Rex Sinquefield amassed a fortune by doing nothing. Well, not exactly: In the 1970s, he pioneered the first index funds, investment vehicles that strictly track a broad portfolio of financial assets, such as the S&P 500, leaving no room for individual error or hunches. He did so by capitalizing on a theory, honed by his intellectual mentors at the University of Chicago, that such “passive” investments in the overall market could outperform even the best stock pickers in the country. “Private investment managers can’t beat markets,” he likes to say.
But he prefers his politics a lot less passive: The 69-year-old retired multimillionaire is now betting that he can pick political winners and losers back in his native Missouri.
Sinquefield is among a small and little-known, but powerful, group of big-money donors who have shied away from national politics to advance pet policy issues in their home states. In Missouri, where the hundred-dollar campaign checks that were long the norm are being replaced by Sinquefield’s six-, seven- and even eight-figure donations, he has fundamentally transformed the state’s sleepy politics in less than a decade. And he is not shy about advertising that fact: In January, as he wrapped up a lecture to a gathering of his fellow Chicago alums, Sinquefield offered a final takeaway from his recent experience in politics. “If you get involved at the local level,” he said, “you will be amazed at how much influence you can have.”
Amazed indeed — especially given Sinquefield’s humble roots. Unlike Charles and David Koch, the better-known GOP donors who inherited their father’s oil-and-gas fortune, Sinquefield carved his own path. The St. Louis native, who spent his early years in a local Catholic orphanage and even considered entering the priesthood, went on to study under famed University of Chicago economists Eugene Fama and Merton Miller, Nobel Prize winners known for their “let the markets sort it out” views. He became rich in the 1980s when he co-founded Dimensional Fund Advisors — he won’t say how much he’s worth — but left the investment firm in 2005 after he says he grew “bored” with simply making money. Now, Sinquefield splits his time between his $1.7 million, 8,320-square-foot, century-old mansion in St. Louis and a 1,000-acre riverside estate in rural Osage County, where he keeps a fleet of vehicles and four houses. He’s taken a decidedly activist view of how to spend his money advancing his idiosyncratic passions: promoting chess, dismantling the traditional public school system and eliminating income taxes.
Thanks to his largesse, St. Louis is now home to a world-class chess club and educational center. (Sinquefield is such a chess fanatic that in 2009, he purchased the private chess library of the late Bobby Fischer, the reclusive 1972 world champion.) And his donations have fueled a sprawling ecosystem of think tanks, political action committees and lobbying firms promoting his favored policy issues, which have dominated the state’s political scene over the past few years.
Given the complexity of his network, it’s difficult to put a dollar figure on Sinquefield’s contributions, and he refused requests to comment for this article. But in 2005, he co-founded the Show-Me Institute, which promotes free-market causes and is now the most prominent conservative policy center in the state. Tax records show the institute, staffed by 13 people, has an annual budget of about $1.4 million. But his reach is far broader. As he put it in a talk two years ago, Sinquefield has “a whole political army that is separate from the Show-Me Institute” — about 40 people who can lobby elites and organize the grassroots.
Sinquefield has also thrown around his weight in state and local elections. One estimate from the St. Louis Beacon found that between 2008 and 2013, he gave $28 million to campaigns, mostly state and local politicians and issue-based committees, though that figure might not reflect all the money he has spent through 501(c) organizations, which do not have to disclose donor information. According to the Missouri Ethics Commission, the $3.3 million Sinquefield has contributed to state candidates and committees so far this year dwarfs the contributions of Missouri’s other largest individual donors, only eight of whom have given in the six-figure range.
Sinquefield’s Osage County house | Timothy Hursley
This cycle, Sinquefield has almost single-handedly funded two right-leaning campaign committees, the Missouri Club for Growth and Grow Missouri, through donations totaling more than $5 million. Both groups have lobbied Missouri legislators to back income-tax-cutting measures. He also gave $25,000 last year to a PAC supporting St. Louis Mayor Francis Slay, a Democrat, and $50,000 to Catherine Hanaway, a Republican running for governor. (As it happens, Slay’s cousin Laura is Sinquefield’s spokesperson.) Sinquefield’s donations have skewed Republican — in the last cycle, a super PAC he financed backed Republican Todd Akin even after the candidate’s remarks on “legitimate rape” repelled the national GOP — but he has been willing to help Democrats who share his views on tax and education policy.
Mainly, though, Sinquefield has sought to move the Missouri Republican Party decidedly to the right. After a number of Republicans opposed a Sinquefield-backed tax measure, the Missouri Club for Growth posted a “Wanted” sign with pictures of each offending politician. (Although the group told reporters it “will be looking for somebody to run against” the lawmakers in the GOP primary, only a few challengers have stepped up so far this year.) In 2012, state Sen. Ed Emery, one of the most conservative lawmakers, won his closely contested primary thanks in part to a $40,000 independent expenditure from Sinquefield’s Club for Growth.
The lecture Sinquefield delivered in January was in part to promote a book he contributed to, How Money Walks, which argues, questionably, that people are driven away by high income taxes and move instead to places with little to no income taxes. Outside the room, a touchscreen television visualized migration patterns from New York and the Midwest to Florida, which has no state income tax. “People … vote with their feet, and high taxes drive them out and low taxes attract them,” he said. “So this is what we’re really trying to do in Missouri.”
By that logic, Sinquefield has been undermining Missouri’s economy. In neighboring Kansas, he helped bankroll a group called Kansans for No Income Tax that promoted, in 2012, one of the largest state tax cuts in history with the support of Republican Gov. Sam Brownback. Sinquefield called the cuts “unbelievably brilliant” and predicted that “there’s going to be a cloud of dust … as the businesses move from Missouri to Kansas.”
If so, that has yet to happen. According to U.S. Bureau of Labor Services statistics, in the year that followed the income tax cut, Kansas lost 4,400 jobs, a 0.3 percent decrease. During the same period, Missouri added 23,400 jobs, a 0.8 percent increase. Kansas’ sharply reduced revenues following the income-tax repeal led rating agency Moody’s to cut the state’s bond rating in April from its second-highest bond rating to its third highest.
In Missouri, Sinquefield has had mixed results. In 2010, he spent $11.2 million bankrolling a successful statewide measure called “Let Voters Decide” that bans new municipal income taxes and forces Kansas City and St. Louis to hold referendums every five years to allow residents the option of repealing their city income tax. If either referendum is successful, that city’s earning tax will be phased out in 10 years.
Last year, he gave some $2.4 million to groups pressuring legislators to override Democratic Gov. Jay Nixon’s veto of a bill to cut the state corporate and income tax rates. Although Republicans hold a supermajority in both houses of the state legislature, the veto prevailed in the Missouri House with 15 Republican votes. The setback may have been temporary, though. In May, the state legislature passed a more modest income tax cut — from 6 percent for the top bracket to 5.5 percent — and did so by overriding Nixon’s veto. His long-term aim, Sinquefield has said, is to have “gotten rid of all taxes on income and profits,” and Hanaway, his pick for governor in 2016, has pledged to make this goal a reality.
Sinquefield’s educational advocacy has arguably been less successful. He has spent millions promoting conservative reforms like school vouchers and the elimination of teacher tenure, without much to show for it. On several occasions, his more radical views have gotten in the way. During a lecture at Lindenwood University in 2012, he provided grist for his detractors by quoting a former judge who had claimed that the Ku Klux Klan had designed the public school system to “hurt the African-American children permanently.” He later apologized for those remarks, but has since said that “the public school system is condemning [children] to a life of failure and lack of opportunity.”
Sinquefield’s political giving spree has been enabled by Missouri, which entirely removed contribution limits in 2008, but it’s consistent with a broader pattern around the country. In North Carolina, Art Pope, the heir to a wholesale company fortune, has pulled his state to the right through two think tanks he has sponsored, a state chapter of Americans for Prosperity and a number of political action committees credited with electing the first Republican legislative majority in his state since Reconstruction. In Michigan, the DeVos family, founders of Amway, are among the largest donors to GOP causes, and are seen as the driving force in a network of grassroots groups and nonprofits that enacted the state’s new right-to-work law, which weakens organized labor.
As for Sinquefield, who often complains about the “horrible public policy that’s coming out of Washington,” he’s convinced that going local is a good investment. In fact, he said in a 2012 interview, he’ll put even more into Missouri politics soon, especially when his old firm, Dimensional Fund Advisors, gets sold. “That’s when I’ll really be able to give money away.”
This story was reported in partnership with The Investigative Fund at The Nation Institute, now known as Type Investigations.