DN editorial: Pols should stay out of charity business while they're pols

Philadelphia District Attorney Seth Williams.

THERE IS NO good reason for an elected official to create a nonprofit organization.

We have said this before - and this week's Inquirer report that a federal probe into District Attorney Seth Williams' finances have extended to a nonprofit he created, prompts us to say it again: The practice of politicians starting nonprofits must stop.

We don't know what the probe of Williams' Second Chance Foundation entails - or whether it is related to his admission this month that he failed to report $160,000 in gifts - but we do know that the minute the words "Williams" and "nonprofit" appeared in the same sentence, we had four immediate thoughts:

1. Chaka Fattah

2. Vince Fumo

3. Mike Veon

4. Kenyatta Johnson

We also thought about Tom DeLay, Rick Santorum, and, yes, Hillary Clinton. All of these are elected officials who have created and controlled nonprofits (except for Clinton, whose husband did, and Johnson, who claimed his nonprofit was registered with the Internal Revenue Service, but wasn't).

Fumo and Veon have served jail time. Fattah is facing a similar fate for activities related to his nonprofit, which he used to funnel payments to pay back a campaign loan.

It's not illegal for elected officials to start nonprofits, and we're not suggesting Williams broke any laws.

But the potential for conflicts is real. Under tax law, organizations are typically classified as 501(c)(3) or 501 (c)(4). Either is a treasured status, since an organization is exempt from taxes and donations to the nonprofit are tax-exempt.

Such organizations also are exempt from much oversight. They file tax forms that detail budgets and spending, but donors to these groups can remain anonymous. Worse, pols can use their influence to fund these organizations with taxpayer dollars. While Fattah, for example, held a powerful appropriations role in Congress, millions of federal dollars flowed to his nonprofits. Those organizations were often staffed, with high salaries, by the congressman's friends and allies.

Williams' Second Chance Foundation reported assets of $104,038 at the end of 2014. Until June, its acting executive director was also a member of the D.A.'s staff.

Here is one problem with the notion of public officials and their nonprofits: The largesse of a foundation or charity can't easily be separated from the largesse of its founder. And when that founder also relies on votes to get elected, how can we be sure this largesse isn't politically motivated? How can the public be sure that the grants an organization bestows are not made strategically to help an official get elected? These nonprofits can make "dark money" look like a high-intensity lamp.

And that's the most benign problem this practice creates. Fumo, for example, was found guilty of, among other things, using his nonprofit, Citizens' Alliance for Better Neighborhoods, as a personal ATM machine.

Let's assume the most optimistic motives: that a public official wants to extend the good he or she can do and creates an organization to raise and dispense money to good causes.

Given the entanglements and conflicts of interest such charities can create - to say nothing of the betrayal of public trust and money - the choice for officials is clear: Serve the public good in your job, or quit your job and become a philanthropist. No one should be allowed to do both.

Continue Reading