Arabella Advisors Dissolves After Years of GOP-Led Investigations

Arabella Advisors, a for-profit philanthropy consulting firm that moved billions of dollars to progressive nonprofits and that drew the ire of conservative lawmakers, is closing. This week the company announced that its operations team will move to a new organization called Sunflower Services. This change marks a significant shift for the consultancy world, in which Arabella was among the best-known and most controversial entities of its kind. Sunflower has acquired Arabella’s administrative services business for nonprofits which the new entity will run.

Arabella was started in 2005 by former Clinton administration official Eric Kessler to provide strategic guidance to nonprofits, impact investors, and corporations. By 2023, Arabella was a $60 million business with 425 employees. It administered more than $5 billion in philanthropy funding annually. Its largest nonprofit partners were the New Venture, Hopewell, Windward, and Sixteen Thirty funds — all of which accept funds to grant to nonprofit groups. The majority of Arabella’s work was done through the New Venture Fund, which is a fiscal sponsor for more than 100 nonprofit projects.

New Venture Fund was the lead investor in the acquisition of Arabella Advisors’ fiscal sponsorship servicing business. The price of the acquisition was not disclosed. New Venture Fund will absorb roughly 243 Arabella staffers into Sunflower Services, a public benefit corporation that can earn a profit but also must benefit the public. Hopewell and Windward Funds, also former Arabella clients, provided additional financial backing for the deal. The three funds support issues such as civil rights protections, environmental justice, and global development. Combined, they helped move close to $1.2 billion in resources to nearly 200 projects worldwide last year.

A Frequent Target

The announcement follows months of speculation about the future of Arabella.  The group was a frequent target of Republicans due to its ties to the Democratic Party and liberal funders. In recent years, House members held a series of hearings related to Arabella and introduced legislation aimed at creating more transparency around money in politics. The D.C. Office of the Attorney General also investigated the firm in response allegations that it was violating nonprofit tax laws before concluding last year that the accusations were unfounded.

In an interview, New Venture Fund President Lee Bodner said that conservatives mischaracterized the group’s work. He previously worked as a managing director at Arabella Advisors. With this new organization, there is an opportunity to keep the focus on the work of supporting nonprofits. “Sunflower is going to continue to be a service provider, but having it owned by nonprofits makes sure that it’s really mission-aligned and that we’re directing all the resources toward impact in doing this,” Bodner said.

Kessler, who has maintained that Arabella was not involved in partisan politics, stepped down from executive and management roles and sold the majority of the business in 2020. Still, Arabella’s association with progressive causes has proved damaging at a time when left-leaning nonprofit groups have been losing federal grant funding and Congress is gearing up to investigate foundations and others in the sector. In June, the Gates Foundation severed its 16 year relationship with the firm after having it administer $450 million in nonprofit funds from the foundation during that period. At that point, some nonprofits that had worked with Arabella began to distance themselves from the firm to preserve their relationships with the Gates Foundation, the New York Times reported.

New Venture Fund, founded in 2006, has also faced criticism for its work to advance progressive causes. Over the years, the organization has also received gifts from Bill Gates and Melinda French Gates along with other major funders like the Ford Foundation, Open Society Foundations, and the Walton Family Foundation. Bodner said Sunflower Services was not created in response to the Gates Foundation’s decision to cut ties with Arabella-affiliated groups.

“However, as their work evolves and as New Venture Fund and the other nonprofit owners of Sunflower continue to invest in this important work, we would welcome any and all future opportunities to work with the Gates Foundation again,” he said.

The Gates Foundation did not respond to a request for comment.

Focus on Nonprofit Work

Along with the New Venture Fund, the nonprofits spearheading Sunflower Services were optimistic about their ability to positively impact nonprofits and to increase the speed of money being delivered to organizations in a moment when many groups are dealing with financial uncertainty and have expressed worries about the politicization of their work. Transitioning the fiscal sponsorship operations to Sunflower Services will help all of the organizations that funded the acquisition keep their focus on their nonprofit work and “not on all the other externalities that confused everyone,” added Adam Eichberg, who is stepping in as the incoming board chair of Sunflower Services after serving in the same role at New Venture Fund. Allan Williams, who was a senior vice president overseeing strategy and design at Arabella Advisors, will serve as CEO of Sunflower Services. 

Sunflower will provide back office services to nonprofits that work as fiscal sponsors. And because it is operated by organizations that are working with groups in the field, needs can be identified faster and money moved more quickly, said C. Lynn McNair, president of the Windward Fund, which sponsors global environmental projects. The groups will be able to move forward on “big ideas that can change communities” at a pivotal moment for the sector, she said.

Anna Brower, president of the Hopewell Fund, hopes Sunflower Services can provide resources to groups led by and serving marginalized communities that are usually cut off from major nonprofit institutions. The Hopewell Fund sponsors domestic and international projects, including an initiative to revamp the U.S. tax system so that it benefits more Americans.

Even with the name change and the new structure, some may still criticize Sunflower Services. And that’s fine, Brower said.

“We can’t totally control for what the naysayers will say and what their narratives might be,” she said. “But our work is going to continue and will ultimately speak for itself. “

Correction: This story has been updated to clarify that Sunflower Services is not a fiscal sponsorship organization and that it has acquired Arabella’s administrative services business. A previous version of this article also misspelled Anna Brower’s name as Anna Bower.