Republican presidential nominee Donald Trump, to be sure, is a candidate like no other. So it should be no surprise that his Donald J. Trump Foundation also doesn’t act like others of its kind.
Many wealthy people have funded their own foundations. Among some famous examples: the Bill & Melinda Gates Foundation, the Robert Wood Johnson Foundation, and the Lilly Endowment. The Internal Revenue Code distinguishes between private foundations, such as these, and public charities. Private foundations typically are funded by an individual, family, or corporation, and are subject to more restrictions and fewer tax benefits than public charities (which is how the Clinton Foundation is classified).
While the specifics of Trump’s personal tax returns remain somewhat of a mystery—beyond the recently leaked details he claimed a $916 million loss in 1995—tax information for most foundations claiming federal tax-exempt status are a matter of public record. And close examinations of records from Trump’s foundation, along with multiple official investigations, have thrown yet more fuel on the increasingly large fires burning around his campaign.
Charity by the brushstroke
Albert C. Barnes, who amassed a fortune in the early 20th century, used his wealth to acquire one of the most famous collections of post-impressionist and early modern paintings. He created the Barnes Foundation, a charitable organization that uses his collection to promote education through appreciation of the arts.
Trump, too, has invested in paintings, having used his foundation’s money to purchase portraits of himself. But unlike Barnes’s artwork, Trump’s portraits have never been used for a charitable purpose, which means that their purchase apparently violates tax law.
When charity begins at home
Trump also allegedly used $258,000 of his foundation’s money to settle lawsuits involving his for-profit businesses. If this allegation is true, he would be open to a charge of “self-dealing,” violating tax laws that prohibit nonprofit leaders from using money from their charities to benefit themselves or their businesses.
Another questionable use of Trump Foundation funds occurred in 2013, when the foundation donated $25,000 to a group supporting Florida Attorney General Pam Bondi, who at the time was considering investigating charges of fraud against Trump University. This is an apparent violation of tax laws that ban nonprofit groups from making political gifts. Moreover, the implication that the donation was made to buy influence seems plausible, as the Florida investigation into Trump University never happened.
Giving to get endorsements?
From 2011 through 2014, Trump also used foundation funds to contribute at least $286,000 to influential conservative or policy groups, according to a tax-filings review by RealClearPolitics. While not illegal since the donations went to other nonprofit organizations, some of the gifts went to conservative or Republican Party-related organizations and corresponded to endorsements or prime speaking slots Trump used to cast himself as a potential Republican candidate for president. Perhaps not a quid pro quo by definition, but certainly in appearance.
For example, in 2013 the Trump Foundation donated $10,000 to The Family Leader, a conservative political organization in Iowa, which featured Trump as a marquee speaker at its influential leader summit. That same year, the foundation donated $50,000 to the American Conservative Union Foundation, which organizes the Conservative Political Action Conference (CPAC). Trump was the closing speaker on the opening night of the 2014 CPAC. Again, not necessarily a quid pro quo, but one could say it has that look.
Trump’s foundation also donated $100,000 to the Citizens United Foundation, which in 2014 held an event in New Hampshire featuring would-be Republican candidates for president. Among them, Trump, who also took the stage at related events in Iowa and South Carolina.
Other possible violations
While the federal tax laws for charitable foundations are complicated, those of individual states add another layer of complexity, because tax laws differ from state to state. In New York State, where the Trump Foundation is based, it is illegal to ask for donations to a foundation without its first having registered with the state as a charity soliciting money. That’s why, after it was reported Trump’s foundation has been soliciting money since 2008 without registering, the New York attorney general’s office ordered the foundation to stop fundraising activity.
Trump, who founded his charity in 1987, was its only donor until 2006, when tax records show its year-end balance as $4,238. And while the records reveal small donations in 2007 and 2008, most of its money has come from other donors – a rarity for name-branded foundations. Where did these donations come from? It appears that Trump may have directed $2.3 million in payments owed to himself or his businesses to his tax-exempt foundation. And while in such cases he would be required to pay taxes on that income, his campaign has not revealed whether he has paid taxes on all of it. Diverting personal income into a charity without paying appropriate taxes can lead to monetary penalties, the loss of tax-exempt status, and criminal charges.
While the Clinton Foundation has its critics regarding possible conflicts of interest, it unquestionably succeeds at its charitable endeavors—the independent watchdog site CharityWatch, for instance, gives it an “A” rating. Trump’s foundation is a different sort of enterprise, so trying to compare the two is an apples to oranges endeavor (like just about everything else in this year’s election). But it’s still worth looking closely at how the two presidential candidates have run the organizations that bear their names.
The views and opinions expressed here are those of the author and do not necessarily represent those of Avvo.