Saturday, October 15, 2011

Politicians & Charities: A Dangerous Mix for Both

News stories continue to highlight how politicians and charities do not mix well even when the issue is not political campaign activity.  Here are a couple of recent examples:

  • Nonprofit Biggest Investor in Politically Connected Solar Company:  The Washington Post reports that the George Kaiser Family Foundation is the biggest investor in Solyndra, the solar company much touted by President Obama that is now at the center of a political dispute over the federal government's decision to restructure its loans to the now bankrupt company.  The article highlights the foundation's supporting organization structure, which permitted it not only to own significant interests in businesses but also to give away significantly less than 5 percent of its over $4 billion in assets.  The biggest fallout from this relationship for the foundation may not be allegations of improper political influence but instead the spotlight shown on its ability to avoid the private foundation federal tax rules through its supporting organization role for the Tulsa Community Foundation.
  • Chicago Inspector General Questions Contributions to Charity Founded by Former Mayor's Wife:  The Chicago Tribune reports that Chicago's internal watchdog has raised concerns about more than $900,000 in contributions from companies to After School Matters, a charity founded by former Chicago first lady Maggie Daley.  According to the Inspector General's report, the concerns arise because the contributions can be traced to fine print in tax increment finance district agreements negotiated by city officials without any indication that the funding was awarded based on established guidelines or its use overseen by the city.
  • Company's Nonprofit Arm Funds Free Trips for Government Officials:  The NY Times reports that the Pearson Foundation, the charitable arm of a major educational publisher, routinely has paid for international trips by state education commissioners to such destinations as Rio de Janeiro, London, Singapore, and Helsinki.  The articles also notes that at least one state (Iowa) has opened an investigation into a trip by its commissioner.  The trips were coordinated by the nonprofit Council of Chief State School Officers but funded by a grant from the Foundation.

LHM

http://lawprofessors.typepad.com/nonprofit/2011/10/politicians-charities-a-dangerous-mix-for-both.html

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