The Trump Foundation, the Clinton Foundation, and the 2016 Election
What does it all mean for Philanthropy?
On Wednesday, October 19th the Helene and Grant Wilson Center for Social Entrepreneurship held a panel discussion event: “The Trump Foundation, The Clinton Foundation, and the 2016 Election: What Does it All Mean for Philanthropy?”
The panel included speakers:
- Benjamin Soskis, a historian and journalist who has covered this topic recently for The Atlantic
- Stacy Palmer, editor of The Chronicle of Philanthropy
- Pace Law School’s Professor James Fishman, JD, PhD, an expert on the topic featured in the recent Washington Post coverage
- Moderator Rebecca Tekula PhD, Assistant Professor of Public Administration and director of the Helene and Grant Wilson Center for Social Entrepreneurship
The discussion covered the developing topic and the many questions about the intersection of politics and philanthropy, and a constellation of issues around public engagement with philanthropy. Watch the event or read through the transcription below.
0:00:04 PROFESSOR REAGIN: Good evening. That mic's a little bit loud. On behalf of all of us at Pace University, let me welcome you to tonight's event. I'm Professor Nancy Reagin, I chair at the department, and I've heard all the jokes about my name. [chuckle]
0:00:18 PROFESSOR REAGIN: I chair at the Department of Women's and Gender Studies, one of the co-sponsoring organizations for tonight's event, and I also chair the faculty council here on this campus. We're all excited about what should be a lively discussion tonight, the Trump Foundation, the Clinton Foundation and the 2016 election, and what does this all mean for philanthropy. At some point in our lives all of our students will be called upon to contribute to society. Our region has a particularly large number of non-profit organizations, and in recent years approximately one third of all Pace University graduates, were employed in the public sector and the non-profit sector. And in response to this demand, we've recently established our first undergraduate minor in Non-profit Studies, which if you're a student here you're welcome to talk about that with me. And we grew our Master's in Public Administration program in the New York City campus as well.
0:01:17 PROFESSOR REAGIN: In addition to creating new academic programs in this area, our university center like the Wilson Center for Social Entrepreneurship, foster environments that encourage interdisciplinary thinking and collaborations. And offer opportunities like this evening's event to leading scholars and public figures on campus to foster collaboration, conversation, to enrich the educational experience of our students, and to enhance the expertise of our faculty, because I'm sure I'll be learning something from tonight's panel. Tonight's discussion will cover a constellation of issues about how politics and philanthropy intersect. People, both in philanthropy and politics, are trying to effect social change. You only go into either field, if you care very much about some issue, and you want to work on it or to fund it. So, it's not surprising there can be considerable overlaps, between the two industries in terms of personnel and sources of funding.
0:02:17 PROFESSOR REAGIN: These overlaps are evident, not only in the work of the foundations that are the subject of tonight's panel, but also in my own department and in the lives of our students. People are drawn to gender studies or peace and justice studies, as teachers or as students, because they care very much about issues of social inequality, and racial and gender hierarchies. And as a result, our students are often deeply, politically engaged, while also preparing themselves for careers in the non-profit sector. In practice, it is not possible, or desirable to completely separate these two impulses. Although, I would advise all philanthropic organizations to comply with New York State Regulations for its certified charities, and other legal requirements. And now, I am happy to introduce Professor Rebecca Tekula, Executive Director of the Wilson Center for Social Entrepreneurship. Thank you.
[applause]
[background conversation]
0:03:18 Prof Rebecca Tekula: Thank you, Nancy. As Nancy said I'm Rebecca Tekula, and I'm the Executive Director of the Wilson Center for Social Entrepreneurship here at Pace, and I'm also on the faculty of Public Administration. So, before we get started, I would just like to welcome all of my Public Administration 601 students in the audience this evening. You were my inspiration for putting together tonight's event to talk about the Trump Foundation and the Clinton Foundation. Your passionate interest in these issues surrounding the Trump Foundation and the Clinton Foundation were my motivation. And now I'd like to quickly introduce our speakers.
[background conversation]
0:04:27 PROFESSOR TEKULA: So, to my immediate left we have, Pace Professor Jim Fishman, an expert on this topic, who's been featured in recent Washington Post coverage. We have Benjamin Soskis, who's a historian, and journalist, who's covered this topic recently for the Atlantic. And Stacy Palmer, Editor of the Chronicle for Philanthropy. Thank you all for being with us tonight. Those of you in the audience, on the flipside of your handout is a bio sheet, if you want to follow along and see everyone's background.
[pause]
[background conversation]
0:05:22 PROFESSOR TEKULA: So, let's start with a question for Stacy. Stacy, why has the Trump Foundation been in the news?
0:05:28 STACY PALMER: Why has the Trump Foundation not been in the news is probably a better question. It's been a really remarkable time to have so much philanthropy coverage. Usually philanthropy doesn't get much attention in an election, it doesn't get much attention from journalists, and yet it's become the really hot story. And one of the really terrific things for those of us who are journalists covering the field of non-profits is to see how vital the journalism has been in this election cycle. Many of you may know that a lot of the most interesting Trump Foundation coverage has come from David Fahrenthold, at the Washington Post, who really just got interested in this when Trump said he wasn't gonna go to one of the debate sessions, and instead was gonna raise money for veterans.
0:06:11 STACY PALMER: And he started asking questions about what veterans charities are actually getting any money from this. And he spent a whole day tweeting to every veterans' charity he could think of. And said "Are you getting any money? Are you getting any money?" And wasn't getting any responses, at all. Nobody seemed to be getting the money. And as he started doing more reporting, and more reporting, he had more questions about this veterans' charity.
0:06:33 STACY PALMER: Around the same time, we started getting questions from people, and people said, "So, Trump's a billionaire, he must be on your list of the biggest donors." We keep a list that we every year we track, the 50 most generous folks who give to philanthropy, and Trump has never appeared on the list, he's, as a matter fact, never appeared in any gifts list, or anything that we've ever received. Now, that's not that unusual, because a lot of people give anonymously, and a lot of people who are very, very rich do not appear on our list, about 375 of the people on the Forbes 400, do no show up in our list. So, it doesn't shock me to see that somebody like Trump isn't there, because there are lots billionaires who aren't there. But it did make me wonder, somebody who likes to have his name emblazoned on everything, I don't think he is an anonymous donor.
0:07:22 STACY PALMER: So, we started looking at his 990, and seeing that there were some really questionable things, and really wondering "What kind of foundation is this? And is this really something where all of the money was coming from other sources, not from his family.? So, was it a private foundation or public charity? And I know Jimmy is gonna talk about, and explain the legal part of this, and I'm not wanting to go near that nearly as much, but it's really important, because it's how the laws are governed.
0:07:50 STACY PALMER: As we discovered more and more about what's going on, it's clear that Trump has violated many parts of the law, and just today, a public interest group in Washington, filed a FOIA request and got even more documents that led many tax experts to say that clearly none of the people who are operating this foundation really understand tax law or, if they understand it, they're flouting it. And they violated it in terms of things like making political donations, self-dealing, and it seems that Trump may have skirted paying taxes on income he was owed, by channeling money directly to the foundation.
0:08:30 STACY PALMER: Those are all kind of violations. So, when this idea that they weren't registered in New York to solicit, that's just one of many, many things, that's the one that's gotten the most attention, recently. But there are all of this questions, which, really, given that Trump talks a lot about his business expertise, it makes people wonder, "How is that claim true?" And I think people expect somebody to be philanthropic, who is that wealthy, and so, I think that's been the other thing that has raised a lot of questions for people.
0:09:00 PROFESSOR TEKULA: Great. Thank you. Jim, how unusual is it, what Trump has done, and what's the legal framework in which foundations operate?
0:09:08 PROFESSOR FISHMAN: Well, I think Mark Owens, who was Assistant Commissioner for Tax-Exempt Organizations of the IRS, Internal Revenue Service, said that in his history, he's never seen anything like this, so Trump is really unique. He's supposed to be a sophisticated, billionaire business man. He really seems like a thousandaire, an ignorant person, in terms of the laws relating to private foundations.
0:09:41 PROFESSOR FISHMAN: Let me say a few words about the legal framework. There are 1.7 million non-profit organizations on the IRS's master list. Of those, about 1.18 million, a little over two thirds, are exempt, under section 5.0.1 [c] [3] of the Internal Revenue Code, and these are called, the charitable non-profits. These are non-profits that are organized, and operated, exclusively for religious, charitable, scientific, literary purposes, or educational purposes, and a few other things. And donations to these organizations are tax-deductible.
0:10:28 PROFESSOR FISHMAN: There are a number of things that these organizations cannot do, one of which, is they cannot intervene in any political campaign. Now, within section 5.0.1 [c] [3], the charitable non-profits, and I'm being very simplistic, are divided into public charities and private foundations. Basically, a private foundation is a charity that has flunked some bizarrely complicated tests, of public support. Of this 1.18 million in the charitable non-profit group, there're roughly 90,000 foundations, that's as of 2014, of which 91% were founded by individuals who gave a grant of money, which is usually called an endowment, and the money is invested, occasionally it's used to operate various things. My favorite definition of a foundation was by Dwight MacDonald, the writer, who said "A foundation is a pile of money, surrounded by people trying to get some of it." In other words, people are trying to get grants.
0:11:45 PROFESSOR FISHMAN: Now, certain charities are exempt from these public support tests, because of what they do. And rather than the sources of support, they 're inherently public, and these would be; churches, hospitals, colleges and universities, but not museums, symphonies, various other charitable non-profits, they have to show that they receive public support. Public charities are considered more broadly representative of, and accountable to the community at large, and seen as less susceptible to abuses that private foundations have had. The Trump Foundation is a private foundation. Now in 1969, Congress created a really restrictive regulatory framework for foundations. In the '60s, foundations were able to bring together the right and the left, both sides disliked foundations. The left accused them of misuse of funds, loopholes for the rich to avoid paying taxes, a way of businesses to have competitive examples, and wealthy people to spend their money on personal projects they like. People in the right, castigated foundations for such things as voter registration drives, supporting civil rights, and giving grants to what they thought were radical organizations.
0:13:22 PROFESSOR FISHMAN: The center piece of the regulatory framework for private foundations is a set of excise taxes, that are imposed on the foundation and also on their managers, their trustees, their donors, and other insiders. These taxes begin with gradual punishment, in terms of an excise tax, and then there's a process known as correction, which you have to give them money that you've improperly spent, back to the foundation. And then there's far more serious second-level taxes if the abuses repeat themselves. The IRS can take away the exemption of the foundation and can even confiscate the amount of the foundation's endowment. It usually does not do this. Now actually fear of excise taxes makes private foundations the most compliant, of all tax payers. Private foundations usually follow the law to the T. Now the two excise taxes that are important for our purposes are; the prohibitions on self-dealing, and taxable expenditures. Self dealing, penalizes virtually any transaction between the private foundation and what is known as, a disqualified person.
0:14:54 PROFESSOR FISHMAN: A disqualified person is a major donor, an officer of the foundation, a trustee, members of their families, some business associates, related business entities. We're talking about you Mr Trump. He is a disqualified person. Among the violations of self dealing that Trump has done is the use of the foundation monies, to settle legal disputes, personal legal disputes. He spent $20,000 at an auction for a six foot portrait of himself, which he has at one of his properties. One of his worst investments, even worse than the casinos, was to spend $12,000 for a helmet of a football player, named Tim Tebow, which is probably worth 2 cents today, because he was very unsuccessful. He also gave a $7 donation to the Boy Scouts. Now I'm cheap, but even I would not give $7. It also happened to be at the same time when his boys were eligible for membership in the scouts. In terms of another excise tax, on taxable expenditures. These are expenditures which Congress did not think that private foundations should be involved in.
0:16:29 PROFESSOR FISHMAN: They include a prohibition on lobbying, absolute prohibition on political activity. You cannot give grants to individuals unless the IRS approves the procedures. Two of the taxable expenditures that Mr Trump has engaged in was giving $25,000 to the Florida attorney general for her re-election campaign when she was just about to open an investigation of the Trump Institute. He also gave the winner of a television show, Trump Pays Your Bills, money from the foundation. And that would be a taxable expenditure as well. Also there's a form 990-PF, that private foundations have to file, it's a public document. The document is a series of questions: Are you involved in any self- dealing transactions? Answer "no". Have you been involved in any political donations? Answer "no". There's misrepresentation, on these forms. Finally, he also did not register to solicit, which in over 40 some states, you have to register to solicit. Now this not a major thing in and of itself but combined with everything else it seems to me that Mr Trump is going to have some problems.
0:18:08 PROFESSOR TEKULA: Thank you for that rundown, of the issues. So Ben from your perspective, why has this resonated so much with people?
0:18:18 BENJAMIN SOSKIS: Well it's the same reason why we watch the tawdry, reality tv shows and car crashes, it's spectacularly disturbing. I approach it as a historian and I actually find it pretty challenging to figure it how to place the Trump Foundation, in historical context, because there really is not precedent for it. And when things are unprecedented, there can be two reasons for it. One; is because it's so progressive and forward looking that it represents the future more than it does the present. And I don't get that sense. The Trump Foundation is just so anonymously weird, and peculiar, that I think it's unprecedented really for what I would call "brazen incompetence" basically. And I think that's where we can see what's unique about it. And so I would disaggregate those terms, it's brazen in the sense of, we just heard from Jim, there's just a spectacular list of ways in which the foundation was pretty much used in ways it shouldn't have been used. And deliberately so, they've often... They sometimes blame administrative errors, but it's pretty clear that there was some method to the madness.
0:19:38 BENJAMIN SOSKIS: And there is some precedent for brazenness. In fact, if you go back before the congressional regulations that were imposed in the '60s, there was all sorts of bad faith, self-dealing in the sector, usually at small family foundations actually, so the ancestors of the Trump Foundation. But what is remarkable about the Trump Foundation is not just the brazenness, it's the incompetence. It's just bizarre that somebody of Trump's stature would be so derelict in some of these basic managerial responsibilities. And what's really strange is that his son has a foundation, the Eric Trump Foundation. The Eric Trump Foundation managed to follow many of these rules. So somehow it's the combination of both real brazenness and incompetence, which strikes me as being unusual.
0:20:33 BENJAMIN SOSKIS: The incompetence is actually interesting. We now live in a time in which sometimes it's called philanthrocapitalism, it's the spirit of social enterprise, and the idea is that the same methods of accumulation that produce fortunes, are usually well equipped to handle their redistribution, charitably. So if you're a really good businessman, a really good entrepreneur, it's presumed that you have a good sense of figuring out how to spend that money philanthropically, but historically, that really was not the case. And if you look at the foundations again in the early part of the century up until really, last few decades, many living donors did not start giving until very late at life and you had many, many, renowned businessmen who are absolutely incompetent, as philanthropist. There just wasn't a sense of the same engagement in the philanthropic sector, as there was in the business sector.
0:21:39 BENJAMIN SOSKIS: So Trump is in the sense, a throwback to those times, when there really just wasn't that spirit of social enterprise. The other striking thing to me is what Stacey brought up. The Trump Foundation because it's just so shocking and tawdry has really captured people's imagination and attention. People that in the past perhaps hadn't really focused on philanthropy. It's been a real education for much of the public who perhaps didn't understand the difference between a private foundation and a public charity, but it's also been an education for people who that's their job; writers, and researchers. And I think it was a moment for the sector itself to realize the gap between the public understanding of what foundations do and the assumptions that the sector has by what people know. It's revealed a pretty wide distance between those bodies of knowledge, and it's actually been pretty helpful in trying to bridge that.
0:22:46 BENJAMIN SOSKIS: The danger, and maybe we'll talk about this a little more, is in the run-up to the congressional investigations, of philanthropy that produced the regulations Jim mentioned. There was a lot of concern that the bad faith actors were going to pollute the faith in the sector in general. And there was in fact efforts to burnish the reputation of the sector, really to create a non-profit sector, which hadn't existed before. There is perhaps a similar danger now for people who don't read much about foundations. Reading about the Trump Foundation is not exactly a vote of confidence in what the philanthropic sector can achieve, what motivates givers, what would working at a non-profit or a foundation be like. I don't know what motivates you guys, but Tim Tebow's helmet just doesn't really do it for me. Though I should note that he's now a New York Met minor league player, so perhaps there's a comeback in the works.
[chuckle]
0:23:54 BENJAMIN SOSKIS: Anyway, I think there is a danger there that this could color people's understanding of why and how our most prominent citizens engage in philanthropy. So I think in that respect it's important for all of us to just point out that this is just really weird. This is anomalous. There are many foundations that aren't run this way. There are many problematic issues surrounding philanthropy, but I can't think of any as problematic, as peculiar as the Trump Foundation.
0:24:33 PROFESSOR TEKULA: Thank you. So if it's okay with all of you, I'd like to shift a little bit, and talk about the Clinton Foundation.
0:24:41 BENJAMIN SOSKIS: Proverbial cold shower.
[chuckle]
0:24:45 PROFESSOR TEKULA: We can always come back to this in questions. Stacy, tell us what exactly is the Clinton Foundation and how is it different from the Trump Foundation?
0:24:58 STACY PALMER: Well, in some ways I think there is a connection because of this cynicism about how charity works that connects both of these foundations, and why we're talking about them. But when Bill Clinton got out of office, he needed to do things like raise money for his library. That's a really traditional thing that all ex-presidents do. Jimmy Carter really set the idea that you could do more than raise money for a library. You could do really interesting things in your post-presidency. We all have incredible praise for the work that Carter has done in so many fronts, taking on some pretty controversial issues, and made a success. Bill Clinton, not surprisingly, being a pretty competitive person, wanted to do one better. He was very young, obviously, when he left office and was raring to go. One of the things he wanted to do was raise money, especially for some of the causes that he felt he didn't get a chance to deal with in office. And so he went out and he started raising money for a number of causes around the world. As many people have said, there's not one... You can give him any idea. If he thinks it's interesting, he'll go after and do it.
0:26:06 STACY PALMER: In philanthropy, there's this vogue right now of being very strategic and very careful. You see this in people like the Gates's just giving to global health and education, and being very disciplined. Bill Clinton is not that way, that's not what interests him, and so his foundation is an amalgam of lots and lots of different things. Regardless of what you think about the politics of all of this, most people think that the work that the foundation has done is strong. That a good percentage of the money is going to the cause. It's really hard to tell. But they certainly are doing good work and, in some cases, exceptional work, that nobody else would do. One of the things that many people are a very worried about, when they disappear, which they are likely to do if Hillary wins; they've said that they will go out of business, is some of their AIDS work, and other kinds of things that they have done, have made such a significant difference, that people really feel there will be a loss when they go away. One of the things they're doing right now is trying to figure out what is gonna happen in the transition with these programs.
0:27:06 STACY PALMER: All of the stuff that they were doing may have raised questions, but it would have all been fine if Hillary wasn't running for President, and being Secretary of State. That obviously is also an unprecedented situation, where we have a spouse running for office, and being in a really important job.
0:27:25 STACY PALMER: When Hillary became Secretary of State, the Obama Administration said, "Look, we need to have some ground rules here about how the Clinton Foundation is gonna operate. We don't want it to be used as a conduit, where countries are giving money in various ways, and trying to influence things, or donors are trying to influence things." Most of the money that Clinton is raising comes from really rich people, who are giving to various causes. It's an obvious question of influence. One of the things that Obama said was "You're gonna have a lot of disclosure. You're gonna have to say where the money is coming from, and where it's going to." Now most non-profits do not have to follow those rules.
0:28:01 STACY PALMER: The American Red Cross does not have to say that Bill Gates gave a ton of money to it, if that's what happened. It was incredibly unusual that we see all of these public disclosures of donations, and they have done that. But that wasn't enough to really quell the controversy about whether there was a pay-to-play kind of policy. I think the jury is really out as to whether there were conflicts. But just the perception is a big, big, problem, and some people can't get past that. That's a really legitimate point of view, to say, "I don't care what kind of good work they're doing. There shouldn't be any kind of influence." And that they should have done a lot more, a lot faster to set up a firewall. That's where a lot of the questions are.
0:28:44 STACY PALMER: But unlike Trump, where we're talking about many, many more millions of dollars being donated to more causes, and we're seeing actual charitable work being done. That's part of the big difference, and it's being raised from lots of people. And one of the ways I think about the work that the Clintons have done, is it's a little bit like the Giving Pledge that Bill and Melinda Gates, and Warren Buffet did. It encouraged a lot of people to think about philanthropy, who might not have thought about it before it exposed them to various kinds of things that they could give to. Now, whether those people also thought they would get a benefit by being associated with the Clintons, probably so. But in a lot of philanthropies, there's this conflict of interest, where people wanna improve their reputation, or be associated with somebody. The idea that there's only one motive in philanthropy... There would be no philanthropy if there was only one motivation. You often have these, mixed worlds.
0:29:34 STACY PALMER: So, there's been a naïve thinking sometimes when you see the commentary about philanthropy related to the Clinton Foundation. But it has definitely become a real flash point, and I think one of the questions that we're probably all waiting for too, is whether this is gonna come up in the debate, in a little bit.
[chuckle]
0:29:52 PROFESSOR TEKULA: That's true. So Ben, how do we understand this, historically? How does this fit into the history of the sector.
0:30:02 BENJAMIN SOSKIS: Well, so like the Trump Foundation, the Clinton foundation is unprecedented. But unlike the Trump foundation, I think the Clinton Foundation is unprecedented because it does represent some really forward looking trends, coupled with the peculiarities of Hilary Clinton and Bill Clinton being involved. So, you could talk about the precedents, in three different ways. First, the Clinton Foundation is a public charity. It is taking on many different donors. It does not get it's funds from one single donor. And this, of course has all sorts of precedents. You could think of the Clinton Foundation in a sense as a kinda community foundation for the Davos set. If the world is now, consists of a global elite, they need the community foundation too. And this was a place that was bringing in lots of funds from all sorts of rich people and foreign governments. That's not new but the scale and the draw of Clinton obviously makes it a little new. It's also a foundation associated with a political figure. And as Stacey mentioned, we have some precedents for that, both in Jimmy Carter but also there are multiple foundations that members of congress have. And they're often quite problematic, but they exist. And we could look to them for some answers of how to think about the foundation historically.
0:31:48 BENJAMIN SOSKIS: The other element is this idea of celebrity, or leverage. And that too, has some precedent, that's perhaps something that is most forward looking. The idea is that, the Clinton Foundation is relying on Clinton's reputational capital, it's leveraging that capital, to bring in more funds. We see this now with celebrities who have their own foundations. And it's again, not necessarily unusual, though it has its own problems associated with it. In combination, those three elements are unique. The most interesting element of it is this idea of straddling the realms of politics, philanthropy and the market.
0:32:48 BENJAMIN SOSKIS: One of the hottest modes of thinking in the sector for the last decade has been this idea of hybridity, or of doing away with the sectoral walls. That everyone should, if you were a philanthropist you had to get involved in policy. And if you were a entrepreneur, you could also do good by using your entrepreneurial skills towards philanthropic ends. There's a lot of power in the erosion of those boundaries.
0:33:23 BENJAMIN SOSKIS: But the Clinton Foundation represents the problematic nature of what happens when those boundaries start to collapse. I don't think our norms have caught up to take account of that. And the real challenge is that, precisely what makes the foundation exciting, the way in which Bill Clinton and some of his staff were able to use their connections, for instance, to get drug companies to lower the prices of AIDS drugs in co-operation with nations who could then administer them. Relied on access. It relied on inside knowledge, it relied on exactly the skills that Bill Clinton has in abundance. And that Hilary has, though she wasn't as involved. And those are precisely the things that are redolent of conflict of interest. You can't separate the two.
0:34:23 BENJAMIN SOSKIS: And so I think we'll never see something exactly like the Clinton Foundation. But, we live in a world in which increasingly the realms of the wealthy and the realms of political leaders are merging. The median income in Congress is now over a million dollars. And if you just look at the candidates we've had running for president, or major public office, it's now, your identities as a politician and as a philanthropist are difficult to disaggregate. And so, we're gonna need to think more carefully about how to judge that intersection. I think what the Clinton Foundation has shown is that, we don't have the comfort level with those intersections yet. I think Stacey alluded to this, a lot of the coverage of the foundation has been pretty knee-jerk, and not necessarily full of nuance and has assumed the worst intentions.
0:35:31 BENJAMIN SOSKIS: Plenty of people who pursued that way of dismissing the foundations work, were motivated by partisanship. But there is also plenty of people who found its work troubling, and were trying to balance the good it did with the problems that it helped to bring to light. This is something that we all need to think more carefully about. Election time is probably not the time to do it. So we'll have to wait until after the election to think more carefully about it. But this something that is forward looking and a major challenge to the sector.
0:36:13 PROFESSOR TEKULA: Thank you. Jim what other issues are raised by the Clinton Foundation in these questions, and what do you think should happen to the Clinton Foundation?
0:36:24 PROFESSOR FISHMAN: I would like to say, I am not a Clinton hater. I've voted for both of them but I do have some criticisms. My great fear is that the foundation will be a philanthropic elephant in the oval office. And that will be a very bad thing for the Office of the Presidency and also for the foundation. The foundation is a public charity and it has much looser rules applying to it that with a private foundation, and there has been no illegality. There have been some troubling, corporate government lapses and conflicts of interest. For instance: the agreement with the Obama Administration has been broken. Apparently, there'll be things coming out, involving Haiti. The chief aide to Hillary Clinton when she was Secretary of State was receiving a salary from the government, from the foundation, and received a consulting fee from a for-profit consulting group. There also was someone working for Bill Clinton's personal office paid by the tax payers, paid by the foundation and he organized this for-profit consulting group.
0:37:56 PROFESSOR FISHMAN: That is to me somewhat troubling. The WikiLeaks, I think they ought to be called Putileaks, given their source, which came out just a few days ago had a draft corporate governance audit, conducted by Simpson, Thacher - Bartlett, an estimable law firm. They found, this was a draft, that was published, that there weren't enough board members, there weren't enough board meetings, there weren't enough experienced directors. The board members should be involved in strategic planning and they found that conflicts throughout the foundation were ignored or down played. This was done in 2011, hopefully the foundation has changed. The foundation has done a lot of good.
0:38:54 PROFESSOR FISHMAN: One of the things that has always bothered me about the Clintons, is an inattention to the appearance of impropriety. They never seem to stop, and if they're going to do something, say to themselves, "How is this going to look to the American public? Will it pass the smell test?" They just do it, and I'm very troubled by that. I think the foundation should continue.
0:39:27 PROFESSOR FISHMAN: I think all of the Clintons, including Chelsea should take a sabbatical. In fact the foundation could become a private foundation. That's just filing a form with the IRS and if Hillary Clinton wins when she's done her term of office it goes back to being a public charity. I think if they, they have an endowment, I believe, of $200 million. If that's not enough to keep the existing programs going I suggest that they set up a non-partisan grants committee with no friends of Bill, Hill, or Chel, and they would determine which foundations they will solicit funds from and they will be foundations without government contacts and which donations they will take.
0:40:25 PROFESSOR FISHMAN: Harry Truman, he was a President in the '40s, until '52. And when he left office the only wealth he had was a veterans pension, from his service in World War I and Congress boosted it to give him some credit for his service in the Senate and as President. He still didn't have much money. Heads of corporations came to him and they wanted him to join their board. And he said "You don't want me, you want the Office of the President, that belongs to the American people and it's not for sale." Well I still think that's the gold standard and given Mrs Clinton's rightly, or wrongly, level of unfavorability, and given the kind of loosey-goosey practices, that the Clinton Foundation has done, I really think there should be a temporary separation, by the Clintons from the foundation to enable it to go on and do its work without them.
0:41:45 PROFESSOR TEKULA: Alright, thank you. So Stacy what does this do for the public perception of charity?
0:41:51 STACY PALMER: Nothing good.
[laughter]
0:41:56 STACY PALMER: I would say one of the things that I've heard a lot of talk from non-profit leaders is they're very worried about what they're seeing and hearing and what the public might end up thinking goes on in philanthropy and that this really might be what is the norm. And one of the things that they've been encouraging me to do is to commission more op-eds from people saying, "Here's the kind of actions non-profit leaders ought to take." And I have had a devil of a time, persuading non-profit leaders to use their own name and write those words in our pages, that's how touchy an issue this kind of thing is. It's not surprising. I mean I'm lucky that Ben writes first, but he doesn't have to worry about running a non-profit, but those people who actually do are really, they're very troubled privately but they're not talking about it so much publicly.
0:42:44 STACY PALMER: They're worried about obviously how the donating public will think about these kinds of things, "Is this the way charity works?" They're worried about the potential that there will be regulation, will Congress start thinking about things a little bit differently given everything we've had. It raises questions about the executive branch, who is monitoring what's going on in the charity world?
0:43:06 STACY PALMER: The IRS didn't seem to know that that's what Donald Trump was doing or not doing with some of these self-dealing things. The attorney general in New York paid attention to it when the newspaper started raising this but didn't do it before. Will it lead to any strengthening of the regulations, the laws, and the biggest thing though is the public perception. And I think one of the things that nonprofit folks have to do is start doing a lot more storytelling, about why this is different. And even if they do applaud some of the work let's say that the Clinton Foundation does, to say, "We don't believe in this idea of this pay-to-play kind of thing, that's not the way most charity works," and really explain what some of the things that are differences.
0:43:50 STACY PALMER: We've talked tonight about how different these foundations are. The public needs to better understand that and to understand what's going on. So I hope that there will be more robust discussion of it. I'm a little worried that perhaps it will be quiet within the sector itself.
0:44:06 PROFESSOR TEKULA: Thank you. Go ahead.
0:44:07 BENJAMIN SOSKIS: I want to add two points to that. So one interesting trend in the sector over the last say 10 years or so, historically post the Congressional investigations in the '60s and even going back to the '20s and '30s with a brief blip in the '50s and mid '60s, philanthropy has defied itself against partisanship. It preferred a position of disinterestedness. It floated above the fray, believed in the value of neutral, sometimes bipartisan, expertise. And that lasted for quite a while. That's what, you got foundations supporting think tanks, and the assumption was that philanthropy did not have to engage in the partisan fray.
0:45:07 BENJAMIN SOSKIS: That that assumption has been challenged in recent years in part because levels of partisanship have become so extreme now, and the political dysfunction is so profound that I'm not sure if foundations, and philanthropy more generally, really can exist outside of partisanship. And we've seen in recent years, more funders willing to roll up their sleeves and define themselves in terms that aren't explicitly partisan, they're not allowed to engage in electoral politics, but that aren't afraid to identify in a partisan way and to lose the veneer of neutrality and disinterestedness. Part of this is because in the last several decades there's been such a growth of conservative philanthropy. Conservative philanthropy really said that pose of disinterestedness was just an excuse to be progressive, but through the pose of neutrality. And so now you have a degree of parity, out there.
0:46:23 BENJAMIN SOSKIS: Each side has an infrastructure of non-profits and foundations, they can slug it out. And to get things done I think philanthropy might have to recognize the battle lines. But as Stacy suggested, that's going to be very, very problematic to many people and it's gonna produce a pushback, each side pushing back on the other. So for instance, not many progressives have good things to say about the Koch brothers' philanthropy, but lots of libertarians aren't particularly enthused with say George Soros' philanthropy. Increasingly that's the world we're gonna inhabit, in which each side tries to discredit the work of the other and there's not as much territory in the middle as there was before.
0:47:13 BENJAMIN SOSKIS: Moving on to the second point, that really puts a huge strain on this idea of transparency. We hear about the Clinton Foundation that there's something amiss, about appearances. We haven't heard really any evidence of actual illegality but there's clearly issues with appearances. But the issue with appearances is it really is in the eye of the beholder. My sense is that the ethos of transparency, the gospel of transparency is going to run smack into an era of hyper-partisanship, in which you can be transparent, but it really depends on having an honest interlocutor, who will look at the evidence and treat it fairly. We don't have that now, that's not the media landscape we inhabit.
0:48:12 BENJAMIN SOSKIS: And so I think foundations have these dueling, sense of how to proceed. One; is to be more transparent, The Clinton Foundation could have been much more transparent than they were but there's also a guardedness, because even if they had revealed all their funders and been as transparent as could be, you would still have plenty of bad faith actors in the media and throughout the research community who would spin facts and find ways to accuse them of things that they probably weren't guilty of. I'm not in a non-profit now but if I was, I think that's a real puzzle, how to bridge those two imperatives. I don't think anyone out there thinks The Clinton Foundation has done a good job. I agree with Jim, it's mystifying, that they didn't see this coming. In fact, some of the leaks, Chelsea was saying, "No, no. This is a problem. This is a problem." And part of this is being in a closed world, where outside scrutiny sometimes just doesn't really make sense. They could have used some young, fresh eyes on some of those procedures and protocols. I think it would have been handled much better if they had some non-Clinton folk involved.
0:49:50 BENJAMIN SOSKIS: The Clinton Foundation is a strange beast, but the problem of how to deal with the media in an era of hyper-partisanship when you're trying to do good, is I think one that is going to be out there for quite a while.
0:50:05 PROFESSOR TEKULA: Thanks. So this is a question really for any and all of you. What does the controversy over the Trump Foundation and the Clinton Foundation suggest about regulation of the sector? Do we need more regulation and is that the direction that we're going generally?
0:50:24 PROFESSOR FISHMAN: We don't need more regulation, or more statutes, we need more regulators. If Donald Trump had not run for President, his foundation would never have been audited or discovered by the IRS. The Internal Revenue Service has been just paralyzed, because of the Tea Party incidents where they were found to be biased, and if you look, in New York State, I think there's 81,000 charities. In California something like 240,000, New York and California have the two most active charities bureaus in the country, how can they oversee them all? They have other things to do and that's one of the great problems. David Farenthold deserves a Pulitzer prize for his work on the Trump Foundation. However, investigative journalism has become the attorney general in default and that is not a good thing necessarily either because they may shame charities and shame people who are not being convicted of violating any law or anything. And so I don't really have an answer.
0:51:44 PROFESSOR TEKULA: Anyone else?
0:51:46 BENJAMIN SOSKIS: I agree, I think we need substantially more regulators, the problem is it's very hard to get... That's not a very popular line item, neither side really is comfortable supporting that and to the sector's discredit, it often, the sector itself acts like a trade organization so every person who works in the non-profit sector has two hats. They're both a member of the sector but they're also citizens and I think too often the sector itself has worn the guild hat, protective of the interests of the sector itself, as opposed to thinking about what the public interest is. I think we'd be much better off on the right, left and in between if we had more robust regulatory infrastructure. I don't see it coming though.
0:52:49 STACY PALMER: I agree with that and that's why a lot of people have called for the idea that instead of being trade associations that promote good charitable giving and things like that, that there ought to be some kind of an association that says, "You can't claim to be a charity if you're acting like this." But the odds of that ever happening strike me as slim, so there isn't really a great way to... There's not gonna be government action and there's probably not gonna be private action and that is why journalists have had to fill the void. And I agree with you, much as I'm proud of journalists for doing what they're doing, it's wrong, we shouldn't be the ones in this position, it should be government actors paying attention.
0:53:25 STACY PALMER: I think one of the wonderful things, Ben was talking about the problems the media has in this hyper era, one of the great things we have is we have so many more journalists operating in so many different ways with so many different sources of action. Even look at somebody like David Fahrenthold, who's using twitter, to crowdsource lots of the kinds of things he's doing. He's getting all of these tips from the public and going out and asking for them. And then there are lots of citizen journalists doing all kinds of amazing work. At least those things are raising the level of visibility in a way that we didn't have 20 years ago and we didn't have people paying attention to the role of philanthropy really beyond charity galas, and those kinds of things, so we are in a better place, at least in terms of scrutiny.
0:54:06 PROFESSOR TEKULA: We've left some time in our program for questions. If anyone in the audience has a question, please come up to the mic so we can hear you. We have some people watching us on a live-feed, so they won't be able to hear your question unless you come to the mic. Thank you.
0:54:23 Question 1: It seems to me that there's one question that you didn't ask, that as an economist, I've been wondering and think of answers. But the question is, all of these issues seem to be related to the fact that charitable donations are tax-deductible. Why should they be tax-deductible? Why should the State subsidize favorite charities? Right? Because tax-deduction is like a subsidy from the state.
0:54:56 PROFESSOR FISHMAN: The Bible says it's better to give than to receive and that's true under tax law as well. I think there'd be a big decline in the amount of money given if the charitable contribution deduction was taken away. It is an important incentive. I don't believe economists can agree how much the hit would be. But I think everyone thinks that people would not give as much.
0:55:37 BENJAMIN SOSKIS: I agree. The one important addendum to that is that it also means that we as citizens have a stake in... We are subsidizing these institutions. You can argue that, actually, there's a benefit to that. Although American... The charitable sector, it's fundamental premise is voluntarism. There's also a benefit to having a countervailing force, of public scrutiny. It would be much easier for philanthropists to say exactly what Donald Trump did say when David Fahrenthold and other journalists started poking around. He said, "It's none of your business, this is my charity, I can do whatever I want with it." Which was basically, the refrain you heard through much of the early part of the 20th century. It's much easier for people to say well, "It's mostly your money, but we're paying for some of that at least." It's easier to defend a level of scrutiny, and public inquiry that balances the voluntarism.
0:56:50 Question 2: First, I'd like to thank you because I found this really informative. I'm a political science major. At the debate tonight, what strategy would you advise Clinton to use when answering questions about her charity? And then, what precautions could she have used to set up to promote transparency and pass the smell test?
[chuckle]
0:57:12 BENJAMIN SOSKIS: I'll answer the first one. I'm struck by how little that they've talked about the actual work that the Clinton Foundation has done. Partially, this is a fault of political journalism. I live in DC, the horse-race is everything. It's process-oriented. It's consumed by questions of corruption, but there's just very, very, little substantive coverage of the actual work that the foundation did. The Clinton Health Access Initiative and the work they did, lowering AIDS drug prices, that's not just important, but it's a very compelling story. It's one that I think people could understand intuitively, though it's complicated. I think that the Clintons, they had some of their surrogates step forward and say, "Wait a second, it did really important work." But it would be nice to hear Hillary say, "I'm proud of this. This is something that I'm proud of," while also gesturing towards some of the problems that arose.
0:58:21 STACY PALMER: [chuckle] There were people discussing this on Twitter this afternoon. Some of the tax experts are advising what Trump and Clinton should say to each other. So it's kind of fun to read. I don't know how many of you follow Brian Mittendorf, who has written a lot about how you look at the Clinton Foundation and how you understand it. He was saying a little bit of what Ben said. For Clinton to engage and to get Trump at, "What is your charity doing and what is your vision of the world? , and ask questions about what he thinks philanthropy ought to do. It would be really interesting to have them talk about their philosophy. Not just what they accomplished, but what do they believe in the role of the private sector.
0:59:01 STACY PALMER: We ran a piece today, by Alan Abramson, who's a scholar in the field, urging that there be a White House office that's dedicated to philanthropy and non-profits. There have been various efforts to try to do this. But given all of the things we've talked about tonight, it's hard to imagine you could have one operate in a way that anybody would trust. We have to solve these problems because obviously foundations and charities are very important to making government work. There's not enough government money to fund... Especially the experimental, risky kinds of things. We need non-profits and foundations to be in the mix. You don't want them not to be and not to have anything to do with government. It would be tragic, if we send that message.
0:59:44 PROFESSOR FISHMAN: I don't think there will be much discussion at a high-level tonight. I was debating whether I should watch the debate or maybe just see Saturday Night Live on Saturday. It's really so depressing, and this debate on their charities, those are important questions, and I don't think they'll be discussed tonight.
1:00:10 BENJAMIN SOSKIS: Just to piggyback on what Stacy said, it's really interesting to think why do we actually care about the charitable decisions of politicians? And I've done some thinking about this. It's striking. At a certain level we're very comfortable judging politicians, in terms of their policies. You could look at a tax plan and see, "Okay this one would benefit the middle class this much and the other candidates would benefit the middle class that much." So scrutiny and balancing, and actual judging rivals against each other in the policy realm, that makes perfect sense. But we're not very comfortable judging people based on their philanthropic decisions. Again, this goes back to the volunteer's tradition in which ultimately the guiding norm was as long as what you're doing is vaguely charitable, we don't judge you, we let you do it and we assume it. In the aggregate, it's good for the public.
1:01:16 BENJAMIN SOSKIS: But one potentially useful thing that I think might come out of this whole debate is that it's okay to judge people in terms of how they give away their money. It's important to judge people because that's the way that you get people to actually think more critically about the decisions they're making if they know that at a certain point they actually have to sort of defend those decisions. As long as it's done in a civil manner, that could be important. The Clinton Foundation has taken a certain path towards doing good in the world. There's many, many different paths they could have taken. They decided to capitalize, on one approach. I don't think this is gonna happen in the debate, but in an ideal world you would confront Clinton and say, "Why did you take that approach, what is your governing philanthropic strategy, how do you think about changing the world philanthropically?"
1:02:16 BENJAMIN SOSKIS: You could ask Trump the same question. I'm not sure if the Trump Foundation actually has enough data behind it to answer it, but everyone has attitudes about how to do good in the world. And in a weird way though, a political campaign is the perfect opportunity to force people to actually judge and discern differences and make choices between them. So if that eventually happened, I think we could besides getting some good Saturday Night Live sketches, that would be a positive outcome for this campaign.
1:02:54 STACY PALMER: And we did get one sign of things, I don't know if you saw from some of the WikiLeaks that came out today, that on the short list of vice presidential candidates were people like Bill and Melinda Gates and the head of the Rockefeller Foundation. You don't really see those kinds of people coming up. So the idea that they even made the list and that they are thinking about philanthropy is something that's pretty different.
1:03:17 PROFESSOR TEKULA: I think the second part of your question was how the Clinton Foundation could have been structured to avoid these issues. Jim, would you say what you had suggested earlier?
1:03:29 PROFESSOR FISHMAN: Well from the beginning, I don't know. I think they should have been a lot more careful with corporate governance and conflict of interest issues, rather than just rushing ahead, and doing the good deeds. There's, Bill Clinton said something, when he was challenged about something, he says, "Well, look at all the good work we're doing." Yeah, you're doing good work but unfortunately that's not just enough, and I've seen that with many smaller organizations that, "Look, we're doing God's work, what do we have to fill out all these forms for?", things of that sort, and I think this is just another larger version of that.
1:04:23 Question 3: Hi. I agree that we definitely don't need a lot more regulation and we need more regulators, but I'm wondering if just from my experience in the industry, that there really are no guidelines, when dealing with certain amounts of money, about who is in charge, what kind of experience you need, the standards that you have to have in place. So whether it would be beneficial to have that and certainly sounds like in both organizations they could have had... It would have been very good if that was actually a requirement, and then also taking a step back in terms of why we have this huge charity sector in this country, it's because there is a huge gap between the for-profit sector and then what the government does and the desire to have government involved less, and so a lot of the space of charity work is actually work that government could be doing. And I went to another event when they talked about, for example USAID, and the work that they do and the fact that a huge amount of their money goes to just a few, large contractors, and that gets subcontracted out, and subcontracted out, and there's a whole amount of waste because there's so much regulation about who we're giving government money to. So they are afraid to even give it to people who might be good actors, direct actors in the field. They give it to the usual suspects, and it goes down a long chain of actors and this happens all over the US government, but we don't really talk about that 'cause we wanna say government shouldn't be involved, but it is involved 'cause it's the largest buyer in our economy. But there is not this discussion, about who needs to be doing what, and how do we stop wasting money, by imposing these false barriers that shouldn't be there.
1:06:26 PROFESSOR FISHMAN: I agree.
[laughter]
[pause]
1:06:41 Question 4: Thank you all very much. I really enjoyed this presentation. I consult in not-for-profit organizations, and I know full well, and I agree with this woman who just came up, that without not-for-profits, communities cannot function. Because what the not-for-profit organizations do is provide services and programs, and support, and missions, for sectors that would not be... That we would be so overtaxed, that we might already be, in order to fulfill and care for the programs and the services that not-for-profits manage to take. And I think that that's why in answer to why you get a tax credit is because... You get that little tax credit because otherwise, we would all be taxed humongous amount of tax, in order to take care of the sectors that need to be taken care of. The comparison between the Trump Foundation and the Clinton Foundation, I think in all fairness, the Trump Foundation...
1:08:09 PROFESSOR TEKULA: Sorry to cut you off. Do you have a question for us?
1:08:12 S9: Yeah. [chuckle]
1:08:13 PROFESSOR TEKULA: Okay, okay, it's coming? Good, good, good. [chuckle]
1:08:15 Question 4 (continued): So what I was gonna say is, do you feel that the Trump Foundation might have been originally set so that it had a mission to do something for others? And the Clinton Foundation, clearly has stated what their mission is. So is it, both wrong, both right... Where do we...
1:08:41 PROFESSOR TEKULA: If I can take this one. As I understand it, in order to register as either a public charity or a private foundation, you do need to state your mission, and specifically what category of mission you're focused on. So there would've been, at least on paper, at the point of registration, a stated mission or focus of the Trump Foundation as well, correct?
1:09:07 PROFESSOR FISHMAN: Yeah. I think what happened with Trump and his foundation is that he got one of his lawyers to incorporate it, fill in the forms, submit them, and he has this tax-exempt vehicle. There was no lawyer that he used, who really knew anything about the law of private foundations, public charities, or anything. I mean he's not crazy. He may be evil, for some people, but he's not crazy. If you look at some of the things he's spent money on, it's a lay person's idea... Well, it's related to charity. For instance, the six-foot portrait purchased at a charity auction. I know a lot of people who have gone to a charity event where they have an auction, and when they bid they think they're making a charitable contribution. It's not deductible if you buy something at auction. If you look at all of the other... Most of the other things that trump did, these crazy things, it's really a lay person who knew nothing about what it was, and that's how he got into this mine field because it's such a complicated area. So I guess there's something good I can even say about him.
[chuckle]
1:10:39 PROFESSOR TEKULA: Are there any other questions for our speakers? Sure, if you don't mind coming up to the mic, that would be great. Thank you.
1:10:53 Question 5: Thank you. My name is Ismael, and my question is with regards to what is the future of philanthropy? Because lately, I think there's a collision, when you talk about the two foundations and the presidential election. So much talk we'd been hearing is like philanthropy has been demonized, or something. How do we redeem philanthropy in the face of... When you talk about ideas of power, access, democracy, privilege, influence? How do we reconcile all these? How do we redeem... Because the values of philanthropy for me, I think... Okay, I will just like to say that... There are like three. One is exclusively giving. Secondly, is giving and taking a little, and there's taking away. So when you talk about these two foundations, what is the future of philanthropy? And especially for maybe high level individuals who are in high places in office, because it will be... If I wanna be president next time, I think I will never want to be involved with a foundation with such kind of sarcasm that we're having, thank you.
1:12:08 BENJAMIN SOSKIS: I'll take a shot at it and then I'm gonna have to unfortunately leave. So, one thing that will help a lot is the campaign ending. Because it's taken all the oxygen up. And actually, in the sector now, for the first time in quite a while, basic questions of privilege, of inequality, of power I think are more prevalent, not just in some social justice organizations, but in some of the big guns out there. The Ford Foundation, for instance, has really put that to the fore. And unfortunately, there's only so much attention people can pay to foundations and it's you have a car wreck or circus and that's where your eyes go, but once this campaign ends, and mercifully, it will be over relatively soon, I actually think now is a very good time, a promising moment, where some of these very difficult fundamental questions that the sector really has to grapple with are being unearthed, and confronted and thought about in a way that they really haven't in recent years. So, hopefully that will... We'll have more of a chance to think of those issues.
1:13:34 BENJAMIN SOSKIS: The Chronicle of Philanthropy, if you read their editorial page, now it may be a bit consumed with the election, but this year, it's been one of the central issues that the Chronicle has really addressed this question of inequality, and how foundations both perpetuate it and address it. So I'm actually optimistic about not necessarily about solving the riddle of inequality, but that foundations in philanthropy will engage in more responsibly.
1:14:10 PROFESSOR TEKULA: Any burning last thoughts before we wrap it up? Thank you so much for your time Jim, Ben, and Stacey. Very much appreciated.
[applause]
[background conversation]