says informs both how he runs the business, Koch Industries, and his political views.

He envisions a society that maximizes personal freedom, with the government’s role scaled back to a few areas, such as enforcing property rights and public safety. He says government cronyism creates a “two-tiered” society, dividing those with access to governmental power and those without.

Although historically the Koch network has supported mostly Republican candidates, Koch is sharply critical of both parties for what he views as out-of-control spending and corporate welfare.

Sometimes he sounds like a liberal. He warned that climate change’s worst effects would fall on people in poorer parts of the world. And of Bernie Sanders’ crusade against the power of corporations, he said, “a lot of what he says is true. The businesspeople who are successful haven’t become successful because they helped others improve their lives. It’s because they helped rig the system.”

Freedom Partners members, many of whom are owners of private companies, pay $100,000 to join the network. The twice-yearly seminars always take place amid heavy security at luxury resorts. Members often bring spouses and find time for golf in between meetings.

Since about 2010, Democrats such as Sen. Harry Reid have attacked the Kochs, saying they have too much influence in U.S. politics and that they use it to advance their business interests. A recent book, Dark Money, by Jane Mayer, is the latest to take a critical look.

Koch alluded to the criticism in his opening remarks, saying he’s had plenty of “garbage” thrown at him.

Still, he exhorted his members to step out of the shadows and publicly advocate for the group’s positions.

“I’ve been identified lately, and it’s not so bad. I’m still here. And matter of fact, I’m stronger than ever,” he said. “Come out and identify yourself, because this isn’t some secret cabal.”

Tamra Farah, of Colorado Springs, Colorado, is one who has taken Koch’s advice.

After joining Freedom Partners with her husband, Barry, a tech executive, she decided to work full-time for Americans for Prosperity, the Kochs’ largest activist network.

She said she hasn’t paid much attention to the current presidential race, and described going door-to-door in Colorado to build support for a repeal of President Barack Obama’s health-care law.

“We’re in this for the long haul.”

This story was originally published February 1, 2016 at 1:17 PM with the headline "Growing Koch network tries to shed secretive image."