THE ASSETS OF THE SARAH SCAIFE FOUNDATION WERE LISTED INCORRECTLY IN A GRAPHIC ACCOMPANYING STORIES SUNDAY ON THE CONSERVATIVE PHILANTHROPHY OF RICHARD MELLON SCAIFE. THE FOUNDATION'S 1997 ASSETS WERE $302 MILLION, NOT $30.2 MILLION. (PUBLISHED 05/05/99)
One August day in 1994, while gossiping about politics over lunch on Nantucket, Richard Mellon Scaife, the Pittsburgh billionaire and patron of conservative causes, made a prediction. "We're going to get Clinton," Joan Bingham, a New York publisher present at the lunch, remembers him saying. "And you'll be much happier," he said to Bingham and another Democrat at the table, "because Al Gore will be president."
Bingham was startled at the time, but in the years since -- as Clinton has struggled with an onslaught from political enemies -- Scaife's assertion came to seem less and less far-fetched.
Scaife did get involved in numerous anti-Clinton activities. He gave $2.3 million to the American Spectator magazine to dig up dirt on Clinton and supported other conservative groups that harassed the president and his administration. The White House and its allies responded by fingering Scaife as the central figure in "a vast right-wing conspiracy that has been conspiring against my husband since the day he announced for president," as Hillary Rodham Clinton described it. James Carville, Clinton's former campaign aide and rabid defender, called Scaife "the archconservative godfather in [a] heavily funded war against the president."
But people who know him well say that although Scaife is fond of conspiracy theories of many kinds, he is incapable of managing any sort of grand conspiracy himself. And months of reporting produced no evidence of his orchestrating any effort to "get" Clinton beyond his financial support. Indeed, focusing on his role in the crusade against Clinton can obscure the 66-year-old philanthropist's real importance, which is not based on his opposition or support for any individual politicians (though he once gave Richard M. Nixon $1 million). His biggest contribution has been to help fund the creation of the modern conservative movement in America.
By compiling a computerized record of nearly all his contributions over the last four decades, The Washington Post found that Scaife and his family's charitable entities have given at least $340 million to conservative causes and institutions -- about $620 million in current dollars, adjusted for inflation. The total of Scaife's giving -- to conservatives as well as many other beneficiaries -- exceeds $600 million, or $1.4 billion in current dollars, much more than any previous estimate.
In the world of big-time philanthropy, there are many bigger givers. The Ford Foundation gave away $491 million in 1998 alone. But by concentrating his giving on a specific ideological objective for nearly 40 years, and making most of his grants with no strings attached, Scaife's philanthropy has had a disproportionate impact on the rise of the right, perhaps the biggest story in American politics in the last quarter of the 20th century.
His money has established or sustained activist think tanks that have created and marketed conservative ideas from welfare reform to enhanced missile defense; public interest law firms that have won important court cases on affirmative action, property rights and how to conduct the national census; organizations and publications that have nurtured conservatism on American campuses; academic institutions that have employed and promoted the work of conservative intellectuals; watchdog groups that have critiqued and harassed media organizations, and many more.
Together these groups constitute a conservative intellectual infrastructure that provided ideas and human talent that helped Ronald Reagan initiate a new Republican era in 1980, and helped Newt Gingrich initiate another one in 1994. Conservative ideas once dismissed as flaky or extreme moved into the mainstream, and as the liberal National Committee for Responsive Philanthropy concluded in a recent report, "The long-standing conservative crusade to discredit government as a vehicle for societal progress has come to fruition as never before."
The ideas behind this success did not come from Scaife. Even the conservative activists who know him best say he rarely offers his own ideas or opinions, and most of those who get money from him have no personal relations with him or don't know him at all.
"I don't see anything resembling a grand strategy about the man," said James Whelan, who was editor of the Sacramento Union when Scaife owned it and later became editor of the Washington Times. "In general he sees certain villains in American life and society and thinks he should do everything he can to attack them and bring them down."
Scaife declined to be interviewed for this story, but in written answers to questions about his motivation, he said: "Our funding is based on our support of ideas like limited government, individual rights and a strong defense."
As for himself, he added: "I am not a politician, although like most Americans I have some political views. Basically I am a private individual who has concerns about his country and who has resources that give me the privilege -- and responsibility -- to do something to help my country if I can."
If Scaife's explanations seem vague, his achievement is not. Besides acting on his own visceral reactions, Scaife has backed people he admired and institutions he favored with lots of money, without ever telling them what to do. He has done this consistently, patiently, over four decades.
Frank Shakespeare, director of the U.S. Information Agency in the first Nixon administration and Scaife's colleague for years on the board of the Heritage Foundation, summarized the accomplishment: "Dick Scaife has made a real difference in his country -- and has had an impact on the larger world."
A Philanthropic Heir Embraces `the War of Ideas'
To make his mark on history, Scaife had to overcome long odds. In his youth he seemed star-crossed, even to many of his friends. He grew up in a household dominated by his mother's alcoholism, in a family whose members specialized in "making each other totally miserable," in the rueful words of his sister, Cordelia Scaife May.
At 9 he spent a year in bed after his skull was fractured by a horse. Yale University suspended him for drunken pranks, then kicked him out entirely before he could complete his freshman year. At 22 he caused a car accident that almost killed him and injured five members of one family, who won a large legal settlement. He had a drinking problem most of his adult life, finally getting on the wagon in the early 1990s. He has feuded bitterly with friends, employees and relatives. He has no relations with his daughter, and hasn't spoken to his sister for 25 years.
Scaife inherited his philanthropic role from his mother. She had established trusts and foundations whose earnings, under the tax law, had to be given away. She began encouraging her son to participate in family philanthropy after his father died suddenly in 1958.
Sarah Scaife's causes were family planning, the poor and the disabled, hospitals, environmental causes and various good works in and around Pittsburgh. Her most famous gifts, in the late 1940s, were to the University of Pittsburgh -- $35,000 to equip a virus research lab. In that lab, Jonas Salk discovered his polio vaccine.
The available recorded history of Scaife's donations to conservative causes in the database assembled by The Post begins in 1962 with small grants of $25,000 or less to groups with educational missions on conservative themes -- the American Bar Association's Fund for Public Education for "education against communism," for example.
Over the next two years he ventured a little further into the conservative world, making donations to the Hoover Institution on War, Revolution and Peace at Stanford University and the brand-new Georgetown Center for Strategic and International Studies. In 1963 he began supporting the American Enterprise Institute.
The events of 1964 were a turning point for Scaife, and for American conservatives. Scaife was an alternate to the Republican Convention that chose Arizona Sen. Barry M. Goldwater as the party's presidential nominee, and he became an active contributor and supporter. He escorted Goldwater on the Scaife family airplane to California in July 1964 to attend the Bohemian Grove retreat, a boozy and confidential gathering of conservative, mostly wealthy men.
Confounded by Goldwater's devastating defeat that November, many conservatives concluded that they could only win an election in the future by matching their enemy's firepower. It was time, as a Scaife associate of that era put it, to wage "the war of ideas." Scaife enthusiastically adopted this view.
"We saw what the Democrats were doing and decided to do the mirror image, but do it better," this Scaife associate said. "In those days [the early 1970s] you had the American Civil Liberties Union, the government-supported legal corporations [neighborhood legal services programs], a strong Democratic Party with strong labor support, the Brookings Institution, the New York Times and Washington Post and all these other people on the left -- and nobody on the right." The idea was to correct that imbalance. "And the first idea was to copy what works."
This sort of thinking went far beyond Scaife's office in Pittsburgh. He was riding a wave at the same time he contributed to it. Former congressman Vin Weber, an early and active member of the "movement conservative" Republican faction on Capitol Hill, recalled that "people on the right were absolutely convinced that there was a vast, left-wing conspiracy" that had to be mimicked and countered with new conservative organizations that were "philosophically sound, technologically proficient and movement-oriented." This became a mantra for the new conservative activists.
Sarah Scaife died in 1965, and her son then had a freer hand to reorient the family giving. By 1976, the year Jimmy Carter was elected president, Scaife's conservative interests had come to dominate the foundations' giving. Just more than half of the $18 million in grants that year went to conservative recipients. By 1980, the year Ronald Reagan defeated Carter, conservative groups were awarded $13 million of about $18 million in Scaife grants. Conservative interests have continued to predominate in Scaife's philanthropy ever since.
While Scaife's money supported individual institutions, his office in Pittsburgh encouraged the evolution of a new community of activists on the right. One longtime recipient of Scaife's support recalled a meeting convened in California in 1973 by Richard M. Larry, Scaife's longtime chief aide, where his beneficiaries could meet one another. A person who attended the California meeting said he was delighted to find people there he'd never heard of -- a new peer group on the right.
The Heritage Foundation became an important part of the right's community-building efforts. Scaife first contributed to Heritage in 1974. Soon afterward, using money from Scaife, Heritage established its resource bank, a compilation of conservative organizations, which from 1982 was published in the Directory of Public Policy Organizations, a guide to the new right-wing establishment. The current edition lists 300 groups; 111 have received grants from Scaife, 76 of them in 1998.
Heritage, organized by former staff assistants to Republican lawmakers whose goal was to influence both Congress and the news media with a stream of brief, meaty position papers on issues of the day, became Scaife's favorite beneficiary. When it began to make a mark in the mid-1970s, Joseph Coors, the beer magnate, was commonly credited as its chief financial patron. Coors did put up the first $250,000. But within two years, according to Heritage officials, Scaife had given more than twice as much, and he has kept on giving ever since -- more than $23 million in all, or about $34 million in inflation-adjusted, current dollars. At Heritage the joke was, "Coors gives six-packs; Scaife gives cases."
With Scaife's early contributions, Heritage could thrive. In 1976, Heritage's third year of operation, Scaife gave $420,000, or 42 percent of the foundation's total income of $1,008,557. This early support was "absolutely critical," said the president of the foundation, Edwin J. Feulner Jr.
Scaife continues to give generously to Heritage -- $1.3 million in 1998. But Heritage took in $43 million last year, so his gift represented just 3 percent of its income.
Hundreds of Millions Flow To Groups With Shared Values
Scaife's money was probably most important to the cause in the '70s and '80s, when conservatives enjoyed the exhilarating reversal of what they had seen as their traditional, inconsequential status in American life. Scaife gave about $200 million to conservative causes from 1974 (his first gift to the Heritage Foundation) through the end of the Bush administration in 1992.
As soul mates in what they considered a war over American values, the groups to which he gave shared a core set of conservative beliefs evident in the way they described their missions.
For example, the Foundation for Economic Education promotes "individual freedom, private property, limited government, free trade." The Pacific Legal Foundation works "for less government and the preservation of free enterprise, private property rights and individual liberties." The Reason Foundation advocates "public policies based upon individual liberty and responsibility and a free-market approach." Lower taxes and fewer regulations are also part of the broadly shared program.
In the realm of national security, Scaife-supported groups have a similarly shared view of the need for a bristling national defense and vigilance against communism and terrorism.
There are disagreements, of course, particularly on emotional issues such as abortion, free trade and immigration. Scaife has long favored abortion rights, to the chagrin of many of those he has supported. In the first years of his philanthropy he stuck to a pattern set by his mother and sister and gave millions to Planned Parenthood and other population control groups, though most such giving stopped in the 1970s. He also has favored stricter controls on immigration and trade, though many Scaife-supported groups do not.
By concentrating his philanthropy on a relatively small number of beneficiaries, Scaife maximized his impact.
Over four decades he has nurtured enduring institutions, not just short-lived crusades. Nineteen percent of his conservative giving went to Heritage, the Hoover Institution, the Center for Strategic and International Studies (CSIS) and the American Enterprise Institute (AEI), four of the biggest think tanks in America.
This list is revealing for its political coloration. Heritage is the most aggressively conservative of the four, but it is hardly extremist. Hoover and AEI are plainly conservative institutions also, but CSIS, now run by former senator Sam Nunn and Robert Zoellick, a protege of former secretary of state James A. Baker III, is more centrist.
Much of Scaife's philanthropy has gone to recipients that made no lasting mark; many have gone out of business. For example, the Capital Legal Foundation, which represented Gen. William C. Westmoreland in his unsuccessful 1984 libel suit against CBS, was granted at least $1.7 million from Scaife sources between 1977 and 1987, then folded.
On some occasions Scaife has given money to an individual project just because it struck his fancy. One was a book project proposed in the early '90s by Elliott Abrams, a Reagan State Department official at the time of the Iran-contra affair and a foreign policy specialist for the Hudson Institute when he decided he wanted to write a book about American Jews.
Leslie Lenkowsky, then the president of Hudson, suggested they ask Scaife to help fund the project. He and Abrams went to Pittsburgh, where they had lunch at the Duquesne Club with Scaife, his son David and Richard Larry. Abrams said he found Scaife fascinated by his subject. "He couldn't figure out the American Jewish community. He wondered why it seemed to be so liberal politically," Abrams recalled.
Scaife gave a $175,000 grant for the project, with one string attached: that it be funded also by some Jewish donor or group. It was. "Faith or Fear" was published in 1997. It argued that "liberal politics" had become for many Jews "the heart of their Jewish identity," often replacing the Jewish religion, and gravely jeopardizing the future of Judaism in America. It sold 6,190 copies.
From Quiet Benefactor To `the Arkansas Project'
Today it is difficult to find an important organization that depends on Scaife's money. The pattern of his giving hasn't changed much, but more and more individuals, corporations and foundations have become contributors to Scaife's causes. The Olin Foundation (assets of $103 million at the beginning of 1998) and the Bradley Foundation (assets of $545 million) have become particularly important. The success of the conservative movement has made Scaife a less significant player.
In many Scaife-supported organizations, the founders have been supplanted by successors unfamiliar with his role. Robert K. Best, president of the Pacific Legal Foundation, oldest and perhaps most influential of the conservative public interest law firms, was surprised to learn that Scaife contributions had constituted at least half the group's budget in its early years.
It is tempting to speculate that the routinization of Scaife's role might have prompted him -- or his key aide, Larry -- to get involved in more adventuresome anti-Clinton activities. Their involvement in what became known as "the Arkansas Project" -- an aggressive and ultimately fruitless attempt to discredit a sitting president -- marked a clear departure from years of relatively anonymous philanthropy, and Scaife could not have foreseen the consequences: He became a celebrity.
The full realization of the trouble he had made for himself probably came one day last September when he appeared, under subpoena, before a federal grand jury in Fort Smith, Ark., that was investigating possible tampering with a federal witness. On that day, Scaife could have felt he was being treated like a suspect -- not the status a Mellon from Pittsburgh worth perhaps a billion dollars expects. According to several associates, Scaife was furious.
The Arkansas Project was apparently cooked up largely by Larry, 63, who has worked for Scaife for 30 years. A former Marine with a deeply ideological view of the world, Larry had developed a powerful dislike for Clinton. "I noticed a change in Dick Larry -- at the mention of Clinton he became almost hyperthyroid," said one prominent figure in the conservative world who knows Larry well. A second prominent conservative close to him said: "I never saw Dick Larry do anything like this before. The only thing I can figure is that Larry dislikes Clinton intensely."
As the chief administrative officer of Scaife's philanthropies for many years and the main contact for anyone seeking a grant, Larry has long been a controversial figure among conservatives. They discuss him with the same reluctance to go on the record that many demonstrate when Scaife is the subject. "Sometimes [Larry] makes you wonder if it is the Richard Scaife foundations, or the Richard Larry foundations," said one source who worked with both men.
In his written answers to questions from The Post, Scaife attributed his support for the project to his doubts that "The Washington Post and other major newspapers would fully investigate the disturbing scandals of the Clinton White House." He explained those doubts: "I am not alone in feeling that the press has a bias in favor of Democratic administrations." That is why, he continued, "I provided some money to independent journalists investigating these scandals."
The Arkansas Project itself relied on several private detectives, a former Arkansas state police officer and other unlikely schemers, including a bait shop owner in Hot Springs, Ark. The two men running the project were a lawyer and a public relations man. Scaife's role became the subject of a special federal investigation because of accusations that the money he donated ended up in the pocket of David Hale, a former Clinton associate and convicted defrauder of the Small Business Administration who had become a witness for Starr's investigation of the president.
Sources at the American Spectator say it was Larry who played an instrumental role in the project. But there is no doubt that Clinton had gotten under Scaife's skin.
Scaife's penchant for conspiracy theories -- a bent of mind he has been drawn to for years, according to many associates -- was stimulated by the death of Vincent W. Foster Jr., Hillary Clinton's former law partner and a deputy White House counsel. He has repeatedly called Foster's death "the Rosetta stone to the Clinton administration" (a reference to the stone found in Egypt that allowed scholars to decipher ancient hieroglyphics).
Last fall Scaife told John F. Kennedy Jr. of George magazine, "Once you solve that one mystery, you'll know everything that's going on or went on -- I think there's been a massive coverup about what Bill Clinton's administration has been doing, and what he was doing when he was governor of Arkansas." And he had ominous specifics in mind: "Listen, [Clinton] can order people done away with at his will. He's got the entire federal government behind him." And: "God, there must be 60 people [associated with Bill Clinton] -- who have died mysteriously."
Even before the Arkansas Project had gotten underway, Scaife personally hired a former New York Post reporter named Christopher Ruddy to write about Foster's death for the Pittsburgh Tribune-Review, the daily newspaper Scaife has owned since 1969. Ruddy's stories about Foster's death -- most of them challenging the suicide theory, without offering an alternative explanation -- began to appear in January 1995.
Scaife has funded other Clinton efforts as well: Two zealous and resourceful (and rival) public interest law firms that have pursued Clinton and his administration relentlessly, the Landmark Legal Foundation and Judicial Watch, have received more than $4 million from Scaife. Judicial Watch, which is aggressively suing several branches of the government and has questioned numerous White House officials under oath, has received $1.35 million from Scaife sources in the last two years, a large fraction of its budget.
The Fund for Living American Government (FLAG), a one-man philanthropy run by William Lehrfeld, a Washington tax lawyer who has represented Scaife in the past, gave $59,000 to Paula Jones's sexual harassment suit against Clinton. FLAG has received at least $160,000 in Scaife donations. And lawyers who belong to the conservative Federalist Society, which has enjoyed Scaife support for 15 years (at least $1.5 million), were members of a secretive group who provided important legal advice to Paula Jones and who may have pulled off the key legal maneuver in the Clinton case by connecting the Jones suit and the Starr investigation.
Officers of the Scaife-supported Independent Women's Forum have appeared on many television programs as Clinton critics. William J. Bennett, author of "Death of Outrage: Bill Clinton and the Assault on American Ideals," is on the board of the Sarah Scaife Foundation, and has received Scaife support as a fellow of the Heritage Foundation and other enterprises.
One of the most publicized allegations of a tie between Scaife and Clinton's enemies was the suggestion that Scaife was trying to set up independent counsel Kenneth W. Starr in a posh deanship at Pepperdine University in Malibu, Calif. Starr briefly toyed with accepting the job early in 1997.
Scaife has been a generous supporter of Pepperdine, donating more than $13 million since 1962 (in personal gifts as well as foundation grants), according to the school. But Scaife and the current president of Pepperdine, David Davenport, both have said that Scaife played no role whatsoever in the offer to Starr. Scaife and Starr have said they don't know each other, and have never met.
Only the Arkansas Project has caused Scaife serious trouble. The possibility that money from the project had tainted Hale, a federal witness, led to the appointment of Michael J. Shaheen, a former senior Justice Department official, as a special investigator. It was Shaheen who summoned Scaife to the Fort Smith grand jury.
Shaheen's investigation apparently is complete. Lawyers involved said they don't expect any indictments.
One result of the enterprise was to strain Scaife's relationship with Larry almost to the breaking point. "He almost fired Larry," said one friend.
The other result has been the emergence of Scaife as a public figure and punching bag for liberals.
"I'm a very private person -- I think I'm essentially shy," Scaife told Kennedy last fall. But now, he acknowledged, he is recognized by passersby on the street -- "thanks to CNN."
NEXT: Burdens of wealth
`ARKANSAS PROJECT' LED TO TURMOIL AND RIFTS; EFFORT TO PROBE CLINTON IMPLODOD IN CONTROVERSY
The "Arkansas Project" that did so much to increase the visibility of Richard Mellon Scaife caused great turmoil at the American Spectator magazine. It skirted close to the tax laws, and failed to learn damaging information about Bill and Hillary Clinton.
According to R. Emmett Tyrrell Jr., founder and editor of the American Spectator, the idea for investigating the Clintons was born on a fishing trip on the Chesapeake Bay that he took in the fall of 1993.
Those on board the chartered boat, Tyrrell remembered, included Richard M. Larry, Scaife's senior aide for many years, David Henderson, a conservative activist and public relations adviser close to Larry, and Steven Boynton, a Washington attorney and outdoorsman.
Henderson and Boynton both had contacts in Arkansas they thought could help them get to the bottom of the Clinton scandals. Through the Junior Chamber of Commerce, Henderson had met David Hale, a Little Rock lawyer and political figure who became prominent in the Whitewater affair after accusing then-Gov. Clinton of pressuring him to make an improper $300,000, federally backed loan that went bad. Among the people Boynton knew in the state was the owner of a bait shop in Hot Springs, Parker Dozhier, a rabid Clinton hater.
Tyrrell described the Arkansas Project as an attempt by the Spectator, best known for its acerbic and lively commentary, to get into more investigative reporting. Henderson agreed. But other well-placed sources have told The Post that Larry, Scaife's aide, tried to sell the idea of investigating Clinton's activities in his home state to at least two other organizations before the Spectator took on the project. Both turned Larry down, the sources said.
Several sources at the Spectator, all of whom asked for anonymity, said they thought Tyrrell had agreed to undertake the investigation to please Larry and Scaife, the magazine's most generous supporter since 1970. Scaife had given the magazine at least $3.3 million.
Under the tax law, Scaife's foundations could not sponsor their own investigation of Clinton. They had to give money to a registered nonprofit organization (a "501[c] organization" in the jargon of the IRS), which could use the money for a legitimate nonprofit purpose. The American Spectator Foundation, which publishes the magazine, qualified to receive the money. Investigating a president -- provided it wasn't tied to a specific electoral campaign -- would fall within the definition of legal activity by a nonprofit, according to Frances Hill, a specialist in the law of tax-exempt organizations who teaches at the University of Miami.
The law also says that a foundation cannot use a 501[c] organization to funnel money to someone the foundation is trying to help directly. Larry's apparent effort to find a home for a project run by Henderson and Boynton might raise questions under this provision, though Spectator officials said the IRS has not said anything about it. (Henderson said he had never heard of Larry trying to persuade other organizations to undertake the Arkansas Project and doubted this was true.)
A third legal question raised by the project involves payments to Henderson, a member of the Spectator board. Under the federal law on nonprofits, it is illegal for a member of the board of a nonprofit organization to receive excessive payments from the organization -- the law calls this "inurement." Over the 3 1/2-year life of the Arkansas Project, Henderson was paid $477,000, according to an accounting drawn up by Boynton in 1997.
In an interview, Henderson said the Spectator's lawyers and board of directors considered the inurement question and concluded that the payments to him were proper. He also defended the project, saying it produced more information on the Clintons than the Spectator used. "There were a number of big stories that we developed pretty far that met some resistance at the magazine," he said, including stories later confirmed and published elsewhere. He declined to specify what they were.
Boynton received at least $577,000. Much of the rest of the project money went to private investigators, according to Spectator documents provided by Charles Thompson, an independent television producer.
One of those employed by Henderson and Boynton was Rex Armistead, now nearly 70, a longtime Mississippi state policeman, undercover operative and, in recent years, private eye. According to the Spectator documents, Armistead was paid at least $353,517 by the Arkansas Project. What he did for that money is far from clear.
The project was launched late in 1994 and got underway in January 1995. This was the month the Spectator published a piece by staff writer David Brock reporting Arkansas state troopers' accounts of how they had arranged illicit trysts for Clinton when he was governor. In future history books, Brock's piece will probably be remembered for a fleeting reference to "a woman named Paula" -- a reference that prompted Paula Jones to file her lawsuit against Clinton.
Brock said Tyrrell and others at the magazine led him to believe that the Arkansas Project was launched to follow up on the "Troopergate" story. But Brock said he came to realize that in fact, the project was put in motion before the editors knew what his story was going to say and wasn't a result of his work. This "raised the question of whether there could have been some purpose other than journalistic," he said.
Brock recalled being summoned to a meeting with Armistead in Miami, at an airport hotel. Armistead laid out an elaborate "Vince Foster murder scenario," Brock said -- a scenario that he found implausible.
On other occasions Armistead provided unconfirmable reports about illicit goings-on at the Mena, Ark., airport purportedly involving Clinton when he was governor. Tyrrell himself wrote an article for the Spectator about the airport that several writers and editors on the magazine described as an embarrassment.
Altogether the journalistic fruits of the project were thin. Wladyslaw Pleszczynski, the Spectator's executive editor, wrote an internal memo recording his impressions of Henderson's and Boynton's efforts in September 1997, after the Arkansas Project had blown up in controversy: "There always seemed to be lots of hush-hush and heavy breathing," he wrote, "but it never amounted to anything concrete enough for a story."
By mid-1997, Larry was apparently worrying about how Scaife's millions were being spent. At a meeting on July 10, 1997, Tyrrell announced that Larry had accused Ron Burr, the longtime publisher of the Spectator who ran the magazine's business and financial affairs, of misallocating $1 million of Arkansas Project funds. "We are going to have a complete audit of the project," Tyrrell said, according to a letter Burr wrote later.
Within three months, Tyrrell had fired Burr -- who had been Tyrrell's principal associate for nearly 30 years. Many of Burr's supporters quit the Spectator's board in protest. The Arkansas Project ended with a whimper.
If Scaife personally had any role in the Arkansas Project, it has never been disclosed. He has denied it. Members of the Spectator staff involved in the investigations never saw any sign of him, though they saw Larry around the magazine's offices in Arlington quite often. "We always had the feeling Larry was behind it," said one senior journalist at the Spectator.
The first public indication of a falling-out between Scaife and the Spectator followed the 1997 publication of "The Strange Death of Vincent Foster: An Investigation." This book, by Christopher Ruddy, a reporter Scaife had hired to write for his Pennsylvania newspaper, sought to poke holes in the official investigations of Foster's death.
The Spectator's review of the book, by John Corry, a former New York Times reporter, described Ruddy as "a very heavy breather" whose book contained "very few direct quotes, but a great many insinuations."
Soon after Corry's review was published in late November 1997, Reed Irvine of Accuracy in Media -- a conservative critic who has received about $2 million from Scaife since 1977 -- reported in his newsletter that Scaife had called Tyrrell to say he was cutting him off.
Tyrrell confirmed in an interview that the call occurred but said he couldn't remember details of the conversation that ended all support from the man who had been his principal benefactor for nearly 30 years.
A source close to Scaife said Corry's review really upset Scaife, who thought the magazine should have been kinder to an author backed by its principal benefactor. Others familiar with the episode said Scaife's decision had also been influenced by the Arkansas Project's lack of success and his relations with Tyrrell.
ABOUT THIS SERIES
This examination of the philanthropy of Richard Mellon Scaife is based on a compilation of four decades of Scaife donations assembled by Ira Chinoy, director of computer-assisted reporting. Research was provided by Alice Crites of the investigations staff. Staff researchers Melody Blake, Karl Evanzz, Kim Klein, Madonna Lebling and Mary Lou White also contributed.
Tax law requires foundations to disclose their grants every year to the Internal Revenue Service, and libraries including the Foundation Center in Washington and the Ruth Lilly Special Collections and Archives in Indianapolis preserve those filings. Some filings could not be located, but most gaps were filled by Scaife's office in Pittsburgh and by libraries in Washington and Pittsburgh that saved copies of the foundations' annual reports. In addition, Karen Rothmyer, author of a 1981 profile of Scaife in the Columbia Journalism Review, gave The Post records she had acquired describing about $150 million in grants made from the late 1950s to 0 by three Scaife family trusts, which did not have to disclose them. All these records were used by The Post to create a computer database.
The database records nearly 8,800 grants to more than 1,400 recipients. Missing are several years of grants by the family trusts in the 1980s, grants from the foundations for several years in the 1960s, grants made in 1998 by the Scaife Family Foundation and several grants where pages were missing from available records. Most entries in the database represent the amounts and dates of grant payments, except in instances in which information was available only about amounts and dates of grant approvals.
Extensive details from the database are available at The Post's Web site, www.washingtonpost.com.
Richard Mellon Scaife's philanthropy has come from family trusts set up by his mother, four foundations and his own checkbook. The trusts expired in the early 1980s. The four foundations and their assets at the end of 1997 are:
The Sarah Scaife Foundation $30.2 million
The Allegheny Foundation $39 million
The Carthage Foundation $24 million
The Scaife Family Foundation $170 million
The last of these is now controlled by Scaife's two children, David and Jenny, though it shares staff with the others and gives to many of the same causes. Scaife controls the three others. All four have boards of directors that meet several times a year to pass on grant recommendations presented by members of the small staff in Pittsburgh. Members of the boards said deference is shown to Scaife's personal desires, but he does not have the authority to make grants without board approval.
Scaife also makes personal contributions, but little is known about them. Scaife's lawyer, H. Yale Gutnick, would say only that in 1997, Scaife personally gave $7 million to charitable causes. He has contributed many millions to the Carthage Foundation, which donates those gifts to nonprofits, mostly conservative groups.
The history of Scaife's money is testimony to the powers of compound interest and the stock market. The market value of the assets he inherited in the 1960s was considerably lower than the market value of the assets at the end of 1997 listed above -- though he also has given away more than $600 million in the interim.
The tax law required Scaife to become a philanthropist. The foundations he inherited had to give away 5percent of their assets every year. Sarah Scaife's trusts, set up under provisions of the tax law that have since been repealed, were required to give away all the income they generated.
Scaife's mother and later Scaife himself got huge tax deductions to establish their trusts and foundations. He can deduct the amount of each gift he makes from his taxable income, which -- given the billion dollars or so in his personal fortune -- is presumably substantial.
Such deductions are classified by the Treasury as "tax expenditures" -- the equivalent of government spending. Charity is a "tax-favored activity" in the jargon of tax lawyers -- it is subsidized by all taxpayers.
Altogether the world of tax-free philanthropy is enormous. In 1997 American foundations gave away about $82 billion, and individual Americans took tax deductions for charitable contributions of $101.4 billion, according to the IRS.
A PHILANTHROPIC SHIFT
Once Scaife inherited his mother's money in 1965 -- and took effective control of trusts and foundations she had created -- he began to change the emphasis of the family's philanthropy. His mother gave to hospitals, family planning groups, local universities and charities. Scaife continued to give to such causes, but he began to add new categories: conservative think tanks, academic programs and activist groups. By 1976, these conservative causes were getting the largest share of the money Scaife was giving away.
Scaife moved his tax-free family philanthropy to conservative causes (This graphic was not available)
CAPTION: Rare Meeting: President Clinton greets Richard Mellon Scaife at January 1998 White House Endowment Fund dinner.
CAPTION: Richard Mellon Scaife at a party last month for the Carnegie Museum's antiques show. By concentrating grants on organizations whose values he holds dear, Scaife has left his mark on modern conservatism.
CAPTION: Frank Armour, Richard Mellon Scaife and Nixon administration Vice President Spiro T. Agnew talk at a 1970 GOP fund-raiser in Pittsburgh. Scaife generally supports ideals over individuals, but he gave Richard M. Nixon $1 million.
CAPTION: David Brock wrote American Spectator "Troopergate" story.
CAPTION: Scaife aide Richard M. Larry urged probe of Bill Clinton.