Now that the presidential campaign is over, I decided to take a look at the claims against both the Trump and Clinton Foundations. I wanted to see if all the chatter was politics as usual, or if the candidates were breaking IRS rules. Here’s what I found.
The Clinton Foundation is a biggie, raising $2 billion in 2016 alone. By contrast, the Trump Foundation is rather small potatoes with current assets of about $1 million. The Clinton Foundation appears to be an operating foundation – meaning that it manages its own nonprofit programs. These programs include initiatives on climate change, girls and women, health and wellness, and economic development. Recent reports state that the Clinton Foundation is shutting down and has laid off 22 employees. Other reports note that the Foundation only is shutting down its global initiative project but otherwise continues to operate.
According to the Washington Post, the Trump Foundation is a grant-making foundation that has made grants to “a smattering of New York and Florida charities, plus a few connected to friends and business partners”. The Foundation also made grants to several nonprofits associated with conservative causes and veterans organizations during the presidential campaign.
Claims have been made that the Clinton Foundation traded donations to the foundation for access to Hillary Clinton during her days as Secretary of State and a presidential candidate. One report stated that 85 of a total of 154 people who met with Clinton made donations in amounts ranging from $25,000 to over $1 million.
The Trump Foundation is charged with using its funds to settle lawsuits and purchase personal items. The Foundation made a grant to the Fisher House reportedly to settle claims made by the city of Palm Beach, Florida totaling $120,000 for code violations relating to Trump’s Mar-a-Lago estate. The Foundation also reportedly made a donation of $158,000 to a golfer’s favorite charity after he was not paid a promised $1 million prize for sinking a hole-in-one at a Trump golf tournament. President Trump and his wife Melania also are said to have used foundation funds to purchase items at charity auctions, including two portraits of Trump at a total cost of $30,000, and a $12,000 football signed by Denver Bronco Tim Tebow.
If these reports are true, were IRS rules broken? Maybe. My guess is that there is no written proof directly linking a requirement that donations be made to secure access to Clinton, or that Trumps contributions were required to settle lawsuits. However, unless Trump can show that his portraits and football were purchased to further his Foundation’s tax-exempt grant-making purposes he may have a problem. In fact, the Trump Foundation’s recently published 2015 IRS tax return indicates that the foundation engaged in “self-dealing” meaning the use of its assets for the personal or financial interests of its founders, officers or directors. No details are provided on the IRS Form 990 about the self-dealing transactions. Self-dealing is strictly prohibited by IRS rules and may result in loss of tax-exempt status.
The Trump and Clinton foundations are among 42,000+ family foundations operating in the U.S. Recent statistics show that these foundations hold assets of over $401 billion, taking in $28 billion in donations in 2014. That’s a lot cash that is not being taxed. Let’s hope these foundations and all that cash are being used to help society and not just as a tool used by the wealthy for their own purposes.
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