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There is also a huge double standard here. The big right-wing foundations are also effectively partisan, but Trump is not going after them. Countless right-wing groups have 501(c)(3) tax status, including the Heritage Foundation, the sponsor of the blatantly partisan Project 2025, which became an operating blueprint of the Trump administration.
The big liberal foundations, and the entire foundation-funded ecosystem of the left, have long been sitting ducks for this kind of campaign. In July 2024, before Trump was elected to a second term, I wrote a feature piece for the Prospect called “The Left’s Fragile Foundations.”
In that article, I pointed out that the great progressive movements of the past, such as the labor movement and the civil rights movement, were not foundation-funded. They were self-financed at the grass roots. This was all the more surprising since both were movements of people who were far from rich. Absent foundation money, they did not have to go through the 501(c)(3) pretense of being nonpartisan. Both worked in partisan politics to elect allies. That was the whole point of voting rights.
I also noted that most large foundations, which may have liberal program officers but typically have corporate-dominated boards, are far from left-wing. They tend to be both risk-averse and faddish. Movement dependence on foundations tends to breed a certain caution, on the part of both funders and grantees. To the extent that progressive think tanks and advocacy groups are constrained by seeking projects that are fundable, it blunts their necessary radicalism.
In addition, the law on just what tax-exempt nonprofits may legally do in politics and elections is a murky mess. Under the law, a 501(c)(3) is a charity that must be nonpartisan. But a 501(c)(4), which is tax-exempt but not tax-deductible for its donors, is allowed to do some politics. According to the most recent IRS regulation from 1959 (!), a (c)(4) may engage in politics as long as that is “not its primary purpose.” Lawyers advising (c)(4) groups have generally defined that to mean 49.9 percent, though the IRS has never made that explicit.
In the 2010 Citizens United decision, the Supreme Court blew away that constraint. Citizens United was a conservative (c)(4) that distributed an anti–Hillary Clinton documentary during the 2008 primaries. But the Supreme Court, in a 5-4 decision, held that groups like Citizens United had First Amendment rights to spend unlimited sums, as long as they were “independent expenditures” not directly affiliated with a campaign. That distinction often proved to be fake, but collusion was hard to document.
Citizens United and subsequent decisions opened the floodgates to oceans of campaign spending by corporations and rich individuals. Yet it remains the case that (c)(3) groups are not supposed to use (c)(4) groups as fronts, as some in effect do. A fishing expedition by the IRS could punish liberal (c)(3) organizations for that gambit. The right, meanwhile, has so much money, dark and otherwise, that it doesn’t need even tax-exempt groups.
So though it might take years for these cases to work their way through the courts, the Trump scheme could do damage. Funders are already becoming more cautious in their grantmaking, and the entire (c)(3)/(c)(4) charade could be ruled illegal. That would leave the world of campaign funding, configured by the Supreme Court’s Citizens United decision, even more dominated by corporate and billionaire funding, both of which tend to be predominantly right-wing and Republican.
Ironies abound in this whole saga. While occasional billionaires like Tom Steyer and George Soros have progressive politics and donate to progressive causes, they are anomalies. And both made their money running hedge funds.
Even Soros stops short of financing some brands of progressive reform, notably of predatory capitalism. In my earlier Prospect piece, I told the story of trying to persuade Soros to fund groups working for financial reform in the context of efforts to enact a tough version of the Dodd-Frank effort in 2010. Soros flatly refused. “If anyone is going to criticize Wall Street with my money,” he said, “it’s going to be me.”
Another irony is that Treasury Secretary Scott Bessent, the point man in the Trump offensive against Soros and other liberal funders, used to work for the Soros hedge fund. It was Bessent who helped craft the successful multibillion-dollar bet that crashed the British pound in 1992, netting a billion-dollar profit for Soros.
For all of his own conflicts and complications, Soros deserves immense credit for helping to restore and defend democracy in Central and Eastern Europe. While Trump ally Viktor Orbán demonized Soros, it was Soros-funded initiatives over many decades in his native Hungary that helped keep democracy sufficiently alive to throw Orbán out.
If Trump and company do succeed in weakening foundation support of progressive organizations, the cure, as always, is to maximize the power of ordinary people against the power of big money.
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