Thursday, September 22, 2005

More Fun With 990's - Capital Athletic Foundation

As we’ve mentioned before, it is amazing the information you can find on the IRS 990 tax returns of 501(c)(3) organizations. Take for example the Capital Athletic Foundation (CAF), a charity “currently under federal investigation because of its ties to lobbyist Jack Abramoff and questions about its spending and revenue.” (Washington Post, 1/21/05,

David Safavian, the Bush administration’s Chief of Government-wide Procurement, was arrested on Monday, September 19th, accused of lying and obstructing a criminal investigation into Abramoff’s dealings in Washington. He allegedly accompanied Abramoff, Rep Robert Ney (R-Ohio), Ralph Reed and others connected to the Bush administration on a 2002 trip to Scotland. According to the Washington Post article above, this trip was hosted by the Capital Athletic Foundation.

Fun with 990s: if you look at the 2002 IRS 990 for CAF, you can understand why it is being investigated. You can find a copy at (registration required – sorry)
Questions abound:
1. Check out the board of directors list. The first listing is the “Capital Athletic Foundation, LLC.” The only other board members are Jack Abramoff, and Pamela, his wife. The return notes that she only joined the board in September, 2002. In the state of Oregon, all nonprofit corporations are required to have at least three board members. Is this also true in the jurisdiction where this group incorporated? Why did Mrs. Abramoff only join the board in September of 2002 when the group began operation in 2000? Why is one of the board members not even a HUMAN? Is it legal for corporations to have human status as members of corporate boards? We are not attorneys here at nonprofitblog, but we’ve certainly never heard of a board slot being taken up by a corporation! Most of us are running around trying to get quality humans to serve on our boards. Also, what in the world is the Capital Athletic Foundation, LLC? Is it a separate corporation from the Capital Athletic Foundation? If not, then how can this foundation serve on its own board? The whole thing is absurd on its face! I invite a corporate law attorney to comment on how this can possibly be legal.

2. Attachment to the tax return – “Capital Athletic Foundation, LLC, Amended and Restated Operating Agreement.” Now this is absolutely fascinating and we would sure love to have an attorney explain to us what this document means. It states that “Abramoff has determined to organize and operate a limited liability company….” So is this a charitable foundation or a company owned by Abramoff? This “agreement” is dated September 23, 2002, the same time frame that Pamela, his wife, joined the board.

3. Revenue: The only portion of the IRS 990 tax returns that is not normally public information is the list of gifts received that are more than $5,000. Nonprofits must provide a copy of the 990 to anyone who wishes within 30 days, but are allowed to redact (black out or don’t include) this revenue page. For some reason, the 2002 CAF tax return revenue is right there on the Guidestar website and it is extremely interesting. Here is a sampling: the Saginaw Chippewa Indian Tribe of NY donated $25,000, the National Center for Public Policy Research gave $450,000, the Mississippi Band of Chocktaw Indians donated a hefty $1,000,000, and Jack Abramoff himself donated $991,749. Generally, other tax exempt organizations do not donate money to private foundations. Generally they stay true to their own missions and fund their OWN PROGRAMS. Why on earth did the Chocktaw Indians make such a massive charitable gift to a private foundation? Have they no health, housing or education needs for their own Native American people?
4. Expenses: The largest expense would not normally raise eyebrows- most of the money was given out to other nonprofit organizations. We have not had time to research their 990’s yet, but will get to that later. The biggest surprise is that the Chocktaw Indians would find it important to give a large sum of money to the CAF so that they could support the “Eshkol Academy’s educational, athletic facilities and operations of private boys school. Includes teaching facilities, instructors, and ice rink.” According to the Washington Post, this is a Jewish academy that schooled two of Abramoff’s sons. Inquiring minds want to know what possible interest the Chocktaws or the National Center for Public Policy Research have in funding the Foundation’s $97,000 donation to “Kollel Ohel Tiferet, an education institution in Israel, with support used for education, athletic and security.” The second largest expense was travel for $268,052. Most likely this sum includes the Scotland golf trip taken by Ralph Reed and his buddies (see above).

5. Retained earnings: Most private foundations are in business for the long haul and retain the majority of their revenue often to the point of hoarding assets that might otherwise be used for charitable purposes. (This is a great debate for another day). But not the CAF. They have indeed retained 46% of the revenue they took in during the year. But most private foundations only expend the bare minimum required by law in order to avoid excise taxes.They want to keep the rest to invest and generate interest so they may continue to give out grants each year in perpetuity. So the question remains – why is this Foundation so radically different? Why did they give out 54% of their fund balance when most only give out 5%?

See, 990s are beautiful. If you try not to get swamped by all the numbers and view them with an open mind, they will supply you with excellent questions. Such questions should be asked of organizations before you donate to them. And on the rare occasion, sometimes these questions reach the minds of federal investigators.


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