Edwards' Nonprofit

by hilzoy

From the NYT:

"John Edwards ended 2004 with a problem: how to keep alive his public profile without the benefit of a presidential campaign that could finance his travels and pay for his political staff.

Mr. Edwards, who reported this year that he had assets of nearly $30 million, came up with a novel solution, creating a nonprofit organization with the stated mission of fighting poverty. The organization, the Center for Promise and Opportunity, raised $1.3 million in 2005, and — unlike a sister charity he created to raise scholarship money for poor students — the main beneficiary of the center’s fund-raising was Mr. Edwards himself, tax filings show.

A spokesman for Mr. Edwards defended the center yesterday as a legitimate tool against poverty.

The organization became a big part of a shadow political apparatus for Mr. Edwards after his defeat as the Democratic vice presidential nominee in 2004 and before the start of his presidential bid this time around. Its officers were members of his political staff, and it helped pay for his nearly constant travel, including to early primary states.

While Mr. Edwards said the organization’s purpose was “making the eradication of poverty the cause of this generation,” its federal filings say it financed “retreats and seminars” with foreign policy experts on Iraq and national security issues. Unlike the scholarship charity, donations to it were not tax deductible, and, significantly, it did not have to disclose its donors — as political action committees and other political fund-raising vehicles do — and there were no limits on the size of individual donations. (...)

Its directors included ["J. Edwin Turlington, a Raleigh lawyer who was the manager of Mr. Edward’s 2003 presidential exploratory committee" -- earlier description from NYT article]; Miles Lackey, Mr. Edwards’s former chief of staff; Alexis Bar, his former political scheduler; and David Ginsberg, Mr. Edwards’s current deputy campaign manager.

The $1.3 million the group raised and spent in 2005 paid for travel, including Mr. Edwards’s “Opportunity Rocks” tour of 10 college campuses, consultants and a Web operation. In addition, some $540,000 went for the “exploration of new ideas,” according to tax filings.

Nonprofit groups can engage in political activities and not endanger their tax-exempt status so long as those activities are not its primary purpose. But the line between a bona fide charity and a political campaign is often fuzzy, said Marcus S. Owens, a Washington lawyer who headed the Internal Revenue Service division that oversees nonprofit agencies.

“I can’t say that what Mr. Edwards did was wrong,” Mr. Owens said. “But he was working right up to the line. Who knows whether he stepped or stumbled over it. But he was close enough that if a wind was blowing hard, he’d fall over it.”"

Discussion below the fold.

The basic facts seem to be these: the Center for Promise and Opportunity (not to be confused with the Center for Promise and Opportunity Foundation, another Edwards nonprofit that seems to have done great work getting scholarships for poor kids in North Carolina) is a 501(c)(4) foundation. While donations to it are not tax-deductible, the organization itself does not have to pay taxes on the money it raises. According to the IRS:

"To be tax-exempt as a social welfare organization described in Internal Revenue Code (IRC) section 501(c)(4), an organization must not be organized for profit and must be operated exclusively to promote social welfare. (...)

The promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office. However, a section 501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity."

The NYT quotes a representative of the Edwards campaign as saying:

“One of the Center for Promise and Opportunity’s main goals was to raise awareness about poverty and engage people to fight it,” Jonathan Prince, deputy campaign manager, said yesterday. “Of course, it sent Senator Edwards around the country to do this. How else could we have engaged tens of thousands of college students or sent 700 young people to help rebuild New Orleans? It’s patently absurd to suggest there’s anything wrong with an organization designed to raise awareness about poverty actually working to raise awareness about poverty.”

“Of course, some of the people who worked for Senator Edwards in the government and on his campaign continued to work with him to fight poverty and send young people to college,” he added. “Perish the thought: people involved in politics actually trying to improve peoples’ lives.”

And surely sending John Edwards around the country to talk about poverty is a way of raising awareness of it, and it might well contribute to the common good. However, the legal question is not whether Edwards did good things with this organization, which I assume he did, but whether (a) the primary purpose of the organization was to contribute to the common good, as opposed to participating in a political campaign, as the law requires; and (b) whether some of the things the organization did involved inappropriate uses of its money. For instance, it is not obvious to me that financing retreats on Iraq with national security experts is a way of “making the eradication of poverty the cause of this generation.”

There's a further question, namely: since Edwards has a fair amount of money, why not just support himself and his staff for a couple of years, or use his speaking fees? Alternately, why not set up a campaign committee and use donations to it? Why insist on tax-exempt status and the right not to disclose his donors?

***

I was reading around to see what other people had written about this, and found this article at RealClearPolitics:

"John Edwards has gotten a lot of bad press recently for his "two Americas" lifestyle - and rightfully so. There is something inherently contradictory about portraying yourself as a champion of the poor while getting $400 haircuts, living in a 28,000 square-foot mansion, and getting paid $55,000 a pop to speak about poverty.

That being said, today's article by Leslie Wayne in the New York Times strikes me as unfair to Edwards."

I take exactly the opposite view. I think that the story about Edwards' speaking fees is ridiculous -- if people want to pay him a lot of money, why not accept it? Likewise his house: lots of people have large, expensive houses and never lift a finger to help anyone else; the idea that this somehow becomes bad when you do try to help other people is, to me, just bizarre, as is the idea that you are only allowed to talk about poverty when you have sold all your worldly possessions and moved into a cardboard box. And the haircut -- well, I said what I thought about that one at the time.

This one, I think, is different. I don't see that there is a good reason for a man of considerable wealth to set up a non-profit, tax-exempt organization to support his travels and his political staff. I honestly don't. I'd be interested in hearing what other people think about it -- especially those of you who know more than I do (which means: anything at all) about tax law.

***

I'd also be interested in reading reactions from bloggers on the left. However, as far as I can tell, most of the left-wing bloggers have gone dark on this one.

To be clear: I don't think that the failure of any particular person to write about something means much of anything. I didn't write about the Obama campaign's Punjab moment, which I thought was odious, because I was busy, and by the time I stopped being busy, he had come out with what I thought was a good apology, in which he accepted full responsibility personally. I didn't write about Hillary Clinton's vile capmpaign manager, whom I find quite troubling. I haven't yet written about the Romney aide who wants to be a policeman when he grows up, or any number of similar things. Virtually nothing can be inferred from the fact that I don't write about something, and I assume the same is true of most bloggers.

On the other hand, it is striking that when I search the 60 left blogs that are on my main bookmarks list, I found three (3) posts on this story. (Apologies to anyone I've missed; I skipped blogs that either restrict themselves to unrelated subjects, like, say, Registan, or are blogs of politicians or parties; on sites like dKos and MyDD, I did not search diaries.) One is from Big Tent Democrat, and concerns the fact that the story's first two paragraphs are unfair. (I agree: it's speculation, not fact, that Edwards came up with the idea of this organization as a "solution" to the "problem" of keeping his public profile alive without a campaign. I also think the larger story is worth commenting on.) One is a snippet in the morning roundup of campaign news at Election Central. And one -- the only substantive comment from the left that I've seen so far -- is by Susan Madrak at the Huffington Post. But Madrak's piece is mainly about how bad the Times is, not about the substantive isues involved. Excerpt:

"The same paper that was oh, so reluctant to question the motives of the gang of crooks and liars that have been desecrating the White House and Congress for far too many years now is going after John Edwards for being smart enough to keep himself politically viable."

I have no problem with Madrak's piece. I agree about the Times -- I think it's often lazy and at times downright pernicious (cough, Judy Miller, cough), though it also does some really good international journalism, and employs Jason DeParle, which makes up for a multitude of sins. What I am worried about is the fact that, as I said, no one else is writing about this at all. No one.

Why is that?

***

Update: missed one (The Daily Howler.) Also, Greg Sargent posted another story at Election Central while I was posting this, and Josh Marshall linked to it. It says: "The Edwards campaign has just told us on the record that The Times refused the chance to talk to any real, live beneficiaries of Edwards' programs."

I assume that by 'beneficiaries of Edwards' programs', the campaign means beneficiaries of the Center for Promise and Opportunity, as opposed to beneficiaries of any of Edwards' other programs. (If they offered to let the Times talk to beneficiaries of his other programs, then I can see why the Times would think that was irrelevant.) I haven't read the documents the Times has, which include its federal filings, but if those documents say (and I am just making this up) that the Center spent, say, 95% of its money on Edwards' travel, retreats on national security policy, and other such things, and only 5% on direct assistance to the poor, then, again, I could see not wanting to interview the people who had recieved that 5%, if I did not plan to assert that they just didn't exist or had not been helped.

Again: the question about this is not whether Edwards cares about policy, or whether he has done good works. He does; he has. It's about whether he also made inappropriate use of a non-profit, tax-exempt organization.

And my further question is: why hasn't anyone on the left blogged this?

***

Now, around two and a half hours after I wrote this, people are blogging it.

Comments

[LizardBreath]

As a minor leftwing blogger, I saw the story, and have been lying low looking for reactions to it, because I don't know much about non-profit law and practices. I agree with you that it looks hinky. On the other hand, if it appears that such non-profits are ordinary and customarily used in circumstances like this (that is, in support of an extended campaign), I don't want to condemn Edwards for something that goes unnoticed when other people do it.

This isn't an area where I have any intuitive sense of the ethics. Given that what he did was within the law, I need someone with a broader perspective on what conventional practice is before I pass judgment one way or the other.

[Joe Thomas]

Bleah. As a closet Edwards supporter (he's barely on non-politically-active-peoples' radars, so it's tough in casual conversation), this is pretty damn disappointing.
As for not blogging about it, I'd bet that that's equal parts having not gotten around to it (it was just posted and, I assume, published, today) and not wanting to get around to it. I can see a liberal blogger seeing it, thinking "That's bad, I should write about it" and then putting it off because it's unpleasant and then getting on to the next thing to blog about and never writing about it -- not an intentional "I don't want to report bad news about a progressive," but the reluctance to do so definitely playing a role.

[Ugh]

Well, as the resident tax lawyer, I'd offer up my opinion on this but I have done little to no work on charitable organizations, so I don't have an idea whether this is kosher or not (or close to being non-kosher or close to being kosher). If I see anything in the tax press on this I'll try to excerpt it here (and it's interesting that the NYTimes resident tax reporter, David Cay Johnston, didn't report on this).

That being said, Edwards' real tax problem is the S-corp he used to avoid paying Medicare taxes on his earnings from his trial lawyer work prior to being a Senator.

[Dan Miller]

I'm not a lefty blogger, just a lurker, but I'll take issue with your question. I, personally, don't find it at all troubling that major liberal sites have let this one go dark. Basically, there are plenty of people who are more than willing to attack Edwards--right blogistan, talk radio, etc. Why on earth should liberals join them? If Edwards did something hinky, then he will get called for it--without help from the left. The same can't be said for, e.g., Alberto Gonzales--if it weren't for the left driving that story, it would never have gotten out.

Basically, it's a question of comparative advantage. The left has a comparative advantage in tearing down figures on the right; and vice versa. Why spend time on something that'll get done anyway? Tearing down Edwards does not help the cause of liberalism, and as such major liberal writers are giving it a pass. This is about as surprising as the fact that George Will rarely writes about the plight of workers who are struggling to unionize.

[hilzoy]

Dan: I don't assume that anyone who wrote about it would be attacking Edwards. On the contrary: Edwards has lots of defenders among left bloggers, and the main reason I checked was that I wanted to see what they had to say before posting.

LB: I completely understand that, and, as I said, I draw no inferences from anyone in particular not blogging something. But: no dKos, no AmericaBlog, no MyDD, no Atrios, no Digby, no Matt Y, no Ezra, no anyone?

[hilzoy]

Actually, that was the reason I started checking. The reason I checked 60 blogs was sheer incredulity.

[Dan Miller]

Hilzoy: fair enough, but in this context, don't you think that silence is the best defense they could give him?

Another reason people have clammed up might be that they don't want to appear to be taking sides in the primary; I know Garance Franke-Ruta at TAPPED has taken some heat over her alleged pro-Hillary bias and there are constant pleas to stop sniping in the diaries at MyDD.

[Jay Jerome]

What I am worried about is the fact that, as I said, no one else is writing about this at all. No one. Why is that?

How about the obvious answer: because it's a boring wonky topic about a second-tier un-charismatic supporting cast member who isn't going to be the Candidate (it's gonna be a Candadette running to be the Presidette), so why waste intellectual fuel writing about it?

[Randy Paul]

There's a further question, namely: since Edwards has a fair amount of money, why not just support himself and his staff for a couple of years, or use his speaking fees?

I hate to generalize, but after having worked with and for attorneys, I can assure that it is not unusual for attorneys to expense everything that they legally can than to spend their own money on anything.

I don't think my experience is that different.

[tzs]

Also the tax issues--how many bloggers just avoided the topic because it involves discoursing knowledgably about non-profits and taxes, one of the most boring topics under the sun?

Still, I'm surprised that Edwards came up with this and didn't realize there might be a problem. Reminds me of the line:" oooh, you're so smart you'll cut yourself."

[Garth]

I am an Edwards fan. I thought the haircut rap was ridiculous. I think his lifestyle, like Gore's, is irrelevant to the agenda they propose and with which I agree.

I think Edwards wanted to achieve a dual purpose. Keep his name in front of the public AND do something good. I like the things Edwards says and believe he is committed to making them happen in the WH.

This looks like it could be a closer question as to whether he violated tax laws or campaign laws or whatever.

If he did something improper, I expect him to cop to it.

But compare this to K Street. Edwards, undoubtedly, has smart people working for him and maybe they got too cute with this. I don't know.

Does Edwards bring this on himself or does the press like to trip him up. I don't recall seeing any other profiles in candidate hygiene.

I'm suspicious mostly because there seems to have been a throw spaghetti at the wall and see what sticks tone to the Edwards coverage.

[hilzoy]

Garth: I'm with you on the comparison to K Street. But (and I don't mean that you meant what I'm about to deny, I just want to say it myself) I don't think we shouldn't talk about stuff our candidates do so long as it's not as bad as K street.

[Anderson]

I dislike the idea that liberals are supposed to keep mum about liberal candidates' errors and misdeeds, out of partisan tactics.

You can't preach from the moral high ground unless you stand on the moral high ground.

What's disappointing about this is that one has to look to "liberal blogs" or whatever ... instead of looking at what Edwards himself has to say about it. It's like the White House -- cooking up a non-answer, instead of being candid.

Given the small fiasco over Marcotte & Shakes, who knows how they'll deal with this one.

[Ugh]

TPM has more.">http://electioncentral.tpmcafe.com/blog/electioncentral/2007/jun/22/edwards_campaign_times_refused_to_talk_to_beneficiaries_of_his_anti_poverty_programs">more.

[Garth]

and I agree with Anderson.

after 8 years of Bush, I am ready for someone to take the high ground. I don't intend to give my team a pass because I want the best team possible.

Edwards better be smart enough to figure out how to run a goddamn campaign because he can expect no slack.

[Mike3550]

Ethically, I am not sure that this is something that is that unethical, if it is indeed unethical at all.

In terms of the ethics of this campaign, I think that not disclosing a donor list is objectionable on the grounds that there is too much money in politics. I think that Edwards should simply respond and let the media know who donated the money - if it is mostly his, then who cares? If it's somebody else's, it's probably not going to be any of the really big players because they are supporting either Clinton or Obama.

And, I don't see the work that he was doing as antithetical to reducing poverty in the U.S. We all know that the war is draining our non-existent tax base that is going to require billions, probably trillions, more to come to some possible conclusion (that is, even if we left Iraq right now), and is going to be a major concern for any domestic policy program as well as an international one. It is hard to combat poverty without money.

Lastly, I don't think that what he did is really that bad, in-and-of-itself. Should the people of the state of New York be upset that Clinton didn't spend most of her money in her Senatorial race and is, instead, spending it traveling the country to run for President, instead? Political contributions are different than contributions to a non-profit but need there be such a divide between Politics big "P" and politics small "p"?

Finally, I was fortunate enough to be at the University of Michigan when Edwards spoke there. I was impressed; it was a stump speech, but he also met with students and helped garner support for increasing the minimum wage there and invested in a lot of on-the-ground organizing that wins elections. And, whether he wins the nomination or not as a result, there is an infrastructure there to begin to address the underlying problems of inequality and political apathy.

This comment is getting long enough that I probably should have posted it on my own blog, but I think that it is an interesting question.

[Garth]

i am perfectly prepared to conclude as Mike3550 suggests that this is another attempt to drum something up that contains a certain truthiness.

in fact, it would serve to further cement my approval of Edwards campaign strategy and make me even more skeptical in the future of allegations of wrong doing.

[Garth]

the internet is becoming part of the political vetting process.

[hilzoy]

Ugh: yeah; see my update.

It bugs me that all the commentary so far, except for Brian Beutler, who just posted one, is about the badness of the Times' election coverage, which I will just stipulate agreement with, or bias, or how apparently this would all be OK for a Republican, and not about the actual facts.

I mean: I normally think of responses to a story that are all about the utterly discredited nature of the source, their malign motives, the obvious bias shown by the fact that the story didn't mention some other event that the responder thinks should have been mentioned, the fact that the other side does much worse stuff and no one ever talks aboutthat, now do they?, and so on, as Bizarro World responses. Not ours. I would like to be right about this.

[LizardBreath]

LB: I completely understand that, and, as I said, I draw no inferences from anyone in particular not blogging something. But: no dKos, no AmericaBlog, no MyDD, no Atrios, no Digby, no Matt Y, no Ezra, no anyone?

The thing is, I can't think of a liberal blogger who I'd expect to have the kind of knowledge I want on this -- you really would need an in-the-weeds-nonprofits/political-type expert. It makes perfect sense to me that everyone is hanging back neither wanting to defend something that turns out bad, nor wanting to jump on the bandwagon and hurt Edwards if it turned out to be unexceptionable (particularly because the tone of the article was condemnatory, and I'm really suspicious of articles condemning Democrats on the basis of wrongdoing I can't quite understand.)

[jim]

I'm not sure I understand what the issue is. Is it that the foundation behaved illegally? As far as I can tell the NYT piece didn't allege that. The furthest it went was "I can’t say that what Mr. Edwards did was wrong, ... but he was working right up to the line." Which when unspun says it wasn't wrong. That is, that the foundation met the IRS requirement that it "must be operated exclusively to promote social welfare." I would imagine that the Bush-era IRS would be investigating the foundation if it were illegal; it's investigated several non-right wing non-profits.

So if the issue isn't the foundation's legality, if the issue isn't whether the foundation was operated exclusively to promote social welfare, what is it?

It's hard to defend against an undefined allegation.

[LizardBreath]

Which means that some blogger who does actual reporting should be phoning an in-the-weeds-political-nonprofits guy for answers. So, someone at TAPPED? Or Yglesias?

[Anderson]

The Edwards pushback at TPM linked above is pretty lame thus far -- the bad old Times rejected the opportunity to speak to people "directly impacted by Edwards' programs." (Bad English is TPM's, not the campaign's.)

If, e.g., they misspent 90% of the money, it wouldn't make any difference that they could trot out beneficiaries of the other 10%.

[Garth]

Hilzoy,

Perhaps all the coverage so far has centered around the bad reporting because the article starts out with strong allegations, but then fails to really bach them up.

Meanwhile, I am sure people are digging in and I expect a stronger Edwards response soon.

I take it this was published today, front page NYT. I don't think anyone knows what to make of it.

[Ugh]

I think 501 filings are made public, but not sure where to find them.

The problem with this is, I think, regardless of whether it was legal or not, that Edwards is using mechanisms that are not available to those with lesser means (as his use of the S-corp I reference above demonstrates). I think this qualitatively differs from things like "he has more money so he can buy a bigger house" sort of stuff, which people intuitively understand. Instead, it smacks of the well-off gaming the system or bending/changing the rules to further their advantage.

Plus the seeming hypocrisy, which doesn't attach to people like Cheney who invest massively in tax-free bonds in order to not pay federal income taxes.

[Bernard Yomtov]

I don't think we should be giving people a pass either, but I'm a little puzzled by this. As far as taxes go, I'm not sure a straightforward political committee of some kind would be treated any differently than this organization. Contributions are not tax-deductible, but the organization pays no taxes because it is set up as a nonprofit. Isn't that what happens with "XXX for President," and the DNC, RNC, etc.?

I can see a couple of possibilities here. One is that this approach avoids some reporting requirements faced by political organizations. Another is that this was done simply because the paperwork was already in place, so it just a matter of convenience, and no harm done since there are no tax issues. IOW it operates under the wrong section of the IRS code, but that's purely technical.

I'm curious to hear more from the Edwards campaign.

[Mike3550]

My understanding is that certain political "soft-money" contributions are capped under campaign finance laws, but other 501(c)(3) and 501(c)(4) organizations are not (hence the rise in importance of organizations such as MoveOn, PFAW, etc.).

But, I could be entirely wrong.

[Bernard Yomtov]

Ugh,

Edwards' real tax problem is the S-corp he used to avoid paying Medicare taxes on his earnings from his trial lawyer work prior to being a Senator.

Isn't this fairly routine for people who earn a lot their income as fees? Does Giuliani pay Medicare taxes on his speaking fees, for example?

[hilzoy]

Ugh: in addition, I think there's another problem.

Let's suppose, for the sake of argument, that Edwards did set this up in order to make his campaign tax-exempt and his donors secret, and let's further suppose that no one can make a clear legal case against it, since that would require showing stuff about its "purpose" and "primary activity" and other nebulous, hard-to-define stuff of that nature. It's still pretty clear that this is not what non-profits are supposed to be, and that setting things up this way is a way of pushing the envelope on a somewhat vague statute.

There are cases where I don't mind that so much, mainly cases where it doesn't matter. But in this case, you have a law that: (a) is set up for a genuinely good purpose: making charities tax-exempt; (b) has a hard-to-avoid vagueness (about primary purpose, etc.) (I mean, the Sierra Club should be able to support legislation, but my campaign for dogkeeper should not be in the same category as the Sierra Club); (c) will only be able to function so long as people don't insist on pushing that vagueness to the limit.

In a case like that, pushing the envelope is just wrong, I think. It's twisting the law in a way that might, I suppose, be OK as part of a legal argument to be assessed by a judge rather than acted on straightaway, since you have a responsibility to your client, but is not OK when you're acting on your own, since you are honestly not respecting the law, and you are pressing very hard on a distinction that might not survive the pressure, but is very much worth preserving.

[hilzoy]

Bernard: disclosure requirements, donation caps...

[Ugh]

Bernard - Edwards would have owed Medicare taxes on his lawyer's fees as a self-employed individual (or member of a service partnership) had he not set up an S-corp to be the one who ostensibly provided the services and then received the bulk of his income as dividends from the S-Corp. Rudy likewise would be subject to Medicare taxes for his speaking fees unless he set up a similar structure.

There was some debate in the tax press as to the extent to which Edwards used the S-corp to avoid medicare taxes was legitimate (focused on the ratio of S-corp dividends to his salary as an employee of the S-corp), although IIRC there was general agreement that this could be used, but not abused.

Either way, I think he's subject to attack on the point and the attack wouldn't be without substance (plus the hypocrisy point).

[Mike3550]

To help, I pulled out my copy of Politics the Wellstone Way put together by Wellstone Action and printed by the University of Minnesota press because I think that it is a great political handbook.

This is what they say about nonprofits:

What can be said with certainty is that it is appropriate and legal for nonprofit 501(c)(3) organizations to engage in electoral activities in a nonpartisan manner. It is also possible to extend the boundaries of acceptable activity of a 501(c)(3) nonprofit by setting up affiliated organizations such as 501(c)(4)s, political action committees (PACs), and 527s. And engage they should.

They go on to list the things that (c)(3)s and (c)(4)s can and cannot do:

A 501(c)(4) may
*engage in all of the activities of a 501(c)(3) [N.B. These are mostly educational functions]
*engage in unlimited lobbying, including work on ballot measures;
*endorse and advocate for a federal candidate to the organization's membership;
*make contributions to candidates (in some states).

A 501(c)(4) may not:
*engage in electoral work as its primary activity;
*endorse and advocate for candiates to the general public
* make contributions to candidates (in some states);
coordinate communications with a candidate.

Given that he is the candidate, it seems to me to be a little more problematic. But, in terms of his work discussing Iraq, traveling abroad and his activities to support unions and increasing the minimum wage seem perfectly legit.

(Again, sorry for the long post).

[rilkefan]

From reading the energetic Obama-Edwards back-and-forth at DK, I'm sure there will be plenty of coverage from the former's supporters and discussion from the latter's when there has been more of a reply from his campaign. Beyond that what LB writes above seems sensible to me.

[ken]

"Thou shalt not bear false witness."

The slander of peoples good charactor is a science practiced as art by modern right wingers.

There greatest achievement is to get others to do their dirty work for them.

Hilzoy, before you become part of the problem you should check the sources and motives of those who give you slanderous material to pass along.

The fact that Edwards did nothing illegal or unethical is not even relevant any more. Some unspecified charge that he did something or other wrong is laid out there and is unanwerable because there is no charge to answer to. The damage is done. Mission accomplished.

[liberal japonicus]

What if there were people who wanted to donate to the Edwards campaign, but didn't want to make themselves targets for speculation and the public eye? Assuming that there are people who are rich and don't like attention, what steps should Edwards take to make sure that their privacy is protected?

This may sound like making up any old thing to protect Edwards, but I've not made up my mind about Edwards. On the one hand, the process of funding should be transparent. On the other hand, looking at the kind of accusations that a person like George Soros has gotten, I could see a strong argument for just sitting on my money and donating it to help the Symphony or the art museum instead of participating in the political process.

[Jon]

I think this is where I get off the Nice Liberal train. We have a political system funded in a million different ways by a gigantic sewer of legalized bribery. Every major politician in the US is implicated in this. Edwards would be completely implicated in it whether or not he'd ever done the things this article covers.

So it seems to me paying any attention to this is not just missing the forest for the trees, it's missing the forest for the tiny patch of four-leaf clover.

[hilzoy]

ken: I have said what I think is wrong with it. And I do not particularly want to get into the business of asking myself whether, by writing things I believe to be true, I might also be advancing someone else's agenda. -- Or rather: I might start wondering about this if I started spending all my time slamming Democrats. But it's not clear why saying this about one (1) story that seems to have merit is different from saying that when I wrote about Abu Ghraib, I am advancing the cause of the enemies of our country.

In that case, I assume that I am probably advancing the casue of friends of our country, by doing whatever trivial bit I can to help make it better, and probably also giving some infinitesimal assistance to anyone whose aim it is to publicize our country's failings. I don't find it helpful to worry about the latter.

[Steve]

I think most lefty bloggers would be willing to say something if it was clear he had done something bad.

On the other hand, when it's not clear, we've all seen too many smear jobs and solid-sounding allegations that didn't play out to jump on the bandwagon. People are curious to know the real deal, but they're waiting to find out, as opposed to making posts that say "this MIGHT be real bad, let's wring our hands over it just in case."

If it's true, of course it's serious. But the problem is, there's so much truthiness out there that you can spend all day trying to confirm Drudge's latest. No one wants to get suckered into that game; they'd rather wait and see.

[Nell]

However, as far as I can tell, most of the left-wing bloggers have gone dark on this one.

An odd turn of phrase for a story that appeared online fewer than 24 hours ago. However, I assume you mean there's nothing on sites that focus heavily on elections, like MyDD, Daily Kos, and Election Central at TPMCafe? They're the only places I'd realistically expect a reaction by this point. That's who you mean by 'left-wing', yes?

Here's the two cents from this left-wing voter inclined to support Edwards if forced to choose among the three front-runners: I'm in agreement with your basic take on the story.

I have to go make snow cones at the drive-in. Maybe by tomorrow there'll be more commentary, or you'll have found it.

[smintheus]

I was poking around blogs thinking of writing something very much like you have here, hilzoy. I was struck by the almost total silence on the left. The excuse offered by Greg Sargent at TPM is ridiculous (in fact, it sounds like Edwards was offering to put the Times in touch with students who'd received scholarships--thus trying to change the subject, or confuse the issue).

I don't know what standard practices are among otherwise unemployed presidential candidates in waiting, but the facts in this case don't look good. The campaign staffers may all have a deep background in poverty issues, and that would be worth looking into. On the face of it, I doubt that's the case.

As for all the foreign policy stuff, that's clearly the presidential campaign. Totally out of line for a tax-exempt entity like this to be paying for that.

It really looks like the NYT hit the nail on the head. And it does fit a pattern.

Edwards does seem very ready to misuse funds. Spending $400 of money people donated to his political campaign, to pay for a damned haircut, and thus leaving a paper trail for investigators to pick up, is worse than stupid. It's arrogant in a Gary Hart kind of way.

Anyway, why would people give his campaign money if he squanders it on personal fluff? That may be behind the info coming out today that there's a big downturn in campaign contributions for Edwards.

Anyway, the more I see of Edwards, the more queasy I become. I don't care if he's an inspirational speaker about poverty. Why is he raising money ostensibly to fight poverty, and using it instead to run a presidential campaign? If this passes the smell test, then he ought to explain why, forthrightly.

[LizardBreath]

Edwards does seem very ready to misuse funds. Spending $400 of money people donated to his political campaign, to pay for a damned haircut, and thus leaving a paper trail for investigators to pick up, is worse than stupid. It's arrogant in a Gary Hart kind of way.

Yeah, see, that sort of thing is what makes me hesitate to pass judgment based on this until I see an expert response.

[Anderson]

Blogs have no trouble raising questions, or jumping to conclusions, 24 minutes after something damaging to Bush comes along.

It's premature to say "Edwards is evil!!!" (unless you already thought that), but it's entirely appropriate for liberal blogs to say "hey, here's this story, what gives?"

The Repubs wouldn't do that, but then, we're not Karl Rove, are we?

[hilzoy]

smintheus: to expand on what LB said: when I first read the haircut story, I thought: look, if there's one thing I know about political campaigns, it's that the candidates have absolutely no time to spare. Any second they're not at events, shaking hands, etc., they are calling donors, strategizing, whatever, and if they get any time to just collapse somewhere, it's a miracle.

Now: I myself have, on occasion, felt rushed, though not nearly to that extent. And one of the things I do when I feel rushed and have no time is: not check prices. I am hungry: here is a restaurant: I will eat. -- I normally make some cursory attempt at frugality, like avoiding places with excessively fancy linen, or for that matter any linen, but that's it. (And if I were John Edwards, I wouldn't be looking to find a cheapo hairdresser in any case.)

For that reason, it has, on occasion, happened to me that I have spent a lot more money than I planned to for lunch, while running somewhere. That being the case, I could immediately see how this could happen to a political candidate. (Or, more likely, to his staff person.) It made such perfect sense. So I have no problem at all with that one.

[smintheus]

Anderson, I agree with your points here.

I see that there is now a post at Daily Kos by Miss Laura, who does little more than restate Sargent's lame smokescreen. Shame, an opportunity missed to say something like "What gives?". Usually she's better than that.

Armando has a post at Talk Left in which he admits that this looks bad for Edwards, but instead of commenting on the substance, he castigates Wayne for the opening few sentences.

[Steve]

It's premature to say "Edwards is evil!!!" (unless you already thought that), but it's entirely appropriate for liberal blogs to say "hey, here's this story, what gives?"

Unless you're actually doing an investigation yourself, as sites like TPM do, it contributes nothing to call attention to the story and say "I have no idea if there's something bad here, but if there is something bad, then it's bad!"

Only liberals suffer from the delusion that there's a magical scorekeeper in the sky who keeps track of whether you publicize unproven attacks on Democrats just as much as you publicize unproven attacks on Republicans, and that if you do, the magical scorekeeper will vest you with a mantle of credibility and the whole world will stop to acknowledge how eminently fair you are.

If there turns out to be something genuinely worthy of commentary in this, then yes, I expect everyone to speak up on it. But until that time, I'm really not bothered by people who assume that this could be just Unsupported Smear Job #372947. They've learned from the previous 372946 times that in the course of trying to impress the magical scorekeeper in the sky, you end up repeating an awful lot of bullshit.

[rilkefan]

"Blogs have no trouble raising questions, or jumping to conclusions, 24 minutes after something damaging to Bush comes along."

Re Bush, one doesn't jump - one takes a tiny step, and there conclusions are.

'It's premature to say "Edwards is evil!!!" (unless you already thought that), but it's entirely appropriate for liberal blogs to say "hey, here's this story, what gives?"'

If I had a "huh, maybe nothing, maybe something" post up at my blog, I would still feel dumb now.

[smintheus]

hilzoy, I think you would have to work pretty hard to stumble across a barber who charges $400 for a haircut. Had to have been a high-priced stylist, probably selected in consultation with Edwards.

Anyway, the main rap is that he paid for it with campaign funds. Is everything campaign related? Does he put his pet food and toilet paper on the campaign charge card too?

This is exactly equivalent to the kind of stuff that Rick Santorum got caught doing, buying meals at the mall for himself and family, etc. from political funds.

[rilkefan]

Front-page at DK now.

[hilzoy]

smintheus: it gets a lot more comprehensible when you realize (I'll find the story if you want) that the haircutter was paid to come to Edwards, rather than Edwards driving across LA. Which, again, strikes me as a quite sensible valuation of a candidate's time. The only problem is "how it looks", but it doesn't look that way to me.

[hilzoy]

But (sorry, forgot this) you're right about the campaign funds issue This, however, I put down to: staff screw up sometimes. (Since I very much doubt that Edwards was responsible for making that call himself.)

[rilkefan]

"think you would have to work pretty hard to stumble across a barber who charges $400 for a haircut."

In Beverly Hills? Who makes house calls?

If you can document the maximum amounts spent by leading Republican candidates this cycle on haircuts, and the numbers are significantly different, you can make this argument, but as it stands it is woefully trivial.

[LizardBreath]

I haven't read the documents the Times has, which include its federal filings, but if those documents say (and I am just making this up) that the Center spent, say, 95% of its money on Edwards' travel, retreats on national security policy, and other such things, and only 5% on direct assistance to the poor, then, again, I could see not wanting to interview the people who had recieved that 5%, if I did not plan to assert that they just didn't exist or had not been helped.

Hil-

Isn't the organization supposed to be a think-tank type thing, not a direct charity? At which point travel, retreats related to poverty, meeting with foreign leaders on poverty related stuff, all looks to be within its proper purview, doesn't it? I'm really not sure how you would identify wrongdoing in this regard, short of literal commingling of non-profit with campaign cash.

[Curt Adams]

I recall when Edwards was doing this and people were speculating whether this was intended to keep him set up for a Presidential bid. The fact that it was speculation at the time is pretty respectable evidence that this isn't over the line or even right on it. As mentioned above, political advocacy is well within the bounds of a 501(c)4 and paying an antipoverty crusader to stump around the country for minimum wage laws, inspirational speeches and meeting with various business and political leaders is a spot-on use of 501(c)4 funds. Edwards could quite obviously have spent the rest of his life doing that kind of stuff - it's basically what Gore does now - so it's by no means necessarily a setup for a political run. Now half a million on "developing new ideas" could be problematic - or might not be. Normally that's called a "think tank" and certainly Cato or Heritage or Rand aren't considered abusive. It depends on who got the money and what kind of new ideas were generated - details missing from the NYT piece.

[hilzoy]

LB: yeah, but I was responding to Greg Sargent's piece, which was about the Times' failure to meet with what the Edwards campaign describes as "beneficiaries of Edwards' programs". Personally, I have a hunch (hunch! supported by nothing!) that these will turn out to be scholarship recipients from E's other foundation, the one the story was not about, or something.

However, suppose this foundation does have "beneficiaries": I think it's only a problem not to meet with them if you planned to say that they didn't exist, or werent benefitted, or something. But if your story turned on the nature of all the other stuff E's foundation had done, meeting them would be irrelevant. (Refusing to meet with them might be like refusing to meet with students testifying to their wonderful educations in a story about an administrator using funds for personal stuff.)

[smintheus]

Well, to back up my earlier inference, here's a BusinessWeek piece from late May:

http://www.businessweek.com/magazine/content/07_22/c4036012.htm

Edwards put BW in touch with a recipient of a scholarship, which seems to deliberately confuse the two non-profits, the scholarship foundation and the center that put him and his political staff on salary.

I don't know of any challenge to the legitimacy of the scholarships/foundation. So for Edwards to try to fob BW off with a scholarship recipient's tale is pretty damned cheesy.

[LizardBreath]

Huh. That'd be really irresponsible of Sargent or the Edwards campaign if true, (that they were talking about the beneficiaries of the wrong program) which means I can't share your hunch. But I do take your point that showing that some money went to the right place doesn't show that lots didn't go to the wrong place.

[smintheus]

There's also now an AP report on this story, which seems to be heavily fact based. I'm going to have to read it carefully.

http://www.forbes.com/feeds/ap/2007/06/22/ap3847718.html

[smintheus]

Lizardbreath, did you see the link I just posted? It seems to prove that the hunch hilzoy and I shared was spot on.

[LizardBreath]

Not really, no. It addresses a different contact with reporters, and describes the scholarships in that story as coming from a foundation that's part of the Center for Promise and Opportunity. So, either BusinessWeek or the NYT is confused about the relationship between the scholarships and the CPO, or there are two distinct sources of scholarships. None of this establishes wrongdoing.

[rilkefan]

smintheus, thanks for the link. A cursory reading leads me to think that since Edwards had a variety of funding sources for his various activities, some of them clearly for campaign purposes, it would be quite difficult to make a clear case that the one in question was used in an over-the-line way. If it turns out that his campaign did something wrong in such an obvious way, I'll be very surprised and disappointed - for now I'm very skeptical.

[smintheus]

I think it's clear from the BW story that part of Edwards' strategy for defusing the allegations against his Center were to link it to the scholarship program. Here are the final two paragraphs of that BW piece:

"Edwards, a former Democratic senator from North Carolina, launched the center in 2005 at the Washington (D.C.) address of his PAC. The nonprofit raised $1.3 million in 2005, the only year for which data are available, and spent some of it on a national speaking tour for Edwards. It also spent $259,000 on consultants. The campaign declines to disclose the donors or consultants. The center is now defunct, and some of its key leaders are now aiding the Edwards campaign. The Edwards campaign says the Center is not connected to a separate Edwards anti-poverty effort at the University of North Carolina.

Edwards' team defends the center. "Obviously, some of the people who had worked for Senator Edwards in government and on his campaign continued to work with him in this effort," says spokesman Eric Schultz. "John Edwards and everyone involved is proud of the organization's work." That work included running a foundation that awarded $300,000 in college aid to 86 North Carolina students in 2006. The Edwards campaign put BusinessWeek in touch with recipient Tony Tyson, 18, who finished his freshman year at North Carolina Agricultural & Technical State University. Tyson calls the scholarship "a golden opportunity." When he returns to campus this fall, he adds, he'll volunteer for Edwards' campaign."

It sounds like Edwards was trying to get the NYT reporter to talk to scholarship recipients as well. Totally misleading, if that's what he was up to.

[LizardBreath]

Sorry, if the organization runs the foundation -- that is, if scholarship money comes out of the CPO, what's misleading? If it doesn't, the BW story is inaccurate.

[Steve]

Here is another data point to consider.

[smintheus]

What is misleading is that the two organizations have the same name, Center for Promise and Opportunity. But the scholarship group adds "Foundation".

Obviously the second paragraph I quoted from BW is less than clear that the scholarships have nothing to do with the "center" and the "organization" that the article is discussing. Yet BW says of the organization, "that work included...(scholarships)".

It could be that BW managed to confuse itself without any help from Edwards. But it's clear that Edwards' campaign was approached about the doings of the defunct center in DC, defended the center, and put the reporter in touch with a scholarship recipient.

I don't see how that can be anything other than disingenuous.

[LizardBreath]

Given that the BW reporter didn't successfully distinguish them when writing the story, we have no way of knowing whether the reporter distinguished them when researching the story -- we don't know what question the scholarship student was provided in response to (that is, we don't know that the reporter made it clear to the Edwards people that the story was only about the CPO, not the CPOF). Once the published story is garbled in a manner that indicates the reporter doesn't understand the subject matter, I'm not blaming the subject of the story for misleading them unless I've got the reporter standing up and claiming they were actively misled.

[smintheus]

Steve, the challenge is NOT in regards to what Edwards did talking about poverty at fora such as the one you refer to.

The question is whether the Center in DC focused heavily or primarily on Edwards' unannounced candidacy. It spent a ton of money on consultants, so far unexplained. A ton of money on salaries to Edwards' political team. And perhaps a lot of money to pay for trips to battle-ground states.

Giving a few speeches at colleges does not cost 1.3 Million dollars.

[smintheus]

LB, the question is: Why put the reporter in touch with such a student in the first place? The work of the NC foundation was not in question.

[rilkefan]

"And perhaps a lot of money to pay for trips to battle-ground states."

Texas? California?

"It spent a ton of money on consultants, so far unexplained."

But not as such nefarious.

[LizardBreath]

Because given that the reporter was demonstrably unaware of the difference between the CPO and the CPOF, we've got no way of knowing what the reporter asked that caused them to be put in touch with the student. If, for example, they asked "Can you put me in touch with anyone that's actually been helped by your foundation?" and the person to which the question was addressed understood 'foundation' as referring to the CPOF while the reporter had no idea there were two distinct organizations, putting them in touch with a scholarship student makes perfect sense.

[hilzoy]

From the NYT story:

"The Edwards campaign declined to disclose the amounts raised or spent by the two similarly-named nonprofit agencies — the Center for Promise and Opportunity and the Center for Promise and Opportunity Foundation — since their 2005 tax filings, which are the most recent to have been filed.

The Center for Promise and Opportunity Foundation, which started with $70,000 in 2005, gave out $300,000 in college scholarships in 2006, said Pamela Garland, the executive director of the College for Everyone Program that is part of the foundation. The center, often praised for helping poor students in Greene County, N.C., get into college, is on track to give out $476,000 this year, Ms. Garland said.

Mr. Edwards broke his ties to that charity once he announced his candidacy for president. “It’s really just me now,” said Ms. Garland, who began her job last May. She credited Mr. Edwards with devising the program, raising the money and speaking to high school students, using his own up-from-poverty story to inspire them."

So: the CPO Foundation gives out scholarships. The CPO (not Foundation) is the subject of the NYT story.

Now, Business Week:

"Edwards' team defends the center. "Obviously, some of the people who had worked for Senator Edwards in government and on his campaign continued to work with him in this effort," says spokesman Eric Schultz. "John Edwards and everyone involved is proud of the organization's work." That work included running a foundation that awarded $300,000 in college aid to 86 North Carolina students in 2006. The Edwards campaign put BusinessWeek in touch with recipient Tony Tyson, 18, who finished his freshman year at North Carolina Agricultural & Technical State University. Tyson calls the scholarship "a golden opportunity." When he returns to campus this fall, he adds, he'll volunteer for Edwards' campaign."

I see three possibilities here.

(a) There are, in fact, two foundations associated with Edwards that not only give out scholarships in NC, but gave out $300,000 in scholarships in 2006. One is the CPO Foundation; the other is run by the CPO.

(b) There is only one such organization, the CPO Foundation. It is run by the CPO. This would be odd, since the BW article says: "The center is now defunct", while the NYT has interviewed the executive director of one of the Foundation's programs, who started her job in May. (If the Center included the Foundation, and the Center were dissolved, wouldn't its parts be dissolved as well?) Likewise, the NYT describes them as "two similarly-named nonprofit agencies — the Center for Promise and Opportunity and the Center for Promise and Opportunity Foundation" which have filed separate tax returns.

(b) There is only one such organization, the Foundation. Tyson got his scholarship from it. The Edwards campaign put Business Week in touch with Tyson to rebut a story about a different organization entirely.

I'm open to hearing about a fourth possibility. But I await more facts.

[hilzoy]

Ah, LB notes a fourth possibility: the BW reporter asks something, we don't know what, causing the Edwards campaign to produce Tyson. This could be, though Greg Sargent's claim that "The Edwards campaign has just told us on the record that The Times refused the chance to talk to any real, live beneficiaries of Edwards' programs" suggests that this might have come from the campaign, or else have been a response to a 'would you comment on the story?' question, of the sort that reporters are supposed to ask people.

[KCinDC]

(it's gonna be a Candadette running to be the Presidette)

What the hell!? Are we receiving comments directly from Rush Limbaugh now? Can we look forward to jokes about Obama's love of watermelon next?

[LizardBreath]

(a) Doesn't work at all. (b) Doesn't seem impossible to me, in that the CPOF could have at some point in the past been a part of the CPO, and been spun off to continue its work after the CPO became defunct. I don't have any reason to think that is the case, but it's a possibility. (c) This also looks like a possibility, but given the confusion of the BW writer, it's not clear to me that they aren't responsible for the confusion of the two entities throughout (that is, that the limited subject matter of the story was not made clear to the Edwards staffer who put BW in contact with Tyson -- they were given the impression that the story was on, say, Edwards' nonprofits generally.)

And I would note that the fact that BW was put in touch with a scholarship student doesn't establish that the Edwards campaign was planning to put the NYT in touch with a scholarship student rather than a recipient of some other form of aid from the CPO.

Now, this sounds like special pleading -- it is perfectly possible that the Edwards campaign knowingly put the BW reporter in touch with an irrelevant scholarship recipient, and was planning to do the same with the NYT. I'm just saying it's not clear yet.

[hilzoy]

LB: true enough. I await further data.

[LizardBreath]

Part of the reason I'm arguing so hard about this little point, is that it seems really unlikely that the CPO didn't help anyone poor at all -- while your argument that it doesn't really matter to the meat of the story is solid, for the same reason you'd expect there to be some actual poor beneficiaries of the CPO -- even if there was wrongdoing, you'd expect some cosmetic good works. (I believe 'Opportunity Rocks', which is I think part of the CPO, paid college kids to rebuild houses in New Orleans, for example.)

Under the assumption that there are poor people helped by the CPO to point to, then, the idea that the Edwards campaign deliberately deceived the BW reporter and tried to deceive the NYT reporter into thinking that CPOF scholarship recipients had gotten money from the CPO gets weird. It's like one of those lies they claimed Gore told, where the lie wasn't helpful and the truth was just as good, it was just motiveless mendacity, and those stories about Gore all turned out to be bullshit.

The Edwards campaign may be lying like a rug, but believing that it is at this point seems off.

[jpe]

For instance, it is not obvious to me that financing retreats on Iraq with national security experts is a way of “making the eradication of poverty the cause of this generation.”

Take a closer look at the 990: the purpose of the charity is something like "to find new ways of improving America."

With boilerplate like that, a finding of ultra vires action is pretty hard.

Funnily enough, I just came back from the AICPA not-for-profit conference and attended a class on this very topic. The gist, which my own research confirms, is that the IRS has a sword of damoclese hanging over most NFPs. It'll only bring it down if there's sufficient political pressure (as there was in the recent crackdown on credit counseling agencies).

Long story short, the IRS probably could make a strong case for stripping the exemption, but it could similarly for many, many others that no one even blinks at (I have any number of clients that would get the whammo if held to the same standard and scrutiny as Edward's charity. And that says a lot more about the selective enforcement by the IRS and lack of coherence and clarity in the law than it does these organizations).

[rilkefan]

Something I don't understand - the Edwards campaign knew this was coming well in advance, why don't they have a crushing rebuttal out? They're really burning news cycles here.

[rilkefan]

jpe: "attended a class on this very topic"

Thanks for the expertise, randomly confirming my prejudice to boot.

[hilzoy]

Fwiw, I emailed the Times reporter, asking for info on what sorts of beneficiaries they were proposing.

[hilzoy]

Also, OT:

Guess who's shipping out next week.

[liberal japonicus]

Interesting point, rf, but I wonder how much the campaign knows about how a story is going to be presented/framed/spun. I get the impression that campaign stories are not double checked, as opposed to other stories, but I may be completely wrong about this.

[jpe]

In a case like that, pushing the envelope is just wrong, I think.

These 501s that have political agendas are commonly referred to as "stealth PACs," and given that GOP s-PACs regularly outspend Dem ones by a sizable margin, I find the outrage! on the right a bit silly.

And notwithstanding the kinda problem I noted above (in which I misspelled Damocles, thank you very much), it's all pretty standard stuff.

The one thing that does concern me - and here I take off the legal cap and put on the auditor cap - is that some of the numbers on the 990 (accessible at Guidestar.org) look pretty suspicious. Large, round number donations (suggesting a small number of donors), all of which was spent as it came in (I've never seen a net asset / revenue ratio that small).

Since it's a 501(c)(4), it doesn't have to file a schedule A and public support test, which could give clues as to whether there's some funny business going on with those donations.

[rilkefan]

"I wonder how much the campaign knows about how a story is going to be presented/framed/spun"

The campaign should have assumed the worst when reporters' sails appeared at the horizon of this story and prepared a broadside. And by now, with the article out for however long it's been, there's no question about the frame.

This is a stupid but important criterion for me in casting my primary vote. I want to see the Edwards campaign tear up the article in the next ten minutes.

[KCinDC]

A Disneyphile, eh? I wouldn't have expected that of Andrew, but maybe I didn't read his blog enough.

[jpe]

If it turns out that his campaign did something wrong in such an obvious way

He had all the right structures in place (a c3, a c4, a 527, and a hard money PAC), so I highly, highly doubt there were any technical shenanigans going on with misuse of money and the political activity regs.

Thanks for the expertise, randomly confirming my prejudice to boot.

I have taken off my visor, loosened the tie around my short-sleeved collared shirt, and am now ready to rumble.

[matttbastard]

KC: What the hell!? Are we receiving comments directly from Rush Limbaugh now? Can we look forward to jokes about Obama's love of watermelon next?

Couldn't help but shed a solitary tear after reading JJ's impassioned defence of unfairly maligned patriot and Good American Bernie Kerik.

[cleek]

stop putting faces to bloggers!!

Guess who's shipping out next week.

best of luck, Andrew

[hilzoy]

jpe: thanks for the link to Guidestar. I couldn't see whatever you saw, with the round numbers, but the 2005 990s were quite interesting. According to them, the CPO Foundation did not share cash or other assets, except for facilities, equipment, and $4,583.35 for the Exec. Director's salary (allotted for time spent on CPO Foundation business.) Also, board members and officers. Its money, other than the $4,583.35, came from elsewhere.

The CPO Foundation return describes the relationship between the two as follows: "CPO explores ideas; CPOF conducts pilot projects to test those ideas." What it did was establish a scholarship program in NC. It took in $70,000, and spent $26,197.02, though it's not clear to me that in this year (2005) it actually gave out any scholarships.

The CPO itself seems to have given out no "grants and allocations", nor "Specific assistance to individuals". Its expenses are for things like salaries, consusltants, web services, etc. Near the very end of its filing, it says:

"CPO will begin by testing a new program to make the first year of college free to academically qualified students residing in its test area who make a commitment to participate in community service."

That seems to be the program that the CPOF is setting up, though.

[Garth]

i a have been a long time Edwards fan, think the haircuts were a dud (the guy gets a hundred buck a cut and clears his schedule. could happen in Dallas, Memphis...)

on the other hand, it's possible they may have been too cute for their own good. it seems like there was one charity doing good... and another charity that may have been doing good, or not, and keeping Edwards in the public eye.

the only reason I now hedge is that I want an explanation from Edwards. the man has a legion of fans that will rebut talking points all over the blathosphere, but he hasn't put any out.

i gave him the benefit of the doubt on the Amanda Marcotte/blogger issue but he's got to be able to counter this fast.

either there's a reasonable explanation or not.

[Garth]

Edwards, a one-term former senator from North Carolina, set out to keep his political options open by promoting issues he cared about, like poverty.

"He wanted to learn, travel and be in a position to be a viable candidate," said J. Edwin Turlington, a Raleigh lawyer and manager of Edwards' 2003 presidential exploratory committee. "He had the ability to raise money to fund his activities. He had a vision, and he knew it would take money."

Beyond the norm

But it was his use of a tax-exempt organization to finance his travel and employ people connected to his past and current campaigns that went beyond what most other prospective candidates have done before pursuing national office. And according to experts on nonprofit foundations, Edwards pushed at the boundaries of how far such organizations can venture into the political realm. Such entities, which are regulated under Section 501C-4 of the tax code, can engage in advocacy but cannot make partisan political activities their primary purpose without risking loss of their tax-exempt status.

Because the organization is not required to disclose its donors -- and the campaign declined to do so -- it is not clear whether those who gave money to it did so understanding that they were supporting Edwards' political viability as much or more than they were giving money to combat poverty.

The money paid Edwards' expenses while he walked picket lines and met with Wall Street executives. He gave speeches, hired consultants and attacked Bush. He led minimum-wage initiatives, went frequently to Iowa and appeared on TV. He traveled to China, India, Brussels, Uganda and Russia.

"He was not a U.S. senator; he had no office," said Ferrel Guillory, a political program director at the Center for the Study of the American South at the University of North Carolina. "So he set up a series of entities to finance his travel, to finance a political shop and to finance an issue shop. It all adds up to a remarkable feat of keeping a presidential candidacy alive without any of the traditional bases for it."

"One of the Center for Promise and Opportunity's main goals was to raise awareness about poverty and engage people to fight it," said Jonathan Prince, deputy campaign manager. "Of course, it sent Senator Edwards around the country to do this. How else could we have engaged tens of thousands of college students or sent 700 young people to help rebuild New Orleans? It's patently absurd to suggest there's anything wrong with an organization designed to raise awareness about poverty actually working to raise awareness about poverty."

The Edwards campaign declined to disclose the amounts raised or spent by the two similarly named nonprofit agencies -- the Center for Promise and Opportunity and the Center for Promise and Opportunity Foundation -- since their 2005 tax filings, which are the most recent to have been filed.

The Center for Promise and Opportunity Foundation, which started with $70,000 in 2005, gave $300,000 in college scholarships in 2006, said Pamela Garland, the executive director of the College for Everyone Program that is part of the foundation. The center, often praised for helping poor students in Greene County, N.C., get into college, is on track to give $476,000 this year, Garland said.

Edwards broke his ties to that charity once he announced his candidacy for president.

At the same time, the larger nonprofit group had a more politically active agenda. The $1.3 million it raised and spent in 2005 paid for travel, including Edwards' tour of 10 college campuses, consultants and a Web operation.

Nonprofit groups can engage in political activities and not endanger their tax-exempt status so long as those activities are not its primary purpose. But the line between a bona fide charity and a political campaign is often fuzzy, said Marcus S. Owens, a Washington lawyer who headed the Internal Revenue Service division that oversees nonprofit agencies.

"I can't say that what Edwards did was wrong," Owens said. "But he was working right up to the line.

[Bernard Yomtov]

Ugh,

Thanks for the explanation. I see the point. Looks bad for Edwards, since I doubt he provided much in the way of capital to the S corp, so realistically little of the income should have been considered dividends.

hilzoy,

I see your point also. I'd like to see what Edwards says before criticizing too harshly though.

[Garth]

Could this be defended as a tax exempt poverty advocacy group that hires John Edwards and acquaintances to study poverty, speak at campuses, hob-nob with policy makers...and keep Edwards in the public eye only as a side benefit to real advocacy for raising awareness of poverty.

I read some of the speeches Edwards made and they were rousing.

Simply because poverty is a meat and potatoes issue doesn't make his advocacy or study of it partisan.

I think the question here is did he lie to the donors... if not, i see nothing inherently wrong with it and will wait another 24 for further developments.

[Garth]

is this that different than Gore producing An Inconvenient Truth...

and... i know, there were no charity shennanigans, but if the donors don't care, i won't say the man didn't pursue a poverty agenda.

[hilzoy]

Garth: as best I can tell from the filing you can look t this on three levels:

(a) completely legalistic: the two organizations are separate, except for sharing facilities and the time of the CPOF's exec. director. Benefits provided by the CPOF do not, I think, technically count as provided by the CPO.

(b) a bit higher-level: the CPO seems to have thought of the CPOF as sort of like a part of itself, at least when it says "CPO will begin by testing a new program to make the first year of college free to academically qualified students residing in its test area who make a commitment to participate in community service." -- about a program that would be run by the CPOF.

(c) big picture: most of the CPO's activities were not about scholarship students at all. According to the CPO's filing, their program expenses go like this:

$142,196.38: Opportunity Rocks

$80,417.62: retreats and seminars with foreign policy experts

$540,599.03: "Exploration of new ideas".

Total: $763,213.03

(There's roughly another $440,000 spent on management and fundraising.)

The CPOF, even if it were a part of this, would have been a very small part. (Its total expenses were under $50,000.)

In this big picture view, it's harder to make the case for this as not being about paying for Edwards' travel, continuing education, staff, etc., I think. Though, like you, I await an explanation.

[Garth]

this for me is the key graf (so far);

"One of the Center for Promise and Opportunity's main goals was to raise awareness about poverty and engage people to fight it," said Jonathan Prince, deputy campaign manager. "Of course, it sent Senator Edwards around the country to do this. How else could we have engaged tens of thousands of college students or sent 700 young people to help rebuild New Orleans? It's patently absurd to suggest there's anything wrong with an organization designed to raise awareness about poverty actually working to raise awareness about poverty."

[Garth]

i agree there seems to be little co-ordinated action between the two.

[Garth]

is it wrong even if it is about paying Edwards expenses to advocate on poverty measures?

even if the intended side benefit is public exposure. it is that very public exposure that gives his advocacy whatever impact it has.

certainly, Edwards is not to be criticized for choosing to tour the nation raising awareness of this terrible problem.

but i see the calculation on his part. he's clearly serving two masters here.

[Garth]

maybe this all boils down to the fact he made every one of his goddamn dollars himself and he'll be damned if he doesn't play it smart... too smart.

[sujal]

is opportunity rocks a CPO or CPOF effort?

Also, I think hilzoy is parsing this too closely. Hilzoy, the fact is that these foundations are related. I'm not really sure that, aside from bookkeeping issues, they are separate in any meaningful way. Lots of 501c3's have c4s to do political work. A lot of political people bring their campaign staffs with them to do other work after they're done campaigning.

jpe makes this point more indirectly, in that Edwards had all 4 types of organizations set up. There's really no reason why he would do anything weird here...

It doesn't prove anything, but then neither has the times (or, remarkably, you for that matter...). I'm not sure what public purpose is served raising allegations without doing the next step investigation. It used to be that our papers did that, but no longer...

[sujal]

on my first question, Hilzoy posted the numbers I didn't find on first read. Sorry bout that. comments crossed on the wire... :-)