August 30, 2008
Labor Day News: Could California Prevailing Wage Law Hurt Nonprofits?
In a story that is appropriate for the Labor Day Weekend, KHTS, a radio station in Canyon County, California, reports a state legislator is making a last ditch attempt to extend an exception to California's prevailing wage law for nonprofit volunteers before this Sunday's deadline for passing legislation this year. An entry on the Governor's California Volunteers website states that the current exception protects nonprofits from having to pay the prevailing wage to volunteers who work on community projects that could be classified as public works. The exception expires, however, at the end of 2008, and the KHTS story states that previous legislative attempts to extend the extension have failed.
Minnesota Church Defiant in Face of IRS Compensation and Loan Investigation
The Chicago Tribune reports that the Living Word Christian Center in Brooklyn Park, Minnesota has declined to comply with an IRS summons and is alleging that the IRS investigation is politically motivated. The apparent grounds for the investigation are accusations of improper financial transactions between the church and its founder and pastor, the Rev. Mac Hammond. These transactions include the leasing of planes by Rev. Hammond to the church for almost $1 million a year and loans totalling almost $2 million from the church to Rev. Hammond, according to a more detailed report in the Minnesota Independent and a press release from Citizens for Responsibility and Ethics in Washington (CREW), which filed a complaint with the IRS against the church back in early 2007. The Minnesota Independent article also notes that the IRS investigated the church in 2006 based on a report in that paper that Rev. Hammond had endorsed a candidate from the pulpit. The IRS and the church are now in federal district court fighting over whether the summons should be enforced, with a hearing date set for October 2, 2008.
August 29, 2008
The Pricing Power of Nonprofit Hospitals
Yesterday's Wall Street Journal had an interesting front page story regarding the increasing pricing power of nonprofit hospitals. The article lends evidence to the assertion that nonprofit hospitals are not using their tax subsidy to benefit the poor, much less "the community."
The power of nonprofit hospital systems like Carilion over their regional communities has increased in recent years as their incomes have surged. Critics charge this is creating untaxed local health-care monopolies that drive the costs of care higher for patients and businesses. "It's a one-market town here in terms of health care," says Sam Lionberger, who owns a local construction firm. "Carilion has the leverage."
The Journal's Health Blog summarizes the story thusly:
Carilion is Roanoke’s dominant health-care player, and it charges high prices for some procedures — $4,727 for a colonoscopy, which is four to 10 times what a local endoscopy center charges, the article says. The area now has some of the highest health-insurance costs in the state. Critics say big medical centers like Carilion use near-monopoly power to charge high prices; Carilion says it needs to charge more for some procedures to subsidize other parts of its business, such as care for the uninsured. And the hospital says an HCA-owned hospital in a nearby town offers competition. Carilion has recently started buying up local medical practices in an effort to move to a multispecialty-clinic model. The hospital CEO says this arrangement will cut down on fragmentation and improve care.
It was perhaps only a coincidence that the story ran on the same day as that an Illinois appellate court reinstated the revocation of a hospital's state property tax exemption. In any event, it seems clear by now that nonprofit hospitals are losing the perception battle, if not the legal battle, one nonprofit hospital at a time.
August 28, 2008
News Coverage and Reaction to Provena-Covenant
For news coverage of, and reaction to the ruling reinstating the denial of Illinois state property tax exemption to Povena-Covenant (see the two immediately prior posts) see this Chicago Tribune article and this Urbana/Champaign News-Gazette article.
More on Provena-Covenant
Late yesterday I posted that the Illinois 4th District Court of Appeals had just released its opinion in Provena-Covenant v. Department of Revenue, a state-property tax exemption case that is being watched very closely nationally. For those who have not followed the case, I previously posted the background here. The court opinion is not yet available on-line; it usually takes several days before a released opinion is put up on the Illinois Courts web site. When the opinion is posted, however, you will be able to view it here.
The 4th District's opinion is the most thorough court examination of property tax exemption for health care providers in Illinois ever. The opinion is 55 pages long, and completely dismantles Provena's "community benefit" argument step by step. The court noted in its opinion that under Illinois law, charitable exemption for nonprofits is based on "the benefit conferred upon the public by them and a consequent relief, to some extent, of the burden upon the state to care for, and advance the interests of, its citizens." Quoting my colleague David Hyman here at Illinois, the court noted that simply being a nonprofit "in the hospital business" is not sufficient to establish charitable status under Illinois law.
It is far from obvious, however, that Provena is a gift to the public. As we will discuss at greater length below, it is unclear to what extent Provena exercises "general benevolence" as opposed to doing what a for-profit hospital does: selling medical services.
The court emphasized the lack of donative support for Provena as a negative factor in its assessment of charitable status: "Thus, having an operating income derived almost entirely from contractual charges goes against a charitable identity." It excoriated the Illinois Hospital Association's argument (adopted by Provena) that providing health care is itself a charitable purpose:
By holding medical care to be, in and of itself, charity, we effectively would excuse charitable hospitals from their ongoing mission of giving. We would hold that a hospital is being charitable, for instance, when it sends an impoverished patient a bill that the patient could never hope to pay. That holding not only would create a deafening cognitive dissonance, but it would ignore the [Illinois] supreme court's repeated rationale in cases involving charitable hospitals . . . There is nothing particularly kind or benevolent about selling somebody something . . . To be charitable, an institution must give liberally. Removing giving from charity would debase the meaning of charity and we resist such an assault upon language.
In short, the court adopted the stance that free care for the poor is the sine-qua-non of "charity" under Illinois law. And on this front, the court found Provena lacking for the same reasons as the Department of Revenue (.7% of revenues spent on charity care in the relevant year). It both rejected Provena's argument that other community benefits should "count" for charitable status, and adopted the view that charity care does not include bad debt - which means that a patient who is billed for service cannot be "counted" as a charity patient. It also specifically adopted a rule that "charity care" must be based on average costs, not charges, and that neither contractual discounts with 3d-party payers nor government program shortfalls (e.g., Medicare and Medicaid shortfalls) count as charity care. While I might nit-pick some of these conclusions (for example, I think it is reasonable to treat the difference between a Medicaid -- but not Medicare -- reimbursement and average cost of treatment as "charity care" given that the Medicaid program is specifically aimed at the uninsured poor), the court's overall dissection of Provena's wildly overstated "community benefit" claims was refreshing to see in print.
Finally, the court rejected Provena's argument that it should be exempt as a religious institution, noting that Provena's property was used primarily for the secular purpose of providing health care services, and not as a place of religious worship or instruction.
I doubt that anyone, including me, thought that Provena would lose this case in such an overwhelming fashion. I thought, based upon prior Illinois appellate opinions over the last decade that the hospital probably would lose the appeal, but not in such a devastating opinion. The 4th District's analysis was far more precise, detailed and analytical than any prior Illinois opinion on this front.
Of course, all of us watching the Provena case fully expect it to be appealed to the Illinois Supreme Court. Like the U.S. Supremes, the Illinois Supreme Court does not have to take this case if it doesn't want to and/or thinks the lower courts have adequately addressed the issues. My money, though, is on the Illinois Supreme Court weighing in on the matter, even though they declined to hear an earlier health care tax exemption case. Stay tuned, folks.
August 27, 2008
Illinois 4th District Upholds Revocation of Provena-Covenant Tax Exemption
In a just-released opinion, the Illinois 4th District Court of Appeals has upheld the revocation of state property-tax exemption for Provena-Covenant hospital in Urbana, Illinois (I blogged about the oral argument in this case here). I'm still digesting the opinion and will post more on it tomorrow (Thursday). The opinion itself is not yet available on-line, but I'll post a link as soon as it becomes available.
Leff: On the Costs of the 501(c)(3) Campaign Intervention Ban
Benjamin Leff has posted Sit Down and Count the Cost: A Framework for Constitutionally Enforcing the 501(C)(3) Campaign Intervention Ban. Here is the abstract:
Section 501(c)(3) of the Internal Revenue Code prohibits charities from intervening in a political campaign for or against a candidate for public office. The IRS currently interprets the campaign-intervention ban to absolutely prevent charities from communicating their views on candidates, even if such communications are completely financed by non-501(c)(3) affiliates. This article argues that the current IRS enforcement paradigm is unconstitutional because it exceeds the government interest in preventing tax-deductible donations to be used for campaign-intervention. A constitutional interpretation exists under the current statutory framework, but it would require the IRS to shift its focus exclusively to campaign-intervention-related expenditures. The IRS could compel 501(c)(3) organizations to make all expenditures through a non-501(c)(3) affiliate using funds that were raised on a non-deductible basis, or receive reimbursement from a non-501(c)(3) for all such expenditures. Enforcement of the ban under the proposed "expenditure" paradigm requires an ability to "value" campaign-intervention speech to provide a means for a non-501(c)(3) affiliate to pay for or reimburse the cost of such speech. This article evaluates competing valuation theories, and finds that campaign-intervention speech that communicates a charity's endorsement of a candidate (whether official or unofficial) may "cost" more than commentators have previously considered. Because an endorsement implicates the "goodwill" that an organization has built up using tax-deductible contributions, it may well be appropriate to take the cost of developing that goodwill into account in determining the cost of the campaign-intervention communication. The article proposes some guidelines for valuing the speech of charities, taking the cost of goodwill into account. It concludes that an "expenditure" paradigm that adequately valued the speech of charities may be more enforceable, and therefore more effective at limiting excessive or abusive campaign-intervention speech by charities, while staying within constitutional parameters.
Bakija and Heim: Charitable Giving Response to Incentives and Income
Jon Bakija (Williams College) and Bradley Heim (Department of Treasury) have posted How Does Charitable Giving Respond to Incentives and Income? Dynamic Panel Estimates Accounting for Predictable Changes in Taxation. Here is the abstract:
We estimate the elasticity of charitable giving with respect to its price and after-tax income using a panel of over 550,000 disproportionately high-income tax returns spanning the years 1979 through 2005. Improvements relative to the previous literature include: using state tax variation to help identify our model while controlling for both individual- and time-specific unobserved heterogeneity; carefully dealing with expectations; allowing people at different income levels to have different degrees responsiveness to taxation and different time paths of unobservable influences on giving; and using a measure of charitable giving that more closely approximates current donations. To address the omitted variable bias that would otherwise arise from failing to control for unobservable expectations of future prices and future incomes, we use predictable changes in future federal and state marginal tax rates and tax liabilities, arising from their pre-announced and phased-in nature, as instruments for future changes in prices and income. Our estimate of the elasticity of giving with respect to a persistent price change for the full sample is about -0.7; this elasticity is generally larger when the sample is limited to high-income people and we control for time-varying unobservable influences on charity in a flexible fashion. We find some evidence, particularly among very high-income people, of re-timing giving in response to expected future changes in price, but this finding is sensitive to the source of identification for the price effects. Our estimates are broadly consistent the permanent income hypothesis. Expenditures on charitable giving are estimated to respond more strongly to persistent changes in income than to transitory fluctuations in income. Moreover, we find evidence in some specifications that people will increase their charitable giving now in response to a predictable reduction in future tax liability arising from tax reform.
Sarah B. Lawsky: On Microfinance Charitable Contributions Deductions
Sarah B. Lawsky has posted Money for Nothing: Charitable Deductions for Microfinance Lenders. Here is the abstract:
The last five years have seen a huge increase in the general public's interest in microfinance, which provides financial services such as loans, insurance, and savings instruments to people living in poverty. At the same time, the popularity of social networking through the internet has exploded. These two worlds intersect in the form of websites that permit a U.S. individual to use PayPal or a credit card to loan small amounts of money to poor people around the world. By far the most successful of these microcredit websites was also the first such website: Kiva Microfunds, or Kiva. Although loans through Kiva are truly loans (that is, the lenders expect repayment), Kiva loans pay the individual lender no interest. The right to use money for a period of time has, of course, a real financial value, as the tax code recognizes in many places. But under current law, even though Kiva is a tax-exempt organization, lenders through Kiva receive no tax benefit for the interest they forego when they loan money interest-free through Kiva. This Article argues that the law should be changed to allow taxpayers who lend money through a microfinance organization that qualifies as tax-exempt and who receive no interest or below-market interest on those loans the option of taking a charitable deduction for that foregone interest. The Article also proposes a novel and simple method for implementing this tax benefit. The practical benefits of the deduction could be significant. Permitting a deduction for interest foregone on loans to Kiva and similar microcredit organizations will help these organizations thrive and thus, as the Nobel Committee stated about another microcredit institution, play a role as an "important liberating force" and a "major part" of eliminating poverty as we know it.
Mehgan J. Ryan: Can the IRS Silence Religious Organizations?
In the years following the 2004 presidential election, the Los Angeles Times reported that the Internal Revenue Service threatened revoking the tax-exempt status of the All Saints Episcopal Church in Pasadena because during a 2004 sermon, a church rector stated that he opposed the Vietnam and Gulf wars and that Jesus would have disapproved of the Bush Administration's preemptive war doctrine. The rector did not tell his parishioners who to support in the 2004 election, however. This threat of revoking an organization's tax-exempt status is just one example of the IRS's recent and unprecedented aggressiveness in seeking out violations of the Internal Revenue Code's prohibition on political intervention by Section 501(c)(3) tax-exempt organizations. Indeed, over a hundred organizations are still under review by the IRS for actions they took in relation to the 2004 presidential campaign. A great number of those under review are religious organizations. Under the IRS's application of the limitation on politicking, these religious organizations are treated in the same manner as other Section 501(c)(3) organizations. This treatment, however, fails to take into account religious organizations' special status under the First Amendment. While some scholars have recognized that Section 501(c)(3)'s limitation on political intervention inhibits religious organizations' exercise of religion, they have failed to recognize that the IRS's application of the limitation implicates both free speech and free exercise concerns, making it constitutionally suspect under Employment Division v. Smith, 494 U.S. 872 (1990). This Article challenges scholars' dismissal of a viable First Amendment claim in this context and argues that the IRS regulations applying the Section 501(c)(3) limitation must be more deferential when applied to religious organizations so as not to be vulnerable to invalidation under a Smith hybrid claim.
Johnny Rex: On Separation of Church and State and Church Political Activies
Johnny Rex Buckles has posted Does the Constitutional Norm of Separation of Church and State Justify the Denial of Tax Exemption to Churches that Engage in Partisan Political Speech? Here is the abstract:
The Internal Revenue Service is aggressively investigating churches for their alleged political endorsements of candidates in the 2008 presidential election. At issue is whether these churches have violated section 501(c)(3) of the Internal Revenue Code, which imposes a ban on electioneering by churches and other charities as a condition of maintaining federal income tax exemption. The ban has been justified as necessary to ensure the proper separation of church and state. Building on Is the Ban on Participation in Political Campaigns by Charities Essential to their Vitality and Democracy?, 42 U. Rich. L. Rev. 1057 (2008), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1021601, Not Even a Peep? The Regulation of Political Campaign Activity by Charities through Federal Tax Law, 75 U. Cin. L. Rev. 1071 (2007), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=931262, and The Community Income Theory of the Charitable Contributions Deduction, 80 Ind. L. J. 947 (2005), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=842325, this article critically analyzes the separationist rationales for the ban. Four major variants of the separationist argument are articulated and thoroughly analyzed in the context of relevant Supreme Court case law, statutory law, administrative guidance, and the norms that underlie the First Amendment. After critically reflecting upon each version of the separationist defense of the ban, as well as the underlying assumptions of each variant, this article concludes that the separation norm not only fails to support the ban, but also counsels against it. This article concludes by briefly explaining the implications of this analysis for public policy.
August 26, 2008
U.S. Nonprofit Hospitals Face Credit Downgrades
While the number of people without health insurance appears to be dropping (see the immediately prior post), Reuters also reports that Moody's and Standard & Poor's expects nonprofit hospital credit ratings to suffer downgrades:
U.S. nonprofit hospitals face mounting pressures that could adversely affect their bottomlines, according to reports released on Monday by Moody's Investors Service and Standard & Poor's Ratings Services. The rating agencies cited various factors affecting the hospitals, including a weaker economy, increased debt issuance for capital projects, and higher costs associated with the collapse of the auction-rate securities market. "We expect the number of downgrades to exceed upgrades for the rest of 2008 and probably in 2009, as business and financial challenges squeeze operating margins and weaken balance sheets," said S&P credit analyst Martin Arrick in a statement . . . Moody's meanwhile, said the weak economy will pressure patient volume growth in many markets, while increasing the amount of charity care and uncollectable patient debts.
Poverty Rate Remains Steady, Number of Uninsured Decreases Slightly According to August Census Bureau Report
An August Census Bureau Report indicates that poverty rates in the United States have remained steady from 2006 to 2007, but there has been a slight decrease in the number of people without health insurance:
Data presented in this report indicate the following:
- Real median household income increased between 2006 and 2007 -- the third annual increase.
- The poverty rate was not statistically different between 2006 and 2007
- Both the number and the percentage of people without health insurance decreased between 2006 and 2007.
These results were not uniform across groups. For example, between 2006 and 2007, real median household income rose for non-Hispanic Whites and Blacks but remained statistically unchanged for Asians and Hispanics; the poverty rate increased for children under 18 years old but remained statistically unchanged for people 18 to 64 years old and people 65 and over; and the percentage of people without health insurance decreased for the native-born population, while the foreign-born population remained statistically unchanged. These results are discussed in more detail in the three main sections of this report—income, poverty, and health insurance coverage. Each section presents estimates by characteristics such as race, Hispanic origin, nativity, and region. Other topics include earnings of year-round, full-time workers; families in poverty; and health insurance coverage of children. This report concludes with a section discussing health insurance coverage by state using 2- and 3-year averages.
Reuters reported on the census bureau report this morning.
Succession Planning for Nonprofits
There is a nicely informative post over on the Nonprofit Law Blog regarding succession planning for nonprofits. It is during changes in nonprofit leadership that tax and other legal issues (e.g., reasonable compensation, conflicts of interest, etc) often arise. The post by Emily Chan begins as follows:
The executive director transition is a pivotal moment for an organization, providing either a moment for positive transformative change or a moment that exposes poor planning for such a transition. Considering that an executive director can impact a wide array of factors from donor relations to the day-to-day operations, organizations will certainly prefer the former situation. In their article, “Succession Planning for Nonprofits of All Sizes,” Jan Masaoka and Tim Wolfred discuss strategies for implementing succession planning, “thinking in advance about how to set the stage for a strong [executive director] transition.”
It includes a discussion of emergency succession planning and links to a couple of useful articles and a monogram on nonprofit succession planning.
Writer Takes Issue With Charities That Support Israeli Settlements
An interesting op-ed piece in the Palestine News Network takes issue with U.S. tax laws that allow charities to accept donations in support of Israeli settlors occupying disputed lands. According to the piece:
The United States government has on numerous occasions affirmed the illegality of Israeli settlements on Palestinian land and has reiterated that they pose an obstacle to achieving peace. However at the same time it also encourages American citizens to support settlers by providing tax exemptions on donations to settlements. US Secretary of State Rice defended the tax exemptions, referring to pro-settler groups as "humanitarian." Following her arrival to the Middle East on Monday in another round of peace talks, the American Secretary of State Condoleezza Rice defended US tax incentives that aid Israeli settlements deemed illegal under international law and also described by herself as an obstacle to a Palestinian state. She said pro-settler groups have the right to tax exemptions because they are "humanitarian" and not political and rejected any comparison with Palestinian charities facing US sanctions for suspected links with Islamic parties such as Hamas. The full scale of the financing of settlements by US tax exemptions is not clear because many groups involved in donating are not always transparent. But the audit conducted by Reuters of American tax records found that 13 tax exempt groups linked explicitly to settlements managed to collect more than $35 million in the past five years alone.
This, of course, is a very touchy issue. But I think the writer makes the same mistake sometimes made in the United States with respect to muslim charities. Nonprofits are part of an "independent sector" and concern themselves with the welfare of individuals without regard to the political context of that welfare. The dangerous tendency nowadays is to conflate intent with effect. The effect of providing free health care to illegal immigrants may be that illegal immigration is encouraged. But that should not lead to the conclusion that the nonprofit is acting with illegal intent or that the intent should be precluded. The same rationale ought to apply with regard to all humanitarian efforts --- that's why the Red Cross and Red Crescent are allowed to give assistance to wounded combatants. The effect might be to encourage combatants but that should not lead to a condemnation of the intent. You know what I'm trying to say, right?
August 25, 2008
Michelle Obama and Chicago's Nonprofit Hospital
I'm telling you, as soon as the nonprofit college football season starts I will have nothing else to say about the "silly season." But today's Washington Post has a potentially scandalous piece describing how the University of Chicago and Michelle Obama came up with a plan to steer poor patients away from the well-endowed hospital's emergency room and instead to local health clinics. I call the article "potentially scandalous" because of its headline, primarily. It begins with this enticing tidbit:
A few years ago, executives at the prestigious University of Chicago Medical Center were concerned that an increasing number of patients were arriving at their emergency room with what the executives considered to be non-urgent complaints. The visits were costly to the hospital, and many of the patients, coming from the surrounding South Side neighborhood, were poor and uninsured. Michelle Obama, an executive at the medical center, launched an innovative program to steer the patients to existing neighborhood clinics to deal with their health needs. That effort, in time, inspired a broader program the hospital now calls its Urban Health Initiative. To ensure community support, Michelle Obama and others in late 2006 recommended that the hospital hire the firm of David Axelrod, who a few months later became the chief strategist for Barack Obama's presidential campaign.
If that's all you read, you might think the story is about a rich university hospital that shuns poor people. Later, though, the article quotes a hospital executive and others to the effect that the use of an nonprofit emergency room for legitimate, but non-emergency medical care wastes charitable resources; the university's plan might very result in more health care for the poor. Still, as anybody who has ever lived in Chicago knows, UC has a reputation as an unwelcome, mostly white, oasis in the middle of a economically arid place. The article does a good job of discussing these perceptions and thus serves as a useful discussion piece for a nonprofit clinic or class -- particularly on the topic of how public relations impacts tax exemption law.
Presidential Candidates to Appear Jointly in Support of Volunteerism
According to The Nonprofit Times, the two presidential nominees will make a joint appearance at a 9/11 forum centered around volunteerism and civic engagement:
Presidential candidates John McCain and Barack Obama will discuss their views on national service and civic engagement in the post-9/11 world during a prime time forum on the evening of Sept. 11 in New York City. ServiceNation, a coalition of 110 organizations that has a collective reach of some 100 million Americans, is staging the forum. It is dedicated to solving problems through civic engagement and service. It will be the opening event of the bipartisan, Sept. 11-12, ServiceNation Summit, which will launch a one-year grassroots campaign to expand voluntary community and national service opportunities for all Americans; use proven service strategies to tackle some of America’s most chronic social challenges; and call on all Americans to make service a bedrock ideal in our democracy.
I will certainly pause in remembrance of 9/11 but I am not sure about listening to the candidates on volunteerism (see my last post). Besides North Carolina plays Rutgers that night.
Nonprofit Campaign Fundraising 101
Its a good thing the totally nonprofit college football season begins this week, otherwise we would stuck with the political conventions (aaack! gag me with a spoon, why don'cha!). But those who are interested in the fascinating and intriguing world of campaign fundraising, should check out The Campaign Finance Institute's incredibly informative website. The site includes this particular report regarding 527 and 501(c)(4) organizations, this report on the financing behind the Democratic and Republican Conventions, and this report on how much donors have otherwise spent on lobbying activities. All the reports are chock full of statiscal data that should be useful to anybody studying this stuff. But I must warn you, if the political season makes you wanna gag, make sure you read these reports on an empty stomach. Here is a small sample from the report on the financing behind the two conventions:
The Federal Election Commission and Internal Revenue Service have permitted a vast expansion of host committee fundraising on the grounds that since these organizations are nonpartisan “charities” or “business leagues,” contributing to them does not present an issue of potential political corruption or appearance of corruption. But CFI’s investigation has established that basically Republican federal and other elected officials, their financiers and party operatives, are asking for largely corporate money to fund the Republican convention in Minneapolis-St. Paul. And their Democratic equivalents are doing the same for their Denver conclave.
In addition, the CFI Report documents that when Minnesota Republicans and Democrats “make the ask”, their undeniable civic boosterism is often accompanied by written and oral offers of special access for donors to federal elected and other officials, national party leaders and other party influentials. (And half of the private money for both conventions is slated to come from out-of-state companies who are presumably less susceptible to boosterism)
The new CFI report details: who has been doing the fundraising for the host committees, how and where they have been teaming up to look for money, and what they have been promising prospective donors. In addition to official documents it draws from host committee “sponsor benefits packages,” local press accounts, and interviews with participants in host committee activities.
Here are just a few of the many interesting findings that appear and are fully detailed in the Report:
- Six Democrats on the Denver host committee’s Executive Committee -- Colorado Governor Bill Ritter, Denver Mayor John Hickenlooper, Senator Ken Salazar, lawyer Steve Farber (a major state and national Democratic donor and fundraiser) and Rep. Diana DeGette -- have done virtually all of the fundraising.
- Ritter, Farber and Hickenlooper traveled to Las Vegas as a team to meet with approximately 50 potential donors, individually and in groups.
- Ritter successfully appealed to a top official of the Service Employees International Union to send a quarter of a million dollars to enable the host committee to meet its December 2007 fundraising target.
- Two Republicans, Senator Norm Coleman and Governor Tim Pawlenty (who also co-chairs Senator John McCain’s presidential campaign), have set the fundraising strategy of the Minneapolis-St. Paul host committee, including recruiting key leadership. The Democratic Mayors of St. Paul and Minneapolis have had little role in the fundraising.
- At a fundraising breakfast for Minnesota CEOs, Pawlenty’s “talking points” said donors would have the opportunity to “connect with influential government officials (Cabinet, President, next President).”
- During his national search for money, Pawlenty’s staff asked him to have New York Republican Governor Pataki contact Koch Industries' CEO on his behalf. (Four Koch-controlled firms are sponsoring the convention)
- The Chairman of the Minneapolis-St. Paul host committee has a longstanding, well-known political relationship with Senator Coleman and has been a major contributor to his campaigns.
- The Denver host committee’s “corporate sponsorship packet” offers $250,000+ donors invitations to “private events” with Gov. Ritter, Sen. Salazar, Rep. DeGette, Mayor Hickenlooper, and Farber.
- During most of 2007, the Minneapolis-St. Paul host committee offered $5 million+ donors “private dinner with Republican leadership and elected officials,” “golfing with Republican leadership,” and a “private reception” with Sen. Coleman, Gov. Pawlenty and the Mayors of Minneapolis, St. Paul and Bloomington.
- After negative publicity during the summer of 2007, the host committee deleted the above three events while maintaining other “sponsor” political access opportunities such as sponsoring state delegation parties and obtaining premier venues for corporate hospitality. Furthermore, Gov. Pawlenty’s talking points for Minnesota CEOs included this promise: “We plan to have various events with Cabinet/VP and other elected officials to thank donors…”
Excuse me. I need to go spit.