Political Pressure as Nonprofit Regulation Strategy: The National Aviation Hall of Fame

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February 15, 2017; Dayton Daily News

Readers may recall the stories about Maine’s Governor Paul LePage and his strong-arm intervention into the choice of a nonprofit school’s CEO. In that case, LePage was threatening the group’s state funding to block a political rival’s appointment to leadership at the nonprofit. This story differs in that it’s taking place at the national level and with an organization that has a Congressional charter, which places it in a special oversight category.

The National Aviation Hall of Fame (NAHF) is located on Wright Patterson Air Force Base in Dayton, Ohio. Dayton is considered the birthplace of U.S. aviation owing to the pioneering success of two of its favorite sons, Orville and Wilbur Wright. In addition to its being recognized as a 501(c)(3) public charity, it also holds a congressional charter as a 501(c)(1) organization, meaning that Congress has authorized it to act as the “official” aviation hall of fame in the United States.

U.S. Rep. Mike Turner (R-OH) represents the Dayton area in Congress and has announced he intends to introduce legislation to strip the hall of fame of its Congressional charter.

I have lost confidence in the current leadership of the NAHF. I have, therefore, directed my staff to draft legislation that would terminate the Congressional Charter of the NAHF. I intend to vigorously pursue this legislation until such time as the Board and leadership of the NAHF regain my confidence that they are committed and capable of executing the responsibilities of a Congressional Charter and ensuring the sustainability of the NAHF at the NMUSAF.

What led to this development? Turner has heard “complaints of financial mismanagement and misappropriation of NAHF resources and assets,” and has sought information from the nonprofit. Dayton proposes establishing a “blue ribbon panel” to review NAHF’s operations and put it on a path to financial stability. A review of the organization’s 990s available on its GuideStar page indicates the organization has been losing more than $150,000 a year for several years on a total budget of only about $500,000 annually.

In response to Turner, the attorney representing NAHF said that Congress has no jurisdiction over NAHF and that further public statements about NAHF would hurt its fundraising (it’s in the midst of a $5 million capital campaign) and, perhaps, induce it to relocate from Dayton to another city. Dayton believes that the Congressional charter gives Congress oversight authority. He said that the “National Aviation Hall of Fame has to stop threatening Dayton, Ohio […] For the last five years, every time that there’s any issues with respect to their finances their first inclination is to threaten to leave. This needs to stop.” Late last year, after decades in Dayton, NAHF held a key recognition event to Ft. Worth, Texas, causing concern among Dayton residents familiar with the move.

NAHF has no staff or other paid or volunteer leadership listed on its website, and their Form 990 returns do not list an executive director or top financial official as required by IRS regulations if it employed anyone in those capacities. The dispute appears to be between the board, represented by their attorney, and Rep. Turner.

Without its 501(c)(1) recognition, NAHF could still operate as a 501(c)(3), but how well it could operate would be in question. “Obviously, if you lose your congressional charter your ability to raise funds is impacted, but it’s not prohibited,” Turner said in a letter to NAHF’s attorney. In addition to the negative publicity already circulating harming fundraising, losing its Congressional charter could theoretically not only jeopardize the NAHF’s collaboration with the U.S. Air Force, but it would also open the door for another organization to potentially become the Congressionally chartered “official” aviation hall of fame.

If your small nonprofit has been losing money for several years, you rely on goodwill from the U.S. Air Force, you don’t have executive staff, and you’re in the middle of a $5 million capital campaign, alienating your local member of Congress seems like a foolhardy move, especially when the dispute becomes public. Will NAHF’s 27-member board and its officers be able to reach an agreement with Rep. Turner, with or without NAHF’s attorney matching the congressman press release for press release? Stay tuned for further developments—this story hasn’t yet reached a resolution.

Readers may also recall that Gail McGovern’s leadership of another Congressionally chartered organization, the American Red Cross, has come under fire from Senator Chuck Grassley (R-IA), the powerful chair of the Senate Judiciary Committee, for refusing to answer accountability questions both as regards the press and the government.—Michael Wyland