Lawyer Mark D. Schwartz of Bryn Mawr has written to IRS Commissioner Douglas H. Shulman in Washington asking for "an investigation of the Philadelphia's Children First Fund," the tax-exempt public-school support nonprofit, and its role in raising $405,000 toward former school superintendent Arlene Ackerman's severance package.
The Fund, Schwartz told Shulman, "has recently been involved in a scheme to solicit and collect tax exempt donations to be distributed as income to an unrelated individual for her sole benefit." Schwarz finds that incompatible with the Fund's stated goal of helping the city schools' "predominantly low-income and historically underserved" students.
The Fund raised $1.4 million in 2009-10, down from $2.4 million in 2008-09, "to facilitate organizational and personal giving to create a permanent source of philanthropic capital to the School District of Philadelphia, its leaders, its teachers, and its students," according to its Form 990 annnual tax emption report filed with the IRS and posted here at guidestar.org (free, registration required).
Schwartz called the Fund's involvement "a clear abuse by and of a no-profit," and asked the IRS to "investigate the 'charity'" and those who helped it raise funds for Ackerman, "with a view towards withdrawing the charitable status of this entity and disallowing charitable deductions made by its contributors." He also sent the letter to Pennsylvania Attorney General Linda L. Kelly.
The IRS grants tax-exempt charitable status to educational organizations. Conditions include that "no part of the net earnings" may benefit "any private shareholder or individual." In a precedent-setting case, the IRS ended the charitable status of a foundation that raised money to be given to "identifiable individuals" and declared it was a "private trust" subject to additional "restrictions." IRS cites the conditions and the case here.
I've asked Fund chief Jeanne-Marie Hagan to respond, will post.