Specter of the Istook Amendment Haunting Congressional Philanthropy Caucus

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Earlier this year, when Republican Congressman Robin Hayes of North Carolina announced his intention to create the Congressional Philanthropy Caucus, nothing seemed amiss. The caucus was the lobbying creation of the Council on Foundations (COF)—so much so, in fact, that Hayes told interviewers to call “Steve” (as in Gunderson, the CEO of the foundation trade association) to understand the caucus’s agenda, as the Cohen Report noted earlier this year.

Hayes reached across the aisle to recruit Ohio Congresswoman Stephanie Tubbs-Jones, who described the purpose of the caucus in a June press release as“increasing communication and dialogue between government and the foundation community with a common goal of increasing philanthropy and opportunities for all of our citizens.” Now, just before Halloween, the list of initial members of the Congressional Philanthropy Caucus has been released, and it includes some pretty scary names that should give nonprofits pause. Maybe recruiting these less-than-pleasant hobgoblins is the secret strategy of Gunderson, Hayes, and Tubbs-Jones to make them born-again supporters of nonprofit small “d” democracy. But some are the stuff of nonprofit bad dreams.

Remember the infamous Istook Amendment in the mid-1990s sponsored by Republicans Ernest Istook of Oklahoma, David McIntosh of Indiana, and Robert Ehrlich of Maryland? Istook would have sharply restricted the ability of nonprofits receiving federal grant support from engaging in public policy and advocacy and lobbying with their private, nonfederal funds. Philanthropy Caucus member Dan Burton, the Republican congressman from Indiana’s 5th District, was strongly in the Istook camp. This past election cycle, his friend Istook chose not to stand for reelection and opted instead to seek the Oklahoma governor’s office, where he was resoundingly defeated.

Notwithstanding his support for the Istook Amendment, Burton is a friend of nonprofits, charity, and philanthropy, right? During the Istook debate, Burton tried to attach a provision gutting the congressional gift ban’s coverage of charity-sponsored trips. At the time, Burton was a leading member not of the Congressional Philanthropy Caucus but of the Golf and Tennis Caucus and appeared frequently at charity golf tournaments. Sometimes, these tournaments were so important that he missed congressional votes. And in 2007, the so-called Bogey Congressman cast the sole no vote against a bill that would ban members of Congress from accepting gifts and free trips from lobbyists and discounted trips on private planes. Yes, the vote was 430 to 1.

Burton may have tried to gut nonprofit free-speech rights, but he knows what’s really important to nonprofits. To prove his nonprofit credentials, he sponsored legislation to override U.S. Postal Service (USPS) restrictions on reduced rates for mailings developed jointly by nonprofits and for-profits (countering the USPS concern that these mailings were really gigs benefiting for-profits).

Like Burton, Philanthropy Caucus member and Republican Mark Souder represents a congressional district in Indiana, but his nonprofit notoriety comes from his leadership role with the Republican Study Committee (RSC). Cofounded by Congressman Burton in 1973, the RSC hired as its first executive director one Ed Feulner, now better known as the president and CEO of the Heritage Foundation—and in philanthropy, a trustee of the Roe Foundation in South Carolina, the Sarah Scaife Foundation in Pennsylvania, and the National Chamber Foundation. (This past April, the Cohen Report took a closer look at the National Chamber Foundation’s distinctively questionable role on behalf of Maurice “Hank” Greenberg of American International Group and the Starr Foundation.)

Souder has garnered his own credentials from his RSC tenure. He was the lead signatory to an RSC letter—crafted with the active assistance from the Alliance for Charitable Reform, a project of the conservative Philanthropy Roundtable opposing governmental intervention in philanthropy—lambasting a fellow Republican, Senator Charles Grassley of Iowa, for the nonprofit regulation efforts of Grassley’s Senate Finance Committee. RSC’s alarmist letter advised SFC members to be “very wary” of proposed legislation that Souder and his friends concluded would cost charities and foundations $1 billion in taxes (I wrote about RSC’s dubious track record on charity and philanthropy in the Hill).

The RSC letter echoed a similar one circulated by then–Pennsylvania Senator Rick Santorum, attesting to the need for no new laws governing foundations. Of course, Santorum’s own charity organization, Operation Good Neighbor Foundation, became famous for spending three-fifths of its money on administrative and fundraising costs, failing to register with state authorities as the law required for its charitable solicitations, employing the senator’s campaign fundraising staff as foundation staff, and renting its office space from a firm owned by the foundation’s executive director, who also happened to be a Santorum campaign functionary. One of the most recent egregious examples of such abuse of philanthropy was Jack Abramoff’s scandalous misuse of the Capital Athletic Foundation’s tax-exempt funds. Despite the extensive interaction of many RSCers with the now-disgraced lobbyist, neither Souder nor his other RSC colleagues called out Abramoff and his foundation.

More troubling was RSC’s position on the proposed National Affordable Housing Trust Fund provisions in the legislation on Fannie Mae and Freddie Mac (generically known as GSEs, or government-supported enterprises). As part of the proposed legislation (described in an NPQ November 2005 e-newsletter), the House also approved the creation of the housing trust fund to be capitalized by 3.5 percent of Fannie’s and Freddie’s profits. But then the Republican leadership acceded to an RSC demand to attach restrictions that applied to nonprofits and only nonprofits seeking affordable housing project subsidies from the fund. These restrictions were unrelated to affordable housing, the functions of the trust fund, or anything other than RSC’s animus toward nonprofit public-policy advocacy.

The RSC demanded the imposition of restrictions that would prevent nonprofits from participating in the fund if they had used their own privately raised, nonfederal funds to engage in nonpartisan voter registration, get-out-the-vote, or election communications activities. Probably most importantly, the curtailments applied if nonprofits were affiliated in any of multiple ways with organizations, including 501(c)(3)s and (c)(4)s, that might be engaged in these activities or in other federal lobbing or advocacy. But every activity that RSC attacked was entirely legal and constitutional. The RSC’s demands were not only noxious but probably unconstitutional; still, the Republican leadership caved to them.

The National Affordable Housing Trust Fund component of the GSE legislation was one of those “teachable moments”: that is, an opportunity to identify which members of Congress understood essential nonprofit lobbying, advocacy, and voter registration rights and which legislators were willing to gut a crucial—and entirely legal—function of 501(c)(3) and 501(c)(4) organizations. Souder, Burton, Mike Conaway of Texas, and Thelma Drake of Virginia are members of RSC and the new Congressional Philanthropy Caucus. If they think that their position on the GSE legislation reflects support of philanthropy, one would hope that the caucus’s advisers at the Council on Foundations would disabuse them of such a notion.

Burton, Souder, and the RSCers who have slid into the Philanthropy Caucus may not end up dominating the group’s discussions. Other caucus members could counterbalance this willingness to snuff out nonprofit advocacy and free speech:

  • California Democrat Henry Waxman, armed with an investigatory mindset as chair of the House Committee on Oversight and Government Reform, whose oversight should extend to the interactions of government, nonprofits, and philanthropy (among Waxman’s nonprofit connections is serving, along with Judge Joseph Wapner of “the People’s Court”, as one of several dozen trustees of the senior citizen housing developer, Alternative Living for the Aging)—Waxman takes over the Oversight Committee from Virginia Republican Tom Davis, who issued a tepid, lackluster report on Jack Abramoff’s philanthropic depredations only long after Abramoff was being measured for an orange jump suit, Waxman can’t do worse);
  • Carolyn Maloney, who represents New York City’s Silk Stocking District on the East Side, with high-end nonprofit associations befitting the economic status of her district. She is also a trustee at the Carnegie Hall Society, along with designer Oscar de la Renta, and the Carnegie Hall Corporation with former Citicorp executive Sandy Weill.
  • Democratic Congressman Kendrick Meek of Miami brings various nonprofit connections to the caucus, including past and current board service at Barry University, the Miami Midnight Basketball League, the Greater Miami Service Corps, the Inner City Youth Center, and the Washington-based think tank, the Center for Policy Alternatives, Questions have been raised, however, about Meek’s active solicitation of federal support for a Boston-based developer’s interest in Miami’s Liberty City area who has channeled a consulting job for his mother, former Congresswoman Carrie Meek, and free office space for her eponymous foundation.
  • New Jersey’s Democratic Congressman Rush Holt brings board experience ranging from the McCarter Theatre to Family and Children’s Services of Central New Jersey (Holt’s bipartisan leadership, along with that of Virginia’s Tom Davis, in trying to prevent voting machine–related election fraud suggests that the congressman understands accountability and would hopefully apply that to the work of private and public grantmaking foundations).
  • Although GuideStar doesn’t list most of his nonprofit gigs, Hawaiian Congressman and weightlifter Neil Abercrombie has served on the boards of the Life Foundation/AIDS Foundation of Hawaii and Amnesty International, according to his Web site. During his days in Hawaii’s state legislature, however, the congressman received campaign contributions from colleagues who later served on the board of Kamehameha Schools, nee the scandal-ridden Bishop Estate. Abercrombie returned some of the money, but nonetheless promoted federal earmarks for the $6 billion estate’s educational programs.
  • Like caucus founder Robin Hayes, Republican Vern Buchanan actually brings foundation experience to the group. But unlike Hayes, it’s not private family fortune that’s in play, but rather Buchanan’s role as a trustee of the Community Foundation of Sarasota County, Florida, that adds a philanthropic dimension to caucus membership.
  • From the Bronx, José Serrano has board membership in some political nonprofits such as the Congressional Hispanic Caucus Institute and the National Puerto Rican Coalition. As a result, he may be a forceful opponent of the quasi-Istook revival.
  • Like Serrano, Fred Upton has a political nonprofit résumé, serving on the board of the Republican Main Street Partnership (whose former executive director happens to be COF leader Steve Gunderson), the moderate Republican counterpart to the conservative Democratic Leadership Council, and who, like Serrano, is connected to the antipoverty-focused Bronx Overall Economic Development Corporation, Upton has served as a board member at the Renaissance Development Fund of poverty-stricken Benton Harbor, Michigan.

A mixed bag of experiences to say the least, but not a lot connected to what foundations can and should be doing with their more than half-trillion dollars in tax-exempt assets. For the Republicans, the caucus member with the reputation and credentials in this arena is Minnesota’s Jim Ramstad. In the first hearing of a post-2006 Ways and Means subcommittee on charity and philanthropy, the only Republican member to show up was Ramstad, which we noted in the August 2007 Cohen Report—hardly a courageous nonprofit performance by the minority party in Congress. Since that hearing, Ramstad has announced that he will not stand for reelection in 2008.

Maybe the caucus’s first step should be to call in members Burton and Souder for intensive training by the Alliance for Justice, the Center for Lobbying in the Public Interest, and the National Committee for Responsive Philanthropy and to enlist caucus peers such as Waxman and Ramstad to convey the basic function of nonprofits that one would hope philanthropy—and the caucus—should support.