Big Builds: A Look Inside Arabella Advisors
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Beyond the day-to-day ebb and flow of charitable giving, several macro-trends are hard to dispute. First, widening wealth inequality has set the stage for an ongoing gusher of new giving during the coming decades. And second, philanthropy itself is getting more dynamic as donors seek greater sophistication, broader impact, and bolder engagement on public policy issues. At the same time, as we explored in a recent deep dive, critiques of big philanthropy are also gaining steam amid a growing debate over the ethics of extreme wealth.
In this environment, it’s no surprise to see philanthropic intermediaries, advisory firms and funder collaboratives enjoying sustained growth—and catching some flak, too. These outfits are a diverse bunch, ranging from gargantuan DAF sponsors like Fidelity Charitable to values-driven outfits like the Proteus Fund and DonorsTrust. But what they share—ideally, at least—are service offerings that reflect what donors want to accomplish in the world.
No list of important players in that field would be complete without Arabella Advisors. Since 2005, Arabella has expanded its services in a dizzying way—grants management, advocacy, governance, impact investing, you name it. It’s less strictly an intermediary (although it does play that role) and more an advisory jack-of-all-trades. The certified B corporation has served hundreds of clients over the years, representing a formidable combined $100 billion in assets. On an annual basis, Arabella handles over $400 million in philanthropic investments and advises on several billion dollars in overall resources.
Beyond its impressive numbers and copious offerings, what makes Arabella interesting is what it’s doing to build and shape the field. “In a philanthropy world that talks a lot about big bets, we do the big builds. We find that the field needs support in going from idea to impact,” said CEO Sampriti Ganguli. Whether it’s providing back-office support or playing a more frontal role, Arabella’s fingerprints are all over any number of philanthropic projects. Yet while the firm is best understood as one of the sector’s top workhorses, its public profile—shaped by a steady stream of articles by places like the Capital Research Center and Breitbart—can suggest something quite different, with conservatives criticizing Arabella for channeling unaccountable funds to politically sensitive causes.
These two narratives aren’t necessarily in conflict. The activities of many philanthropy-serving organizations these days reflect a growing drive by wealthy donors and foundations alike to shape policy outcomes and public narratives. Arabella Advisors exemplifies that trend, but it’d be wrong to slap a political label on the firm given its diverse array of clients and projects.
As part of our ongoing effort to understand the work and influence of “philanthropy’s new middlemen,” here’s a look inside Arabella.
Catering to the New Philanthropists
While their services often overlap, every advisory firm and intermediary has its own identity. According to founder Eric Kessler, who now serves as a principal and senior managing director, Arabella began as a way to formalize a set of services he found himself providing already. After years in the nonprofit sector, Kessler said, “I ended up getting to know lots of philanthropists, and folks would call me asking for advice. For years, I had been a philanthropy advisor before I knew there was such a thing.”
Circa 2004, during the heady years of the pre-recession bubble, Kessler made an effort to find out just who all these new billionaire and multimillionaire families were. He became convinced that “all this wealth is going to turn into a ton of new philanthropy, but they’ll approach it differently than in the past.” The staid world of old-school philanthropy would have to accommodate new givers with unorthodox mindsets and strategies, a trend that was underway back then and continues today.
From the start, Kessler’s vision for Arabella was to create a client-driven firm offering the widest range of services under one roof. That differentiates it from advisory organizations and intermediaries focused on a narrow range of services, particular ideological positions, or a specific geographic region. “The biggest hypothesis I had was that [the new givers] wouldn’t be content betting on other charities, but would want to work alongside them to design and build new approaches to philanthropy,” Kessler said.
Kessler also told me he founded Arabella with evolution in mind. “Lots of what we now do didn’t exist 15 years ago, and I wanted a platform upon which we could hang different services that would wax and wane over time,” he said. When the recession hit in 2008, Kessler and team concluded that their initial intuition was correct: Many new givers wanted efficiency and ease of management, and saw little need to cleave to clunkier ways of disbursing gifts—like, for example, starting foundations.
Arabella has seen sustained demand for its grant management services over the past 15 years. Demand is also on the rise for inclusive grantmaking that encompasses DEI as well as “fundamentally rethinking grantmaking practices to bring in different voices to help shape strategy,” as Ganguli put it. In a similar vein, there’s been more attention lately to structural inequity and implicit power dynamics.
Around 60 percent of Arabella’s work involves institutions with professional staff, with the remainder encompassing families, individuals and corporations. It would be a fool’s errand to go through everything Arabella’s involved in, but several aspects of the firm’s work stand out in terms of scale and breadth of impact.
Back-Office Thought Partner
First among them are Arabella’s fiscal sponsorship and project incubation services, which coalesce around four entities: the New Venture Fund (NVF), the Sixteen Thirty Fund, the Windward Fund and the Hopewell Fund. Each caters to a particular set of clients. NVF is the largest, with over 280 projects under its belt in the U.S. and abroad. In 2017, NVF’s total expenses exceeded $329 million.
While NVF is a 501(c)(3) nonprofit, the Sixteen Thirty Fund’s 501(c)(4) status lets its donors support lobbying and certain political activities. It spent around $141 million in 2018. The other two funds are smaller. The Windward Fund is a (c)(3) focused on conservation and climate projects with 2017 expenses of about $11 million. The Hopewell Fund, another (c)(3) dedicated to social entrepreneurship efforts, spent just under $29 million in 2017.
Arabella contracts with all four funds to provide staffing and management services, and they share its Washington, D.C., address. While the folks at Arabella stress that these fiscal sponsorship platforms are independent entities, which is true, it isn’t hard to see why some partisans paint Arabella’s network as a means to disburse so-called “dark money.” But more on that later. For now, suffice it to say that by providing a legal and administrative home for all sorts of philanthropic projects, Arabella’s fiscal sponsors can help donors get more done.
Take Co-Impact, a collaborative giving venture housed at NVF that’s pursuing global “systems change.” As we’ve reported, Co-Impact’s donors include big names like Bill and Melinda Gates, Jeff Skoll and the Rockefeller Foundation. It plans to roll out hundreds of millions in grants over the coming years to address the roots of global development challenges. As Co-Impact’s Chief Operating Officer Pam Foster put it, “Arabella goes beyond providing [back-office] services through its arrangement with NVF to being a thought partner to us on all aspects of our operations, including how we think about partnerships and communications.”
Big Builds, Progressive Leanings
When Arabella talks about “big builds,” its fiscal sponsorship work certainly fits the bill. But so do many of the other advisory services it provides, including advising donors about how they can best achieve their goals around advocacy, impact investing and collaboration. In many cases, those services also flow through the four fiscal sponsorship funds.
One good example is the Heartland Fund, a giving collaborative focused on building philanthropic infrastructure in under-resourced rural and suburban places. Housed at the Windward Fund, the Heartland Fund launched in 2018 with support from the Wallace Global Fund and the Franciscan Sisters of Mary. Open Society and several anonymous donors have also backed the effort. By supporting movement organizing and local advocacy, especially around environmental challenges, the Heartland Fund has the potential to build bridges between urban wealth centers and rural communities—a vital if difficult task these days.
Another big build that got its start at Arabella is the Center for Disaster Philanthropy (CDP). With a mission to increase the effectiveness of disaster-related funding, CDP began in 2012 as a fiscally sponsored project at the New Venture Fund. Building on an initial $1 million from a group of core donors, CDP has grown into a strong advocate for funding throughout the life cycle of disasters—rather than just in their immediate aftermath. Some of CDP’s major donors in recent years include the Conrad N. Hilton Foundation, the Patterson Foundation and Margaret A. Cargill Philanthropies. CDP even engages in grantmaking of its own (totaling a respectable $15.3 million in 2018), with a focus on long-term recovery work and low-attention disasters.
The Heartland Fund and the Center for Disaster Philanthropy are two examples of Arabella projects that aren’t necessarily left-leaning or “progressive.” But it’s important to note that many projects do fit that description—and they include some pretty interesting and avant-garde initiatives. One that’s been making waves lately is the Economic Security Project (ESP). Facebook co-founder Chris Hughes co-founded ESP in 2016, with the Hopewell Fund acting as fiscal sponsor.
ESP started off with a mission to study and normalize the idea of a guaranteed income, a cause Hughes has long been passionate about. This fall, ESP expanded its scope with a new $10 million anti-monopoly fund to back research, advocacy and organizing against corporate concentration. As we’ve reported, some major names are involved in ESP’s new battle with bigness, including Open Society, Ford, Knight and Nathan Cummings.
Some other Arabella-affiliated projects that fall under the progressive heading include Americans for Tax Fairness and the Latino Victory Foundation, both housed at the New Venture Fund, the Fund to Build Grassroots Power, founded by the JPB Foundation and housed at Windward, and political advocacy groups like Demand Process Action and the American For Tax Fairness Action Fund, both housed at the Sixteen Thirty Fund.
On Today’s Menu: Fundamental Change
An inclination toward progressive causes isn’t the only theme running through many of the projects Arabella supports. Another interesting vector is food and nutrition, an issue area that gets little hype in the context of U.S. philanthropy, even though it speaks to basic human needs—not to mention environmental consequences that may impact the trajectory of human civilization.
Arabella’s expertise in food philanthropy can be traced to the interests of its founder. Kessler co-founded the Chef Action Network, a nonprofit that organizes culinary professionals to transform food systems. Among his other roles, Kessler currently leads Arabella’s Good Food practice area. “A lot of it’s about advocacy,” he said. “One group of philanthropists involved in health and nutrition asked Arabella to look at the range of policies that influence health and nutrition, like getting better meals for kids or preserving SNAP benefits. Advocacy also includes advocating for more resources in general.”
One example of how Arabella operates around food issues is its work with the Washington Regional Food Funders, a network launched and incubated by the Washington Regional Association of Grantmakers. With support from the Town Creek Foundation, Arabella conducted a survey of food funders in the Chesapeake region and assembled a report on the local situation. In the report, Arabella recommends working across silos, developing cohesive narratives and building regional capacity—all decent if fairly standard advice.
The report also notes that in the Chesapeake region, “Individual donors, government leaders, industry representatives and investors are all putting resources into our food system, though their inputs are disparate and far from the scale that is needed to support sustained solutions.” That speaks to a discouraging reality in philanthropy: All this giving may be commendable, but it often lacks the coordination and financial heft to drive fundamental change. By driving donor collaboration and opening up new paths for philanthropy to influence policy, intermediaries and advisors like Arabella offer tools to change that reality.
It’s worth mentioning another aspect of Arabella’s services with the capacity to foster fundamental change: the advice it provides to impact investors. Arabella says it “helped write the book on impact investing for small-staffed foundations,” and according to Kessler, the firm’s approach has evolved continuously. “Now that all the big wealth management firms [give advice on impact investments], smaller firms have to reimagine the services they provide,” he said.
For John M. Sobrato and Timi Sobrato, Arabella’s advantage lies with its deep knowledge of food systems and related environmental challenges. “I needed a large firm with expertise in a very niche philanthropic segment, and my interests happened to align with their interests,” John said. A Giving Pledge signatory, Sobrato is the son of John A. Sobrato, whose family enterprise built a $6.6 billion fortune renting real estate to techies as Silicon Valley flourished. The Sobratos are important philanthropic figures in the Bay Area, focused among other causes on place-based economic opportunity.
John and Timi Sobrato’s philanthropic interests include food security, environmental sustainability and reducing humanity’s dependence on animal agriculture. John says the couple brought on Arabella to advise them about impact investments. “I’m not a private equity guy, but I wanted to get exposed to companies developing plant-based foods. I needed help, and that’s how I found Arabella,” he said.
Although Sobrato is an active philanthropist, he sees impact investing as the most far-reaching way to ease the transition away from animal products. “If plant-based burgers become the least-expensive option, they could become the biggest-selling item in fast food. It’s a price-based decision when people eat in fast-food restaurants,” he told me. On advice from Arabella’s team, Sobrato has placed money into several investment funds and made several more direct investments in plant-based food companies, commitments that range from $250,000 to $3 million apiece.
The Dark Money Debate
Because its work is so varied, Arabella doesn’t position itself in the ideologically pointed terms of some of its peers. But it hasn’t escaped scrutiny. In particular, the magnitude of anonymous funds flowing through entities like the New Venture Fund and the Sixteen Thirty Fund have attracted negative attention for the political influence they may exert. Although most of that attention originates in conservative circles (the Capital Research Center, a think tank funded in part by major conservative philanthropies, has been especially adamant in its investigations), other outlets have picked up the story.
Late last year, Politico published a piece on the Sixteen Thirty Fund, associating it with the term “dark money” and pointing out that one anonymous contributor gave it a whopping $51.7 million in 2018—with runners-up at $26.7 million and $10 million. “The group's 2018 fundraising surpassed any amount ever raised by a left-leaning political nonprofit, according to experts,” wrote authors Scott Bland and Maggie Severns. The piece goes on to detail some of the known destinations for that cash, which spanned the progressive organizing field. Some Sixteen Thirty-funded outfits have placed lobbying pressure on elected officials; others pay for TV ads and other tactics to sway the vote.
Ganguli was quick to point to the ideological diversity of Arabella’s clients. “Many of our clients are very public about their work, as is their prerogative,” she said. “Others prefer to remain private, as is also their prerogative, and completely consistent with laws regarding privacy and donor disclosure that all in our field follow.” Whether one calls it “dark money” or not, she’s right that everything going on is completely aboveboard from a legal standpoint. So are the analogous networks that have operated on the right with backing from the Kochs and others.
The question we have to ask ourselves is whether donor privacy warrants this much anonymity. Hypothetically speaking, would revealing donor identities open them to retribution, as some have argued? Or is more transparency a necessary burden big donors should bear in the name of democracy?
Those are hardly new debates. What is new is the size and strength of the left’s donor-funded organizing apparatus. The most obvious cause for gains at places like the Sixteen Thirty Fund is the presidency of Donald Trump, which has driven many left-leaning funders to abandon their customary caution and get political. For those of us who sympathize with progressive politics, it’s about time. The left has long lagged behind the right on its values-driven philanthropy game. But the potential downside is a philanthropic future where the rich access the levers of power with greater ease than ever, while regular Americans find themselves increasingly locked out.
Juggling Act
It’s important to remember that this kind of thing isn’t limited to one or even several philanthropic intermediaries or advisors. Right and left, at large scales and small, plenty of donors are keen to cover their traces when they fund controversial work. That doesn’t take away from intermediaries’ core role: to connect interested donors with effective ground-level organizations. And what about cases where big giving eases the path of underrepresented Americans to the polls? Even if some of that controversial work is funded anonymously, it cannot really be labeled plutocratic or un-democratic in spirit.
Politics aside, it’s hard to argue that Arabella and intermediaries like it aren’t playing a crucial field-building role in an era of turbo-charged philanthropy. Even if all this new giving doesn’t reorder the nonprofit sector and the public sphere, as some have predicted, the short-term political impact of entities like the Sixteen Thirty Fund is worth keeping in mind.
Whether they admit it or not, Arabella and its peers are also in competition for clients. Their collective future may be guaranteed as long as big philanthropy grows, but the fortunes of individual firms depend on how well they advise donors. As their clientele grows, they need to figure out how to manage their own expansion and maintain efficiency, all while tending to reputations in a volatile political climate. And if populist sentiment ever leads to new limits on funders’ prerogatives, they’ll need to adapt to that, as well.
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