Ringmasters of Corruption

Posted by Laura Otten, Ph.D., Director on July 25th, 2013 in Thoughts & Commentary

0 comment

Perhaps the IRS should be paying more attention to the missions of the organizations apply for tax-exempt status.  Clearly, not by using keywords, but by really looking at the mission of an organization and determining if, in fact, it is working on behalf of some portion of the public good.  Granted, that means, as it should, that I will not like all of the missions that get approved to become the drivers of tax-exempt organizations operating in the same realm as the organizations whose missions I admire.  But somewhere and somehow, the IRS should be asking: “Does this organization’s mission really qualify it to be a tax-exempt organization?”

Case in point:  there is a newly minted nonprofit in Virginia called Restoration Fund.  You might think this is an organization that works to help families restore their homes after natural disasters or possibly crime victims or survivors of serious illness who need help putting their lives back to normal.  But would you think it was a legal defense fund for the Governor of Virginia accused of accepting thousands of dollars in gifts (for example, $15,000 to cater his daughter’s wedding) from the company and its owner, Star Scientific?

Seriously?  I’m struggling here to find the nonprofit purpose in a legal defense fund for one individual, particularly a public servant.  Public servants are supposed to uphold the law, not violate them; public servants are supposed to model appropriate behavior, not look for the loopholes and try to get away with as much as possible.  I get that some people might want to help the Governor with his legal fees, but do their donations deserve to be tax deductible?

Do their donations warrant being put on the same level as a gift to a special needs school where the children did nothing to get themselves into the position of needing help?  Should donations to a Governor’s legal defense fund equal gifts to medical research intended to find a cure for disease?  Should we treat gifts to the legal defense of a man who swore in his oath of office to protect and defend the Constitutions of both the State of Virginia and the United States of American with those that go to the 1.5 million nonprofits who help protect, improve and enrich the lives of our citizens and our communities?

Interestingly, another nonprofit, Citizens for Responsibility and Ethics in Washington (CREW) just released their latest report, “The Worst Governors in America.”  Governors were assessed in eight different areas:  mismanagement, cronyism, corruption, transparency, partisan politics, self-enrichment, pressuring public officials, and scandals. Eighteen governors made it onto the worst list.  And, yup, you got it:  Governor McDonnell made it into the category of “Ringmasters” and was sited for corruption, self-enrichment (which not only included the gifts as noted above but also improper use of state resources and pay to play), partisan politics, and lack of transparency.  Evidence is almost overwhelming.  So glad the IRS approved his legal defense fund as a nonprofit!  Makes me proud to work in this sector!

I’ve said repeatedly in this blog that nonprofits cannot and should not be painted with the same brush.  And yet, we so often are; one bad nonprofit does spoil a bushel of nonprofits.  Too many people too frequently say to me that nonprofits are always trying to get away with things (whatever that means…) But if someone were to say that to me while pointing to Restoration Fund, I’d get it this time.  And before that person put a period on his accusation, his brush would already be coloring every other nonprofit in his figurative line of vision.

I am saddened by the co-opting of crowdfunding sites like Kickstarter and Indiegogo by individuals seeking money for their own personal growth experiences, pet projects, wanderjahrs, etc.  I am dismayed that city governments are turning to local philanthropists to bail them out, while simultaneously taxing nonprofits.  And I am angered by the IRS’s failure to screen out those wanna-be nonprofits that are really simply a ruse for someone’s personal need or interest.

Approving the Restoration Fund as a tax-exempt organization debases all nonprofits in order to defend the greed of one individual.


The opinions expressed in Nonprofit University Blog are those of writer and do not necessarily reflect the opinion of La Salle University or any other institution or individual.