Donors and Double Standards

On November 7, on the basis of information in the “Paradise Papers,” The Guardian’s John Swaine reported that “Offshore cash helped fund Steve Bannon’s attacks on Hillary Clinton.”  The “Paradise Papers” were leaked to the nonprofit International Consortium of Investigative Journalists (ICIJ).  One of ICIJ’s main funders is George Soros’ Open Society Foundations, which gave it $1.5 million last year.

The Paradise Papers “and newly obtained public filings show how the billionaire Mercer family built a $60 million war chest for conservative causes inside their family foundation by using an offshore investment vehicle to avoid US tax,” according to Swaine.  Some Mercer companies in Bermuda, it continues, “appear to have been used to legally avoid a little-known US tax of up to 39% on tens of millions of dollars in investment profits amassed by the Mercer family’s foundation,” which is headquartered in New York.

On November 8, former New York Times executive editor Jill Abramson then published an opinion piece in The Guardian, an ICIJ “partner,” entitled “Robert Mercer invested offshore dark money to sink Clinton.  He must be delighted.”  It covers the Mercers’ support of the nonprofit Government Accountability Institute, which supported the research and writing of a book by Peter Schweizer about how foreign governments and companies helped make Bill and Hillary Clinton rich through their Clinton Foundation.  The book became part of the sometimes-tumultuous public discourse surrounding Hillary Clinton’s unsuccessful 2016 campaign for president, to Abramson’s chagrin.

“No doubt, the Clinton-hater Robert Mercer must be delighted,” writes Abramson, seemingly ecstatic herself.  “His original investment in the Government Accountability Institute has more than paid off.  He not only managed to finance the successful election of Trump, but also to see his original plan to kill Clinton come back to life.  And, according to the Paradise Papers, all of this was accomplished at a very nice tax saving.

“It’s a Trifecta,” she concludes.  “Call it the Bermuda Triangle.”

Hmmm

So, one might wonder, what about the now-defunct, Bermuda-based Atlantic Philanthropies use of offshore accounts help pass Obamacare?  I don’t recall (and can’t quickly find online) any extensive Guardian coverage or Abramson commentary about that.  A what-about question like that seems fair game under the rule given in another context by Leonid Bershidsky in a recent Bloomberg View column: such questions are legitimate when they make “an appeal to fairness, and to correcting for an opponent’s biases.”

According to its entry in InfluenceWatch, Atlantic Philanthropies was established by businessman Charles “Chuck” Feeney in 1982. Due to quirky technicalities of American foundation law, moreover — since it was organized offshore — Atlantic Philanthropies was permitted to fund the political advocacy of tax-exempt organizations operating under § 501(c)(4) of the Internal Revenue Code without restriction, which U.S.-based foundations cannot.

 In the U.S., 501(c)(4) “social-welfare” groups can participate in politics, as long as politics does not become their primary focus.  Hypothetically, American private foundations operating under 501(c)(3) of the Code could make a grant to a (c)(4), but they would have to require that the money fund only charitable or educational activities.  Since the risk to foundations’ tax-exempt status is too high, they hardly ever do so.  Foundations in America, like the Mercers’, thus support charitable nonprofits that are themselves also (c)(3)s — which cannot support politics, but can engage in public education about policy.  (Atlantic Philanthropies could also, and did, support (c)(3)s.)

Offshore, On Mission

Atlantic Philanthropies thus benefited from its offshore-ness in this way, as well, and took advantage of it.  It says it granted an initial infusion of $25 million to Health Care for America Now (HCAN), for example, a (c)4 that lobbied for and organized political support of national health care during the years preceding Obamacare’s passage, and then for its protection afterwards.

After listing several reasons for pursuit of its mission to achieve national health care, then-Atlantic Philanthropies chief executive officer Gara LaMarche wrote in 2008, “In short, we know too much not to wage the most effective fight possible for a goal that so many have sought to achieve in the United States for so long.

“That’s why Atlantic recently approved a major grant — one of the largest for advocacy ever made in the U.S. — for HCAN,” continued LaMarche, who also once worked for Soros, “and why we hope you’ll join or support this coalition to make certain that every member of Congress and every candidate for the House, Senate and White House understands that meaningful health reform is an essential action item in 2009.”

From 2008 to 2013, HCAN says it ultimately spent a total of about $60 million on its grassroots-activist campaign to pass, protect, and promote Obamacare, which passed in 2010. (As many (c)(4)s do, HCAN has a (c)(3) affiliate, the Health Care for America Now Education Fund.)

Atlantic Philanthropies is quite proud of the role it and HCAN played in passing Obamacare.  That role has been touted by La Marche, now president of the Democracy Alliance, which garners and galvanizes support for (c)(4)s, (c)(3)s, and outright political recipients.

Atlantic Philanthropies has sent hundreds of millions of offshore dollars into (c)(4) groups that it created for itself—the Atlantic Advocacy Fund, the Mangrove Foundation, and the Civic Participation Action Fund—and they in turn have sent money on to politically active (c)(4) and (c)(3) groups like Center for Community Change Action, National Council of La Raza, PICO Action Fund, and others who in the last election helped boost the chances of Hillary Clinton.

No doubt Atlantic Philanthropies’ accounts benefited financially from its legal offshore tax avoidance as much as the Mercers’ accounts did.  Even more, unlike the Mercers’, Atlantic Philanthropies’ grantmaking from outside the country was legally unconstrained by what it apparently considered the bothersome political nuances of the U.S. Internal Revenue Code.  And Bermuda’s got nice scenery and weather, all year.

It’s something of a(nother) Trifecta.  Call it the Bermuda Triangle.