How One Donor-Advised Fund Helps Leonard Leo Weaponize Philanthropy

In 2020, conservative judicial mastermind Leonard Leo stepped away from his role running the Federalist Society. Just a couple of short years later he’s emerged as the dark money kingpin of a $1.6 billion fund called the Marble Freedom Trust.

A new letter obtained by Axios now shows the degree to which Leo is trying to reshape the conservative movement by exerting his influence through philanthropy. In his view, conservative philanthropy has been too focused on “ideation,” and needs to shift towards “weaponizing those ideas and policies to crush liberal dominance at the choke points of influence and power in our society.”

Marble Freedom Trust’s primary activity is grantmaking: As its most recent IRS reports show, grants account for 98% of the trust’s spending. Even though Marble is already what’s known as a “dark money” organization, Leo did not choose to fund his network of allied conservative groups directly.

Instead, as Axios reported in 2020, Leo said he planned “to work with two existing non-profit groups, which will be rebranded as the Concord Fund and the 85 Fund, to funnel tens of millions of dollars into conservative fights around the country.”

But even this was apparently not dark enough for Leo. Instead of plowing money directly into the 85 Fund from Marble, he redirected the lion’s share of money — hundreds of millions of dollars in the last two years alone — through a donor-advised fund at Schwab Charitable. That had the effect of further concealing the source of funding, and also, as we’ve noted before, of allowing the 85 Fund to maintain its status as a public charity even though it’s controlled and funded by Leo.

The new letter is a warning. Leo is ratcheting up his commitment to weaponize philanthropy, and his beneficiaries better get with the program — or expect his support to wither away. After the Fund concludes a review this fall, prior 85 Fund grantees will find out if their programs are sufficiently weaponized to merit future funding.

Leo’s expanding influence over the conservative movement has headline-worthy political implications, receiving expanding coverage. But it’s also critical to focus on how Leo’s been able to marshal money — with minimal accountability to the tax base and the public — to realize his worldview. Schwab Charitable has served as Leo’s chief intermediary, making the 85 Fund look like a public charity while in fact it serves entirely as Leo’s personal instrument.

As we’ve noted before, donor-advised funding from Schwab now constitutes almost all of the 85 Fund’s revenue. And that money comes into Schwab from the Marble Freedom Trust — a billion-dollar entity Leo also controls. Bloomberg’s Emily Birnbaum also outlined Schwab’s role in this May 2024 piece.

Schwab’s own guidelines should theoretically prohibit this kind of subterfuge:

“Schwab Charitable generally will not approve grants to organizations that would likely be considered non-operating foundations absent the Schwab Charitable grants. Further, Schwab Charitable generally will not approve a grant recommendation to an organization that is controlled by the recommending Schwab Charitable account holder and/or their family members and/or their affiliates.”

But Schwab’s grants to the 85 Fund flunk this legitimacy test on both counts:

• In both 2022 and 2023, Schwab Charitable made grants to the 85 Fund of over $141 million. Those grants constituted nearly the entirety of the 85 Fund’s public support. As Birnbaum noted: “In 2022, the 85 Fund reported $134 million in revenue; the Schwab Charitable Fund accounted for 95% of those donations.”
• The source of Schwab’s funding was almost certainly two corresponding grants of $153.8 million and $153.75 million to Schwab from Marble Freedom Trust, which Leonard Leo controls. (We say “almost” because current IRS rules do not require DAF sponsors like Schwab to report the sources of their income or to show which accounts make which grants.) So Leo or someone else at Marble was likely the one advising Schwab to make those grants to the 85 Fund. And Leo’s control over the 85 Fund is clear from the letter, which he says he is writing “on behalf of the 85 Fund and its Directors.”
  
  As Accountable.US notes, “While Leo holds no formal role at the 85 Fund, which, on paper, is run by his close allies, the letter released by Axios today is signed by Leo — suggesting Leo’s role within the organization is more significant than what appears in the group’s tax filings.”

Schwab Charitable may choose to ignore its own guidelines to continue doing business with one of its largest clients: In each of the last two years, Schwab’s second-largest grant has been to the 85 Fund. 

Donor-advised fund rules are desperately in need of change, as part of a broader effort to ensure that the wealthiest donors who reap the greatest tax breaks for their gifts don’t continue to play fast and loose in a virtually unregulated space.