Yes, the Planned Giving Blog is apolitical but there are times when I can’t resist getting into the spirit of politics – especially Presidential elections when they cross over into my territory! (For fun and a little education, of course!)
What caught my attention? A little article this morning on Foxnews.com entitled “Half of Clintons’ charitable giving in 2014 went to their own foundation.” Check out the article by clicking on the title and then come back here to read the rest!
So, I got into investigative reporter mode this morning and starting checking out the most recent 990s.
Here is what I found.
#1 – Yes, the Clintons contributed $3 million or so in 2014 to their small private foundation – The Clinton Family Foundation (CFF).
#2 – CFF granted out around half of its holdings to nonprofits in varying amounts between $5,000 and $200,000 to various good causes (I’m sure – it included a client of mine!) around the country.
#3 – The other half did stand out for 2014 Calendar Year: a grant of $1,865,000 to The William J. Clinton Foundation (PC – Public Charity)
Now point #3, of course, is strange. Presumably, the Clintons are involved plenty already with this public charity, The William J. Clinton Foundation (now doing business as the Bill Hillary and Chelsea Clinton Foundation – let’s refer to it as BHCCF). Why not just donate that $1.865 million directly to BHCCF, a full fledged public charity? Maybe a little better deduction on their tax returns? Actually, there is no difference for them on the surface. The charitable deduction is not affected either way. And, BHCCF’s public charity status seems pretty solid (at least on this issue!) – this $1.865 million won’t impact it as far as I can see with their public support test. Hmmm – why all of the subterfuge?
#4 – The above picture – here it is again (click picture to see larger view):
This is a snapshot from BHCCF’s 2013 990 tax return. It is showing the totals of their fundraising events in 2013. Did you notice that their 14 events or so actually lost money?
You could say that is certainly not out of the norm but not at this scale. To run 14 or more high end events like these, with the costs and revenue associated with them, you would need a team – a pretty big team of full time staff working their tails off. And, for what? To lose over $800,000 for the organization. What about the cost of probably 10 or more full-time staff members dedicated to running these events? The loss is probably more like $2 million, if you add in real staff costs like salaries!
If I were investigating this foundation, I would want to know why they are spending so much money and effort on so-called fundraising events when they are clearly not designed to actually raise money.
In other words, what I am looking for is whether these events are not really to support the charitable mission of the foundation (obviously not doing the job financially) but rather some other purpose (i.e. getting someone elected President – which actually is a pretty big issue for a public charity whose status also rests on the fact that politics must be severely limited if you want to keep your public charity status).
Last lesson – Step Transactions. I was an attendee of the S. Prestley Blake Law Center (building name of my law school), who just happens to be the founder of Friendly’s Corporation and also the taxpayer in one of the most infamous tax law cases (Blake v. Commissioner of Internal Revenue Service). That case set down the principle of step transactions, which means that you cannot do something indirectly that you couldn’t do directly (i.e. gift funds for a deduction to one entity that sends it to another which really shouldn’t have public charity status after all). Is this the answer as to why bother funneling funds through CFF?
Alright, this was a fishing expedition. I was just wondering if any nefarious tax or charitable issues would jump out at me. That event spreadsheet in the 990 hints to some serious issues with the public charity status of the BHCCF – which on its face should be questionable in any case. Someone seeking higher office, has huge “public charity” foundation at her beck and call, and runs presumably high end events that lose money hand over fist. Maybe, just maybe, much of the rest of the BHCCF activities are way over board towards helping Hillary’s election campaign. Of course, this isn’t a headliner issue, is it? Oh well, maybe next time.
$14.8mm in contributions for a net cost of $859k.
If this was a fishing expedition, you just caught a boot.