Full disclosure: I work for a DC-based think tank. So I understand how nonprofits of this kind exist alongside funders and boards. I’m also familiar with occasional baseless accusations of being beholden to one or another stakeholder. But the storm brewing around Cato Institute — a libertarian think tank also based in Washington — rises to another level due to three little words: the Koch brothers.
Allow me to disabuse you of the notion that I have anything against Cato. Like most things libertarian, a broken clock is right twice a day. For every baffling economic or tech-policy position, Cato occasionally strikes a well-reasoned pose. (See: gay marriage; foreign policy and national security.)
Of course, there’s the whole climate change-denying business. But at least it’s good business — ExxonMobil has donated substantially to Cato, as has Chevron, Shell Oil and Tenneco Gas, the American Petroleum Institute and the Amoco Foundation. Not a huge deal on the surface — successful nonprofits should have diverse funding portfolios, and they can often include groups and individuals with whom the organization agrees or disagrees. Sure is a lotta energy companies there, though.
My point isn’t to besmirch Cato’s reputation; they can do a fine enough job of that on their own. What’s more interesting to me, and those who observe DC for sport, is where the institute goes from here. The Koch brothers recently filed a lawsuit to assert control over Cato, but in reality, Charles and David Koch have always had pull. Of course, that doesn’t mean that the org wants to completely bend over. New York Times reports:
The rift has its roots, Cato officials said, in a long-simmering feud over efforts by Charles Koch and his brother David Koch to install their own people on the institute’s 16-member board and to establish a more direct pipeline between Cato and the family’s Republican political outlets, including groups that Democrats complain have mounted a multimillion-dollar assault on President Obama. Tensions reached a new level with a lawsuit filed last week by the Kochs against Cato over its governing structure…
…At a tense meeting in November at Dulles Airport outside Washington, David Koch and two family emissaries laid out what they described as the “intellectual ammunition” they envisioned that Cato could provide by supplying its brand-name research and scholars to Koch-financed political advocacy groups, according to [Cato board chairman] Robert A. Levy.
Color us pleased that Cato is resisting the dirty deal the Koch bros. are peddling. What, Americans for Prosperity isn’t good enough for you guys? But as I said before, the Koch influence already exists. In fact, the way Cato is structured is designed to guarantee it. NYT:
The brothers still wield significant influence over Cato’s governance because of its unusual structure, which created four “shareholder” seats, each with shares of capital stock bought for a dollar each. The Kochs have used their shareholder positions to name seven employees and associates to the 16-member board.
The shareholder arrangement has raised questions among some nonprofit tax experts, who said a sale of the shares was legally problematic and possibly in conflict with Internal Revenue Service regulations.
So the think tank is “in the tank” and might not even be a qualifying nonprofit? Impressive.
Things sure get weird in Washington, especially during election season. I’d like to think that Cato can resist the pull of Koch’s evil empire, but looking at the history and hierarchy, I’m not so sure. Still, I wish them the best of luck. Better to have a nerdy libertarian consortium that puts out wackadoodle white papers than a morally bereft propaganda factory with the borrowed veneer of legitimacy.
But after you’ve made the initial Faustian bargain, sometimes you don’t get to choose.