Trump Foundation Illegalities

Donald Trump often touted how wonderful his foundation is, especially in comparison to the Clinton Foundation. So far, six illegalities are well-known.

A typical boasting and untrue tweet from Donald J. Trump:
Donald J. Trump Verified account ‏@realDonaldTrump
The DJT Foundation, unlike most foundations, never paid fees, rent, salaries or any expenses. 100% of money goes to wonderful charities!
7:06 PM – 26 Dec 2016
21,262 replies 15,295 retweets 67,661 likes

You will find farther down this page some numbers from the 2015 Form 990-PF for The Donald J. Trump Foundation which refute the tweeted nonsense above. The foundation not only had the usual and expected legal, filing, accounting and tax preparation expenses, but reported “other nondeductible charitable contributions” of $41,636. This item is not further detailed, and may consist of illegal nonsense similar to the $20,000 portrait of Trump (purchased 2007) and the $12,000 Tim Tebow’s signed football helmet (purchased 2012) which the foundation paid for and gave to the Trump family. How these could be considered charitable expenses is beyond the imagination of anyone except Trump.

Donald Trump often talks about how charitable he is, although he will not release the tax returns which would support or refute such statements. The Form 990-PF (Personal Foundation) reports which his foundation, begun in 1988, must file annually, paints a different picture. According to a lengthy report by The Atlantic, “The Many Scandals of Donald Trump: A Cheat Sheet,” the foundation skimps on giving, while the funding money often comes from sources other than Trump, including even NBC. The foundation was  to take donations from third-party sources. It also reported donations it didn’t actually make.  Special scrutiny has fallen on a $25,000 donation which it did give in September, 2013, to a group supporting Florida Attorney General Pam Bondi, received by them shortly before she quashed an investigation into Trump University and the Trump Institute. Trump and Bondi of course claim there was no quid pro quo [which brings to mind the Profumo Affair’s Mandy Rice-Davies’ comment “Well he would [say that], wouldn’t he?], but the donation was illegal for a charitable nonprofit to make, and the foundation paid a $2,500 fine for doing it.  Trump also apparently used $258,000 in foundation money, most of it given by other donors, to settle his legal disputes, including donations to charity in lieu of paying fines. Trump directed more than $2 million in income to the foundation, and if he didn’t pay taxes on this income—his campaign for the most part refused to say—it would be illegal tax-dodging. The Foundation’s Form 990PF for 2015 (page 21), for example, lists five contributors, including The Trump Corp. for $566,370, and Trump Productions LLC for $50,000. These payments may constitute tax-dodging.

Item 1. Trump Foundation 2015 Form 990-PF, Schedule B, Page 2, the five donors to the foundation. The foundation did not receive legal permission from New York State to receive donations from entites other than Donald J. Trump.
Item 2. Trump Foundation 2015 Form 990-PF, Statement #5 “Other Assets.”
“Helmet” is the Tim Tebow football helmet for which the foundation paid $12,000 in 2012 to Susan G. Komen breast cancer organization.The “Schantz fine art” is a 4-ft-tall portrait of Donald Trump, painted by Havi Schanz, for which the foundation paid $14,000 in 2014.
The “Israel fine art” is a 6-ft-tall portrait of Donald Trump, painted by Michael Israel, for which the foundation paid $20,000 in 2007.
The Schanz portrait was found hanging on the wall of the sports bar at Trump’s Doral golf resort, outside Miami. Trump spokesman Boris Epshteyn said the sports bar was doing the charity a favor by “storing” its art free of charge. The other two items are in one or another of Trump’s homes.

IRS rules forbid “self-dealing;” The Foundation appears to have broken these rules by paying to resolve the foundation’s numerous legal disputes, as well as buying a portrait of Trump (in 2007 for $20,000) and a Tim Tibow helmet (in 2012, via a $12,000 check from Trump Foundation to Susan J. Komen breast cancer organization) both of which items went to the Trump family. In tax filings posted online in November 2016, the foundation admitted to self-dealing rule violations in 2015 as well as in prior unnamed years. Liberal watchdog group Citizens for Responsibility and Ethics in Washington charges that other laws may have been broken as well. New York Attorney General Eric Schneiderman has reportedly launched an investigation into the foundation. Schneiderman has also informed the foundation that it is in violation of rules on fundraising and ordered it to quit. Trump has announced plans to shutter his foundation, but reportedly cannot do so while it is under investigation.

Item 3. First page of Trump Foundation form 990-PF for 2015. Note “other expenses” on line 23.

Charity Navigator has issued Donald J. Trump Foundation a “Moderate Concern CN Advisory” which:

…highlights allegations being made against a charity or an employee of a charity that have not been confirmed yet, which is why these advisories are of moderate concern. Advisories at this level may also contain some concerns related to 990 and financial audit reporting issues.

Charity Watch does not rate the foundation because “it is structured as a private foundation.”

Item 4. Trump Foundation 2015 Form 990-PF, additional statements Nos. 1-4. Statement #4 is supposed to further explain any Page 1 Line 23 “Other Expenses” of $41,886 “other expenses.”
Item 5. Closeup of Trump Foundation 2015 Form 990-PF. Statement #4 shows insufficient explanation of $41,886 “other expenses,” particularly $41,636 of “Nondeductible Charitable Contributions,” (which were deducted in spite of being labeled “Nondeductible”) which has no further explanation anywhere on the return.
Item 6. Trump Foundation 2015 Form 990-PF, page 5 Part VII-B, Transfers to Disqualified Persons. This likely refers to the $41,636 “Nondeductible Charitable Contributions,” deducted anyway.

Here are some numbers from the 2015 Form 990-PF (Return of Private Foundation) for The Donald J. Trump Foundation, EIN 13-3404773.

2015 assets at end of year: $1,116,241
2015 Revenue: $783,992  This consists of: Contributions Received: $781,370, Interest Income: $2,622.
2015 Contributions Received: $781,370. This consists of: $566,370 from Trump Corp, $50,000 from Trump Productions LLC, $50,000 from UK Office of Victor Pinchuk Foundation, $10,000 from NYREI, $5,000 from Lawrence Roman. See Item 1 above.

2015 Expense: $943,321. This consists of: Gifts Given $896,380; Other nondeductible charitable contributions $41,636; NYS filing fee $250; Weisermazars LLP (tax prep & accounting) $5,000; Legal fees $55.
[Note – the report contains no explanation for the $41,636 “Other nondeductible charitable contributions.” Later reports indicated there were payments to people or organizations not qualified to receive charitable donations. As a point of logic, “nondeductible” expenses ought not be deducted, as done here. They should be reimbursed to the foundation by whomever authorized the phony expenditure, and there should a penalty.]
2015 Net Loss: $159,329
[Note: It is likely that the 2015 net loss was incurred in order to bring the multi-year distribution ratio (see below) up to a more reasonable level and to spend down the accumulated assets in expectation of closing the foundation.]

Gifts Given: $896,380. This consists of 56 gifts, ranging from $100,000 each to Comic Relief Inc and Marine Corps – Law Enforcement Foundation, down to $750 to The Indiana Golf Foundation and $415 to New Jersey Boxing Hall of Fame.

Carryovers: The foundation doesn’t come close to spending its accumulated monies. Funds carried over to following years ranged from $530,467 for 2014, up to $1,607,794 for 2012.

Distribution ratios: These are a critical metric in tracking how a charity utilizes or wastes their money.
This return cites the ratios for five prior years: 2010 – 38.7644%, 2011 – 46.8656% , 2012 – 78.2716%, 2013 – 61.4174% , 2014 – 44.9986%, yielding a 2010-2014 average of 54.0365%
The ratio for 2015 is not specifically stated, but is embedded within the various income & expense numbers.
[Note: For comparison, the Clinton Foundation spends in the 88% range, and is top-rated by the charity rating organizations Charity Navigator and Charity Watch.]

List (probably incomplete) of Illegalities in Trump Foundation activities:

  • Mid-2000’s: Reconfiguration to a pass-through (receives money from third parties, spending them as it sees fit) without permission from New York State
  • 2007: Six-foot-tall Portrait of Donald Trump painted by Michael Israel, $20,000
  • 2012: Football helmet autographed by Tim Tebow, $12,000
  • 2013: $25,000 check to group supporting Florida Attorney General Pam Bondi, received by them shortly before she quashed an investigation into Trump University and the Trump Institute
  • 2014: Four-foot-tall portrait of Donald Trump, painted by Havi Schanz, $14,000
  • 2015: Nondeductible Charitable Contribution of $41,636, probably paid to unnamed Disqualified Person(s)
  • 2016 & 2017: We’ll have to wait and see

Final Note: The dust hasn’t settled on Donald J. Trump Foundation, and Trump can’t shutter it until all audits are done and penalties paid. The 2015 “Disqualified Person” who received transfer(s) has not been revealed. The $41,636 of Nondeductible Charitable Contributions has not been explained, and reimbursement for this phoney “contribution” has not been made. So much for Trump’s false claim that “The DJT Foundation, unlike most foundations, never paid fees, rent, salaries or any expenses. 100% of money goes to wonderful charities!”

Read  More:
The Atlantic: The Many Scandals of Donald Trump: A Cheat Sheet – David A. Graham, 1/23/17
The New York Times: Trump Revives Defense Of Charitable Foundation Amid Inquiry – Megan Twohey & Steve Eder, 12/27/16
The Huffington Post: Donald Trump Claims 100 Percent of His Foundation’s Money Goes To Charity. That’s a Lie – Hayley Miller 12/27/16
The Washington Post: Donald Trump plans to shut down his charitable foundation, which has been under scrutiny for months – Mark Berman & David A. Fahrenthold, 12/24/16
The Washington Post: Trump Foundation admits to violating ban on ‘self-dealing,’ new filing to IRS shows – David A. Fahrenthold, 11/22/16 
The New York Times: New Records Shed Light On Donald Trump’s $25,000 Gift to Florida Official – Kevin Sack & Steve Eder, 9/14/16
The Washington Post: How Donald Trump retooled his charity to spend other people’s money – David A. Fahrenthold, 9/10/16
Tax Prof Blog: Tax Profs Weigh in on the Trump’s Foundation Tax Issues – Paul Caron, 9/30/16
Tax Prof Blog: Did Trump Violate IRS Rules by using his Foundation’s Money to Purchase Tebow-signed Helmet (Now Worth $415) for $12,000? – Paul Caron, 7/2/16
USA Today: Trump Foundation Apparently Admits to Self-dealing in New Tax Filing – Ray Locker & Kevin McCoy, 11/22/16
Vanity Fair: Records Reveal the Trump Foundation Admitted to Illegal “Self-dealing” – Abigail Tracy, 11/22/16
Donald J. Trump Foundation Form 990 for 2015  – 990s filed Nov. 2016
Donald J. Trump Foundation Form 990 for 2014  – 990s filed Nov. 2015

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