EMT Action Fund — which the minutes of a US Virgin Islands commission suggest owns a stake in at least one other investment company — listed its objectives in a 2019 filing as “supporting Jewish heritage, education, welfare, charity, healthcare and general communal growth and well-being.” One Orthodox Jewish charity lists EMT as a donor.
What’s less clear is who controls EMT Action Fund, or the exact size of its startup stake, owned through various holding companies that appear in filings. EMT’s official headquarters, a four-story office building in downtown Hamilton, Bermuda, is home to countless offshore shell companies.
Clear Street said it can’t comment on behalf of EMT or its founders. It relayed a statement saying “the nonprofit charity has donated millions of dollars to charitable causes and will continue to make significant contributions as its assets grows.”
Several attempts to contact those listed as associated with EMT in filings were unsuccessful.
‘Legislative Needle’
Despite their looser rules, C4s are still subject to basic guardrails. Donors can’t take the money back, for example. And direct spending on elections can’t be a C4’s “primary purpose,” a rule many lawyers interpret to mean it can devote up to 49% of its spending to campaigns. Though such spending is prohibited for C3s, traditional nonprofits can still reflect the political outlook of their donors, or even indirectly influence policy, such as by funding and publishing research.
A long-standing strategy among many nonprofits working on contentious issues is to pair a C3 organization with a C4 that can more easily lobby and give to campaigns. Examples of nonprofits with both arms include Planned Parenthood and the American Civil Liberties Union. Another is Everytown for Gun Safety, which is backed by Michael Bloomberg, founder and majority owner of Bloomberg LP.
Long outspoken on environmental issues, Chouinard made clear that influencing policy and politics is one of his goals for Holdfast Collective. Other donors are also likely to find a C4’s political influence appealing, said Karen Kardos, head of philanthropic advisory at Citi Private Bank.
“Many philanthropists recognize that in order to make systemic change to truly drive impact, they must be able to move the legislative needle,” Kardos said.
By contrast, Dalio’s “philanthropic entities do not make political donations,” a spokesperson said. His family’s giving, more than $1.3 billion so far according to Dalio Philanthropies, has focused on causes such as ocean exploration, child welfare in China and improving education in Dalio’s home state of Connecticut.
The Koch family’s giving strategy has shifted in recent years. In a 2020 book, Charles Koch said he regretted his heavy spending to boost Republicans, arguing partisan politics won’t solve the country’s long-term problems.
This year, Americans for Prosperity, a C4 founded in 2004 that’s part of the network established by Charles and his late brother David Koch, praised President Biden for pardoning marijuana convicts, while criticizing the tax hikes in his Inflation Reduction Act and boosting Republican-supported state ballot initiatives in the November election.
The Kochs’ new C4s don’t show the same overtly political bent. In filings through the end of 2020, all their gifts went to C3 nonprofits, including donor-advised funds and the Charles Koch Foundation, which can’t give to campaigns. Last year, Chase Koch’s C4 gave $85 million to Stand Together Chamber of Commerce with the condition that the Koch-funded group not “support or engage in any political activity” with the grant.
“I don’t think about Republican versus Democrat,” Chase Koch said at the SALT conference at New York’s Javits Center in September. The head of Koch Disruptive Technologies, a venture capital arm of the family empire, he said his goal in both philanthropy and business is “finding those entrepreneurs that are going to change the way the world works.”
Hanging over the C4 is also the threat that Congress could change the rules. The reforms most commonly discussed are limits on their tax benefits.
With Democrats retaining the Senate after the 2022 midterms and Republicans controlling the House, major tax changes are unlikely. That means for the next few years at least, a tool pioneered by a few of the world’s richest people may soon be adopted by a broader array of wealthy families, Fei said.
“Once it’s out there, other people can follow the model,” she said. “There isn’t one vehicle that has everything, and from a public policy perspective, there shouldn’t be. But for donors, that’s the holy grail.”
--With assistance from Noah Buhayar.
This article was provided by Bloomberg News.