A non-profit under Section 501(c)(3) of the Internal Revenue Code is essentially allowed to operate with the help of a “tax subsidy” from U.S. taxpayers. Other non-profits, those organized under other sections of the Internal Revenue Code, pay no income tax on their revenues but contributions to them are not tax deductible by donors.
501(c)(3) non-profits pay no tax on their revenue and their donors get a charitable deduction for any money they donate. Since the donors are essentially giving money to the non-profit that they would otherwise be paying to the United States government on their income tax return, you could say the tax savings to the donor is an indirect government subsidy to the non-profit. That’s why it’s called a “tax subsidy.”
This type of non-profit organization is supposed to be using its gift of a tax subsidy to further its charitable functions. The Southern Poverty Law Center says its charitable function is the protection of civil rights and the reduction of poverty in the South. Now we have learned that SPLC is transferring millions of dollars to offshore bank accounts and investment enterprises.
If your mission is to reduce poverty and advance civil rights, why would you be transferring beaucoup bucks to offshore accounts? There is no good reason that I can think of. Here is what some financial and tax experts have to say about that, as reported by The Washington Free Beacon:
“I’ve never known a US-based nonprofit dealing in human rights or social services to have any foreign bank accounts,” said Amy Sterling Casil, CEO of Pacific Human Capital, a California-based nonprofit consulting firm. “My impression based on prior interactions is that they have a small, modestly paid staff, and were regarded by most in the industry as frugal and reliable. I am stunned to learn of transfers of millions to offshore bank accounts. It is a huge red flag and would have been completely unacceptable to any wealthy, responsible, experienced board member who was committed to a charitable mission who I ever worked with.”
“It is unethical for any US-based charity to invest large sums of money overseas,” said Casil. “I know of no legitimate reason for any US-based nonprofit to put money in overseas, unregulated bank accounts.”
“It seems extremely unusual for a ‘501(c)(3)’ concentrating upon reducing poverty in the American South to have multiple bank accounts in tax haven nations,” Charles Ortel, a former Wall Street analyst and financial advisor who helped uncover a 2009 financial scandal at General Electric, told the Free Beacon.
And how much does SPLC spend fighting poverty and advancing civil rights? Total revenue reported by SPLC for 2015 was $58,126,499. From the Washington Free Beacon again:
The nonprofit also pays lucrative salaries to its top leadership.
Richard Cohen, president and chief executive officer of the SPLC, was given $346,218 in base compensation in 2015, its tax forms show. Cohen received $20,000 more in other reportable compensation and non-taxable benefits. Morris Dees, SPLC’s chief trial counsel, received a salary of $329,560 with $42,000 in additional reportable compensation and non-taxable benefits.
The minimum amount paid to an officer, director, trustee, or key employee in 2015 was $140,000 in base salary, not including other compensation. The group spent $20 million on salaries throughout the year.
The SPLC, which claims to boast a staff of 75 lawyers who practice in the area of children’s rights, economic justice, immigrant justice, LGBT rights, and criminal justice reform, reported spending only $61,000 on legal services in 2015.
Dan Gainor, vice president of Business and Culture at the Media Research Center, told the Free Beacon:
“The SPLC is an anti-conservative, anti-Christian hate group that the media have given pretend legitimacy to. One glance at their 990 tax forms is a reminder just what a fund-raising super-power it is,” “Its assets are over $328 million in 2015 and went up $13 million in just one year. It doesn’t need new liberal money. It could operate for at least six years and never raise a penny. It’s like a perpetual motion machine for fundraisers.”
The SPLC has also been hit with a number of lawsuits over “hate” defamation claims in recent days.
From the Washington Times, RE: SPLC’s activities of branding anyone they disagree with as a “hate group:”
“This isn’t about defending civil rights; this is about attacking civil rights.”