Saturday, December 22, 2018

The Demise of the Trump Foundation, an Extreme Example of Elite "Do-Gooding" to Prop Up the "Broken System" that Benefits Them

Big foundations often claim that they are out to improve society.  For example, the Robert Wood Johnson Foundation claims to be

the nation’s largest philanthropy dedicated solely to health.

Its goal is to improve health care for all, that is,

help raise the health of everyone in the United States to the level that a great nation deserves, by placing well-being at the center of every aspect of life.

Yet, as we discussed here, large foundations with an interest in health rarely address the sorts of issues we discuss on Health Care Renewal, particularly problems with health care organizational leadership and governance, most particularly leadership that is ill-informed, incompetent, self-interested, conflicted, or even corrupt.  One explanation was provided by Anand Giridharadas, author of  Winner Take All: Elite Charade of Changing the World, as summarized in an August, 2018, op-ed ine New York Times.

His thesis was that society has handed over the responsibility for reform to those who benefit most from the status quo. Thus,charitable foundations, one vehicle for reform, are now largely run by people with business management background, and financial ties to big corporations.  The foundations thus largely propose minimal, if not fake reforms, representing change "the powerful can tolerate." So, 

American elites generally seek to maintain the system that causes many of the problems they try to fix — and their helpfulness is part of how they pull it off. Thus their do-gooding is an accomplice to greater, if more invisible, harm.

What their 'change' leaves undisturbed is our winners-take-all economy, which siphons the gains from progress upward.

In a recent interview with the Guardian, Giridharadas explained how his concerns evolved while he was a fellow of the Aspen Institute,

a thinktank that organizes exclusive ideas conferences for the wealthy and powerful, as part of a program designed to raise up a 'new breed of leaders' and solve 'the world’s most intractable problems'.

Aftr being selected as a fellow, along with a bunch of corporate leaders, he realized that the Institute was carrying out its view that

the people best-equipped to protect the interests of the poor are the rich and rich adjacent.

In a 2015 talk to an Institute audience, he

delivered an electrifying critique, arguing the 'change makers' and 'thought leaders' in America’s winners-take-all economy – once again, the very people he was speaking to – are less helping the world through their various philanthropic efforts than propping up the broken system that made them.

The 2015 audience was apparently "aghast," but it is not clear whether Giridharadas' insight led them to change their ways.   Instead, foundations continue to prop up the "broken system," but in often subtle ways.   It is likely that those that benefit from the current status quo continue to promote little reforms around the edges, while failing to face the real issues, because doing so could "could implicate powerful people, or perhaps even themselves."

Foundations may continue to fund projects that promote small incremental changes, while avoiding those that could lead to questions about aspects of the system that benefit its current top leaders, or suggest changes in the policies that allow this.  For example, as we wrote here, the Bill and Melinda Gates Foundation's is currently led by a former top pharmaceutical executive who had defended extremely high drug prices which presumably helped fuel her extravagant compensation.   Meanwhile, the Foundation has been accused of "ideological commitment to promote neoliberal economic policies and corporate globalisation."

Example: the Demise of the Trump Foundation

Now in 2018, three years after Giridharadas confronted the Aspen Institute with little effect, we witness a truly extreme example of a non-profit foundation supposedly set up to do good for society, instead propping up the system, and specifically the supposedly generous philanthropists who founded it.  However, rather than funding marginal reforms, this example demonstrates much more direct, crude efforts to prop up the system which supported the founders of the "charity" in question, that being the Trump Foundation, the creature of our current US dear leader.

Major questions were first raised about the Foundation in 2016, when the Washington Post published an article by David Farenthold entitled, "Trump Boasts About His Philanthropy.  But his Giving Falls Short of his Words."  The Post continued its investigation of the topic, leading to an investigation by the New York Attorney General.  This week, that investigation resulted in an agreement to shut down the Trump Foundation, as again reported Farenthold in the Washington Post.  In announcing this agreement, Barbara Underwood, the New York AG, said the investigation found

a shocking pattern of illegality involving the Trump Foundation — including unlawful coordination with the Trump presidential campaign, repeated and willful self-dealing, and much more.

Transactions Benefiting Trump and Family

Basically, the Foundation was alleged to have made transactions that resulted in direct personal benefit to Donald Trump and his family.  For example,

The largest donation in the charity’s history — a $264,231 gift to the Central Park Conservancy in 1989 — appeared to benefit Trump’s business: It paid to restore a fountain outside Trump’s Plaza Hotel. The smallest, a $7 foundation gift to the Boy Scouts that same year, appeared to benefit Trump’s family. It matched the amount required to enroll a boy in the Scouts the year that his son Donald Trump Jr. was 11.

One suspicious transaction could be construed as a bribe meant to forestall investigation of another shady Trump venture, Trump University.  Per an opinion piece in USAToday, the Foundation made a "donation" to

Florida Attorney General Pam Bondi's re-election campaign in September 2013, years before Trump decided to run for office. According to Florida campaign finance records, the Trump Foundation contributed $25,000 to And Justice for All, a section 527 political organization associated with Bondi.

Charitable foundations like the Trump Foundation, however, are prohibited from political activity. On its tax forms, the Trump Foundation claimed it did not transfer any money to a 527 organization or engage in any political activity, and did not report any contribution to And Justice for All. Instead, it reported a contribution to a similarly named nonprofit organization. The foundation cited 'coincidences and errors,' but it looked like a ham-handed attempt to hide the illegal political contribution.

In fact, something more sinister than improper political activity may have been going on. The Trump Foundation made its contribution three days after it was widely reported that Bondi's office was reviewing joining the New York attorney general's lawsuit against Trump University. Following the donation, Bondi's office decided not to join the suit or open an investigation. It is possible the contribution was meant to influence Bondi's decision, and it is possible that it worked. Whatever the intent, the payment was illegal, and the IRS ultimately sanctioned the foundation, levying a fine for the violation.

After the shut down of the Foundation was announced, Trump boasted on Twitter that at least his charity had not paid him directly, as reported by Politico,

The Trump Foundation has done great work and given away lots of money, both mine and others, to great charities over the years - with me taking NO fees, rent, salaries etc.

It seems like a distinction without a difference  

The Foundation Functioned as an Arm of the Trump Campaign

In recent years, the Foundation mainly worked to benefit Trump's presidential campaign. Per the Washington Post,

In 2016, state investigators allege, Trump effectively 'ceded control' of his charity to his political campaign. He raised more than $2 million at a fundraiser in Iowa that flowed into the foundation. Then, the state said, Trump campaign manager Corey Lewandowski determined when and where it would be given away.

'Is there any way we can make some disbursements . . . this week while in Iowa?' Lewandowski wrote in an email cited in Underwood’s lawsuit.

Trump gave away oversize checks from the foundation at campaign events in the key early-voting states of Iowa and New Hampshire, pausing his campaign rallies to donate to local veterans’ groups.

Federal law prohibits charities from participating in political campaigns. As president, Trump has called repeatedly for that law to be repealed.

Again, the Foundation was acting directly to promote Donald Trump's interests.

The Foundation Had No Meaningful Governance Structure Beyond Trump's Whims

Finally, the Foundation seemed to have no meaningful governance structure that could counter its use as a family "piggy bank"

The attorney general’s investigation turned up evidence that Donald Trump Jr., Eric Trump and Ivanka Trump — all listed as officers of the charity — had never held a board meeting. The board hadn’t met since 1999. The charity’s official treasurer, Trump Organization executive Allen Weisselberg, told investigators that he wasn’t aware that he was on the board.

State investigators asked him what the foundation’s policies were to determine whether its payments were proper.

'There’s no policy, just so you understand,' Weisselberg said.

So, thanks to the investigations that have swirled around Donald Trump and company since he began his campaign for the presidency, we have seen an amazingly blatant example of a non-profit charitable foundation used not to improve society, but to support the "broken system," and particularly the advantageous position of the charity's founder within the system.

Further Discussion

This example may be extreme, but it may not be unique.  Vox just published an opinion piece entitled,"The Trump Foundation shows just how preposterously light our oversight of charity is." It noted,

As the political theorist Rob Reich explains in his new book Just Giving, we really don’t expect much from foundations as a matter of public policy.

They don’t have to have a website or some other way for interested charities to contact them about funding. They don’t have to make their giving strategy publicly available or accessible in any way. They do have to fill out 990-F tax forms, which are public and provide some information on their assets, spending, and grant recipients. But those take the form of long, difficult-to-parse tax documents, and crafty philanthropists can get around these requirements by starting up offshore foundations. And there are basically no requirements to speak of beyond filing a 990-F and spending at least 5 percent of assets every year.

'Foundations are often black boxes, stewarding and distributing private assets for public purposes, as identified and defined by the donor, about which the public knows very little and can find out very little,' Reich writes.

Maybe the revelations about the Trump Foundation will inspire a more skeptical look at "do-gooder" foundations.  We need to know the extent to which they are devoted to the interests of rich insiders rather than of society at large.  Per Giridharadas, shining more light on their obscure operations might inspire them to start

listening to more of society’s losers, and fewer winners. 'The powerful are very good at disseminating their own bullshit,” he says. 'They don’t need the intellectual reputation laundering of ideas festivals to make their heavily marketed bullshit smell even sweeter.'

'I sincerely believe,' he says, 'that had more of the institutions of this country – and particularly those involved in thinking and ideas, not just conferences but all kinds of things – been more skeptical of elite fantasies and more mindful of what was actually going on in other people’s lives in this country, I think it’s very possible we wouldn’t have orange Mussolini in the White House.

We also could have had real health care reform.

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