The Wisconsin Example: A Thin Line between Charitable Purposes and Politics

May 17, 2017; Milwaukee Journal Sentinel

Keeping politics, government, and charitable purposes separate has been a basic requirement of 501(c)(3) nonprofit organizations. Legally speaking, to qualify as tax-exempt under IRS section 501(c)(3), an organization’s purposes must be limited to “charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals.” Charities with this tax-exempt status include direct service and membership organizations, religious institutions, and charitable foundations.

In Wisconsin, we can see this line between politics and charitable giving blur. The relationship between the state’s current Republican leadership and the funding coming from the Lynde and Harry Bradley Foundation raises questions about what charitable purpose is and is not.

One case in point is the Bradley-funded Future of the Family Commission, which was charged with developing strategies for Governor Scott Walker to address and reduce the number of families on welfare in the state. In his two-year spending plan, Walker is forwarding the commission’s recommendations to do away with the so-called marriage penalty for the earned income tax credit, provide in-home training for new fathers, and promote the “success sequence”: graduate from high school, get a full-time job, don’t have a child before age 21, and get married before bearing children. Critics maintain these rules are not a “magic formula” and shouldn’t be seen as a substitute for welfare programs for needy families. However, these rules do align with the Bradley Foundation’s perspective, which looks for greater personal responsibility and more stringent requirements for those receiving support from the state. The funding for and makeup of the Commission and the experts that it consulted also align with the Foundation.

The Commission received a grant of $100,000 from the Bradley Foundation to conduct its study and make recommendations. This grant was not disclosed until the recommendations were submitted. A Bradley staffer sat on the Commission and a number of the experts brought in to advise and contribute were grant recipients of the Foundation.

The foundation actively grades its grant recipients, looks for ways in which they can work together and evaluates progress, focusing often on how they took actions helpful to Walker and other Republicans or harmful to their opponents.

The result: The work of these Bradley Foundation-funded conservative groups often becomes deeply intertwined with that of the Republican governor, even as the foundation tries to avoid crossing the line into partisan politics.

As a tax-exempt charity, Bradley cannot engage directly in political activity. Federal law requires that charitable donations be made to benefit the public good, not a private interest.

The role of key Walker administration officials in this process and their subsequent follow up is also something to consider. Wisconsin State Children and Families Secretary Eloise Anderson, who chairs a separate Bradley-funded national initiative on welfare reform, met with foundation officials shortly after her appointment to explain her priorities. She later sought the grant for the state commission.

Along with being a Walker cabinet member, Anderson—who once said welfare had “outlived its usefulness”—is the head of the Secretaries Innovation Group, which has been awarded $1.5 million by the Bradley Foundation’s board.

Anderson’s group, made up of 20 human services secretaries from states with GOP governors, wants to return welfare decisions to the states and to cut the number of people on welfare, food stamps [SNAP], and Social Security Disability Insurance. It also wants to revise the earned income tax credit, with one option being to make it a subsidy for employers, not a payment to families.

The role of the Bradley Foundation in commingling charitable giving and politics has been the subject of an earlier article in NPQ. The model of using the considerable funds and focus of a nonprofit foundation to move a political agenda is not new. Wisconsin’s example is one to which other states and foundations are looking for guidance, as its successes in achieving the political goals of both the Republican leadership and the Bradley Foundation are clear. The question remains as to whether this is legal under the “charitable purpose” mandate for nonprofits.—Carole Levine