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.