By
Republican presidential nominee Donald Trump, to be
sure, is a candidate like no other. So it should be no surprise that his Donald
J. Trump Foundation also doesn’t act like others of its kind.
Many wealthy people have funded their
own foundations. Among some famous examples: the Bill & Melinda Gates
Foundation, the Robert Wood Johnson Foundation, and the Lilly Endowment. The
Internal Revenue Code distinguishes between private foundations, such as these,
and public charities. Private foundations typically are funded by an
individual, family, or corporation, and are subject to more restrictions and
fewer tax benefits than public charities (which is how the Clinton Foundation
is classified).
While the specifics of Trump’s personal
tax returns remain somewhat of a mystery—beyond the recently leaked details he
claimed a $916 million loss in 1995—tax information for most foundations claiming
federal tax-exempt status are a matter of public record. And close examinations
of records from Trump’s foundation, along with multiple official investigations, have thrown yet more fuel on the increasingly large fires burning around his campaign.
Charity by the
brushstroke
Albert C. Barnes, who amassed a fortune
in the early 20th century, used his wealth to acquire
one of the most famous collections of post-impressionist and early modern
paintings. He created the Barnes Foundation, a charitable organization that uses his collection
to promote education through appreciation of the arts.
Trump, too, has invested in paintings,
having used his foundation’s money to purchase portraits of himself. But unlike Barnes’s artwork, Trump’s portraits have
never been used for a charitable purpose, which means that their purchase
apparently violates tax law.
When charity begins
at home
Trump also allegedly used $258,000 of
his foundation’s money to settle lawsuits involving his for-profit businesses. If this
allegation is true, he would be open to a charge of “self-dealing,”
violating tax laws that prohibit nonprofit leaders from using money from their
charities to benefit themselves or their businesses.
Another questionable use of Trump
Foundation funds occurred in 2013, when the foundation donated $25,000 to a group supporting Florida Attorney General Pam
Bondi, who at the time was considering investigating charges of fraud against
Trump University. This is an apparent violation of tax laws that ban nonprofit
groups from making political gifts. Moreover, the implication that the donation
was made to buy influence seems plausible, as the Florida investigation into
Trump University never happened.
Giving to get
endorsements?
From 2011 through 2014, Trump also used
foundation funds to contribute at least $286,000 to influential conservative or
policy groups, according to a tax-filings review by RealClearPolitics. While not illegal since the
donations went to other nonprofit organizations, some of the gifts went to
conservative or Republican Party-related organizations and corresponded to
endorsements or prime speaking slots Trump used to cast himself as a potential
Republican candidate for president. Perhaps not a quid pro quo by definition,
but certainly in appearance.
For example, in 2013 the Trump
Foundation donated $10,000 to The Family Leader, a conservative political
organization in Iowa, which featured Trump as a marquee speaker at its
influential leader summit. That same year, the foundation donated $50,000 to
the American Conservative Union Foundation, which organizes the Conservative
Political Action Conference (CPAC). Trump was the closing speaker on the
opening night of the 2014 CPAC. Again, not necessarily a quid pro quo, but one
could say it has that look.
Trump’s foundation also donated $100,000
to the Citizens United Foundation, which in 2014 held an event in New Hampshire
featuring would-be Republican candidates for president. Among them, Trump, who
also took the stage at related events in Iowa and South Carolina.
Other possible
violations
While the federal tax laws for charitable foundations are complicated, those of
individual states add another layer of complexity, because tax laws differ from
state to state. In New York State, where the Trump Foundation is based, it is
illegal to ask for donations to a foundation without its first having
registered with the state as a charity soliciting money. That’s why, after it
was reported Trump’s foundation has been soliciting money since 2008 without
registering, the New York attorney general’s office ordered the foundation to stop fundraising activity.
Trump, who founded his charity in 1987,
was its only donor until 2006, when tax records show its year-end balance as
$4,238. And while the records reveal small donations in 2007 and 2008, most of
its money has come from other donors – a rarity for name-branded foundations.
Where did these donations come from? It appears that Trump may have directed $2.3 million in payments owed to himself or his businesses to his
tax-exempt foundation. And while in such cases he would be required to pay
taxes on that income, his campaign has not revealed whether he has paid taxes
on all of it. Diverting personal income into a charity without paying
appropriate taxes can lead to monetary penalties, the loss of tax-exempt
status, and criminal charges.
While the Clinton Foundation has its critics regarding possible conflicts of interest, it
unquestionably succeeds at its charitable endeavors—the independent watchdog
site CharityWatch, for instance, gives it an “A” rating. Trump’s foundation is a different sort of
enterprise, so trying to compare the two is an apples to oranges endeavor (like
just about everything else in this year’s election). But it’s still worth
looking closely at how the two presidential candidates have run the organizations
that bear their names.
The views and opinions expressed here are those of the author and
do not necessarily represent those of Avvo.
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