Monday, August 29, 2016

The speech Hillary should give about the Clinton Foundation

Wednesday afternoon (our time) I heard televised speeches from both presidential candidates, first from Donald Trump, and then from Hillary Clinton. I want to focus on something that Trump made frequent reference to and that Clinton spoke to not at all. That something is the Clinton Foundation. Basically, Trump blustered out the talking points from the last several days about Clinton's emails and the corrupt nature of the Clinton Foundation. (Trump's attack is just one of the right wing's assaults.)

I kept waiting for Clinton to speak in defense of the Foundation, but she did not. So, I started imagining what I would write if I were her speech writer. My story line would be something like this. We Clintons have created an organization that has done good for the health and well-being of millions of people around the globe. What have you, Donald Trump, done with your casinos and towers and reputed billions for the health and welfare of even just our own citizens?

But then I realized that I knew little about the Clinton Foundation (other than the charges of pay-to-play). And I knew even less about the Trump Foundation. I set out to learn more about those organizations so I could expand my speech and speak intelligently about those foundations.

Update: This morning's editorial in the Daily Star was one of the RedBlueAmerica series titled "Is foundation a problem for Clinton’s candidacy?" Neither author was particularly kind to the Clintons or the foundation. The editorial is one more reason to publish my project this morning.

Before I even start, I want to be clear. One part of the story now bruited about is the charge of special access to then Secretary of State Clinton supposedly granted to donors to the Clinton Foundation. (That, BTW, is the substance of the above referenced editorial.) This is the stuff of scandal spouted by Trump and others. The consensus among those journalists who have taken a serious look at these charges is that there is no evidence of criminality. Check out these articles: Paul Waldman's The latest Clinton email story just isn’t a scandal, Mark Sumner's Daily Kos article AP defends their attack on Clinton Foundation by compounding the error, and Ruth Marcus' Obliging a donor is not necessarily criminal. My intent here is to look at what the Clinton and Trump foundations aim to do, how they operate, where they get their money, and what they do with it. My main focus is on the Clinton Foundation but I will draw comparisons with the Trump Foundation to the extent possible.

What are the goals of the foundation?

The Clinton Foundation says this about itself.

We believe that the best way to unlock human potential is through the power of creative collaboration. That's why we build partnerships between businesses, NGOs, governments, and individuals everywhere to work faster, leaner, and better; to find solutions that last; and to transform lives and communities from what they are today to what they can be, tomorrow.

Everywhere we go, we're trying to work ourselves out of a job. Whether it's improving global health, increasing opportunity for girls and women, reducing childhood obesity and preventable diseases, creating economic opportunity and growth, or helping communities address the effects of climate change, we keep score by the lives that are saved or improved.

And this is from the Form 990 for 2013.

Improve global health & wellness, increase opportunities for women/girls, reduce childhood obesity, create economic opp & growth and help communities address effects of climate change.

I could not find a web site for the Donald J. Trump Foundation. Nor could I find a statement about the goals of the Trump Foundation. (Note that nothing in my research or writing is relevant to the separate foundation run by Trump's son, Eric.)

How to does the foundation operate?

The Clinton Foundation is not like other foundations in that it operates its own programs and invests relatively little in direct grants to other organizations. Here is its own statement.

The Clinton Foundation is an operating foundation. The money raised by the Foundation is spent directly on our programs, and not as grants to other charitable organizations.

The majority of the Clinton Foundation’s charitable work is performed and implemented by our staff and partners on the ground. We operate programs around the world that have a significant impact in a wide range of issue areas, including economic development, climate change, health and wellness, and participation of girls and women.

In cases where we support others in their own philanthropic endeavors, the money is used to convene these partners to develop their programs and commitments, rather than directly implement projects.

factcheck.org explored the exceptional status of the Clinton Foundation.

Simply put, despite its name, the Clinton Foundation is not a private foundation — which typically acts as a pass-through for private donations to other charitable organizations. Rather, it is a public charity. It conducts most of its charitable activities directly.

Katherina Rosqueta, the founding executive director of the Center for High Impact Philanthropy at the University of Pennsylvania, described the Clinton Foundation as an “operating foundation.”

“There is an important distinction between an operating foundation vs. a non-operating foundation,” Rosqueta told us via email. “An operating foundation implements programs so money it raises is not designed to be used exclusively for grant-making purposes. When most people hear ‘foundation’, they think exclusively of a grant-making entity. In either case, the key is to understand how well the foundation uses money — whether to implement programs or to grant out to nonprofits — [to achieve] the intended social impact (e.g., improving education, creating livelihoods, improving health, etc.).”

Judging from the tax statements (form 990), the Trump Foundation is more traditional in that it operates no programs directly but makes grants to other organizations. Thus the Trump Foundation as defined above is a non-operating foundation. That distinction - operating vs. non-operating - is important when it comes to understanding the finances of the foundations.

Where does the money come from

There are two parts to that question: how much money flows through the foundation and who donates it.

I followed the lead of factcheck.org and used the 2013 consolidated audit of the Clinton Foundation and its affiliates.

Daniel Borochoff, president and founder of CharityWatch, told us by phone that its analysis of the finances of the Clinton Foundation and its affiliates found that about 89 percent of the foundation budget is spent on programming (or “charity”), higher than the 75 percent considered the industry standard.

In order to get a fuller picture of the Clinton Foundation’s operations, he said, people need to look at the foundation’s consolidated audit, which includes the financial data on separate affiliates like the Clinton Health Access Initiative.

“Otherwise,” he said, “you are looking at just a piece of the pie.”

The relevant data are on p. 4 of the consolidated audit which shows revenues of $230,891,017. Bear in mind that this figure is higher than the revenue for the foundation itself because it includes data for the affiliates like the Clinton Health Access Initiative.

I used the 2013 form 990 to find out about the cash flows of the Clinton and Trump foundations. I picked 2013 because it was the most recent year for which I could compare financial reports for both the Clinton Foundation and the Trump Foundation - both 990s are available at propublica.org.

The total revenue for the Clinton Foundation was $148,889,439; for the Trump foundation $569,865. One immediate conclusion from the difference in revenue (and consequently in charitable expenses) is that the Clinton Foundation is a far bigger, and presumably more impactful, operation than is the Trump Foundation.

The second question, about who donates, is provided on the Clinton Foundation's web site. Their contributors are listed by broad category of donation organized into a pull-down list: $25 million and above, 10-25 million, etc. There we find, for example, that the Bill and Melinda Gates Foundation was one of the top contributors. The list includes both governments (e.g., Commonwealth of Australia) and individuals (e.g., Elton John Aids Foundation). I could not find a list of donors to the Trump foundation.

I'm led to believe that one reason why there is so much buzz in the media is that the Clintons were/are quite transparent about who was/is contributing to their foundation and its affiliates. What has not been reported as prominently as it should is the presence of one name under the $100,001-$250,000 category: Donald J. Trump. You know - the guy who characterizes Hillary as "crooked" and the Foundation as "corrupt." I guess Donald is comfortable supporting crooks and corruption.

Where does the money go?

Recall the distinction between operating and non-operating foundations. When that distinction is not understood, then the spending by the Clinton Foundation is mis-reported. Such was the case, in June 2015, when then candidate Carly Fiorina charged the Foundation with spending a small percentage of its revenue on charitable causes. factcheck.org set the record straight.

Republican presidential candidate Carly Fiorina says that “so little” of the charitable donations to the Clinton Foundation “actually go to charitable works” — a figure CARLY for America later put at about 6 percent of its annual revenues — but Fiorina is simply wrong.

Fiorina and others are referring only to the amount donated by the Clinton Foundation to outside charities, ignoring the fact that most of the Clinton Foundation’s charitable work is performed in-house. ...

Simply put, despite its name, the Clinton Foundation is not a private foundation — which typically acts as a pass-through for private donations to other charitable organizations. Rather, it is a public charity. It conducts most of its charitable activities directly.

I returned to the 2013 consolidated audit to get the big picture of the Foundation's spending. Reported expenses totaled $222,396,102. Of that $196,633,380 (88.4%) was spent on program services, i.e., funding the charitable programs operated by the Foundation. Of the remaining expenses 7.0% went for management and 4.6% went to support fundraising. Remember that a ratio of 75/25 of program expenditures to management and fundraising is "industry standard." Operating at a ratio of 88/12 the Clinton Foundation is doing far better than that.

What good comes from the Foundation's spending on "program services"?

Because of our work, more than 31,000 American schools are providing kids with healthy food choices in an effort to eradicate childhood obesity; more than 105,000 farmers in Malawi, Rwanda, and Tanzania are benefiting from climate-smart agronomic training, higher yields, and increased market access; more than 33,500 tons of greenhouse gas emissions are being reduced annually across the United States; over 450,000 people have been impacted through market opportunities created by social enterprises in Latin America, the Caribbean, and Asia; through the independent Clinton Health Access Initiative, over 11.5 million people in more than 70 countries have access to CHAI-negotiated prices for HIV/AIDS medications; an estimated 85 million people in the U.S. will be reached through strategic health partnerships developed across industry sectors at both the local and national level; and members of the Clinton Global Initiative community have made more than 3,500 Commitments to Action, which have improved the lives of over 430 million people in more than 180 countries.

The Trump Foundation appears to spread its resources fairly broadly among various causes and organizations. Grants run the whole range from a 250 dollars to over 100,000 dollars (the latter amount going to the Nicklaus Children's Health Care Foundation).

Related observations

Trump's charitable giving

Trump's own charitable giving has come under scrutiny in the last several months partly because of some promises he made to veterans groups. Here's the investigation by the Washington Post.

In May, under pressure from the news media, Donald Trump made good on a pledge he made four months earlier: He gave $1 million to a nonprofit group helping veterans’ families.

Before that, however, when was the last time that Trump had given any of his own money to a charity?

If Trump stands by his promises, such donations should be occurring all the time. In the 15 years prior to the veterans donation, Trump promised to donate earnings from a wide variety of his moneymaking enterprises: “The Apprentice.” Trump Vodka. Trump University. A book. Another book. If he had honored all those pledges, Trump’s gifts to charity would have topped $8.5 million.

But in the 15 years prior to the veterans’ gift, public records show that Trump donated about $2.8 million through a foundation set up to give his money away — less than a third of the pledged amount — and nothing since 2009. Records show Trump has given nothing to his foundation since 2008.

The rest of the story is a trail of promises broken and commitments unfulfilled. For example:

When Libyan strongman Moammar Gaddafi visited New York in 2009, Trump rented him space for a huge tent at an estate Trump owns north of the city. He said nothing about giving the proceeds to charity.

Two years later, Trump told a television interviewer, “I said when I did it, ‘I’m going to take Gaddafi’s money . . . and I’m going to give the money to charity,’ and that’s exactly what I did.”

BuzzFeed recently estimated Trump’s take from Gaddafi at $150,000. If Trump did donate the money, there is no public trace of it; he donated nothing that year to his own foundation. And this spring, Trump seemed to have forgotten his vow to give the money to charity: “I made a lot of money with Gaddafi, if you remember,” he told CBS.

Another Washington Post report has more extensive documentation.

I return to one of my lead questions: What have you, Donald Trump, done with your casinos and towers and reputed billions for the health and welfare of even just our own citizens? The answer is, relative to the Clinton Foundation, not so much.

Ratings of the foundations

factcheck.org notes that Another philanthropy watchdog, CharityWatch, a project of the American Institute of Philanthropy, gave the Clinton Foundation an “A” rating.. See more about this rating at CharityWatch.org.

This noon CNN was running one of these awful battles between surrogates for the two presidential candidates. You know - the hour long shouting match in which they talk over each other while the moderator looks baffled. One of the comments made about the Clinton Foundation was that one of the charity watchdogs, CharityNavigator, did not rate the Clinton Foundation. That is true. Here is what CharityNavigator has to say:

Why isn't this organization rated? We had previously evaluated this organization, but have since determined that this charity's atypical business model can not be accurately captured in our current rating methodology. Our removal of The Clinton Foundation from our site is neither a condemnation nor an endorsement of this charity. We reserve the right to reinstate a rating for The Clinton Foundation as soon as we identify a rating methodology that appropriately captures its business model.

What does it mean that this organization isn’t rated? It simply means that the organization doesn't meet our criteria. A lack of a rating does not indicate a positive or negative assessment by Charity Navigator.

What about the Trump Foundation? It's not rated either. Here is what Charity Navigator has to say.

Why isn't this organization rated? This organization is not eligible to be rated by Charity Navigator because it is a Private Foundation.

Private foundations receive the majority of their money from only one individual, family or corporation. This differs from the public charities that Charity Navigator evaluates. Public charities have a broad-base of support from the general public as well as variety of other funding sources. The IRS requires that private foundations file a Form 990-PF which differs from the document public charities file. This makes it impossible for us to compare the financial performance of private foundations to public charities.

What does it mean that this organization isn’t rated? It simply means that the organization doesn't meet our criteria. A lack of a rating does not indicate a positive or negative assessment by Charity Navigator.

Is the Trump Foundation breaching the firewall?

A charitable organization, registered with the IRS as a501(c)(3), must not ever engage in campaign activities. Here is the IRS statement.

To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual. In addition, it may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.

The Daily Beast reports on a watchdog group complaining about an alleged violation of that proscription by the Donald J. Trump Foundation,Watchdog Group Files Complaint With IRS Against Trump Foundation.

Citizens for Responsibility and Ethics in Washington filed a complaint with the IRS alleging the mogul’s foundation violated its tax-exempt status by participating in his presidential campaign.

If the IRS audits the Trump Foundation and it is determined to have violated regulations governing nonprofits, the charitable organization could lose its tax-exempt status and the Republican nominee himself could be subject to excise taxes.

Tax-exempt organizations like the Trump Foundation—of which Trump is the president—are strictly prohibited from engaging in political activity.

[The] legal action was prompted in part by the presentation of checks to veterans charities that were paid by the foundation, which had Trump’s campaign logo and its signature slogan—“Make America Great Again”—imprinted on them.

Although the IRS prohibits charities like the Trump Foundation from engaging in political activity, the agency does not specifically define what that is. According to FEC guidelines, though, the use of a campaign slogan is a violation because it constitutes express political advocacy that “can have no other reasonable meaning than to urge the election or defeat of a candidate.”

The future of the Clinton Foundation

As a result of the [muddled reporting about Clinton Foundation donors][kos] by the Associated Press, there have been calls to shut down the Foundation - notably by Donald Trump. Unfortunately, by going on the defensive, the Clintons are making it tougher on themselves. By promising strict changes should Hillary become president, they opened the way for their opponent to argue that those changes should have been in place when Clinton was Secretary of State. (Never mind that there is no evidence at all of "pay-for-play."). Scriber thinks that the Clintons should have gone on the offense much sooner and using all the good done globally by the foundation as its weapon and shield. It is sad that the foundation is at risk for reductions in its scope and effectiveness just to deflect politically motivated attacks from Trump and his right-wing fellow travelers.

James Carville weighed in rather heavily in defense of the Foundation. (h/t Miriam Lindmeier)

"Somebody is going to hell" over the political attacks on the Clinton Foundation, longtime Clinton confidant James Carville declared Tuesday, denouncing the recent scrutiny and criticism of the charitable organization.

If the Clinton Foundation had decided not to accept foreign donations while Hillary Clinton was secretary of state, as it has recently announced it would do if she is elected president, Carville said on MSNBC's "Morning Joe" that the "good" thing would be that the organization would not be part of the political discussion.

"The bad would be you'd be out hundreds of millions of dollars that are doing good. What the Clinton Foundation does, it takes money from rich people and gives it to poor people. Most people think that's a pretty good idea," Carville said.

Bill Clinton also announced to supporters on Monday that he would step down from his position on the foundation board if his wife wins in November and would cease fundraising activities for the organization.

Pressed on whether the Clinton Foundation should have clamped down on foreign donations before Clinton became secretary of state, Carville responded, "If you ask me as a political adviser, of course."

"If you ask me as a human being, eh, I’m not too sure. As a human being I think the foundation does an enormous amount of good. From a strictly political standpoint, yeah," Carville said, invoking his Catholic sixth-grade teacher to say, "somebody is going to hell over this. Because somebody, now I’m not saying here—or somewhere is. This is saving people’s lives."

Morning Joe did not appreciate that comment, but Carville continued.

“I wish I could say the word I want to say. I’ll just say that’s BS," Scarborough remarked. "You know the fact is if it's a great charity and it’s a five-star rated charity, guess what, other people can raise the money. It doesn't have to be Bill Clinton calling somebody up making people think, if I give him money it could help me out. If it's a great charity, it can stand on its own and other people can raise money for it. It's not a zero-sum game. It's not having Bill Clinton raise money while his wife is running for president or else we're all going to hell and little kids are going to die across the planet.”

“They’re gonna," Carville shot back. "The other thing is, Bill Clinton has more charm and people around the world have an enormous amount of faith in him. I've traveled with him. I've seen it myself. There are not many people that have the relationships and are held in the affection around the world as Bill Clinton."

And there you have it. Donald "Deadbeat" Trump wants to close down a foundation that betters the lives of millions across the globe while he uses his own foundation, illegally, to provide service to his campaign. There certainly are more serious things at stake in the 2016 election, our Republic, for example. But it would be sad to see the Clinton Foundation shut down at the certain cost of lives.

I leave this one with a thought about the Clintons' Foundation: blinded by goodness, wounded by politics.


If you detect any errors or omissions, please let me know at wsmaki@gmail.com and I will update this post with your corrections.

1 comment:

  1. Awesome job Bill! You should cross-post on RestoreReason!

    ReplyDelete