The left-wing dominance of the Golden State is sustained by a giant pile of cash, much of it out of sight. Billions of dollars extracted from the for-profit conversions of health insurers — assets meant for broad public benefit — bankroll an infrastructure of organizing, media, policy shops, and leadership development that locks in progressive governance.
The California Endowment (TCE), the California Wellness Foundation (Cal Wellness), and the California Health Care Foundation (CHCF) have combined assets of $6.3 billion while underwriting annual grants of about $400 million. They were created in the 1990s as the result of the conversion of two nonprofit health plans to for-profit corporations, Blue Cross of California and Health Net.
The foundations were born from conversions meant to ensure continuity of charity care, expanded access, and direct health services. Regulators and the public expected tangible benefits, in the form of clinics, coverage enrollment, and medical care for the underserved.
Unsurprisingly, they have suffered from mission drift over 30 years.
Today, the entities embrace “social determinants of health.” This broad catchall covers everything from racial equity and climate justice to community organizing and power-building. Grants flow to groups such as Asian Americans Advancing Justice for advocacy and legal work and to the Asian Pacific Environmental Network for environmental organizing framed as “health.” Cal Wellness just comes out and boldly proclaims on its homepage that their “strategic framework puts race, money, and power at the center of making health possible for all Californians.”
Direct service delivery in a clinic takes a backseat to advocacy aligned with far left-wing priorities.
Putting things into perspective, as these behemoth California nonprofit organizations have drifted into politics, it doesn’t take much of a share of $400 million to make an impact — Gov. Gavin Newsom spent $25 million to get reelected in 2022.
A History of Political Involvement
In 2005, as a freshman member of the California State Assembly, I sat on the Assembly Committee on Revenue and Taxation. The Democrats had a bill to tax Catholic hospitals. The tax was a thinly disguised penalty to force these faith-based institutions to unionize or lose their ability to subsidize care for low-income communities.
I asked one of the witnesses in favor of the Catholic hospital tax about who was funding his advocacy. He responded with an acronym I’d never heard: it was one of the big, then fairly new, health-care nonprofit organizations.
Perturbed, I stayed up until 3 a.m. that night poring over IRS Form 990 filings for a trio of California nonprofits. What I discovered was astounding.
These foundations, created to preserve charitable assets for health-care access, managed billions of dollars even then. In the mid-2000s, they were distributing around $250 million annually in grants. But I quickly found several grants that were ideological, not supporting health care.
Among those grants were two $12,500 checks from Cal Wellness to Karen Bass in 2003. Bass had been running for a Los Angeles City Council seat but dropped out and refiled soon after to run for an assembly seat. Bass’s legislative campaign recorded its first contribution on Sept. 3, 2003. Almost four weeks later, the first $12,500 check from the nonprofit was recorded on Sept. 30, 2003.
The California Endowment and Cal Wellness are 501(c)(3) nonprofits and are prohibited by federal law from making any material contribution to political campaigns. The same day Bass received the windfall from Cal Wellness, she cut her campaign a personal check for $3,400. Then, at the end of the year, she loaned her campaign $34,000. There’s no doubt that the $25,000 from Cal Wellness gave her first successful campaign for public office a major boost. This financial injection helped her project strength against her better-known Los Angeles City Councilman Nate Holden.
Two employees responsible for grantmaking at Cal Wellness also made personal contributions to Bass, one on the very same day as the nonprofit’s first check — raising serious questions about compliance with rules barring nonprofit involvement in candidate campaigns.
Bass was elected to the State Assembly the same year I was — 2004 — and later became speaker of the assembly, a member of Congress, rumored to be on the shortlist for vice president on Joe Biden’s 2020 ticket, and now mayor of Los Angeles and running for reelection.
I wrote about it at the time and Bass was none too happy with me, confronting me on the assembly floor, claiming that the money she loaned her campaign was from an inheritance. I responded that cash is fungible — and further, imagine the outrage if the NRA named me a “Hero of the Second Amendment” and sent me a personal $25,000 check after I declared I was running for office.
Not Neutral Philanthropy
These massive nonprofit foundations fund advocacy groups that shape policy debates in Sacramento and throughout California. They influence elections indirectly through civic engagement and “nonpartisan” mobilization and build pipelines for aligned leaders.
The foundations operate with minimal oversight, interpreting their charters expansively while ordinary Californians struggle with housing costs, crime, and a health-care system shaped, above all, by ideology not delivery.
Taxpayers and even energetic and knowledgeable federal prosecutors such as U.S. Attorney for the Central District of California Bill Essayli, a former California Assembly member, should force accountability: a return to core missions of actual health-care services rather than subsidizing the advocacy machine that contributes to keeping California locked in one-party rule and policy insanity.
Without reform, these entities will continue quietly shaping the state’s future — deep in the political trenches, instead of at the bedside or in a clinic.
