Chase Koch Foundation and How Chase Koch Spends His Charity Dollars

Well it has been many years since I have blogged about Chase Koch (son of Charles and Liz Koch). It appears within the past few years (March 15, 2019) has established the Chase and Annie Koch Foundation Inc. Annie is the wife of Chase Koch and I actually blogged about her here. 

The 2018 Chase Koch Foundation tax return (990-PF) shows a $5 million contribution made. This contribution appears it was solely made by Chase Koch himself. The 2019 return for the Chase Koch foundation shows $15 million of contributions. Of the $15 million gift $1 million came from the "KC 2009 Gift Trust" and $14 million "KC 2009 Family Trust". These were trusts that were established back in 2009 from my guess would be Charles Koch (his initials backwards). 

Chase Koch has mentioned before that he is a shareholder of Koch Industries (he is on record saying this on video-see at the 30:14 mark. It is hard if not impossible to figure out how much ownership he has. His father Charles Koch back in 2012 told Daniel Fisher of Forbes magazine that he has been estate planning for "many, many years". 

Uncle David Koch mentioned in a 1999 article that he regularly gave away 50% of his income every year. This is an interesting dynamic if Koch Industries reinvests 90% of their profits back into the business leaving only 10% of the profit available to be distributed to Koch Industries owners and in actuality only around 7% of the profits (based on historical data has been distributed in the form of dividends) and then between federal and city taxes for New York city and New York state is 50% and assuming 50% was given to charity would say that David Koch was living on less than 2% of Koch's profits for his living needs! 

In terms of what charities Chase Koch has supported it appears the largest charity he contributed to in 2019 was the Phoenix Multisport ($1.1 million just to this). Chase Koch has talked about the positive impacts of Phoenix and how the charity has been able to transform lives as a result. Phoenix Multisport is a community that allows individuals who battle addiction to use physical fitness as an outlet for coping with their addiction. You can think of the Phoenix as a sober gym. From their 2020 report the Phoenix has 54% of members who lived in poverty, 61% who were involved with the criminal justice system, and 15% who identified being part of the LBTGQ+  community. The results of the Phoenix have been amazing though. Roughly 87% of individuals report being sober after 3 months (this is impressive compared to the statistic that 40-60% of individuals relapse after 30 days of leaving a rehab program and the percentage of relapse increases to 85% within 1 year. There is no question that this program seems to have a positive impact by improving the lives of not only many people but their families and communities. 

Another large beneficiary ($350,000) of the Chase Koch Foundation is Wonder Inc. Wonder Inc is a private school that is primarily funded by Chase and Annie Koch that will offer K-12 education on the Wichita State University campus. The school is trying to break the mold of traditional educational by allowing children to be more curious (as opposed to a teaching from a top down approach and "put into practice by solving complex real-world problems using critical thinking, creation, collaboration, and innovation". Annie Koch on the Wonder website lists herself as a "mother since 2012, vegan since 2016" and enjoys "reading, running, and Kombucha (tea)" and she is currently reading "Untamed" 

What is crazy is even though the Chase Koch Foundation is a charity it still pays an excise tax (1%) on investment income. Although this was a de minims amount the Chase Koch foundation paid $433 of tax in 2019. Chase's father Charles Koch (who has his own foundation) in 2020 paid over $1 million in excise taxes). Charles Koch appears to have done estate planning at least in 1997 and 2009. As far back as 2016 the Charles Koch Foundation received gifts from the Charles G. Koch 1997 Trust ($30 million), the KC 2009 Family Trust $27.5 million, and the KE 2009 Family Trust $27.5 million, and smaller gifts from the KC 2009 Gift Trust $7.5 million, and the KE 2009 Gift Trust $9.5 million. My guess would be the names of the trusts represent the initials (KC for Charles Koch and KE for Elizabeth Koch). These trusts have continued to provided funding for the Charles Koch foundation over the years. It is hard even as a billionaire to give away money fast enough to overcome estate taxes. However, Charles Koch years ago stated that he planned to give the main bulk of his estate to Stand Together. 

What is interesting is how the Koch family has set up all these private foundations over the years to give money to various charities. To me it becomes too complicated as you have many different organizations that ultimately are trying to achieve a similar objective. One option is to convert the private foundations into a donor advised fund. The benefit of doing this is tax returns don't have to be filled. Also the donations from the donor advised fund can be contributed to various charities without anyone knowing the source. The 990-PF tax return allows the whole world to see who you are giving to and how much. 

I would predict that over time Chase Koch will be given more ownership of Koch Industries given it seems that currently he is the only one of the Koch family working for the company. David Koch has children however they are too young. Fred Koch himself was charitably inclined as back in 1966 and 1967 set up trusts that would pay income for 20 years to charity and then the remainder after the 20 years would be given to his sons. There is no doubt that Charles and Liz Koch will continue to give away substantial sums of money away and Chase Koch will have access to give away a multiple of what his parents were able to give away if Koch Industries shares transfer to him over time.