When Philanthropy Is Not Enough: A Top Donor Couple Takes a Broader Approach to Impact

Laura and John Arnold were among the biggest backers last year of state campaigns to end gerrymandering. Susan Montgomery/shutterstock

Laura and John Arnold were among the biggest backers last year of state campaigns to end gerrymandering. Susan Montgomery/shutterstock

Editor’s Note: This article was first published on July 18, 2019.

The Laura and John Arnold Foundation has been one of the most interesting philanthropies to watch in recent years, charging into a range of tough issue areas like criminal justice reform and drug pricing and making more than $1 billion in grants since 2011. Last year alone, the foundation committed $250 million to grantees.

But those who closely follow the billionaire couple behind this operation know that they’ve long engaged in political giving alongside their foundation’s grantmaking. For example, they’ve bankrolled efforts to pass local taxes on soda, and last year, they emerged as the single biggest backers of state ballot measures to end gerrymandering of legislative districts. Funds for those ballot fights came from an organization created by the Arnolds, the Action Now Initiative, with a mandate “to improve the lives of individuals through political advocacy.”

Now, the Arnolds are bringing their philanthropy and political giving together in a new limited-liability corporation called Arnold Ventures. The goal is to create a more integrated push for impact on the wide range of public policy issues that have long animated the couple.

The move came after a year of internal strategy conversations at LJAF, according to the foundation’s president, Kelli Rhee. It reflects a drive by the Arnolds and their staff to do more to advance their core objective of backing “evidence-based solutions that maximize opportunity and minimize injustice.”

Arnold Ventures is emerging at a time when a handful of other prominent givers are also looking beyond the foundation model. Mark Zuckerberg and Priscilla Chan do their impact work through an LLC, the Chan Zuckerberg Initiative, which engages in grantmaking, 501(c)(4) giving, impact investing, and the direct creation of new technology tools. The Omidyar Network and Emerson Collective are also LLCs that use multiple strategies to convert the wealth of their billionaire founders into impact. And just last week, I published an article on Vulcan Inc., the company founded by the late Paul Allen, which combines a range of approaches to urgent problems like marine conservation and wildlife protection.

Such hybrid entities are still outliers in the philanthrosphere—so unusual in a “neither fish nor fowl” kind of way that we don’t even know what to call them. But maybe the real question is not why some top donors are creating outfits like CZI and Arnold Ventures—it’s why more billionaires aren’t creating operations like these.

After all, philanthropy is a famously limited tool. The sums involved are small change compared to what moves through capital markets or the amounts government spends. You can see why so many wealthy people who want to change the world have lately embraced impact investing in an effort to harness the power of markets to achieve their goals. And you can see why so many donors try to influence government policies. To do that, however, grants to 501(c)(3) groups will only get you so far. You can have much more impact if you also back ballot initiatives, help to elect candidates who favor your causes, and engage in other electoral activities.

Some of today’s savviest mega-givers strategically blend philanthropic and political giving. Charter school backers are a prime example; they’ve given many millions of dollars in campaign donations to create a political climate friendly to charters even as they pumped even greater sums into the construction of such new schools.

Laura and John Arnold have long embraced this same kind of dual-track strategy on the issues they care about. To reform drug pricing, for example, their foundation has given millions for academic research and policy development while the couple has also invested in 501(c)(4) advocacy work. During last year’s mid-term elections, the Arnolds moved about $10 million through a super PAC called Patients for Affordable Drugs Action. All told, the couple has made $70 million in political donations through their Action Now Initiative since 2011.

That political arm, renamed Action Now Inc., has become part of Arnold Ventures. And with the launch of this larger organization, the couple now have a single entity that can pursue the full spectrum of strategies needed to take ideas from the drawing board to implementation as law and policy.

It’s not clear how much the Arnolds plan to increase their political giving. But Kelli Rhee said that the flow of grants to 501(c)(3) organizations wouldn’t change and could even grow. She also said there were no plans to engage in significant impact investing, which has not been a major focus for the Arnolds.

The creation of Arnold Ventures is another example of billionaire donors becoming ever more sophisticated about using private wealth to influence public policy—wielding exponentially more power in American life than ordinary citizens of more modest means. If you want to see two “super-citizens” in action, empowered to shape the lives of their fellow countrymen by a big stash of cash and lots of smarts, you can’t find a better example right now than John and Laura Arnold.

The model behind Arnold Ventures is also a reminder that the lines between different forms of influence spending by the super-wealthy keep blurring. Yet while there are multiple organizations dedicated to limiting one form of such spending—political campaign donations—there is no comparable push to rein in philanthropic giving that often aims to achieve the exact same legislative goals that animate campaign donors.