Oh, Those Compassionate Conservatives
Arianna Huffington has a post about how the Abramoff scandal is shining a bright light at the way the Republican machine is using charitable foundations to funnel money into their own pockets.
One of the sleaziest of these is the charitable-foundation dodge. This shockingly legal scam allows those looking to game the system a number of ways to do so. First and foremost, when politicians align themselves with charities, it allows special interests to donate unlimited sums of money and curry favor while acting as if they are doing it out of the goodness of their souls instead of the usual oily self-interest. What's more, because they are giving to "charity," these non-political (wink, wink) donations are tax-deductible. And, thanks to these charities' 501 (c)(3) status, donations to them do not have to be reported -- allowing the influence-buyers to remain in the shadows. It's a win-win-win for shady politicians, lobbyists, and their big-buck backers -- and a lose-lose-lose for our democracy.
Second, these charitable foundations are often used as a full-employment program for the friends, families, and significant others of the politicians and lobbyists connected to them. For instance, DeLay's wife, Christine, pocketed $115,000 from a firm run by the lobbyist who set up the aforementioned U.S. Family Network (a group that never had more than one full-time staff member). A lobbyist who also just happened to be DeLay's former chief of staff. And what did Mrs. DeLay do to earn those six figures? According to DeLay's lawyers, she made lists of the favorite charities of members of Congress. Christine DeLay and Delay's daughter, Dani DeLay Ferro, have also been paid more than half a million dollars by Tom DeLay's assortment of PACs and campaign committees -- but that's a rant for another blog post.
Third, charitable foundations allow politicians to play both sides of the favor-currying street, taking money from corporate interests looking to curry favor then turning around and using that money to curry favor with groups and organizations that might prove helpful down the line. For a prime example of how this works, look no further than Bill Frist's World of Hope charity which took in millions from corporations like 3M and Eli Lilly that have frequent business before the Senate, then doled out heaping helpings of that corporate cash to evangelical Christian groups such as Franklin Graham's Samaritan Purse and the Rev. Luis Cortes' Esperanza USA. Groups that could prove very helpful should one think about -- oh, I don't know -- mounting a run for president.
The charitable donation dodge reminds me of one of those weird stories that was floated before the 2004 Republican convention about how Tom DeLay was going to bring cruise ships to New York for the conventioneers and fund it with donations to a charitable organization he and his wife had formed.
Mr. DeLay has won power and loyalty from Republican members of Congress by making sure they were treated luxuriously. He saw to it that House ethics rules were changed so that members could accept free trips and lodging to attend charity events.
At the Republican convention in Philadelphia in 2000, he provided representatives with cars and drivers, and he set up a hospitality suite inside a luxury railroad car. This time, he would not be footing the bill for the ship, but is the driving force behind making it available during the convention, according to Republicans. The idea of using the cruise ship, which operates out of New York City year-round for Norwegian Cruise Line, first came up when the company approached Republican leaders several weeks ago, a company spokeswoman said. The cruise line has also approached Democrats about their convention, which will be held in Boston in July, but those talks have not progressed as far as they have with the Republicans, said a spokeswoman, Susan Robison.
Ms. Robison and a DeLay aide also confirmed that Susan Hirschman, Mr. DeLay's former chief of staff, is a member of the lobbying firm hired by the ship's owners to pursue this kind of business. Ms. Hirschman did not return a call for comment, and Ms. Robison said she did not know if Ms. Hirschman made the original pitch to the Republican leadership. But once the pitch was delivered, Mr. DeLay and Mr. Fossella presented the plan to Congressional Republicans.
The charity that DeLay setup for to help fund this extravaganza was created in September 2003.
Mr. DeLay's charity, Celebrations for Children Inc., was set up in September and has no track record of work. Mr. DeLay is not a formal official of the charity, but its managers are Mr. DeLay's daughter, Dani DeLay Ferro; Craig Richardson, a longtime adviser; and Rob Jennings, a Republican fund-raiser. Mr. Richardson said the managers would be paid by the new charity.
Mr. Richardson said the goal was to give 75 percent of the money it raised to children's charities, including some in the New York area. He said the charity also planned to hold other events at the Super Bowl.
But because the money collected will go into a nonprofit organization, donors get a tax break. And Mr. DeLay will never have to account publicly for who contributed, which campaign finance experts say shields those who may be trying to win favor with one of the most powerful lawmakers in Washington.
DeLay's financing scheme was so creative and so effective that Senate Majority Leader Bill Frist decided to form his own charity designed to address the AIDs crisis.
Like Mr. DeLay, Dr. Frist, a Tennessee Republican, is tying charity fund-raising to the convention. He is planning to play host to a reception and a concert at Rockefeller Center during the convention that promises to donate money to five AIDS charities. In a letter sent out on behalf of the "Senator Frist Charitable Event," potential donors - the top tier is $250,000 - are advised, "This is the only event during the convention which Senator Frist will personally host."
A spokesman for Dr. Frist said that the effort was in the early planning stages and that the senator had not yet set up a charitable organization to collect the money.
Reading Arianna's post, it is clear that Dr. Frist figured out how make this work because she used his AIDs charity as a particularly egregious example of this immoral scam.
This Kos post neatly lays out how Frist's World of Hope hits the charitable-foundation-dodge trifecta: taking in corporate cash, and then doling it out to friends and cronies, and to those whose support he is looking to gain.
Hopefully, as we unravel the web of scandal, we'll find and root out the bogus charities that are fronts for the Republican machine.
Coda: This post has a very interesting update in the comments on the charity DeLay set up but couldn't use in NYC.