I am not saying that individuals or institutions are giving money to charities with the intent to influence the political process or to circumvent campaign finance laws. But such donations may, indirectly, produce that exact result.
As a case study, we take the example of the Minneapolis-based McKnight Foundation. McKnight is a $2-billion-asset charitable foundation, administering a private fortune earned through the 3M corporation. It is organized as a Section 501(c)(3) exempt private foundation. As a 501(c)(3) [the number refers to a section of the tax code], donations to the Foundation can be tax deductible to the donor, income earned by the Foundation is exempt from income taxes, but the entity is restricted on the amount of political activity and lobbying that it may engage in.
From 2004 through 2011, McKnight donated a total of $475,000 to Conservation Minnesota, a Minneapolis-based environmental non-profit. I have previously documented ([1], [2] and [3]) the work of Conservation Minnesota and its related entities, so I won't repeat that material here.
According to IRS Form 990 filings, Conservation Minnesota, like McKnight, is organized as 501(c)(3) charity. An affiliated organization, the Conservation Minnesota Voter Center, is organized as a 501(c)(4). The two organizations share an Executive Director, staff and office space.
A 501(c)(4) differs from the charity form in some key elements. Donations to (c)(4) organizations are not tax deductible. The income tax exemptions enjoyed by (c)(4) entities are not as broad as for (c)(3) groups, but (c)(4) groups operate under fewer restrictions on lobbying and political campaigning.
According to its IRS Form 990 (Schedule I), for the fiscal year ending June 30, 2011, $50,000 actually flowed upstream from the (c)(4) Voter Center to the (c)(3) charity.
The Conservation Minnesota Voter Center has, according to its IRS 990 filings, a related entity: the Conservation Minnesota Voter Fund. The Voter Fund is organized as a "527" entity. A 527 organization is another form of tax-exempt entity and has fewer restrictions on its activity than a 501(c)(4). However, a 527 must publicly disclose its donors and its spending activity, unlike the 501(c)(3) or (c)(4).
The Voter Fund is required to, and does, file reports with Minnesota's Campaign Finance and Public Disclosure Board. For the 2010 election year, the Voter Fund listed total expenditures of $166,736.98. Expenditures by the Fund included reimbursement of the Center of over $77,000 of their costs. The Fund, like other such entities, does not donate money directly to candidates. Instead, it spends money, independently, to support or defeat individual candidates.
But the Fund can, and does, donate money to political party units, such as the DFL's House of Representatives Caucus ($7,000 in 2010). The DFL House Caucus donates money up to the state party, the Minnesota DFL (almost $2,000,000 in 2010). The state-level unit, can, and does donate money directly to candidates (a mere $4,000 in 2010).
To take another example, in 2011, the McKnight Foundation donated $60,000 to the St. Paul-based TakeAction Minnesota Education Fund. TakeAction Minnesota is a coalition of 26 organizations, most of which (14) are labor unions. TakeAction consists of the charitable 501(c)(3) Education Fund (the McKnight grantee) and a 501(c)(4) entity.
According to TakeAction's IRS Form 990 filings, the two TakeAction entities share an Executive Director, staff, facilities, and mission statement (Line 1). They have two related 527 organizations, the TakeAction Political Action Committee (PAC) and the TakeAction Political Fund.
TakeAction engages in its political activity under the name reNEW Minnesota Campaign. The MinnPost news website reported in September 2010 that TakeAction endorsed 12 candidates for the November general election, all DFL members.
MinnPost reported,
"DFLer Mark Dayton's bid for governor was endorsed Sunday by TakeAction Minnesota, no big surprise since the group exists to help elect progressive candidates and neither Republican Tom Emmer or Independence Party candidate Tom Horner fit that bill.
"More than 200 of the group's members showed up and gave Dayton the endorsement on the first ballot. TakeAction Minnesota is the parent organization of reNew.mn, the group that was deeply involved in the DFL convention held in Duluth at the end of April. About 150 reNew.mn members went through the caucus process and were elected to be convention delegates, promising to work together to select a DFL candidate that shared their progressive vision."
According to reports filed at the Campaign Finance and Public Disclosure Board, in 2010 the TakeAction PAC spent more than $135,000 on the campaign. The PAC reimbursed the (c)(4) entity more than $117,000 for expenses. The PAC donated $406 of in kind services (phone bank space) directly to two candidates, and donated a total of more than $4,500 in cash and in kind services to the state DFL party.
The TakeAction Political Fund (a separate unit) spent more than $45,000 on the 2010 campaign. The Fund lists as a contribution almost $40,000 of in kind services (canvassing) from the (c)(4) entity.
In the end, the effort paid off, as TakeAction-endorsed DFL candidate Mark Dayton won the race for Governor in a recount. The almost Governor-elect (the recount would not end until December) appeared at the November 19th TakeAction Minnesota 2010 Annual Leadership Awards Dinner to personally thank the organization for its efforts.
No comments:
Post a Comment