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HOW ONE DONOR-ADVISED FUND HELPS LEONARD LEO WEAPONIZE PHILANTHROPY
 
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Dan Petegorsky
September 26, 2024
Inequality.org
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_ Donor-advised fund giant Schwab Charitable plays a pivotal role in
Leonard Leo’s weaponized funding schemes. _

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In 2020, conservative judicial mastermind
[[link removed]] Leonard
Leo stepped away
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his role running the Federalist Society. Just a couple of short years
later he’s emerged as the dark money kingpin of a $1.6 billion fund
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the Marble Freedom Trust
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A new letter
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by_ Axios_ now shows the degree to which Leo is trying to reshape
the conservative movement by exerting his influence through
philanthropy. In his view, conservative philanthropy has been too
focused on “ideation,” and needs to shift towards “weaponizing
those ideas and policies to crush liberal dominance at the choke
points of influence and power in our society.”

Marble Freedom Trust’s primary activity is grantmaking: As its most
recent IRS reports
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grants account for 98% of the trust’s spending. Even though Marble
is already what’s known as a “dark money” organization, Leo did
not choose to fund his network
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allied conservative groups directly.

Instead, as _Axios_ reported
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2020, Leo said he planned “to work with two existing non-profit
groups, which will be rebranded as the Concord Fund and the 85 Fund,
to funnel tens of millions of dollars into conservative fights around
the country.”

But even this was apparently not dark enough for Leo. Instead of
plowing money directly into the 85 Fund from Marble, he redirected the
lion’s share of money — hundreds of millions of dollars in the
last two years alone — through a donor-advised fund at Schwab
Charitable. That had the effect of further concealing the source of
funding, and also, as we’ve noted before
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allowing the 85 Fund to maintain its status as a public charity even
though it’s controlled and funded by Leo.

The new letter is a warning
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Leo is ratcheting up his commitment to weaponize philanthropy, and his
beneficiaries better get with the program — or expect his support to
wither away. After the Fund concludes a review this fall, prior 85
Fund grantees will find out if their programs are sufficiently
weaponized to merit future funding.

Leo’s expanding influence over the conservative movement has
headline-worthy political implications, receiving expanding coverage
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IT’S ALSO CRITICAL TO FOCUS ON _HOW _LEO’S BEEN ABLE TO MARSHAL
MONEY — WITH MINIMAL ACCOUNTABILITY TO THE TAX BASE AND THE PUBLIC
— TO REALIZE HIS WORLDVIEW. Schwab Charitable has served as Leo’s
chief intermediary, making the 85 Fund look like a public charity
while in fact it serves entirely as Leo’s personal instrument.

As we’ve noted before
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donor-advised funding from Schwab
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constitutes almost all of the 85 Fund’s revenue. And that money
comes into Schwab from the Marble Freedom Trust
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a billion-dollar entity Leo also controls. _Bloomberg_’s Emily
Birnbaum also outlined Schwab’s role in this
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2024 piece.

Schwab’s own guidelines
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theoretically prohibit this kind of subterfuge:

_“Schwab Charitable generally will not approve grants to
organizations that would likely be considered non-operating
foundations absent the Schwab Charitable grants. Further, Schwab
Charitable generally will not approve a grant recommendation to an
organization that is controlled by the recommending Schwab Charitable
account holder and/or their family members and/or their
affiliates.”_

But Schwab’s grants to the 85 Fund flunk this legitimacy test on
both counts:

* In both 2022
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Schwab Charitable made grants to the 85 Fund of over $141 million.
Those grants constituted nearly the entirety of the 85 Fund’s public
support. As Birnbaum noted
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“In 2022, the 85 Fund reported $134 million in revenue; the Schwab
Charitable Fund accounted for 95% of those donations.”
* The source of Schwab’s funding was almost certainly two
corresponding grants of $153.8 million
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million
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Schwab from Marble Freedom Trust, which Leonard Leo controls. (We say
“almost” because current IRS rules do not require DAF sponsors
like Schwab to report the sources of their income or to show which
accounts make which grants.) So Leo or someone else at Marble was
likely the one advising Schwab to make those grants to the 85 Fund.
And Leo’s control over the 85 Fund is clear from the letter, which
he says he is writing “on behalf of the 85 Fund and its
Directors.”
As Accountable.US
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“While Leo holds no formal role at the 85 Fund, which, on paper,
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run by his close allies, the letter released by _Axios_ today is
signed by Leo — suggesting Leo’s role within the organization is
more significant than what appears in the group’s tax filings.”

Schwab Charitable may choose to ignore its own guidelines to continue
doing business with one of its largest clients: In each of the last
two years, Schwab’s second-largest grant has been to the 85 Fund. 

Donor-advised fund rules are desperately in need of change, as part of
a broader effort to ensure that the wealthiest donors who reap the
greatest tax breaks for their gifts don’t continue to play fast and
loose in a virtually unregulated space.

_DAN PETEGORSKY is a member of the Charity Reform Initiative at the
Institute for Policy Studies._

_INEQUALITY.ORG has been tracking inequality-related news and views
for nearly two decades. A project of the Institute for Policy Studies
since 2011, our site aims to provide information and insights for
readers ranging from educators and journalists to activists and policy
makers._

_Our Inequality.org contributors come from the United States and
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_If you would like to support and help expand our work, please
consider making a donation.
[[link removed]]Thank you!_

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