Blog — 501c Groups

January 21, 2016

Introducing the Newest Koch Network Group: Freedom Partners Institute, Inc.

By Matt Corley

The constellation of groups that make up the Koch brothers’ political network quietly expanded last spring with the formation of a new nonprofit organization that is affiliated with and ultimately controlled by the network’s flagship organization, Freedom Partners Chamber of Commerce, according to tax filings obtained by Citizens for Responsibility and Ethics in Washington. Operatives for the network incorporated the new group, Freedom Partners Institute, Inc., in Delaware in March 2015. The Internal Revenue Service (IRS) granted the new group tax-exempt status under section 501(c)(3) of the tax code in July 2015.

Little is known about Freedom Partners Institute. It has no website of its own and there are no mentions of it on the websites of Freedom Partners Chamber of Commerce or Freedom Partners Shared Services, the nonprofit organization that handles human resources issues for Koch network groups.  

Set up as an educational charitable organization, Freedom Partners Institute cannot engage in electoral politics, and the organization stated on its application for tax-exempt status that it does not intend to attempt to influence legislation. Instead, it appears the new group will fund, produce, and promote research that can subsequently be used by other organizations in the Koch network. In a narrative description of the group’s planned activities that was included as part of the application, Freedom Partners Institute cited several issues that are current Koch focuses as examples of potential areas of research, including “overcriminalization” and “cronyism.”

To pursue its goals, Freedom Partners Institute told the IRS it may conduct its own research, sponsor conferences and events, host focus groups, and make grants to other 501(c)(3) organizations. A statement of revenue and expenses included as part of the application suggests grant making will be the new group’s main activity, though its ambitions are far more modest than the larger Freedom Partners Chamber of Commerce, which distributed more than $87 million in grants in 2014. For 2015, Freedom Partners Institute said it would spend $1 million on grants out of a planned budget of $1.5 million. In 2017, the organization projects it will be spending $3 million on grants and $506,500 on other expenses. The size and number of grants issued by Freedom Partners Institute, however, could defy expectations. When Freedom Partners Chamber of Commerce applied for tax-exempt status in 2011 (back when it was known as the Association for American Innovation), the group provided the IRS with similar budgetary expectations.

At the time of its application for tax-exempt status, Freedom Partners Institute said it did not have any employees of its own and had not engaged any independent contractors. The organization’s officers and director are all employees of Freedom Partners Chamber of Commerce: Freedom Partners Chamber of Commerce president Marc Short, Freedom Partners Chambers of Commerce chief financial officer Josh Fisher, and Freedom Partners Chamber of Commerce general counsel Julie Strauss. Their work for the new group is compensated by Freedom Partners Chamber of Commerce, not the Institute itself, according to an attachment included with the application. 

Though Freedom Partners Institute describes itself as being “legally organized and operated separately” from Freedom Partners Chamber of Commerce, the Koch network’s central hub is “the sole member of the Institute” and “has the power to elect and remove the Institute’s directors,” who manage Freedom Partners Institute’s affairs. Elsewhere, the application refers to Freedom Partners Institute being “formed and controlled” by another organization.

At the moment, it is unclear exactly what this new group will do in practice, but its mere existence is representative of the maturation of the Koch network and the centralization of activities under the Freedom Partners banner. As Politico’s Ken Vogel has noted, the Koch network has “centralized and rejiggered its organizational flow chart to bring more functions under the umbrella of Freedom Partners Chamber of Commerce” in recent years, including absorbing another Koch-backed nonprofit called Public Notice. In July 2015, the Center for Shared Services changed its name to Freedom Partners Shared Services. According to Vogel, the Center was folded into Freedom Partners Chamber of Commerce. It remains to be seen if, like those two groups, Freedom Partners Institute will replace the function of another nonprofit in the Koch network’s orbit.

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