How a group of young, liberal philanthropists are commandeering their family fortunes for 2020.
The new philanthropists of the Trump era are young, liberal, and ticked off — at their parents.
This group is spoiling to oust the president this November. But they’re also spoiling for yet another bloody fight, one within their own bloodlines to politicize their family’s giving.
Behind the scenes, a younger generation of heirs has begun commandeering their family foundations and convincing their socially minded, but largely nonpartisan, elders to stop spending all their money on charitable institutions that don’t actually address structural issues in society. They’re trying to shift millions that have long gone to alma maters and senior centers toward electoral combat.
Every industry has been deeply politicized in the age of Trump, and the family charity is no different.
It’s all a new movement for the left, which for all its wealth has historically struggled to lavish the same billions on political advocacy groups that it has on libraries, universities, and museums. Gifts to those traditional charities are increasingly criticized as ineffective. Meanwhile, in the decade since the Supreme Court’s Citizens United decision opened the floodgates to new political spending, conservative advocacy groups have vastly outspent liberal groups by some $400 million that has helped elect Republicans up and down the ballot. This has left some Democratic operatives feeling they need to better organize the billionaires in their ranks behind political nonprofits.
That’s why some Democrats are salivating about the possibility of a new way to get their hands on liberal purse strings not by convincing the older generation but by encouraging this younger generation that is bringing their to-the-barricades attitude to their own old-money families ahead of the November election.
If the kids win, liberals think they could usher millions of dollars into progressive politics that are currently trapped on the philanthropic sidelines.
“That’s what every political fundraiser’s dream always is,” said Alexandra Acker-Lyons, an adviser to many younger Silicon Valley political donors.
Why people on the left are watching Resource Generation
More and more charities — from the Southern Poverty Law Center to the NAACP — have started their own political arms upon realizing after Trump’s election that they were ill-equipped to execute their social justice missions without exerting political influence.
But the real center of this resurgent and insurgent philanthropic push are groups like Resource Generation, a closely watched national network of young, lefty inheritors whose family fortunes total a staggering $22 billion.
One affiliated donor, for instance, said that she and her family spent very little on political groups prior to 2016, focusing their time and money on charitable giving instead. That changed during a 2018 camping retreat for members of the family foundation when her mother shared that she had dreams to see the US elect its first female president.
“If that’s what your long-term vision is 10 years from now,” the daughter told her mother, “we’ve got to do some C4 (political) giving.”
The family is now preparing to spend $1 million through groups like Climate Equity Action Fund ahead of the November election, which will help organize voters who care about environmental issues in five presidential battleground states.
Or take Michael Schmale, who comes from a conservative family that made a fortune in the oil and gas industry. The Schmale family liked to donate their millions to safe, hard-to-protest causes, like the $500,000 his parents donated to a senior home in their native San Diego, or to colleges like the Colorado School of Mines, his father’s alma mater.
Then 2016 happened. And Schmale — then a 30-year-old lawyer in New York City and a new member of Resource Generation — took the wheel.
“Prior to 2016, giving wasn’t really a family affair,” he said. But now? “I’m the one researching organizations. Making phone calls with executive directors. [My parents are] generally receptive to what I suggest.”
And what Schmale often suggests is a bit of a departure from his parents’ usual fare. Since he began directing his family’s giving, the Schmale family’s yearly donations have doubled. But here’s the thing: That extra money isn’t going to schools or charities, it’s all going to politics.
Why charity needs to change to get political
Resource Generation is just one little-known group, but its evolution speaks to how liberal networks are itching to uncuff the legal shackles that have historically handicapped them.
It has 700 rabble-rousers, all of whom are under the age of 35 and most of whom are heirs of families in the top 10 percent of the country by income or wealth. The organization is a cross between a college philosophy seminar and a group therapy session, as members wrestle with their class privilege and begin each meeting by sharing aloud their “Money Stories,” which are the often unsavory ways their families amassed their fortunes in the past, like slaveholding or corporate raiding.
What it has not been — until recently — was yet another advocacy organization. In fact, it took internal pressure for Resource Generation to begin letting its members solicit one another for donations to their favored political causes last year.
Now, Resource Generation is seriously considering launching a new political nonprofit, according to people familiar with the matter, that would amount to a politicization of its core mission.
“People are giving the big gifts to their alma maters or to big institutions that are working on things that are often making up for the fact that government funding priorities are not enough,” said Billy Wimsatt, a former board member of Resource Generation. “If you’re a smart philanthropist who’s thinking about giving millions of dollars to your alma mater … if you gave it strategically to fund political change, you can have an order of magnitude bigger impact on the things you care about.”
Wimsatt is now leading an organization called Movement Voter Project (MVP), which scouts national political groups and recommends where the wealthy should place their chips. MVP and Resource Generation have had some discussions about a potential partnership that would, in effect, offer its consulting services to Resource Generation’s new donors, part of MVP’s effort to route $50 million to $100 million during this presidential cycle to outside groups.
The plans boil down to some arcane tax law: Your typical charities and foundations — from the Red Cross to the Colorado School of Mines — are classified under a section of the IRS code called 501(c)3, or just “C3s.” Give $1 million to a C3 and you’ll receive a massive tax break — but that money has to be spent on charity, not on politics.
What Resource Generation is considering launching is a similar but different kind of nonprofit, which would be classified under section 501(c)4. These kinds of nonprofits, which are called C4s, can spend their money on political advocacy, such as how Charles and David Koch funded conservative grassroots groups and the National Rifle Association. Donations to C4s don’t offer tax breaks, though (which dissuades some from donating).
But a new generation of donors is less focused on tax breaks.
“This moment demands that we do everything we can do,” Sarah Frank, the granddaughter of a Chicago steel baron and one of the leading political agitators within Resource Generation, told Recode.
Before the 2018 midterms, Frank and four other Resource Generation members tapped their network to raise $200,000 to back candidates running for New York state office in the Democratic primary. But because Resource Generation is a C3, this all had to happen covertly.
“Oh my god,” Frank recalled thinking, “I’m doing this thing and I can’t send it out to our listserv.”
How politics could threaten and transform your neighborhood charity
But there could indeed be losers from this new push, both from the charities that wish philanthropy wasn’t getting so politicized and from activists who think it’s not getting politicized enough.
The most obvious losers are the traditional charities that could see donors start shifting their money away from C3s and toward C4s.
People only have a certain amount of disposable money to spend on philanthropy of all types. So to some extent, it is indeed zero-sum — and charity could be undercut.
Melissa Berman, who advises traditional foundations on how to raise money, told Recode she has seen data that shows the share of money that goes to politics instead of philanthropy tends to spike in the lead-up to presidential elections. While political gifts are usually about 2 percent of a month’s total philanthropic giving, that share jumped to about 12 percent before the 2012 and 2016 elections. (Philanthropic giving falls in the aggregate, as well.)
“There is some risk to traditional charitable organizations. Part of the question of risk for traditional charities is whether these younger, social-change agents budget their money,” explained Berman. “If I give $1,000 to a political campaign, that comes out of the $1,000 I’d be giving to an anti-hunger initiative. Absolutely, some people budget that way.”
But giving to political nonprofits also means donors aren’t giving directly to politicians or their super PACs. These donors are, in general, not redirecting money to people like Joe Biden or Elizabeth Warren, but to advocacy groups that try to register voters or combat climate change, building a liberal movement beneath the surface.
Leah Hunt-Hendrix is the granddaughter of Texas oil billionaire H.L. Hunt, and she sits at the center of this new power circle of young, liberal donors. Hendrix spent the last several years in San Francisco trying to convince her wealthy Silicon Valley peers to spend their money on grassroots movements rather than on political candidates.
“Electoral politics was seen as actually problematic. … All those resources were going to the next short-term win for the next mediocre Democrat just because we’re trying to hold onto a seat,” Hunt-Hendrix told Recode. “I spent years saying we needed to divert resources to movements that expand what’s possible — and let the electoral results follow.”
Inside the new family fights of 2020
One other advantage of donating to C4 groups instead of to candidates: They are a sweet spot between full-scale partisan warfare and inoffensive charity. In theory.
“Politics is more divisive than charitable activity. And depending on your relationship with your family, some young donors don’t want to engage directly with their family around politics,” said MVP’s Jason Franklin, who works with high-net-worth families, including some of those he knows from his days at Resource Generation. “C4 giving is actually a way for families to find common ground around politics.”
But make no mistake, this isn’t common ground for everyone. Some Resource Generation members privately say they’re nervous about jumping into the shark tank of presidential politics. And there are cautionary tales everywhere.
Ila Duncan is the sixth generation of the Lumpkin family, which founded what would become one of the country’s largest telephone companies in the 20th century. Before 2016, her family and its foundation would fund things like local museums, nature centers, or musical instruments for a rural school.
But when Trump was elected in 2016, Duncan felt shaken and knew she had to do more. She began directing about $30,000 a year of her own money to community-organizing work.
The problem? Her own father voted for Trump.
He would decline to fund her friends’ social-justice proposals, seeing the work as just “identity politics.” Or maybe he’d “lowball” her and give token amounts.
“I was just incredibly upset. Conversations that we had got heated. I took them very personally. They didn’t end very well most of the time,” she said. “At first, it was really crushing.”
Now, the father and daughter basically separate their giving entirely. That’s the risk for these new, younger donors who want to change the world by changing their families.
“I still don’t really talk much to my parents about their giving because it feels so much like a minefield,” Duncan said. “I don’t feel like we’ve ever been in danger of losing our relationship or anything. But I do still have to weigh the conversations and if they’re worth it.”
Groups like Resource Generation are trying their best to make these breakdowns the exception. It has even offered trainings to try and help its members navigate the proverbial Thanksgiving dinner debate. Duncan said she and her family made real progress over the holidays by finding shared values such as opposing wars.
“If you were to think of grassroots organizing,” said Iimay Ho, Resource Generation’s executive director, “We use those same tactics. We just think of the people we’re related to. Who has the power in this family to do what? And how can I move them?”
Author: Theodore Schleifer