A few years ago, Mark Steyn sagely observed, “In America today, few activities are as profitable as a ‘nonprofit.’” Nothing warrants changing that assessment now. President-elect Trump has a lot on his plate if he plans to turn around the ship of state. But if it’s not too presumptuous, I’d like to add one more item to his agenda: a substantial rewrite of the laws respecting our tax-exempt sector, reining in private foundations.
During a 75-year period (1884-1969) the U.S. Tax Code “established the basic principles and requirements of tax exemption, identified business activities of tax-exempt organizations that were subject to taxation, and defined and regulated private foundations as a sub-set for tax-exempt organizations.” Their assets have increased enormously since then. It’s time for another look at the law with an end to rewrite it.
Together, private and public charitable foundations are apparently sitting on trillions of dollars of assets.
These organizations have grown to massive size -- and are poorly, if at all, regulated. Instead of meeting the charitable needs of citizens that government funds were inadequate to provide for, foundations are regularly being misused to fund organizations and outfits antithetical to our best interests, disenfranchising us and working at cross purposes to the desires and beliefs of most Americans. The achievements of a few big foundations include undermining the war on terror, Balkanizing our universities and society, lobbying for open borders, and undermining our economy with radical environmentalism. -
The most egregious offenders in terms of size seem to be those foundations categorized as private “non operating foundations” such as the Bill, Hillary and Chelsea Clinton Foundation --which exist primarily to give grants to others, and it will be these to which I refer here. (Operating foundations function rather like public charities, providing direct support to a school, a hospital, or another specific charitable program, and are not the subject of this article.)
The Foundations that are my focus are those like the Tides Foundation, Rockefeller Brothers Fund and the Ford Foundation. Evidence of their anti-democratic, anti-American, anti-capitalist, anti-Israeli activities is copious and well documented.
The Ford Foundation
Ford funded the Black Power Movement, helped establish the Black studies, Womens Studies, Hispanic Studies and Diversity Programs in colleges throughout the country, and supported Multiculturalism in place of assimilationist policies. It created and funded the Black Power Movement and La Raza, the Mexican national group here. Ford fought to expand the welfare state, created the Open Borders Lobby, underwrote the “human rights “ focus in America’s law schools, and pushed affirmative action programs. Its sponsorship of the anti-Israeli, anti-American Durban Conference got it into hot water, after which it promised to cease funding “subversive groups” including those calling for the destruction of Israel,
In recent decades, the Ford Foundation has continued to play a major role in shaping American culture, popular opinion, and public policy, by funding organizations whose agendas and worldviews are consistent with its own. These agendas and worldviews include:
- the weakening of homeland security and anti-terrorism measures on the theory that they constitute unacceptable assaults on civil liberties;
- the dissolution of American borders;
- the promotion of mass, unchecked immigration to the United States;
- the redistribution of wealth;
- the blaming of America for virtually every conceivable international dispute;
- the depiction of Israel as an oppressor state that routinely victimizes its Palestinian minority;
- the weakening of American military capabilities [snip];
- a devotion to the principle of preferences based on race, ethnicity, gender, and a host of other demographic attributes;
- the condemnation of the U.S. as a racist, sexist, homophobic nation that discriminates against minorities, women and gays;
- the characterization of America as an unrepentant polluter whose industrial pursuits cause immense harm to the natural environment;
- the portrayal of the U.S. as a violator of human rights both at home and abroad;
- the depiction of America as an aggressively militaristic nation; and
- support for taxpayer-funded abortion-on-demand as an inalienable right for all women.
The Rockefeller Brothers Fund
This fund worked to derail the Keystone Pipeline. While it indicates its goal is “Peacebuilding in the Middle East,” NGO Monitor’s analysis shows it has been fomenting war there.
Among the nefarious groups funded by this Fund are these:
- Middle East Policy Network ($100,000 for 2 years, June 2015, for general support; $30,000 for 1 year, December 2013, for general support): Also known as Al-Shabaka, The Palestinian Policy Network, a think tank that produces policy analyses “on Palestinian human rights and self-determination within the framework of international law.”2 In July 2013, Al-Shabaka hosted a roundtable on “Political Agency For Palestinian Return,” arguing that “efforts for changing the balance of power by weakening and isolating Israel should be seen as efforts for refugee return” and that anti-Israel boycotts (BDS) are “the most effective and strategic campaign for refugee return at present.”[snip] Institute for Middle East Understanding ($150,000 for 2 years, June 2015, general support; $50,000 for 1 year, November 2013, general support): Institute for Middle East Understanding (IMEU) aims to be a resource for journalists, providing a one-sided Palestinian perspective and narrative that demonizes Israel. For instance, a factsheet titled “Endgame Apartheid: The US-Sponsored ‘Peace Process’” refers to “Israel’s nearly 47-year-old discriminatory occupation regime” and describes U.S.-led peace efforts....
How antithetical it is to US interests -- and peace in the Middle East -- is evident from this about Al-Shabaka:
“Al-Shabaka’s policy advisors include: convicted Hezbollah spy Ameer Makhoul, Grace Said of Friends of Sabeel, Ali Abunimah of Electronic Intifada, BDS activist Omar Barghouti, Ingrid Jaradat Gassner of Civic Coalition for Palestinian Rights in Jerusalem (formerly head of Badil; during her tenure, Badil had its funding frozen for posting antisemitic imagery on its website – dozens of disturbing images promoting the elimination of Israel, antisemitism, and violence remain), Muhammad Jaradat of BADIL, and Issam Younis of Al-Mezan and Gaza Community Mental Health Program “
Nor has the Rockefeller Brothers Fund ignored domestic lobbying groups here. It has been a major funder of J Street, the anti-Israeli nominally Jewish group favored by the Obama Administration and the go-to group on Israel-American Jewry of the major media.
Other grantees on Middle East issues include the New American Foundation for the now defunct Open Zion blog run by Peter Beinart ($30,000 in June 2012) and the National Iranian American Council”
Much more than I can cover in one article has been reported about these foundations. Useful sources of information include David Horowitz’s Discover the Networks site and NGO Monitor.
The environmental movement is heavily subsidized by major foundations. [snip] With more than $7 billion in assets, the William and Flora Hewlett Foundation — funded by the fortune of the co-founder of the Hewlett-Packard computer company — has made grants to such organizations as the American Civil Liberties Union (ACLU), the Sexuality Information and Education Council of the United States, and "pro-illegal immigration" groups including the Mexican American Legal Defense and Education Fund.
George Soros’ Open Society Institute, with assets of more than $300 million, has supported the ACLU, the National Organization for Women and the "pro-illegal alien" National Immigration Forum.
The Pew Charitable Trusts
The Pew Charitable Trusts, now also in the hands of the left, not only pushed for the ill-conceived campaign finance reform, they manipulated the facts in an effort to get it passed.
In the early 1990s, Sean Treglia, a former program officer with Pew, conceived a strategy whereby a few major leftist foundations would bankroll front groups and so-called “experts” whose aim was to persuade Congress to swallow the fiction that millions of Americans were clamoring for “campaign-finance reform.”
A cynic might conclude they were merely trying to preserve their hold on political speech while denying it to ordinary voters.
And it ,too, has been a major contributor to radical environmental groups:
PCT supports a host of organizations that are passionately anti-corporate and anti-capitalist, while it simultaneously holds many millions of dollars worth of investments in major corporations. [snip]
PCT is the largest funding source for the Tides Center, having given the latter nearly $109 million between 1990 and 2002. Other PCT grantees include: the Brennan Center for Justice; the Brookings Institution; the Council on Foundations; Environmental Media Services; the Institute for Policy Studies; National Public Radio; Physicians for Social Responsibility; Planned Parenthood; the Union of Concerned Scientists; the Urban Institute; and Zero Population Growth.[snip]
In addition to earmarking enormous sums of money to fund the projects and activities of the aforementioned organizations, PCT also proposes its own policy solutions in a number of areas, including the Global Warming movement:
Working in partnership with the Energy Foundation to promote “the adoption of state and regional policies that curb global warming pollution,” PCT seeks “to advance the climate change debate through analysis, public education and a new cooperative approach with business.”[snip]
PCT is a member organization of the International Human Rights Funders Group (IHRFG), a network of more than six-dozen grantmakers dedicated to funding leftwing groups and causes.
Perhaps the worst outfit to have tax-exempt status is the Tides Foundation. That is so because it a money-laundering scheme which allows others to contribute to very radical causes without being identified as funding them,
Because many of these recipient groups are quite radical, the donors often prefer not to have their names publicly linked with the donees. By letting the Tides Foundation, in effect, “launder” the money for them and pass it along to the intended beneficiaries, donors can avoid leaving a “paper trail.” Such contributions are called "donor-advised," or donor-directed, funds.
Through this legal loophole, nonprofit entities can also create for-profit organizations and then funnel money to them through Tides -- thereby circumventing the laws that bar nonprofits from directly funding their own for-profit enterprises. Pew Charitable Trusts, for instance, set up three for-profit media companies and then proceeded to fund them via donor-advised contributions to Tides, which (for an 8 percent management fee) in turn sent the money to the media companies.
If a donor wishes to give money to a particular cause but finds that there is no organization in existence dedicated specifically to that issue, the Tides Foundation will, for a fee, create a group to meet that perceived need. (Source)
Allowing foundations like these to pile up huge assets virtually tax-free (they are charged 1-2% excise tax on their revenues depending on the distribution of their funds) injures us twice: by reducing federal revenue and by making us fight against those who advocate against our best interests.
How then to rein them in?
1. Federal and state agencies must exercise greater oversight over their operations
Community watchdogs say the present regulatory structure is nowhere near adequate. For one thing, says Trent Stamp, executive director of Charity Navigator, a New Jersey-based nonprofit that helps donors select charities, existing law delegates considerable enforcement authority to states, but many of today's philanthropies cross state lines.
“We are continuing to regulate nonprofits in a way that might have worked in 1954,” he says, “but nonprofits are a big business that they weren't in 1954.” And while the Securities and Exchange Commission (SEC) oversees for-profit organizations, he explained, influential nonprofit boards of directors investing billions of dollars in the stock market represent “a parallel universe that we are not paying attention to.”
Stamp, in fact, advocates establishing an SEC counterpart to oversee the entire nonprofit sector. Short of that, philanthropies should have to justify keeping their tax-exempt status, he argues. “The IRS gives out tax-exempt status and doesn't see those charities ever again,” except in a handful of cases, he says.
Rich Kent suggests state attorneys general should do more on criminal oversight of these foundations, which often operate in many jurisdictions. He cites Mike Cox’s efforts in 2005 against the Ford foundation in Michigan, which had gone far outside the grantor’s intent:
“Between 1998 and 2005, the foundation’s annual grants to Michigan charities totaled less than $1.5 million a year, running as low as $200,000 in 2000. In 2001 the Ford Foundation granted $593 million worldwide.
No wrongdoing was ever found in the investigation and in subsequent years, the foundation began funneling more money to Detroit and Michigan.”
2. Change the Tax Code on Foundation Lobbying Expenditures
The IRS permits limited lobbying by these foundations. Watchdogs need to ascertain if they are following these rules, but the biggest loophole it seems to me is in their grant making to groups that engage in lobbying.
“Private foundations may make grants to public charities that engage in lobbying activities, but those grants cannot be earmarked (in whole or in part) for lobbying. Permissible grants to such organizations may take one of two forms. First, a private foundation may make a general support grant to a public charity that engages in lobbying, leaving to the grantee discretion as to how the funds will be used. The recipient of the grant may then choose on its own to use the funds for lobbying expenditures, but must comply with federal lobbying rules for public charities. Second, private foundations may make specific project grants to projects that involve some lobbying component. However, the grant must be limited to the non-lobbying component of the project.”
This should be tightened with grantees forbidden to use any portion of money received from private foundations for lobbying.
3. Require Faster Pay Outs of Endowments
At the moment these non-operating foundations must pay down 5% of their endowments annually for charitable purposes or pay a penalty in taxes and sanctions. I think this rule ought to be changed to require that they actually pay out 20% of their non-fixed assets annually. Not doing so only enlarges their endowments for years past the deaths of the grantors, and takes them further from their original intent. When foundation boards become self-perpetuating, appointing new members to fill vacancies, officers can receive free rein to indulge their whims.
4. Require More Specific Definition of Aims and Make Foundations Stick to Them
I think the charitable purposes which the non-operating foundations are permitted to engage in should be reduced to more specific ends. At the moment organizations that are tax exempt under Section 501 C (3) are very broadly defined -- they must have as their purposes “religious, charitable, scientific, literary or educational” purposes. This is too broad, and a proscription for continued trouble making.
5. Require Transparency
Outfits like Tides should be forbidden. Allowing one grant making tax-exempt foundation to give to another in a way that hides who gave money to a grantee allows grant making institutions to hide their contributions to the most nefarious groups.
These are just a few suggestions. I’m certain that tax experts can refine the existing laws in a way that makes these institutions more responsive to our needs than what we get from the leftist officers who have burrowed into these outfits and shell out money in ways their long-dead, more conservative original grantors intended.
If they fail, I plan to set up a Wine Women and Song Foundation which will work to get fabulously rich people to spend all their money on frivolous self-indulgences and leave us alone instead of trying to reshape our world into their blinkered wishes for it.Read more: http://www.americanthinker.com/articles/2016/12/big_very_rich_and_dangerous_time_to_rein_in_private_charitable_foundations.html#ixzz4SYV27FqI
Follow us: @AmericanThinker on Twitter | AmericanThinker on Facebook