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Is a Council Member Who Runs a Local Charity Giving Back to the Community?
Tuesday, September 7th, 2010
Robert Wechsler
The
lead article in yesterday's New York Times was on charities set up
by members of congress. I've written a few times about the use of
charities to get around campaign finance and gift provisions (1
2 3), but this is an area
of special creativity, where new ideas, and new reasons for regulation,
arise frequently. For example, the foundation on which the article
focuses employs the congressman's son, a Rialto, CA council member, as
its CEO and President.
According to an article in the Wall Street Journal last year, the Joe Baca Foundation gave away $36,000 in scholarships in 2008, but paid the son and council member (Joe Baca, Jr.) $51,800 (according to IRS documents; the son said he was receiving only half that amount). In 2008, the foundation also gave $20,000 in fire equipment to the son's city, paid for totally from a contribution by another nonprofit, AmeriDream.
I could find no other figures on the foundation's website, a serious lack of disclosure for a charity founded and run by public officials.
According to the Journal article, AmeriDream is a sponsor of Hogar, an initiative to promote Latino homeownership created by the Congressional Hispanic Caucus Institute Inc., a nonprofit entity founded and run by leaders of the Congressional Hispanic Caucus along with corporate and nonprofit representatives. It was funded by mortgage lenders, especially sub-prime lenders, including Countrywide and Washington Mutual. Joe Baca chaired the Congressional Hispanic Caucus 2007 to 2008.
AmeriDream had a seller-financed down-payment assistance program, whereby builders would put up down payments for buyers who couldn't afford them. In 2008, this program was prohibited by law, according to the Journal article, and Baca cosponsored "a bill that would allow AmeriDream and similar nonprofits to resume arranging seller-financed down-payment assistance to low-income Federal Housing Administration borrowers."
Why would a nonprofit focused on increasing housing opportunities fund firefighting equipment for Rialto, California?
According to the Times article, the foundation has raised $200,000 in contributions this year. One of the donors to the foundation is Rentech, a California-based biofuels company that wants to build a new fuel plant in Mr. Baca’s district. After it made two donations last year, Mr. Baca’s son ... voted to endorse federal assistance for the project — even before the company had completed the local environmental permit reviews. Then the congressman sent a letter to the Energy Department on his office stationery urging approval of the assistance."
The son/council member defends the foundation by saying, “We have always been about giving back." I'd like to take him at his word and ask the question, Is it right for a council member to give back to his or her community by setting up a charity for which he seeks funding from individuals or entities that do business with the community's government?
No one is in a better position to help his community than an official who can twist the arms of potential contributors. Isn't it better that the twisting be done for charitable purposes than just to get the official re-elected? And isn't it a great boon for the community that the council member can make use of the even greater power of a family member who sits in Congress?
The Times article talks about the influence that companies seek to get by giving contributions, but this situation has nothing to do with influence-peddling. This is about pay-to-play and paying back for favors done.
The problem is that favors shouldn't be done by government officials. That's preferential treatment. Nor should arms be twisted by government officials or employees. That's misuse of office.
Local legislators give to their communities by doing their jobs. Once they've retired, it might be nice to use their fame to work with local charities. But setting one up on their own while they are still in office, or even soliciting for community charities from anyone doing business with the government, only sets up a series of conflicts of interest. And it is coercive, because many of those who give will be those who feel they have to. If businesses want to help their community, they have a thousand ways to do this without doing it through a charity run or selected by a local official.
In short, setting up a charity is not a way for an official to give back to his community. It's a way of taking. It's nicer than pocketing the money, although in this case, with the council member getting a salary incommensurate with the foundation's programs (and not declaring it publicly on the website), it's pocketing money, too.
In fact, the apparent generosity of the foundation is itself a taking. What better campaign publicity can there be than another community program paid for by the Joe Baca Foundation, a name held by both congressman and councilman?
Robert Wechsler
Director of Research-Retired, City Ethics
---
According to an article in the Wall Street Journal last year, the Joe Baca Foundation gave away $36,000 in scholarships in 2008, but paid the son and council member (Joe Baca, Jr.) $51,800 (according to IRS documents; the son said he was receiving only half that amount). In 2008, the foundation also gave $20,000 in fire equipment to the son's city, paid for totally from a contribution by another nonprofit, AmeriDream.
I could find no other figures on the foundation's website, a serious lack of disclosure for a charity founded and run by public officials.
According to the Journal article, AmeriDream is a sponsor of Hogar, an initiative to promote Latino homeownership created by the Congressional Hispanic Caucus Institute Inc., a nonprofit entity founded and run by leaders of the Congressional Hispanic Caucus along with corporate and nonprofit representatives. It was funded by mortgage lenders, especially sub-prime lenders, including Countrywide and Washington Mutual. Joe Baca chaired the Congressional Hispanic Caucus 2007 to 2008.
AmeriDream had a seller-financed down-payment assistance program, whereby builders would put up down payments for buyers who couldn't afford them. In 2008, this program was prohibited by law, according to the Journal article, and Baca cosponsored "a bill that would allow AmeriDream and similar nonprofits to resume arranging seller-financed down-payment assistance to low-income Federal Housing Administration borrowers."
Why would a nonprofit focused on increasing housing opportunities fund firefighting equipment for Rialto, California?
According to the Times article, the foundation has raised $200,000 in contributions this year. One of the donors to the foundation is Rentech, a California-based biofuels company that wants to build a new fuel plant in Mr. Baca’s district. After it made two donations last year, Mr. Baca’s son ... voted to endorse federal assistance for the project — even before the company had completed the local environmental permit reviews. Then the congressman sent a letter to the Energy Department on his office stationery urging approval of the assistance."
The son/council member defends the foundation by saying, “We have always been about giving back." I'd like to take him at his word and ask the question, Is it right for a council member to give back to his or her community by setting up a charity for which he seeks funding from individuals or entities that do business with the community's government?
No one is in a better position to help his community than an official who can twist the arms of potential contributors. Isn't it better that the twisting be done for charitable purposes than just to get the official re-elected? And isn't it a great boon for the community that the council member can make use of the even greater power of a family member who sits in Congress?
The Times article talks about the influence that companies seek to get by giving contributions, but this situation has nothing to do with influence-peddling. This is about pay-to-play and paying back for favors done.
The problem is that favors shouldn't be done by government officials. That's preferential treatment. Nor should arms be twisted by government officials or employees. That's misuse of office.
Local legislators give to their communities by doing their jobs. Once they've retired, it might be nice to use their fame to work with local charities. But setting one up on their own while they are still in office, or even soliciting for community charities from anyone doing business with the government, only sets up a series of conflicts of interest. And it is coercive, because many of those who give will be those who feel they have to. If businesses want to help their community, they have a thousand ways to do this without doing it through a charity run or selected by a local official.
In short, setting up a charity is not a way for an official to give back to his community. It's a way of taking. It's nicer than pocketing the money, although in this case, with the council member getting a salary incommensurate with the foundation's programs (and not declaring it publicly on the website), it's pocketing money, too.
In fact, the apparent generosity of the foundation is itself a taking. What better campaign publicity can there be than another community program paid for by the Joe Baca Foundation, a name held by both congressman and councilman?
Robert Wechsler
Director of Research-Retired, City Ethics
---
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