A Texas philanthropist is abusing the nonprofit legal system to quietly fund Democratic priorities such as ranked-choice voting, a conservative watchdog group claims.
John Arnold’s Action Now Initiative pretends to be a social welfare organization to enjoy tax-exempt status while spending heavily on campaigns, American Accountability Foundation (AAF) alleged in an IRS complaint obtained by the Daily Caller News Foundation. In one instance, Action Now Initiative’s IRS filings seemingly failed to report hundreds of thousands of dollars spent on a 2020 ranked-choice voting campaign in Alaska, AAF told the agency Feb. 4, citing public records.
“Our organization fully complies with all applicable tax laws and reporting requirements, and any claim otherwise is false,” a spokesperson for Arnold Ventures, Arnold’s private company, told the DCNF in response to an inquiry sent to Action Now Initiative. Arnolds is also a board member at Mark Zuckerberg’s Meta, its website shows.
Arnold’s organizations promote gun control, lenient criminal justice policies and “racial justice,” though he has portrayed himself as opposed to “partisan” politicians. Sixty-one percent of Arnold Ventures’ campaign donations went to Democrats in 2024, according to the database Open Secrets. Action Now Initiative’s website declares its goal of supporting “the mission of Arnold Ventures to MAXIMIZE OPPORTUNITY AND MINIMIZE INJUSTICE through evidence-based policy reform.”
Records show “substantial evidence of failure to report state political spending by [Arnold] to influence a successful ballot initiative in Alaska and him abusing the federal tax code to do it,” AAF told the IRS.
Action Now Initiative spent around $3 million in 2019 and 2020 on Alaska’s ranked-choice voting ballot initiative while reporting just $2,500 in expenses for 2019 and $8,693 for 2020 in IRS filings, AAF noted. The discrepancies “strongly indicate violations” of tax law, according to the watchdog group.
“While [Arnold’s] ideology is not itself unlawful, the use of a § 501(c)(4) entity to channel large-scale electoral spending — particularly when paired with materially incomplete federal reporting — constitutes an abuse of the social welfare form and warrants heightened enforcement scrutiny,” AAF wrote.
The complaint asks the IRS to investigate Action Now Initiative’s financial disclosures, decide whether it is improperly acting as a political organization and impose “all appropriate enforcement actions” if needed, such as revocation of its tax-exempt status. The IRS did not respond to the DCNF’s request for comment.
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