“Donald Trump Accused of Using His Charity as a Political Slush Fund” - The Daily Beast

June 18, 2016 | By: .(JavaScript must be enabled to view this email address) Mark Blumberg
Topics: News

The Daily Beast has a rather extensive article on Donald Trump's use of the Trump Foundation entitled Donald Trump Accused of Using His Charity as a Political Slush Fund.  It is well worth reading.  I have criticized the Clinton Foundation for some lapses when it came to transparency and especially the lame excuses they gave in response to questions.  Nothing that the Clinton's have done with their foundation seems to be even close to the seriousness of the allegations leveled against the Trump Foundation.

I think that the article illustrates a number of points:

1) Private foundations (in the US and Canada) are often very poorly run and it is painful to watch the rather obvious mistakes that could have been avoided if they set up proper systems, obtained appropriate advice and for that matter cared about compliance;

2) Private foundations and other types of charities can be a reputation drag if not run properly.  Trump appears to be a bit of a Teflon man so we will have to see;

3) If charities were to be allowed to conduct unlimited political activities or be allowed to conduct partisan activities the reputation and trust levels of the charity sector would plummet in a matter of months;

4) Those involved in the political realm often do not understand the difference between policy advocacy, political activities and partisan activities. They live in a political world in which just like fish in water the partisan approach to everything is just normal;

5) Not only is mixing politics and a private foundation bad for the private foundation it is also bad for grantees who are reluctantly or unwittingly dragged into behaviour that either could cause them problems or at least the anxiety that they may have problems;

6) If there is confusion between who works for the campaign and who works for the foundation then that is not a great way to run a foundation; and

 7) Perhaps most disturbing the article also highlights the very precarious position of the IRS when it comes to regulating tax exempt organizations even if there are clearly abusive situations.

Philip Hackney, a law professor who spent five years working for the IRS’s chief counsel, said the apparent coordination between the foundation and the campaign was “unwise” because it could put his foundation—and its tax-exempt status—in jeopardy.

The Bondi donation is probably sufficient evidence for the IRS to open an audit into the Trump Foundation, Hackney told The Daily Beast, adding that Trump himself could be subjected to extra taxes.

“I don’t know that they’ll even audit him,” Hackney said. “I think it’s dangerous, particularly politically for them right now, to audit in this realm. That bothers me, given what I see in this particular case, but I don’t know that the IRS has another choice in some ways.”

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Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.

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