Thursday, August 18, 2016

Does the Clinton Foundation enrich the Clintons?

The short answer is no. There are many accusations floating around about the Clinton Foundation. These are based upon political wishful thinking in contrast to fact. I will review some of these. Let us begin with an important fact: None of the Clinton family are, or have been, on the payroll of the Foundation. Reportedly, the foundation pays some travel expenses for President Clinton. Nothing wrong with that if he is attending foundation events.

Newspaper articles appeared around the time that Peter Schweizer, a former fellow at the right-wing Hoover Institution, was providing media with previews of his then forthcoming book “Clinton Cash.” Schweizer is long on theory and short on evidence.

The source of at least some of the innuendo associated with the Clinton Foundation is an April 26, 2015 article in the Murdoch owned New York Post written by Isabel Vincent. Much of it is false. Ms. Vincent is primarily a crime reporter (a good one at that) but not financially sophisticated. The headline reads: “Charity Watchdog: Clinton Foundation a 'Slush Fund.'” Vincent goes on to explain:
The Clinton Foundation’s finances are so messy that the nation’s most influential charity watchdog put it on its “watch list” of problematic nonprofits last month.
Neither the headline nor that paragraph are true. Vincent is primarily referring to Charity Navigator which rates 501(c)3 organizations. Here is what they say about the Clinton Foundation:
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.
There is nothing about a “slush fund” or “messy finances.” Pure fiction. Later on in the piece Ms. Vincent makes another claim that simply isn't true:
Charity Navigator put the foundation on its “watch list,” which warns potential donors about investing in problematic charities.
The Clinton Foundation is not on the Charity Navigator watch list. Vincent continues:
“It seems like the Clinton Foundation operates as a slush fund for the Clintons,” said Bill Allison, a senior fellow at the Sunlight Foundation, a government watchdog group where progressive Democrat and Fordham Law professor Zephyr Teachout was once an organizing director.
This is the apparent source of Vincent's misleading headline. However, the Sunlight Foundation is not a charity watchdog so Vincent is wrong again. The Sunlight Foundation champions transparency in government. Bill Allison is now a staff writer for Foreign Policy. If he responds to an email query that I made this morning I will update this piece. I cannot fathom how Allison could possibly draw that conclusion and Ms. Vincent provides no details. I have done an extensive search of Bill Allison's pieces at the Sunlight Foundation and am unable to find any reference to a slush fund. Vincent continues:
In July 2013, Eric Braverman, a friend of Chelsea Clinton from when they both worked at McKinsey & Co., took over as CEO of the Clinton Foundation. He took home nearly $275,000 in salary, benefits and a housing allowance from the nonprofit for just five months’ work in 2013, tax filings show. Less than a year later, his salary increased to $395,000, according to a report in Politico.
It is actually six months. No big deal but Vincent doesn't get much right. In 2014 Braverman was paid about $500 thousand. It is not excessive for an organization that size (Blowhard Bill Donohue pulls that in from the minuscule Catholic League). And even if it is excessive, so what? Braverman was a partner at McKinsey and he previously did some work with the Foundation in Haiti following the 2010 earthquake. What? You think that the head of the Clinton Foundation is kicking back some of his or her salary to Clinton? What is this all about?

Later on:
The nonprofit came under fire last week following reports that Hillary Clinton, while she was secretary of state, signed off on a deal that allowed a Russian government enterprise to control one-fifth of all uranium producing capacity in the United States. Rosatom, the Russian company, acquired a Canadian firm controlled by Frank Giustra, a friend of Bill Clinton’s and member of the foundation board, who has pledged over $130 million to the Clinton family charity.
Just to position this properly, a Canadian company controls about a fifth of US uranium production. That company was acquired by Rosatom, the Russian atomic energy agency. A committee comprised of a number of government agencies had to approve the deal including State. According to the New York Times, in an April 23, 2015 piece, Canadian records show, a flow of cash made its way to the Clinton Foundation. Uranium One’s chairman used his family foundation to make four donations totaling $2.35 million. That's a far cry from $130 million. And so what? Unless someone can demonstrate that the Clintons benefit it is irrelevant. According to the Times:
In a statement, Brian Fallon, a spokesman for Mrs. Clinton’s presidential campaign, said no one “has ever produced a shred of evidence supporting the theory that Hillary Clinton ever took action as secretary of state to support the interests of donors to the Clinton Foundation.” He emphasized that multiple United States agencies, as well as the Canadian government, had signed off on the deal and that, in general, such matters were handled at a level below the secretary. “To suggest the State Department, under then-Secretary Clinton, exerted undue influence in the U.S. government’s review of the sale of Uranium One is utterly baseless,” he added.
The New York Times piece concludes by providing some important context:
When the Uranium One deal was approved, the geopolitical backdrop was far different from today’s. The Obama administration was seeking to “reset” strained relations with Russia. The deal was strategically important to Mr. Putin, who shortly after the Americans gave their blessing sat down for a staged interview with Rosatom’s chief executive, Sergei Kiriyenko. “Few could have imagined in the past that we would own 20 percent of U.S. reserves,” Mr. Kiriyenko told Mr. Putin. 
Vincent concludes:
The group also failed to disclose millions of dollars it received in foreign donations from 2010 to 2012 and is hurriedly refiling five years’ worth of tax returns after reporters raised questions about the discrepancies in its filings last week.
This is all inaccurate. It relates to Hillary Clinton's agreement with the administration to disclose foreign donations and has nothing whatsoever to do with the foundation's tax filings. The foundation has no obligation to disclose any information about donors except for Hillary Clinton's agreement with President Obama. The problem is associated with about 1,100 donations that came in from a Canadian partnership. To be fair it is possible that not all of that money is Canadian. However Canadian law prohibits disclosure. I see no evidence or indication of the foundation filing amended tax returns. Ms. Vincent, it seems, is profoundly confused.

What came to my attentions is the fact that the Foundation shows surpluses of  $64 million and $87 million for 2013 and 2014 respectively. However, at the end of 2014 the balance sheet shows pledges receivable in the amount of $111 million. Under generally accepted accounting principles those pledges are recorded as revenues even though the funds are uncollected. This gives the incorrect impression (including me at first in error) that the foundation is employing a smaller percentage of revenues as program services than it would demonstrate on a cash basis.

The bottom line to all of this is that there is no evidence that the Clinton Foundation is used, in any way, to enrich any of the Clintons. Instead of obsessing over a presidential library, Bill Clinton wanted to do some good with a charity. That seems to be what the foundation is doing.

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