posted September 17, 2016 02:11 PM            

No so called charity which spends only 5.7% of it's annual income on helping the people they say they were organized to help can even remotely be termed a "Charity".

Just 5.7 Percent Of Clinton Foundation Budget Actually Went To Charitable Grants
Peter Hasson
Associate Editor
09/16/2016

Just 5.7 percent of the Clinton Foundation’s massive 2014 budget actually went to charitable grants, according to the tax-exempt organization’s IRS filings. The rest went to salaries and employee benefits, fundraising and “other expenses.”

The Clinton Foundation spent a hair under $91.3 million in 2014, the organization’s IRS filings show. But less than $5.2 million of that went to charitable grants.

That number pales in comparison to the $34.8 million the foundation spent on salaries, compensation and employee benefits.

Another $50.4 million was marked as “other expenses,” while the remaining almost $851K was marked as “professional fundraising expenses.”

Despite taking in an additional $30 million in 2014, the Clinton Foundation spent 40 percent less on charitable grants in 2014 than in 2013. Even as it slashed charitable spending, the foundation increased the amount spent on salaries, employee benefits and compensation by $5 million in 2014. The foundation also spent $5 million more “other expenses” in 2014.

Sean Davis at The Federalist notes, “the bulk of the charitable work lauded by the Clinton Foundation’s boosters — the distribution of drugs to impoverished people in developing countries — is no longer even performed by the Clinton Foundation. Those activities were spun off in 2010 and are now managed by the Clinton Health Access Initiative, a completely separate non-profit organization.” (RELATED: Clinton Foundation Deceived IRS On Tax Exemption From The Start)

posted September 17, 2016 09:41 PM            

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Much of the discussion about the Clinton family foundation has focused on who donated to it and what they may have expected in return from then-Secretary of State Hillary Clinton. But critics of the Clintons have opened up another line of attack on what is formally known as the Bill, Hillary & Chelsea Clinton Foundation, charging that it doesn’t actually spend very much on charitable works.

Conservative radio host Rush Limbaugh aired this line of argument on April 23, 2015, citing a report in the Federalist, a conservative publication. Here’s a portion of what Limbaugh said:

"The Marine Corps-Law Enforcement Foundation -- 99 percent pass-through. The Clinton Family Foundation pass-through is 15 percent. The Federalist reports only 15 percent of the money donated to the Clinton Family Foundation went to actual charitable causes. The bulk of the money donated to the Clinton Family Foundation went to travel, salaries, and benefits. Sixty percent of all the money raised went to other expenses. In other words, folks, 85 percent of every dollar donated to the Clinton Foundation ended up either with the Clintons or with their staff to pay for travel, salaries, and benefits. Fifteen cents of every dollar actually went to some charitable beneficiary."

As this claim was circulating, the Clinton Foundation pushed back. The foundation tweeted, "More than 88% of our expenditures go directly to our life-changing work."

The difference between 15 percent and 88 percent is wide, so we decided to check Limbaugh’s claim. A representative with Limbaugh’s radio network didn’t answer an email inquiry.

An unusual approach for a foundation

When most people in the charitable world think of foundations, they think of organizations that give away a lot of money in the form of grants to others who go out and do good works. The Clinton foundation works differently -- it keeps its money in house and hires staff to carry out its own humanitarian programs.

This set-up means the Clinton foundation’s finances get complicated in ways other foundations do not.

Partly because of that, one of the leading independent groups that track charities -- Charity Navigator -- has been flummoxed about how to analyze that foundation and has stopped rating it, at least for now.

Charity Navigator says it has "determined that this charity's atypical business model cannot be accurately captured in our current rating methodology. Our removal of The Clinton Foundation from our site is neither a condemnation nor an endorsement of this charity. We reserve the right to reinstate a rating for The Clinton Foundation as soon as we identify a rating methodology that appropriately captures its business model."

What is counted in the foundation’s financials?

The Federalist article that Limbaugh cited dug into the Clinton foundation’s tax forms known as 990s, which nonprofits have to file annually with the Internal Revenue Service. Here’s an excerpt from the Federalist article:

"When anyone contributes to the Clinton Foundation, it actually goes toward fat salaries, administrative bloat, and lavish travel. Between 2009 and 2012, the Clinton Foundation raised over $500 million dollars according to a review of IRS documents by The Federalist (2012, 2011, 2010, 2009, 2008). A measly 15 percent of that, or $75 million, went towards programmatic grants. More than $25 million went to fund travel expenses. Nearly $110 million went toward employee salaries and benefits. And a whopping $290 million during that period — nearly 60 percent of all money raised — was classified merely as ‘other expenses.’ "

The Clinton foundation, on the other hand, gets to its 88 percent going to "life-changing work" by combining the finances of the Clinton Foundation and an affiliated organization, the Clinton Health Access Initiative, that before 2010 had been part of the Clinton Foundation proper. The Clinton Health Access Initiative works with governments and private groups to lower the costs of treatment for HIV/AIDS in the developing world.

The Clinton Health Access Initiative was split off from the foundation because "they got so big they needed their own organization to do it," said Craig Minassian, a spokesman for the foundation, in an interview with PolitiFact. But in putting together its annual report for 2013, the Clinton Foundation folded together both groups before calculating the numbers.

Some question the logic for doing it this way.

"Clinton allies are deliberately conflating the activities and finances of multiple independent nonprofit organizations and hoping you'll view everything together as ‘The Clinton Foundation,’ " Sean Davis, who wrote the Federalist story, told PunditFactc. "That's just not the case, though."

The correct number for the Clinton Foundation alone -- which owned the account the tweet was sent from -- was just over 80 percent in 2013, not 88 percent.

The Clinton Foundation’s unusual model

As we noted earlier, many foundations carry out charitable works by giving money to other organizations that, in turn, do the ground-level charity work, whereas the Clinton foundation’s charitable works are mostly done by people on the foundation’s payroll. "We are an implementing organization rather than a grantmaking organization," said the foundation’s Minassian. That’s why the Clinton Foundation’s 990s show a relatively small amount of money categorized as "grants" -- only about 10 percent of all expenses in 2013.

The foundation says its own employees are doing its charitable work. The annual report -- which, remember, includes both the Clinton Foundation and the Clinton Health Access Initiative -- says that 7 percent of expenditures were spent on "management and expenses" and 4.5 percent for "fundraising." (The numbers on the 990s for the two entities are in the same ballpark.)

Add those two percentages together and you get almost 12 percent; subtract that from 100 percent and you get the magic 88 percent figure the foundation cited.

An independent academic CPA who specializes in nonprofit foundation finances said Limbaugh’s error was in assuming that all spending beyond grants amounted to wasteful overhead.

"When Mr. Limbaugh says most of the spending is on salaries, travel, and other, that is not particularly informative," said Linda Parsons, an associate professor of accounting at the University of Alabama's Culverhouse College of Commerce. "Travel and salaries for those who are directly carrying out the mission of the organization are much different than salaries and travel for executives who are networking in order to raise funds or for those who manage the organization. The response from the Clinton foundation that they carry out their missions directly, rather than outsource it to another organization or series of organizations, makes sense given that the Clinton Foundation reports travel, salaries, depreciation and conferences directly."

Of course, Parsons’ interpretation depends on trusting the Clinton foundation’s characterization of its expenditures. As with any institution that files tax forms, the Clinton foundation has to characterize on its own what counts as "management" and what counts as spending on front-line charity work.

The Federalist article says the foundation’s tweet exaggerates when it says money spent "directly" on "life-changing work," when in fact the group, by its own calculations, "spent nearly $8.5 million – 10 percent of all 2013 expenditures – on travel. Do plane tickets and hotel accommodations directly change lives? Nearly $4.8 million – 5.6 percent of all expenditures – was spent on office supplies. Are ink cartridges and staplers ‘life-changing’ commodities?"

In response to a PolitiFact request, the Clinton Foundation said the expenditures for its programs are "inclusive of salaries for staff, large-scale conferences (which is how the foundation convenes partners to take action such as the Clinton Global Initiative and the Health Matters conference), training for farmers and other beneficiaries, as well as direct program expenses like purchasing seeds and fertilizer for our agricultural programs and medical equipment for our public health work."

Reasonable people can disagree about how to categorize expenses, said Janet S. Greenlee, emeritus professor of accounting at the University of Dayton business school.

"There is no approved, required, or suggested method for allocating costs between program and nonprogram spending, so two charities that have the same financial events may have totally different financials," Greenlee said. "Limbaugh is saying everything that’s not direct service must be a waste of money, while the foundation is probably estimating that most of its other costs are actually direct service and so are accounted as such. The ‘truth,’ if there is such a thing, is somewhere in between."

The foundation sent PolitiFact a rough geographic breakdown for program spending in 2012 and 2013. It cited expenditures split between 66.2 percent for the United States, 18.1 percent for South America, 5.6 percent for Southeast Asia, 4.9 percent for Sub-Saharan Africa, 3.6 percent for Central America and the Caribbean, 1.2 percent for West and Central Africa and 0.4 percent for Mexico.

That’s more than we had expected to see in domestic spending -- we’re checking with the foundation on why that was so high, and will report their explanation if we receive one -- but even if the foundation devoted as little as one-third of its expenses to programs outside the U.S., then Limbaugh’s 15 percent estimate would be too low.

To offer some context, spending 88 percent of expenses on charitable programs, as the Clinton foundation says it does, would actually be pretty good by industry standards. Parsons said the average reported across all organizations in the National Center for Charitable Statistics is 81 percent -- equal to the Clinton Foundation’s rate on its own -- and the Better Business Bureau’s Wise Giving Alliance suggests a minimum of 65 percent. "The foundation exceeds that," Parsons said.

Our ruling

Limbaugh said "85 percent of every dollar donated to the Clinton Foundation ended up either with the Clintons or with their staff to pay for travel, salaries, and benefits. Fifteen cents of every dollar actually went to some charitable beneficiary."

There’s a grain of truth here -- roughly 85 percent of the foundation’s spending was for items other than charitable grants to other organizations, and a large chunk of this 85 percent did go to Clinton Foundation staff for travel, salaries and benefits. However, the foundation says it does most of its charitable work in-house, and it’s not credible to think that the foundation spent zero dollars beyond grants on any charitable work, which is what it would take for Limbaugh to be correct.

The claim contains some element of truth but ignores critical facts that would give a different impression, so we rate it Mostly False.

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posted September 17, 2016 09:54 PM            

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Republican presidential candidate Carly Fiorina says that “so little” of the charitable donations to the Clinton Foundation “actually go to charitable works” — a figure CARLY for America later put at about 6 percent of its annual revenues — but Fiorina is simply wrong.

Fiorina and others are referring only to the amount donated by the Clinton Foundation to outside charities, ignoring the fact that most of the Clinton Foundation’s charitable work is performed in-house. One independent philanthropy watchdog did an analysis of Clinton Foundation funding and concluded that about 89 percent of its funding went to charity.

Simply put, despite its name, the Clinton Foundation is not a private foundation — which typically acts as a pass-through for private donations to other charitable organizations. Rather, it is a public charity. It conducts most of its charitable activities directly.

Fiorina Attacks

Fiorina has been shadowing Hillary Clinton on the campaign trail in order to contrast herself with her Democratic rival. In a Fox News interview, Fiorina was asked about a New York Times story about Sen. Marco Rubio’s finances, and Fiorina responded that she wished the New York Times would do more to investigate the Clintons’ finances, and particularly “what they’ve been doing with their donors’ money to the Clinton Global Initiative.”

Fiorina, June 10: I mean, honestly, the question, I think, now for the Clintons is, ‘What else don’t we know? What don’t we know about your donors? What don’t we know about the conflicts of interest that those donors represent when Mrs. Clinton is serving as Secretary of State?’ We are now finding out that so little of those charitable donations actually go to charitable works.

Asked for backup, the CARLY for America super PAC noted that the Clinton Foundation’s latest IRS Form 990 shows total revenue of nearly $149 million in 2013, and total charitable grant disbursements of nearly $9 million (see page 10). That comes to roughly 6 percent of the budget going to grants. And besides those grants, the super PAC said, “there really isn’t anything that can be categorized as charitable.”

That just isn’t so. The Clinton Foundation does most of its charitable work itself.

Katherina Rosqueta, the founding executive director of the Center for High Impact Philanthropy at the University of Pennsylvania, described the Clinton Foundation as an “operating foundation.”

“There is an important distinction between an operating foundation vs. a non-operating foundation,” Rosqueta told us via email. “An operating foundation implements programs so money it raises is not designed to be used exclusively for grant-making purposes. When most people hear ‘foundation’, they think exclusively of a grant-making entity.

In either case, the key is to understand how well the foundation uses money — whether to implement programs or to grant out to nonprofits — [to achieve] the intended social impact (e.g., improving education, creating livelihoods, improving health, etc.).”

Craig Minassian, chief communications officer for the Clinton Foundation, said the Clinton Foundation is “an implementer.”

“We operate programs on the ground, around the world, that are making a difference on issues ranging from poverty and global health to climate change and women’s and girls’ participation,” Minassian told us via email. “Many large foundations actually provide grants to the Clinton Foundation so that our staff can implement the work.”

Asked for some examples of the work it performs itself, the

Clinton Foundation listed these:

Clinton Development Initiative staff in Africa train rural farmers and help them get access to seeds, equipment and markets for their crops.

Clinton Climate Initiative staff help governments in Africa and the Caribbean region with reforestation efforts, and in island nations to help develop renewable energy projects.

Staff at the Clinton Health Access Initiative, an independent, affiliated entity, work in dozens of nations to lower the cost of HIV/AIDS medicine, scale up pediatric AIDS treatment and promote treatment of diarrhea through life-saving Zinc/ORS treatment.

Clinton Health Matters staff work with local governments and businesses in the United States to develop wellness and physical activity plans.

To bolster its case, CARLY for America noted that the Clinton Foundation spent 12 percent of its revenue on travel and conferences and 20 percent of its revenue on salaries. That’s true. But the Form 990 specifically breaks out those travel, conference and salary expenses that are used for “program service expenses” versus those that are used for management or fundraising purposes.

For example, nearly 77 percent of the $8.4 million spent on travel in 2013 went toward program services; 3.4 percent went to “management and general expenses”; and about 20 percent went to fundraising.

As for conferences, nearly 98 percent of money spent was tabbed as a programming expense. And when it comes to salaries — which includes pension plan contributions, benefits and payroll taxes — about 73 percent went to program service expenses.

“I am not the expert on what portion of the Clinton Foundation activities are truly charitable,” Vince Stehle, executive director of Media Impact Funders and a board member of the Center for Effective Philanthropy told us via email. “But I can say that it is not appropriate to simply calculate that based on what portion goes out in grants.

Certainly all types of foundations are able to engage in direct charitable activities in any event. But as I understand it, the Clinton Foundation is a public charity, despite the name. Many charities call themselves foundations, which can be confusing, as they might seem like private foundations.

“The organization carries out programs,” Stehle said. “I am not intimately familiar with those programs, but assuming they are genuine, those would be considered charitable activities.”

Charity Evaluators

Fiorina isn’t the only one making this charge about the Clinton Foundation. Fox Business Network’s Gerri Willis, for example, also claimed only 6 percent of the Clinton Foundation’s 2013 revenue “went to help people.” Willis claimed that charity experts have looked into whether the Clinton Foundation “wisely spen(t) charitable dollars” and weighed in with a “resounding no.”

“Charity Navigator … [has] placed the Clinton Foundation on a watch list,” Willis said. “They think there are problems with this nonprofit. They don’t like the way it runs itself. They say the money is not spent wisely.”

She said Charity Navigator concluded the Clinton Foundation “does not meet their criteria as an organization that does charitable work.”

But that’s not what Charity Navigator said.

Here’s what the Charity Navigator site actually states:

Charity Navigator: We had previously evaluated this organization, but have since determined that this charity’s atypical business model can not be accurately captured in our current rating methodology. Our removal of The Clinton Foundation from our site is neither a condemnation nor an endorsement of this charity. We reserve the right to reinstate a rating for The Clinton Foundation as soon as we identify a rating methodology that appropriately captures its business model.

What does it mean that this organization isn’t rated?

It simply means that the organization doesn’t meet our criteria. A lack of a rating does not indicate a positive or negative assessment by Charity Navigator.

We spoke by phone with Sandra Minuitti at Charity Navigator, and she told us Charity Navigator decided not to rate the Clinton Foundation because the foundation spun off some entities (chiefly the Health Access Initiative) and then later brought some, like the Clinton Global Initiative, back into the fold. Charity Navigator looks at a charity’s performance over time, she said, and those spin-offs could result in a skewed picture using its analysis model. If the foundation maintains its current structure for several years, she said, Charity Navigator will be able to rate it again.

The decision to withhold a rating had nothing to do with concerns about the Clinton Foundation’s charitable work. Further, Minuitti said citing only the 6 percent of the budget spent on grants as the sum total spent on charity by the foundation — as Willis and Fiorina did — is inaccurate.

She referred us to page 10 of the 2013 990 form for the Clinton Foundation. When considering the amount spent on “charitable work,” she said, one would look not just at the amount in grants given to other charities, but all of the expenses in Column B for program services. That comes to 80.6 percent of spending. (The higher 89 percent figure we cited earlier comes from a CharityWatch analysis of the Clinton Foundation and its affiliates.)

“That’s the standard way” to measure a charity’s performance, Minuitti said. “You have to look at the entirety of that column.”

Minuitti said it is also inaccurate to assume all money spent on travel and salaries does not go toward charity. Depending on the nature of the charity, she said, travel and salary could certainly be considered expenses related to charity.

It’s true, as Willis said, that Charity Navigator put the Clinton Foundation on its “watch list,” but not because of concerns about insufficient funds going toward charity. Mainly, it was put on the watch list due to questions raised in the media about foreign donations to the foundation and the potential for quid pro quo when Hillary Clinton was secretary of state. The site also linked to a story about the abrupt resignation earlier this year of the foundation’s CEO. (Go here to see a full list of articles that led to the decision by Charity Navigator to place the foundation on its watch list.)

According to the Charity Navigator site, it “takes no position” on the allegations raised in the media reports, nor does it “seek to confirm or verify the accuracy of allegations made or the merits of issues raised.” Minuitti said the watch list was more like “news to know” for potential donors.

None of the articles cited by Charity Navigator has anything to do with a low percentage of funding going to charitable work.

Another philanthropy watchdog, CharityWatch, a project of the American Institute of Philanthropy, gave the Clinton Foundation an “A” rating.

Daniel Borochoff, president and founder of CharityWatch, told us by phone that its analysis of the finances of the Clinton Foundation and its affiliates found that about 89 percent of the foundation budget is spent on programming (or “charity”), higher than the 75 percent considered the industry standard.

By only looking at the amount the Clinton Foundation doled out in grants, Fiorina “is showing her lack of understanding of charitable organizations,” Borochoff said. “She’s thinking of the Clinton Foundation as a private foundation.” Those kinds of foundations are typically supported by money from a few people, and the money is then distributed to various charities. The Clinton Foundation, however, is a public charity, he said. It mostly does its own charitable work. It has over 2,000 employees worldwide.

“What she’s doing is looking at how many grants they write to other groups,” Borochoff said. “If you are going to look at it that way, you may as well criticize every other operating charity on the planet.”

In order to get a fuller picture of the Clinton Foundation’s operations, he said, people need to look at the foundation’s consolidated audit, which includes the financial data on separate affiliates like the Clinton Health Access Initiative.
“Otherwise,” he said, “you are looking at just a piece of the pie.”

Considering all of the organizations affiliated with the Clinton Foundation, he said, CharityWatch concluded about 89 percent of its budget is spent on programs. That’s the amount it spent on charity in 2013, he said.

We looked at the consolidated financial statements (see page 4) and calculated that in 2013, 88.3 percent of spending was designated as going toward program services — $196.6 million out of $222.6 million in reported expenses.

We can’t vouch for the effectiveness of the programming expenses listed in the report, but it is clear that the claim that the Clinton Foundation only steers 6 percent of its donations to charity is wrong, and amounts to a misunderstanding of how public charities work.

— Robert Farley

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posted September 19, 2016 12:42 AM            

September 16, 2016
Sean Davis

The Clinton Foundation spent less than 6 percent of its budget on charitable grants in 2014, according to documents the organization filed with the Internal Revenue Service (IRS) in 2015.

During the 2014 tax year, the tax-exempt foundation spent a total of $91.2 million, but less than $5.2 million of that money, or 5.7 percent, was granted to charitable organizations, the group’s tax filings show. The Clinton Foundation raised nearly $178 million in 2014. The organization’s charitable grants also declined significantly when compared to its donations in 2013. Compared to its 2013 charitable grants of $8.8 million, the Clinton Foundation’s grants in 2014 declined by more than 40 percent, even as its revenue over the same period increased by 20 percent. According to the tax filings, the Clinton Foundation is currently sitting on $354 million in assets, including $125 million in cash or cash equivalents and $108 million in property or equipment.

The tax records, which were filed with the IRS in November of 2015, show that the Clinton Foundation spent far more on overhead expenses like travel ($7.9 million) than it did on charitable grants in 2014. The group also spent more on rent and office supplies (a total of $6.6 million) than it did on charitable grants. The Clinton Foundation’s IRS forms show that even its depreciation expense ($5.3 million) — an accounting classification that takes into account the wear and tear of an organization’s assets — exceeded the tax-exempt organization’s charitable grant outlays.

clinton-foundation-2014-990

Supplemental tables within the Form 990 filed with the IRS show that the Clinton Foundation’s largest charitable grant was a $2 million payment to the Alliance for a Healthier Generation (AHG), a joint project founded by the Clinton Foundation and the American Heart Association. Bruce Lindsey, the board chairman for the Clinton Foundation in 2014, also served on AHG’s board that year, according to the organization’s 2014 tax filings. Of the $16.3 million AHG organization spent in 2014, only $349,022, or 2.1 percent, was spent on charitable grants, the group’s tax filings show.

alliance-healthier-generation-2014-990

The Clinton Foundation’s largest single charitable grant to an organization not founded by the Clinton Foundation or managed by one of its board members was a $700,000 check to the J/P Haitian Relief Organization, a non-profit founded by actor Sean Penn. That organization reportedly spent more than $126,000 on first-class flights for the actor. Other charitable grants from the Clinton Foundation included $200,000 for the Tiger Woods Foundation and $37,500 for the Sesame Workshop in New York City.

Clinton Foundation defenders say the total amount of its charitable grants is irrelevant and argue that the bulk of the Clinton Foundation’s charitable work is done by salaried employees. A review of the organization’s tax filings and statements from its own executives about the group’s “commercial proposition,” however, suggests that this may not be the case.

The Clinton Foundation’s three largest charitable “program service accomplishments,” according to its tax reports, are the Clinton Global Initiative ($23.2 million), the Clinton Presidential Library ($12.3 million), and the Clinton Climate Initiative ($8.3 million). The Clinton Global Initiative, which exists to organize and produce a lavish annual meeting headlined by former president Bill Clinton, was characterized by the New York Times as a “glitzy annual gathering of chief executives, heads of state, and celebrities,” hardly a portrait of the kind of charitable work that directly impacts the lives of the needy.

Ira Magaziner, a top former Clinton Foundation executive, also explicitly rejected that the group’s climate change activities were charitable in nature. “This is not charity,” Magaziner told The Atlantic in 2007. “The whole thing is bankable. It’s a commercial proposition.”