Wednesday, May 22, 2024

Industry Funded Private Benefit

PlayUSA Analysis: Legal US Gambling Industry Value Tops $200 Billion

The HHS OIG advisory opinion and the relationship between Greentown Labs and the fossil fuel industry I posted about today are two examples of what might aptly be labeled "industry funded private benefit."  They relate to for-profit industry capture -- for the industry's private benefit -- of tax exempt organizations.  Those particular cases raise the question whether it is ever really appropriate for a charity to become thoroughly dependent upon donations from an industry whose unintended harm the charity operates to prevent?  Can those charities really exist without providing private benefit to the for-profit industry whose legal activities cause harmful consequences?  Will they continue to react with objectivity in the perception and remediation of harmful consequences?  It seems to me that industry funding in these circumstances effectively incentivizes charities to maintain that a serious social problem exists indefinitely and simultaneously minimize that seriousness of that social problem.  

Here is one more example.  According to this interesting report, the Charity Commission has opened an investigation into GambleAware, the UK's largest gambling addiction charity.  GambleAware receives all of its funding from gambling organizations and some people claim that GambleAware is now working for casinos and other gambling organizations.    

The industry regulator, The Charity Commission, told i News it has opened a “regulatory compliance case” after receiving a complaint that questioned GambleAware’s independence and claimed it was failing in its charitable duties.  GambleAware commissions gambling treatment, education and research in the UK and is funded by voluntary donations from the gambling industry, which experts have claimed presents “conflicts of interest”.

GambleAware publishes details of donations and pledges received from those that derive an income from gambling in Britain on a quarterly basis. It received £46,565,912 from gambling operators in the 2022-23 financial year.  The Charity Commission has confirmed that it has opened a case. This is not a finding of wrongdoing, but is the first step the commission can take in examining whether the charity is compliant with the relevant regulations after receiving a complaint.

The complaint, brought by Will Prochaska, a gambling reform campaigner, Annie Ashton, whose husband Luke died of gambling-related suicide, and the Good Law Practice, raises concerns about the quality of treatment commissioned by GambleAware, the education materials it supplies to schools and the self-help tools it provides to the public.  A lesson plan, created for 14-year-olds by GambleAware, includes a note to teachers that “this lesson is not to demonise the gambling industry. They are promoting their trade just like any other potentially risky pastime might, fully sanctioned by law”.  An online self-assessment spending calculator, to determine whether someone is gambling too often and with too much money, tells someone gambling away more than their earnings to reduce the frequency of their gambling – rather than to quit.  This remains the case even when the calculator is told that the person gambling is underage, despite the activity disclosed being illegal.

I don't suppose we would necessarily look askance at a charitable gun safety organization taking donations from Smith & Wesson.  But even then, it is probably a matter of degree.  And just like too much from one person might turn a charity into a private foundation, too much from an industry should trigger protective measures lest a public charity become nothing but a mouthpiece for that industry.   

Gambling, gun manufacturing, and selling cigarettes are all legal and wildly profitable, each generating expensive negative societal consequences.  It would seem inefficient to deny tax exemption to a charity that receives the bulk of its funding from the Ballagio, Glock, or Phillip Morris.  We would only cut off the funding of solutions with some of the very huge profits.  But what, really, can be done?  I think the only solution, short of prohibiting charities from accepting some or all of their funding from manufacturers, is to hope and insist that charitable organizations will retain their independence and integrity despite their addiction to industry funding.  And for taxing authorities to maintain a heightened vigilance against those organizations drifting into industry capture and private benefit in their actual operations.

darryll k. jones

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