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Solyndra And Obama Bundler’s ‘Foundation’

Another seemingly random outbreak of actual journalism from the Washington Post:

Investment in failed solar firm Solyndra raises questions about nonprofit’s purpose

By Joe Stephens, Published: September 27

Six years ago, Senate Finance Committee investigators mounted an inquiry into an exotic variety of nonprofit organization that they feared affluent families were using to warehouse wealth while simultaneously earning themselves lucrative tax breaks.

One nonprofit group singled out for scrutiny was a low-profile organization based in Tulsa. That group, the George Kaiser Family Foundation, later became the biggest investor in Solyndra, the solar company that collapsed last month after burning through a half-billion dollars in taxpayer money.

Congressional interest in the nonprofit group was so high in 2005, in fact, that an attorney for then-committee Chairman Charles E. Grassley (R-Iowa) used it in an internal memo as a case study into whether the tax loophole should be closed. The memo, previously unreported, pointed out that in 2002 the foundation distributed just 0.2 percent of its assets to charity. That was acceptable under the law because GKFF, as it is known, was founded to financially “support” another nonprofit group, the Tulsa Community Foundation.

Most private foundations must spent 5 percent or more of their assets on charitable work each year or face financial penalties.

“Tax deductions for charitable contributions are intended to encourage transfer of wealth to those in need,” the memo said. “Individuals should not be allowed to ‘park’ their assets in charities in order to preserve their assets in perpetuity, while simultaneously benefiting from a charitable contribution deduction.”

The loophole used by GKFF, the memo concluded, “is now being used by wealthy individuals to avoid the private foundation rules.” Those organizations, it said, were in effect “conducting the abusive activities Congress intended to curb” when it established the 5 percent minimum payout for foundations

What’s this? Rich people are using ‘loopholes’ to avoid paying their fair share of taxes? Rich Democrats? Obama bundlers?

But despite its name, the $4 billion foundation is not a private foundation under tax law. Instead, Kaiser established the organization as what is known as a “supporting organization.” There are thousands of supporting organizations in the United States, and although they are perfectly legal, some reformers think they shouldn’t be — especially one that stockpiles $4 billion.

“In that case, that’s not supporting anything but itself,” Pablo Eisenberg of Georgetown University’s Center for Public & Nonprofit Leadership said of GKFF. “I think it should be abolished.”

Under current law, Kaiser would be entitled to tax write-offs for cash and stock he donated to the organization

Meanwhile, Mr. Obama wants to cut the tax deductions the rich (making $200,000 a year) get for their donations to charity.

If GKFF were organized as a private foundation, it probably would be barred from owning a large percentage of any single business, tax experts said. That could have precluded it from owning more than a third of Solyndra, they said. At the end of 2009, GKFF listed its Solyndra investment as worth $342 million — more than twice the value of any other securities the organization held

In 2009, the last year for which records are available, GKFF reported paying out grants of about $46 million, not including management costs. Though substantial, that sum represents slightly more than 1 percent of the organization’s assets. If GKFF had paid out 5 percent of its assets, as most foundations do, it would have spent nearly $200 million that year on grants to charity…

That’s okay. Mr. Kaiser gives to the right political party. So the rules don’t apply to him. (See the Clintons below.)

Neither Kaiser nor GKFF have responded to questions about how they came to invest in Solyndra.

Securities filings show that in 2010, Argonaut Private Equity and other affiliates of GKFF beneficially owned 35.7 percent of Solyndra and that they had the right to buy up to 15 percent in additional shares in a public stock offering that was planned at the time but later abandoned. The managing director of Argonaut, Steven R. Mitchell, sat on Solyndra’s board of directors…

An investigative panel of the House Energy and Commerce Committee has requested documents from Argonaut, seeking all materials related to Solyndra’s $535 million federal loan guarantee, the company’s canceled initial public offering and the company’s bankruptcy. It also is seeking copies of communications with the Obama administration regarding a February loan restructuring, which placed Argonaut ahead of taxpayers for repayment of $75 million in case of a liquidation

But this is just the way Democrats do things. There’s obviously nothing illegal or unethical about it.

After all, as we have previously noted, the Hillary Clintons have a similar foundation, the Clinton Family Foundation. Which they secretly used to shelter their multi-million dollar income since 2001.

According to a February 27, 2007 article in the Washington Post, their foundation "enabled the Clintons to write off more than $5 million from their taxable personal income since 2001."

However, to be fair, the Clinton Family Foundation has handed out a few ‘grants.’ According to the Post, the Clintons gave a grant "to the Arkansas businessman who helped Hillary Clinton make $100,000 on a commodities trade that stirred controversy a decade ago."

Now that is what they mean when they say ‘charity beings at home.’

This article was posted by Steve on Wednesday, September 28th, 2011. Comments are currently closed.

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