James "Art" Pope is probably the most important conservative benefactor in North Carolina -- and, increasingly, one of the most influential in the country, thanks to his leadership in national groups like Americans for Prosperity.
Yet North Carolina conservatives, while grateful for Pope's generous support, chafe at the idea that the retail magnate and Republican philanthropist controls them.
This past May, John Hood, president of the Raleigh-based John Locke Foundation -- a think tank Art Pope helped found, and which received over $17 million from Pope's family foundation between 1994 and 2008 -- lashed out at critics who had "whined that the Pope Foundation had used its resources to gain an inordinate influence on the state through 'puppets'who did Art Pope's bidding."
It was a familiar refrain: In August 2004, Hood had similarly pounced at the suggestion that "the existence of organizational or financial relationships between free-market groups in North Carolina must create a locus of control ... the Dark Side of the Force as personified by Art Pope."
But a Facing South analysis of federal tax records reveals that Art Pope has structured his relationships with North Carolina's leading conservative organizations in a way that ensures Pope holds a high level of organizational and financial control -- far beyond that seen in most other nonprofits in the state.
Facing South looked at five of North Carolina's most influential conservative research, advocacy and legal groups -- many of which Art Pope created, or helped create: Capitol Monitor, The John W. Pope Civitas Institute (named after Art Pope's father), the John Locke Foundation, the North Carolina Institute for Constitutional Law and the Pope Center for Higher Education Policy.
Tax records show that Art Pope sits on the board of directors of all but one of the groups, which by law confers a high degree of power to Pope in managing operations, setting policy, and approving their annual budgets.
Most crucially, Pope supplies at least 80 percent -- and in some cases, nearly all -- of the operating budgets of the groups, a level of purse-string power so dominant that the Internal Revenue Service classifies all but one of them as a "private foundation," a relatively rare designation used only by non-profits who disproportionately rely on a single benefactor.
A Saint to Civitas
Take, for example, the Civitas Institute, a think tank launched in 2005 to "facilitate the implementation of conservative policy solutions." Civitas is a so-called 501(c)(3) tax-exempt nonprofit -- like the Institute for Southern Studies, publisher of Facing South -- named after the IRS tax code governing nonprofit groups.
Civitas owes its existence almost entirely to the generosity of Art Pope. A Facing South comparison of the tax records filed by the Civitas Institute and the John W. Pope Foundation -- which Art Pope chairs, and whose philanthropy John Hood acknowledges Pope oversees -- reveals that Pope's backing has constituted more than 99 percent of all the grants, donations and gifts that Civitas has received between 2005 and 2009.
Even after adding in conference fees and other sources of revenue, Pope's money still makes up more than 97 percent of Civitas' total income, as the following chart shows:
Civitas' near-total reliance on Pope makes it a "private foundation" in the eyes of the IRS, a classification reserved for nonprofits that depend on a sole benefactor. That's different than "public charities," the most common nonprofit classification but available only to groups that show they have a more diverse base of support.
Nationally, the majority of 501(c)(3) nonprofits are public charities; only six percent are private foundations.
Art Pope's imprint is visible at every level of Civitas. Pope sits on the group's board of directors. The group's president, Francis De Luca, used to be director of the North Carolina branch of Americans for Prosperity -- a good fit, given that the Pope Foundation is the second-largest financial backer of foundations giving to the Americans for Prosperity Foundation.
Indeed, Civitas' tax filings show that, from 2006 to 2008, its office space was donated, free of charge -- an in-kind contribution worth $283,150. At the time, Civitas occupied office space within a building owned by Variety Realty, LLC, a real estate company that Art Pope organized in 2005.
As Facing South reported last week, Pope is also at the heart of Civitas Action, the Civitas Institute's 501(c)(4) sister group that is now running attack ads against Democratic state legislators. Pope is listed as a founding board member of Civitas Action.
According to State Board of Elections records [pdf], 72 percent of the money Civitas Action has raised for the ads comes from Variety Wholesalers, the retail company Pope owns. The rest came from Americans for Prosperity, where Pope is a director and a leading donor to its sister AfP Foundation.
Staying in Control
An analysis of tax records shows that Art Pope maintains a similar level of control over other leading conservative organizations in North Carolina:
* Between 2004 and 2008, the Pope Foundation gave $1.9 million to the Pope Center for Higher Education Policy, making up 90 percent of that organization's budget those five years.
* Over 99 percent of the income for Capitol Monitor, a relatively new group that gives a right-leaning spin on state policy (the website is down, a cached version is here), has come from Pope's foundation.
* The $2.5 million the Pope Foundation has given since 2004 to the N.C. Institute for Constitutional Law, a legal outfit "fighting for freedom and fairness," accounts for 93 percent of that' group's income over that period.
* The John Locke Foundation is the most independent of the groups -- but even they counted on Pope's foundation for 80 percent of their total income between 2001 and 2008.
Like the Civitas Institute, all of the groups except the Locke Foundation are classified by the IRS as "private foundations" due to Pope's high level of control. And even the Locke Foundation's dependence on Pope is increasing: The share of the group's income coming from the Pope Foundation rose from 72 percent in 2001 to 80 percent in 2008.
Art Pope also sits on the boards of the Pope Center for Higher Education Policy, the N.C. Institute for Constitutional Law and the John Locke Foundation.
The following chart shows how extensively these groups have relied on the Pope Foundation over the last five years:
But in the end, the record shows that North Carolina's leading conservative organizations are uniquely arranged in a way that offer Art Pope significant control over their money, policies and future.
PHOTO: James "Art" Pope