A Chance to Break the Silence

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When a prominent national leadership organization fails to take a stand on ethical issues that affect the nonprofit sector, particularly after trumpeting its own high standards, what message does it send to nonprofits and policymakers? Readers of the Cohen Report may remember our report (National Harbor, Not Safe Harbor) in June regarding the decision of the Council on Foundations to hold its annual meeting at the National Harbor complex in Prince Georges County, Maryland. Despite some press coverage pointing out the dubious arrangements underpinning National Harbor’s charitable activities, namely a philanthropic slush fund awarding grants to nonprofits linked to the County Executive of PG County, the Council remained silent in spite of, or perhaps because of, its close association with National Harbor. Fortunately the Council has been handed another opportunity to speak up, but will it?

The Washington Post has recently uncovered a scheme where it appears that the County Executive of Prince Georges County actually spawned many National Harbor-type philanthropic slush funds from real estate developers large and small. To get approvals from the county, real estate developers were required to make charitable donations just like the National Harbor gifts. The recipients? In some cases, like the charities getting National Harbor money, they were connected to PG County politicians and power brokers.

For example, one of the groups that the County’s director of housing and community development specified as a designated beneficiary was the Justice and Mercy Empowerment Center in Camp Springs, Maryland, offering job training services. Its director, Rev. Diane Johnson, is married to the special assistant of the county executive. In addition to “contributions” from various other developers, the center also got money from the National Harbor owners. A little digging will undoubtedly find that the nearly $500,000 in pledged charitable donations from these developers were to go to charities in some cases just as dubious as some of those who got their share of the National Harbor’s good tidings.

In all fairness to the Council on Foundations, a State’s Attorney investigation of the National Harbor philanthropic slush fund was quietly deep-sixed after the initial press attention faded. So why should the Council on Foundations—or other nonprofit leadership organizations in Maryland or nationally—speak out? Because this stuff sullies the credibility of charities everywhere; it makes the public think that nonprofits are simply tools or pawns. Silence in this case is not golden.

What might the Council or other organizations say about the latest revelations of the political/charitable slush funds in PG County? Here are some talking points for the Council’s leadership:

  1. Prince Georges County ought to immediately and publicly divulge the terms of every developer contract that required a charitable contribution (it has been, shall we say, reluctant to come entirely clean). Exactions to mitigate the direct and indirect impacts of residential and commercial development are legitimate and well known around the nation; developer exactions to fund politicians’ favorite charities, connected to the developments only because of the power of the politicians calling the shots, is not defensible in real estate development or charity and philanthropy.

  2. The charities that were identified for contributions—and sometimes not even told they were named in the contracts—should be told and should receive the assistance of the Council and other nonprofit leadership associations to get the money that was committed to them, even if it means that the Council might want to help the charities file suit if need be and the Council itself could “donate” solid amicus briefs.

  3. The politically connected charities should forego their contributions, and the moneys promised to them by developers should go to the Prince Georges County Community Foundation, just as the left-over National Harbor slush funds did after that deal came to light.

  4. Because these “donations” were required of the developers and not voluntarily made, the developers should be prohibited from getting charitable tax deductions for this kind of compulsory charity, and the IRS should be forewarned.

  5. The Council and other organizations ought to lay out, in clear terms and in great detail, exactly how Prince Georges County’s version of compulsory charity violates the norms and precepts of accountable and ethical charity and philanthropy, and despite the political reluctance of state officials in Maryland, COF attorneys should lay out the legal improprieties here as well.

  6. Maybe the Council could remind Prince Georges County that when it exacts a charitable contribution from developers, it might want to make sure that the payments were made. In most of the cases mentioned in the Post, the developers seem to have conveniently avoided making the donations required in their development contracts.

No doubt the Council on Foundations received a hearty welcome and thank you from the Prince Georges County Executive for bringing some 3,000 philanthropists this past May to what used to be Oxon Hill, Maryland, for a long discussion of best practices in philanthropy worldwide. The Council might want to send the County Executive its legal analysis of the Prince Georges County slush fund stapled to the text of Prince Georges County’s obligatory welcoming message and proclamation.