Tides Foundation & Tides Center
"Anonymity is very important to most of the people we work with."
— Tides Foundation founder Drummond Pike, quoted in The Chronicle of Philanthropy
Background
When is a foundation not a foundation? When it gives away other foundations’ money.
Most of America’s big-money philanthropies trace their largesse back to one or two wealthy contributors. The Pew Charitable Trusts was funded by Joseph Pew’s Sun Oil Company earnings, the David & Lucille Packard Foundation got its endowment from the Hewlett-Packard fortune, the Charles Stewart Mott Foundation grew out of General Motors profits, and so on. In most cases, the donors’ descendants manage and invest these huge piles of money, distributing a portion each year to nonprofit groups of all kinds (the IRS insists that at least 5 percent is given away each year). This is the way philanthropic grantmaking has worked for over a century: whether a given endowment’s bottom line occupies six digits or twelve, the basic idea has remained the same.
Now comes the Tides Foundation and its recent offshoot, the Tides Center, creating a new model for grantmaking -- one that strains the boundaries of U.S. tax law in the pursuit of its leftist, activist goals.
Set up in 1976 by California activist Drummond Pike, Tides does two things better than any other foundation or charity in the U.S. today: it routinely obscures the sources of its tax-exempt millions, and makes it difficult (if not impossible) to discern how the funds are actually being used.
In practice, “Tides” behaves less like a philanthropy than a money-laundering enterprise (apologies to Procter & Gamble), taking money from other foundations and spending it as the donor requires. Called donor-advised giving, this pass-through funding vehicle provides public-relations insulation for the money’s original donors. By using Tides to funnel its capital, a large public charity can indirectly fund a project with which it would prefer not to be directly identified in public. Drummond Pike has reinforced this view, telling The Chronicle of Philanthropy: “Anonymity is very important to most of the people we work with.”
In order to get an idea of the massive scale on which the Tides Foundation plays its shell game, consider that Tides has collected over $200 million since 1997, most of it from other foundations. The list of grantees who eventually received these funds includes many of the most notorious anti-consumer groups in U.S. history: Greenpeace, the Natural Resources Defense Council (NRDC), Environmental Media Services, Environmental Working Group, and even fringe groups like the now-defunct Mothers & Others for a Livable Planet (which used actress Meryl Streep to “front” the 1989 Alar-on-apples health scare fraud for NRDC).
For corporations and other organizations that eventually find themselves in these grantees’ crosshairs, there is practically no way to find out where their money originated. For the general public, the money trail ends at Tides’ front door. In many cases, even the eventual recipient of the funding has no idea how Tides got it in the first place.
Remarkably, all of this appears to be perfectly legal. The IRS has traditionally been friendly toward this “donor-advised” giving model, because in theory it allows people who don’t have millions of dollars to use an existing philanthropy as a “fiscal sponsor.” This allows them to distribute their money to worthwhile charities, while avoiding the overhead expenses of setting up a whole new foundation.
In practice, though, the Tides Foundation has turned this well-meaning idea on its head. When traditional foundations give millions of dollars to Tides, they’re not required to tell the IRS anything about the grants’ eventual purposes. Some document it anyway; most do not. When Tides files its annual tax return, of course, it has to document where its donations went -- but not where they came from.
Where the Money Comes From
The Tides Foundation is quickly becoming the 800-pound gorilla of radical activist funding, and this couldn’t happen without a nine-figure balance sheet. Just about every big name in the world of public grantmaking lists Tides as a major recipient. Anyone who has heard the closing moments of a National Public Radio news broadcast is familiar with these names. In 1999 alone, Tides took in an astounding $42.9 million. It gave out $31.1 million in grants that year, and applied the rest to a balance sheet whose bottom line is over $120 million. Since 1996, one foundation alone (the Pew Charitable Trusts) has poured over $40 million into Tides. And at least 17 others have made grants to Tides in excess of $100,000.
The Tides Center: A Legal Spin-Off
While Tides makes its name by facilitating large pass-through grants to outside groups, many of Tides’ grantees are essentially activist startups. Part of Tides’ overall plan is to provide day-to-day assistance to the younger groups that it "incubates." This can translate into program expertise, human resources and benefits management, assistance with facilities leasing, and even help with public relations and media. Tides typically charges groups 8 percent of their gross income for these services.
Until recently, these administrative functions were provided to grantees by the Tides Foundation itself. But in order to limit exposure to any lawsuits that might be filed against its many affiliated groups (many injured parties have considered suing environmental groups in recent years), a new and legally separate entity was born. In 1996 the Tides Center was spun off, insulating the Foundation’s purse and permanently separating Tides’ grantmaking and administrative functions.
Many environmental groups that now operate on their own got their start as a “project” of the Tides Center. These include the Environmental Working Group, Environmental Media Services, and the Natural Resources Defense Council -- which was itself founded with a sizable Tides “grant.” The Tides Center began with a seemingly innocent transfer of $9 million from the Tides Foundation. The Center immediately took over the operations of nearly all of the Tides “projects,” and undertook the task of “incubating” dozens more. There are currently over 350 such projects, and the number grows each year.
This practice of “incubation” allows Tides to provide traditional foundations with a unique service. If an existing funder wants to pour money into a specific agenda for which no activist group exists, Tides will start one from scratch. At least 30 of the Tides Center’s current “projects” were created out of thin air in response to the needs of one foundation or another.
The Tides Center board of directors has been especially busy of late. In 2001 the first Tides “franchise” office (not counting Tides’ presence in Washington and New York) was opened in Pittsburgh. This new outpost, called the Tides Center of Western Pennsylvania, was erected largely at the urging of Pittsburgh native TERESA HEINZ (the widow of Senator John Heinz, the ketchup heir). Heinz pulls more strings in the foundation world than almost any other old-money socialite; she’s presently married to U.S. Senator John Kerry (D-MA). The Tides Foundation has collaborated on funding projects with the Heinz Endowments (Teresa Heinz’s personal domain) for over 10 years.
The tangled web
The Tides “complex” has established itself as an important funding nexus for movements and causes aligned with leftist ideology. Everyone who’s anyone in the big-money activist world now has some connection to Drummond Pike and his deputies.
Consider that as early as 1989, when the Natural Resources Defense Council (NRDC) wanted to promote the now-infamous health scare about apples and the chemical additive Alar, the Tides Foundation was used as a financial conduit to allow NRDC to pay Fenton’s fees. NRDC was itself set up by Tides, and has since incorporated on its own, one of over a dozen other multi-million dollar former Tides projects to do so.
Fenton Communications, itself a touchstone for radical political campaigns, made use of the Tides Center to set up its Environmental Media Services (EMS) in 1994 (it has also since emerged from under Tides’ protection and formally set up shop in Fenton’s offices). The fact that Tides originally ran EMS’ day-to-day operations provided PR spinmeister David Fenton with “plausible deniability” -- a ready-made alibi against charges that this supposedly “nonpartisan” media outfit was just a shill for his paying clients. Now, of course, we all know that it is just that.
Similar stories can be told about SeaWeb, the Environmental Working Group, the National Environmental Trust (formerly known as the Environmental Information Center) and the Center for a Sustainable Economy, each of which received millions while under the Tides umbrella. Besides having been “incubated” in this fashion, the other principal commonality among these organizations is a client relationship with Fenton Communications.
The depth and financial implications of the Tides/Fenton connection is truly impressive, if not surprising. After all, long-time Fenton partner and recently-departed Environmental Media Services chief Arlie Schardt has sat on the board of the Tides Center/Tides Foundation complex since the very beginning. At present, the Fenton Communications client list includes at least 36 Tides grantees, as well as 10 big-money foundations that use Tides as a pass-through funding vehicle just about every year. In some cases, the Tides Foundation has been used to funnel money from one Fenton client to another.
Even taking into account the peculiar relationship between Tides and its in-house “projects,” Tides only spends about 40% of its money on these organizations. The rest goes to other left-leaning grantees, many of which have managers or board members that are connected to Tides in other ways.
For instance, the Tides Center’s corporate registration documents on file in Minnesota show that Institute for Agriculture and Trade Policy (IATP) president Mark Ritchie is its “registered agent.” This might explain why the Tides Foundation has paid over $20,000 to a commercial corporation owned by Ritchie and his brother. It’s a “sustainable coffee” company called Headwaters Inc., which does business with the public using the name Peace Coffee. The Ritchie brothers run this for-profit venture out of the same offices of their nonprofit (IATP), which just happens to advocate society’s total conversion to Peace Coffee’s main product. It’s a clever bit of flim-flammery, and the Tides Foundation has been helping to foot the bill.
This is business as usual for Mark Ritchie, though. He is the mastermind behind several other food-scare and health-scare organizations, all of which get appreciable funding through his Tides connection. A Tides Center “project” called the Trade Research Consortium lists its purpose as “research that illuminates the links between trade, environmental, and social justice.” Ritchie is its only discernable contact person. Similarly, Ritchie’s IATP runs the organic-only food advocacy group Sustain, but has taken great pains to hide this relationship (the group’s Internet domain listing was altered just hours after the connection was noted in an on-line discussion group in 2001). Ritchie also started the Consumer’s Choice Council, a Tides grantee that lobbies for “eco-labels” on everything from soybeans to coffee.
Tides also maintains an interesting relationship with the multi-billion-dollar Pew Charitable Trusts. Since 1993 Pew has used the Tides Foundation and/or Tides Center to “manage” three high-profile journalism initiatives: the Pew Center for Excellence in Journalism, the Pew Center for Civic Journalism, and the Pew Center for the People and the Press. These Pew “Centers” are set up as for-profit media companies, which means that Pew (as a “private foundation”) is legally prohibited from funding them directly. Tides has no such hurdle, so it has gladly raked in over $95 million from Pew since 1990 -- taking the standard 8 percent as pure profit.
In practice, the social reformers at the helm of the Pew Charitable Trusts use these media entities to run public opinion polling; to indoctrinate young reporters in “reporting techniques” that are consistent with Pew’s social goals; and to “promote” (read: subsidize) actual reporting and story preparation that meets Pew’s definition of “civic journalism.” Civic journalism, by the way, is defined as reporting that “mobilizes Americans” behind issues that Pew considers important.
