May 2, 2017; Politico
As NPQ reported earlier this week, the knives were out for Jim DeMint, the former U.S. senator who resigned his seat in 2013 to become president of the conservative Heritage Foundation. As anticipated, DeMint’s forced resignation was accepted at a board meeting on Tuesday. Co-founder, trustee, and only former president Ed Feulner will take over as interim president of the $93 million 501(c)(3) foundation.
The official statement from board president Thomas Saunders III, posted on the Heritage website and emailed to the foundation’s 500,000 members after the board meeting, was uncharacteristically blunt. Rather than thanking DeMint for a good job and wishing him well, Saunders said,
After a comprehensive and independent review of the entire Heritage organization, the Board determined there were significant and worsening management issues that led to a breakdown of internal communications and cooperation. While the organization has seen many successes, Jim DeMint and a handful of his closest advisers failed to resolve these problems.
In his own statement, DeMint called the assessment “puzzling,” citing the board’s past praise for his work as well as steady performance bonuses for his management team and himself as part of his million-dollar compensation package. He also cited a positive independent review of Heritage Foundation’s scholarship from the University of Pennsylvania and recognition of the Heritage Foundation by Penn’s Scholarly Commons as “the 13th best managed think tank in the world in 2016.”
Founded in the 1970s, Heritage reached heights of influence during the Reagan administration. Reagan himself distributed Heritage’s 20-volume, 3,000-page 1981 “Mandate for Leadership: Policy Management in a Conservative Administration” at an early Cabinet meeting. Two of its authors, Bill Bennett and James Watt, became Reagan administration cabinet members. A 2016 version of “Mandate for Leadership” was produced by Heritage to aid in the Trump transition and administration.
One key problem affecting DeMint was that the Heritage Foundation had strayed from its conservative think tank roots and had become too involved in dealmaking on Capitol Hill. Founding board member and former Congressman Mickey Edwards (R-OK) said, “When DeMint went in, Heritage became very political. It changed from a highly respected think tank to just a partisan tool and more ideological—more of a Tea Party organization than a think tank.” NPQ observed in 2013 that changes early in DeMint’s tenure were calling Heritage’s research integrity into question.
DeMint’s intended solution to restore the foundation’s research focus included curtailing or even shuttering the foundation’s 501(c)(4) arm, Heritage Action for America, founded in 2010. The problem with this approach was that Heritage Action is headed by Michael Needham, a powerful Heritage insider who was formerly Ed Feulner’s chief of staff. The relationship between DeMint and Needham had deteriorated to the point that Needham is rumored to have thrown a chair across the room when told DeMint had changed his mind about retiring voluntarily.
According to the statement, “Feulner and his successor” will work to restore the organization to being the go-to place for conservatives to find the research and policy options. The inference is that Feulner is serving in an interim capacity and that an executive search will be performed, but this is not addressed directly by Heritage. It is expected that further resignations and firings will happen as Feulner removes DeMint loyalists from the foundation’s staff.
In his statement, Saunders also mentions a problem familiar to nonprofit organization leaders seeking to balance member and stakeholder transparency with the legal rights of employees.
I regret not being able to let you know sooner about this change. While we were trying to resolve this matter amicably, we honored our side of the bargain to remain silent. I wanted to ensure that the Board’s decision was final before alerting you. Unfortunately, the media ran with speculation about this story before the facts could be disclosed.
Needham may well end up in the foundation president’s role, or another candidate may be found, but rumors have been floated that presidential adviser and former head of Breitbart News, Steve Bannon, may be in the running. Initially a high-profile Trump adviser, Bannon may have become embroiled in palace intrigue involving both Donald and Ivanka Trump as well as Jared Kushner and White House chief of staff Reince Priebus. Rumors swirled earlier this year that a dignified exit strategy for Bannon was being investigated by conservative donor and activist Rebekah Mercer as well as other Bannon supporters.
Bannon is a favorite of Rebekah Mercer, who serves on the Heritage board and has guided the donation of more than $1 million to Heritage in recent years. Through her family’s foundation (of which she is the sole officer), Mercer is also a major donor and board member of Bannon’s own nonprofit, the Government Accountability Institute, which NPQ addressed in a story late last year. Bannon is a former board member of Cambridge Analytica, a data analysis and strategic communications company heavily financed by Mercer and her father, hedge fund billionaire Robert Mercer.—Michael Wyland