Wednesday, July 7, 2010

Congressional Ban on Earmarks Circumvented by Using a Nonprofit Entity

The New York Times reports that businesses are bypassing the House of Representatives announced ban on earmarks to for-profit companies by forming a nonprofit organization.  The article describes an Ohio-based defense contractor that incorporated a nonprofit research center that specializes in work similar to that performed by the company and shares the company's address.  The research center now has $10.4 million in new earmark requests from its local Congresswoman.  Similarly scenarios are reported in California and New York.  The article reports that there have been $150 million in earmarks recommended for nonprofits that will indirectly benefit for-profit companies around the country.  Profit-making companies were identified for earmark elimination because their requests, typically buried in large budget bills by friends in Congress, are questioned more routinely than those requested by nonprofit groups, including charities, educational institutions, and local governments.  Although some members of Congress are acknowledging that this use of nonprofits likely violates the spirit of the new earmark ban, they are leaving enforcement of the ban to Congressional committees.


Current Affairs, Federal – Legislative | Permalink

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