The controversy over Donald Trump’s use of his charitable foundation is growing this week. Previously, Trump was fined $2,500 by the IRS for making a $25,000 gift from his charity to support the re-election of Florida Attorney General Pam Bondi. That donation occurred just a few days after Bondi said that she was considering joining the state of New York in a lawsuit against Trump University. It was a highly problematic use of a charity with obvious concerns over the timing. Now, there is an even more surprising disclosure that Trump used more than a quarter-million dollars from his foundation to settle lawsuits involving his for-profit businesses. That is a very serious allegation and I am surprised that, if true, legal counsel would have signed off on such an arrangement.
The payout from the Foundation amounted to $258,000. Not-for-profits are barred from being used for “self-dealing” — the use of charities by donors to benefit themselves or their businesses. After all the foundation has money not just from Trump but others who donate to benefit charity not the businesses of Trump.
Yet, one such payout settled a legal controversy between Palm Beach and Trump’s Mar-a-Lago Club. The city agreed to waive a fine in exchange for a donation being paid to a veteran’s charity. The specified $100,000 donation was not paid by Trump’s for-profit business but the Donald J. Trump Foundation. Another payout for $158,000 was a settlement in New York over an issue at one of the Trump golf courses.
Those payments raise legitimate issues of self-dealing with charitable funds.
It is ironic that this presidential election should become enmeshed in the rules governing charitable organizations with both the Trump Foundation and the Clinton Foundation. My colleagues specializing on 501(c)(3) issues and non-for-profits are delighted that suddenly the world is looking at their field. Both scandals involve allegations of self-dealing or “pay to play” arrangements, but also the rather complex rules related to such organizations. It is reflective of the often shadowy relations and functions of some non-for-profit groups closely associated with business and political figures.
What do you think?