Friday, November 27, 2015

IRS asked to review Ackerman bailout charity tax status

Using Children's First Fund to pay ex-Phila school chief Arlene Ackerman's severance is "a clear abuse by and of a non-profit," Mark Schwartz tells IRS boss Douglas Shulman

IRS asked to review Ackerman bailout charity tax status


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 (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.

We encourage respectful comments but reserve the right to delete anything that doesn't contribute to an engaging dialogue.
Help us moderate this thread by flagging comments that violate our guidelines.

Comment policy: comments are intended to be civil, friendly conversations. Please treat other participants with respect and in a way that you would want to be treated. You are responsible for what you say. And please, stay on topic. If you see an objectionable post, please report it to us using the "Report Abuse" option.

Please note that comments are monitored by staff. We reserve the right at all times to remove any information or materials that are unlawful, threatening, abusive, libelous, defamatory, obscene, vulgar, pornographic, profane, indecent or otherwise objectionable. Personal attacks, especially on other participants, are not permitted. We reserve the right to permanently block any user who violates these terms and conditions.

Additionally comments that are long, have multiple paragraph breaks, include code, or include hyperlinks may not be posted.

Read 0 comments
comments powered by Disqus
About this blog

PhillyDeals posts interviews, drafts and updates that Joseph N. DiStefano writes alongside his Sunday and Monday columns and ongoing articles about Philadelphia-area business.

DiStefano studied economics, history and a little engineering at Penn. He taught writing and research at St. Joe’s. He has written for the Inquirer since 1989, except when he left a few times to work at Bloomberg and elsewhere. He wrote the book Comcasted, and raised six kids with his wife, who is a saint.

Reach Joseph N. at, 215.854.5194, @PhillyJoeD. Read his blog posts at and his Inquirer columns at Bloomberg posts his items at NH BLG_PHILLYDEAL.

Reach Joseph at or 215 854 5194.

Joseph DiStefano
Also on
letter icon Newsletter