To its credit, the Council on Foundations is making an effort to include conservative viewpoints at its upcoming annual conference in May. There is much to be learned from the leaders of the conservative movement, whose politics have dominated our society off and on for the past two decades or more.
One of the more stirring discussions of philanthropy occurred not all that long ago at the Hudson Institute’s Bradley Center for Philanthropy and Civic Renewal, during a program titled “Vision and Philanthropy.” The Weekly Standard’s Bill Kristol, the Heritage Foundation’s Stuart Butler, the Manhattan Institute’s Heather MacDonald, David Keene of the American Conservative Union, and several others provided remarkably erudite perspectives, hardly in lock-step agreement, on the past and future of American philanthropy. Until Linda Chavez launched into a tirade about modern rap music, waxing nostalgic for the good old music of her teenage years (she obviously didn’t recall the controversy surrounding the Kingsmen’s “Louie Louie”), it was a powerful session, and the transcript available at the center’s Web site[1] is well worth the read to understand conservative perspectives on the nonprofit sector.
So why—with so many powerful and thoughtful conservative thinkers to choose from—would the Council on Foundations opt to recruit former Speaker of the House of Representatives and rumored presidential candidate Newt Gingrich as an upcoming keynote speaker? There’s nothing wrong with hearing Gingrich’s take on public events, but as a keynoter on philanthropy?
Gingrich’s track record of philanthropic benevolence in the 1990s earned him several years of serious scrutiny from the Internal Revenue Service and a troubling ethics review by the House Committee on Standards of Official Conduct (back in the days when the ethics committee actually looked, even if halfheartedly, at members’ ethical missteps). That the IRS ultimately let Gingrich off the hook, which Gingrich’s people read as a clean bill of health and his critics read as a highly unusual IRS maneuver, can’t be taken as the end of the story. An IRS tax-exempt division enfeebled by years of chronic underfunding and relatively impotent statutes has meant that many a philanthropic miscreant has escaped with hardly a question, much less official action.
At a time when the Council on Foundations and its members have to face up to its rhetoric and support bolstered federal oversight combined with putting muscle into its commitment to self-regulatory actions, recruiting Newt Gingrich as opposed to nearly any of the Bradley Center’s Vision and Philanthropy right wing theorists raises some concerns. (Note: Of course, not all of those in the Hudson Institute program have survived with pristine reputations since their February 2005 presentations—notably Grover Norquist of the American Taxpayers Union, whose nonprofit has been linked to some of the highly questionable campaign finance, lobbying disclosure, and charitable funding abuses associated with Jack Abramoff.)[2]
A review of Gingrich’s troubles with philanthropic institutions—namely the Progress and Freedom Foundation and the Abraham Lincoln Opportunity Foundation, plus his political action committee (GOPAC)[3]—sounds like the philanthropic precursors of how Jack Abramoff blended partisan political activity and tax-exempt charity in the form of the Capital Athletic Foundation. Gingrich’s use—or misuse—of tax-exempt foundation resources might have been where he wanted to go during his implementation of the Republican Revolution, but it’s not the direction where charity and philanthropy—or the philanthropic sector’s trade associations and self-anointed leaders—ought to be headed, especially when the question of substantive philanthropic accountability is on the table.
Having been operated much like the CAF, it would be hard to ignore the current reverberations of the Abraham Lincoln Opportunity Foundation (ALOF), in 1990 a long inactive nonprofit that had been established by high-ranking GOPAC official Howard “Bo” Callaway with the purpose of “help[ing] inner-city children.” At the time, GOPAC was running TV shows to train and mobilize Republican activists, but found the shows too expensive to operate. To save the PAC money, Gingrich endorsed moving the shows lock, stock, and barrel to ALOF, so that they could be financed by tax-exempt charitable donations rather than precious GOPAC political contributions. It’s not clear what direct benefit inner city children got from TV programs “on a citizens’ movement to reform government,” but GOPAC got costly item off its books, with the Lincoln Foundation contributing $260,000 for two broadcasts in 1990.
In the words of one expert, ALOF was no more than “a slush fund for GOPAC … a shelter for political money.” Much of this got lots of attention, including a special counsel’s investigation from the House ethics committee, and while Gingrich averred his innocence, he ended up being fined $300,000 and had to acknowledge making several clearly erroneous statements to the committee’s investigators.
Although the IRS didn’t specifically find Gingrich himself guilty of tax-exempt misbehavior, the IRS did revoke the tax exemption of the Lincoln Foundation in 1998 because of the obvious role the foundation played in “how GOPAC…captured and dominated ALOF, using it to raise funds and pay costs for an ambitious cable television show featuring Gingrich. The two groups, in essence, merged, sharing the same staff, resources, and office. GOPAC went as far as offering its members the chance to pay their $10,000 dues by contributing to ALOF, which provided the donors with the benefit of a tax-deductible expense.”[4]
ALOF had more than a passing resemblance to Jack Abramoff’s Capital Athletic Foundation (CAF). Like the nonexistent evidence of CAF’s support of sportsmanship for needy children, no one can find evidence of activity supporting ALOF’s original mission, “to conduct annual Land of Opportunity speech contests throughout the secondary schools of Colorado, to lend care and assistance to the needy and to provide educational services to the public,”[5] but that didn’t concern the IRS any more than GOPAC’s shift of Gingrich’s television lectures to ALOF. Maybe the IRS might have looked into ALOF had it recognized not only Callaway’s GOPAC chair role, but also that the next GOPAC chair happened to be Kay Riddle, who was not only executive director of the Colorado Republican Party but also on the ALOF board.
It would be hard to imagine Gingrich was unaware of the relationship. In a document he wrote for GOPAC, called “Key Factors in a House GOP Majority,” Gingrich laid out the need for a “reform movement parallel to the official Republican Party because …the nonvoters who are nonpolitical or anti-political will accept a movement more rapidly than they will accept an established party. …”[6] It would be equally difficult to imagine that anyone would buy any of this as nonpartisan and nonpolitical. Describing the foundation-funded TV show, Riddle owned up to the notion that “another product [of the TV show] …would be, of course, if we got people interested . … We hoped and believed that eventually they would vote Republican.” At a congressional briefing, Gingrich acknowledged that the ALOF/GOPAC television lectures would be “the largest focus group project ever undertaken by the Republican Party,” but then suggested that the program could somehow qualify as nonpartisan because of the participation of “a lot of former Democrats… [such as] Ronald Reagan, Phil Gramm, Jean Kirkpatrick, (and) Connie Mack.”[7] Sure—the involvement of Ronald Reagan and Phil Gramm as recovered Democrats made the TV show nonpolitical.
Gingrich’s use of his foundations in GOPAC-originated functions or employing GOPAC consultants like Eisenach (paid $200,000 a year at the foundation alone) sounds a bit like the DeLay and other political foundations serving as holding pens and income streams for between-cycle campaign staff. It begs credibility to imagine that all of this happened to Gingrich without his knowledge, much less direction. As his friend Callaway said about Gingrich, “Everywhere he goes he takes chances and is audacious, but he knows where he’s going.” [8] The shifting of expenses for GOPAC’s TV shows between Gingrich’s campaign apparatus and the tax-exempt foundation that his GOPAC colleagues controlled makes the entire operation look like Abramoff’s political money laundering behind the façade of philanthropy.
It may be merely a coincidence, but after the 2000 elections that brought George W. Bush to the White House, the IRS found a way of reversing its decision about the Lincoln foundation as the result of a campaign led by none other than GOPAC’s Bo Callaway, who was also unhappy that his own personal foundation had lost its tax exemption because it had improperly contributed to ALOF.
In the wake of the Bush election, Callaway got the then barely known “independent review office” of the IRS, established to respond to citizen complaints, to review the ALOF and Callaway foundation issues. Callaway’s people presented their evidence to the IRS, but the review office made no attempt to contact the House ethics committee that investigated Gingrich and ALOF and uncovered the partisan nature of the foundation’s operations. The special counsel for the committee, James Cole, was surprised by the IRS reversal, saying, “Based on what we found about ALOF, if that’s not political and partisan, then I don’t know what is.” Other observers suggested that this IRS reversal had the earmarks of a political decision. Fran Hill, a University of Miami tax law professor, called it “an extraordinary decision,” noting that it “wouldn’t be the first time there was political influence going on at the IRS.”[9]
The core of the Progress and Freedom Foundation (PFF) controversy is similar. PFF was directed by GOPAC Executive Director Jeffrey Eisenach, who was recruited out of GOPAC to the foundation (though GOPAC paid a chunk of his initial salary) to initially raise tax-exempt money for Gingrich’s multipart “renewing American civilization” course at Kennesaw State College and then, when questions arose about doing the political fundraising of tax-exempt dollars through the university’s own foundation, shifted the fundraising and funding burden to Progress and Freedom.
PFF also had its share of questionable fundraising linkages for a sitting Speaker of the House. Like Senate Majority Leader Bill Frist’s “World of Hope” nonprofit, Gingrich’s PFF raised its share of money from pharmaceutical companies that might want to show the speaker they were friendly supporters. For example, Solvay Pharmaceuticals reportedly granted PFF $30,000 toward a study on how to expedite drug approvals by the Food and Drug Administration. Gingrich wrote the FDA on behalf of a Solvay drug application and introduced at least three bills in support of Solvay’s interests.[10] The actual House ethics inquiry into Gingrich included his intervention with the FDA on behalf of Johnson & Johnson subsidiary Direct Access Diagnostics, which had donated to the foundation.[11] Philip Morris, then facing scrutiny from FDA about the health effects of tobacco, also proved to be a generous funder of Progress and Freedom.
Maybe a reformed and reborn Newt Gingrich wouldn’t do that stuff anymore. However, his newly chartered Gingrich Foundation—headed by his wife, Callista Bisek (currently chief clerk of the House Committee on Agriculture, chaired by Bob Goodlatte (R-Vir.)— has established a Gingrich scholarship program for instrumental music majors at Callista’s alma mater, Luther College. It’s only coincidence, but Luther College is in Iowa, where Gingrich has been spending noticeable time preening like a 2008 presidential candidate.[12] One would hope that the Gingrich Foundation doesn’t take on the fundraising dynamic of the DeLay and Frist nonprofits, serving as lodestars for influence purchasing.
No one should take this commentary as opposition to having a big time conservative at the dais of the council’s annual meeting. There are plenty of conservatives who have long questioned Gingrich’s conservative bona fides[13] or get queasy with his recent health care alliance with Democratic Senator Hillary Rodham Clinton. But it isn’t a question of whether Gingrich is or isn’t a conservative or whether there is some imaginary ideological demarcation that philanthropic gatherings shouldn’t cross.
The issue is whether Gingrich’s own history of using philanthropy, in light of two years of Senate Finance Committee hearings and now the front page scandals around the philanthropic misadventures of the likes of Tom DeLay and Jack Abramoff, sends exactly the wrong signal for a sector and its trade association that should be making substantive philanthropic accountability—beyond simple minimal compliance with the letter of the law—its core priority.
[1] http://pcr.hudson.org/files/publications/Vision_Symposium_Transcript.pdf)
[2] Cf. http://www.texasobserver.org/showArticle_new.asp?ArticleID=13, http://taxbiz.blogspot.com/2006/01/grover-norquist-and-tax-code.html, and more.
[3] Now chaired by former Congressman J.C. Watts, GOPAC (http://www.gopac.com) was run by Gingrich from 1986 to 1995, extensively used to support Gingrich’s own Congressional races and ran into problems with the House Ethics Committee and the Federal Elections Commission on its own merits in addition to the connections with the Gingrich foundations in this article.
[4] Damon Chappie, “IRS Reversal Could Spark ‘Notorious Abuse’, Roll Call, April 28, 2003, http://www.campaignlegalcenter.org/press-571.html
[5] http://www.westword.com/Issues/1997-01-02/news/columns.html
[6] http://www.washingtonpost.com/wp-srv/national/longterm/gingrich/report/part_ii.htm
[7] Where will you find characters such as Riddle and Callaway now? The Abraham Lincoln Opportunity Foundation may not have delivered a scintilla of benefit to young people’s athletics, but their new venture does. Callaway is the president of Opportunity Through Baseball, a nonprofit funded by the Howard H. Callaway Foundation to provide baseball camps and coaches for “talented boys from inner city neighborhoods”. Unless the organization’s 2004 990 is incorrect, Opportunity Through Baseball has all of a two-person board, comprised of Callaway himself and Kay Riddle, identified in the 990s as the treasurer though named as executive director on the website (http://www.opportunitythroughbaseball.com/board_of_directors.htm). Apparently, the organization’s all-boy baseball focus since its start in 1993 has not been broken by a woman ED/treasurer.
[8] http://www.pbs.org/wgbh/pages/frontline/newt/newtintwshtml/callaway.html
[9] Chappie, http://www.campaignlegalcenter.org/press-571.html
[10] http://www.congressproject.org/ethics/ethrel.html, also Phil Kuntz and Laurie McGinley, “Gingrich Interceded With FDA for Firm That Had Donated Money to Foundation”, Wall Street Journal, February 2, 1995
[11] Inquiry Into Various Complaints Filed Against Representative Newt Gingrich, Report 104-401, December 12, 1995
[12] Gingrich’s recent trips to Iowa included Republican fundraising events in October, 2005, GOPAC-sponsored training programs earlier in August, and additional Republican party fundraisers in May, in addition to promoting his “transforming health care” writings during the may and August trips (http://www.gwu.edu/~action/2008/iavisits08r.html)
[13] Cf. John Pitney’s “The Many Faces of Newt Gingrich” in the February 1997 Reason magazine, basically calling Gingrich a 1960s vintage liberal