Either Trump Was Too Cheap To Run A Proper Foundation Or He Didn’t Care To

Republican presidential candidate Donald Trump waves after delivering an economic policy speech to the Detroit Economic Club, Monday, Aug. 8, 2016, in Detroit. (AP Photo/Evan Vucci)
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As the revelations about the Donald Trump Foundation have piled up, an overarching theme has emerged: Trump’s foundation wasn’t operating the way well-meaning wealthy people usually run their philanthropic non-profits.

“He’s a guy who is supposedly a billionaire but has run that foundation like a thousand-aire,” Jim Fishman, a professor at The Elisabeth Haub School of Law at Pace University in New York, told TPM last week. “The scope of it is surprising. Normally you would have one or two things, but this is rotten all over the core.”

The scrutiny of Trump’s philanthropic practices — led by the Washington Post and now the subject of a New York state investigation — began with the question of exactly how much he was giving to charity and expanded to various aspects of the Trump Foundation, the GOP nominee’s chief charitable vehicle. What emerged was a picture of a sloppily run, bare-bones operation that paid little regard to the laws and the etiquette surrounding charitable giving. Whether the foundation’s poor practices were driven by cravenness or laziness is unclear, but it’s hard to believe that Trump took the foundation’s philanthropic mission very seriously, charity law experts told TPM.

“Basically, he is not being charitable in order to be charitable. He is being charitable in order to enhance his personal and business interest. Sometimes that’s legal, sometimes it’s not,” said Lloyd Mayer, a Notre Dame Law School professor who teaches courses on not-for-profit organizations. “And he doesn’t seem to really care. Because if he cared, he would get lawyers who actually know … about how much you can do and how much you can’t.”

An early red flag was the difficulty the Washington Post had in finding even a few examples of Trump giving personally to charitable causes, despite the millions of dollars he pledged over the years. Without Trump’s release of his own tax returns, the Post turned to the charities’ own records and in many cases contributions traced back to his foundation, rather than Trump himself. That alone isn’t unheard of. It’s fairly common among the upper echelons of wealth for an individual person or a family to use their own private foundation to spearhead their philanthropic efforts. In Trump’s case, the foundation was created in 1987 in order to donate the proceeds of his book The Art of The Deal, but in the early aughts, began receiving outside donations and Trump himself stopped contributing after 2008, the last tax return showing a personal donation.

“Its not easy to raise outside money for a foundation,” said Marcus Owens, an attorney at Loeb and Loeb in Washington who represents nonprofit organizations. “First of all people say, ‘Why am I giving any money to a billionaire’s foundation? That doesn’t seem like it’s needed.’”

Secondly, Owens added, the tax deduction granted to donors for contributions to private foundation like Trump’s is much lower than that for donations to public charities. But Trump was able to convince other people to donate to his non-profit, while he took the credit for writing Trump Foundation checks.

From there, the Trump Foundation’s operations only got murkier. Despite not giving to the foundation himself for years, Trump often used its money to make flashy donations and to cement business relationships for his properties.

More alarming still were the examples of blatant self-dealing, a major no-no in the charity world. The examples surfaced by the Washington Post ranged from purchasing self-portraits and sports paraphernalia with foundation funds to Trump writing foundation checks to settle legal matters. They reflected an ignorance of federal and state non-profit law, which explicitly bans financial transactions that benefit a person in charge of the foundation.

Since, it has also been reported that the Trump Foundation wasn’t even properly registered to raise outside money — prompting a cease and desist letter on fundraising activities from the New York Attorney General’s office last week.

“At the very least, I would expect that one of the law firms that he must engage on a regular basis to assign somebody to watch over his philanthropic activities to make sure they don’t do what they have apparently been doing — creating a never-ending paper trail of large and small violations of federal tax law and state charity law,” Owens said. “It’s pretty rare to see somebody with Donald Trump’s financial assets and a family foundation not sort of having that managed by somebody who knows what they’re doing.”

Questions have also been raising about payments to Trump for goods and services that went directly to the foundation, where they may have escaped being taxed like personal income. The campaign has said the transactions followed the proper rules and regulations, but without Trump’s personal tax releases, those claims cannot be independently confirmed.

Charity law is complicated, and each of the Trump Foundation’s potential offenses — as a one-off violation — isn’t unheard of. Nor would Trump be the first rich person to use his foundation to burnish his own reputation and business relationships.

“There are people who certainly do this — use their private charity for enhancing their own network — but then they hire lawyers to tell them, ‘How far can I go and how far is too far,’” Mayer said.

The Trump Foundation has no paid staff and hasn’t spent much on lawyers. The last time the charity reported on its tax returns any spending on legal fees was 2010, according to the Washington Post, and the total for the year was $53.

“At the heart of what is getting him into trouble here is one of two things. One is not knowing and probably not caring what the legal restrictions are,” Mayer said. “And the fact that he is treating the foundation like any other business asset he has. It’s a means to an end. It’s not an ends to itself.

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