The Corruption Of Non-Profits For Political Purposes

Despite the myriad of stories in the mainstream press that unearthed virtually zero evidence of any illegal or unethical doings by the Clinton Foundation and the people associated with it, the 2016 election did manage to highlight the actual fraudulent use of foundations for personal and political use, thanks to Donald Trump and his self-named foundation. And as time has gone on, it has become clear that this abuse of foundation and non-profit law has became a favorite Republican tool.

During the 2016 campaign, the NY Times in particular ran story after breathless story detailing all sorts of contributions from various foreign powers and dignitaries to the Clinton Foundation that all ended in the same way. Somewhere around paragraph 27 or 30, we learned that both the Foundation and Secretary Clinton followed all the rules, regulations, and ethics requirements around these issues, with Clinton herself often specifically asking for guidance from the State Department ethics watchdog.

Meanwhile, David Fahrenthold at the Washington Post was actually reporting on the news that the Trump Foundation had been used to not only buy items for Donald Trump’s personal use but to also pay around $250,000 in settlements on behalf of the Trump Organization. In addition, the Trump Foundation and Donald Trump Jr.’s foundation both violated election law with illegal campaign donations to Florida Attorney General Pam Bondi while she was deciding whether Florida would join with other states in suing Trump University. In addition, the Trump Foundation hid this donation by listing it as a gift to an unrelated organization in Kansas.

It was also revealed during Steve Mnuchin’s confirmation hearings that he used the One West Foundation to provide money to other organizations that astroturfed support for One West in its merger with CIT. Mnuchin was head of OneWest at the time.

Of course, ever since Citizens United, non-profit 501(c)(4) organizations have essentially become a slush fund for dark money political activity. Despite rules that say these organizations can not spend over 50% of their money on political activity, many of them continue to do so with impunity. Back in 2013, the Nation highlighted five such organizations, all of whom supported Republican and/or corporate interests. Because the donors to these organizations are not disclosed, it is a favorite way for corporations to effect the political process without getting their hands dirty. In addition, these organizations can decide to cease to operate after every election cycle and, in doing so, end liability for any violations they engaged in during the campaign. They have just become gigantic corporate slush funds for political activity.

Earlier this month, the Washington Post showed how these 501(c)(4)s may now be “sharing” their polling data with certain campaigns. Polling done by America First Policies, a 501(c)(4) organization, is actually posted on the its web site, if you know exactly what hidden link to click. By making it “public” in this way, it allows the campaigns who “know” where this data is located to get critical polling information without having to pay for it. In other words, it is a massive in-kind contribution to a political campaign through a perfect vehicle for hidden corporate and dark money. One of the founders of America First Policies is none other than Brad Parscale who is the current campaign manager for Trump’s 2020 campaign and who ran digital media for Trump in 2016.

Another point of abuse are the personal foundations of sitting legislators. The Center for Public Integrity (CPI) reported on the non-profit set up to archive and house the letters and papers of Senator Orrin Hatch, the chairman of the Senate Finance Committee. At a two-day event to raise money for the non-profit with Hatch also attending, top donors ended up giving over $100,000. Many of those donors were corporations that had much to gain from the tax cut legislation that Hatch and Republicans were trying to pass, many of them specifically citing pressure from their donors.

By law, these corporations are required to disclose donations to non-profits that are closely associated with individual lawmakers as well as events that “honor” those lawmakers. But CPI found that many corporations neglect to make that disclosure and, worse, enforcement of the disclosure provision is virtually nonexistent. “[T]the number of ‘honorary contributions’ disclosed in the reports is roughly a third of what it was a decade ago, when the disclosure requirement first kicked in, even though the number of lobbying registrants filing the reports has remained relatively constant. Only 308 filings disclosed any such honorary contributions in 2017, the lowest number since the requirement came into force.” Beyond that, corporations can avoid the disclosure entirely by running the contribution through the corporate foundation.

Eric Greitens, the now disgraced (if that’s still possible these days) Governor of Missouri, had a unique use for a 501(c)(3) charity for veterans called the Mission Continues that he founded. Greitens illegally used the donor list that he had acquired from the charity as the basis for the fundraising for his nascent political career, raising over $2 million from donors on the Mission Continues list. Greitens initially denied that his campaign used the list before finally admitting the truth when presented with evidence that a Greitens’ employee had emailed the list to two Greiten’s campaign staffers shortly after leaving the non-profit to work directly for Greitens. It is illegal for a 501(c)(3) to be involved in political campaigns on behalf of individual candidates.

Are there Democrats who abuse these non-profits and foundations. I’m sure there are but seemingly nothing like what the GOP seems to do. And most corporate abuse is going to go toward Republicans as they are seen as the pro-business party. Citizens United has certainly corrupted the 501(c)(4) non-profits and the faux scandal about the IRS cracking down on conservative non-profits has effectively neutered any oversight and even the rules about disclosure are being flagrantly violated. In the present environment, any hope for restraining these violation from non-profits will rely on state attorneys general.

Originally published at on March 11, 2018.