The million dollar donation came as the COVID-19 crisis unfolded, a charitable donation made on behalf of Governor Gavin Newsom last year. But unlike other so-called ordained payments, philanthropic contributions made at the behest of an elected official, the source of the donation was concealed in public disclosures required under state law intended to ensure transparency and accountability. limit any undue influence within government.
The seven-figure donation was made from a donor-advised fund, a type of charitable account offered by some nonprofit foundations and for-profit investment companies that offer more generous tax deductions and l ‘anonymity. Little is known about the practice of channeling requested payments through such accounts, even to seasoned political insiders, but it raises concerns with government watchdogs who say it allows unidentified donors to avoid a scrutiny when making charitable contributions on behalf of politicians with whom they may try to gain favor.
In documents filed with the California Fair Political Practices Commission, Newsom’s office said the $ 1 million donation was made in April 2020 by the Silicon Valley Community Foundation. The foundation confirmed to The Times that the money did not come from the charity itself, but was donated at the behest of an individual or company with a donor-advised fund within. organisation.
“The public needs to know who the original donor is,” said Bob Stern, co-author of the state’s Fair Political Practices Act, approved by voters in 1974 and updated in 1997 by through legislation to include required payments. “This was clearly not foreseen when the law was passed.”
Public charities can offer organizations, families, and individuals the option of opening donor-advised funds that allow for immediate tax write-offs, a sort of savings account-type approach to charitable contributions. Donor Advised Funds are the fastest growing vehicle for charitable giving, but they have come under scrutiny for having too little control over how and when funds are donated. used, the assets being allowed to accumulate indefinitely.
MP Buffy Wicks (D-Oakland) and nonprofits relying on donations have been pushing for state legislation to increase transparency requirements for foundations offering donor accounts. However, the use of donor-advised funds to ensure the anonymity of requested payments raises new questions as to whether it violates the Fair Political Practices Act.
“Donor-advised funds can be used to hide things, that’s not the only reason people use them, but it’s one of the reasons,” said Jan Masaoka, CEO of California Assn. non-profit organizations.
And, according to critics, they are a significant barrier to the transparency of the requested payment process.
Under California law, when an elected official or person acting on their behalf requests that a donation of $ 5,000 or more in cash or services be directed to a nonprofit or government organization, that contribution is considered a payment required and must be reported to the FPPC. There is no limit on the amount of donations from organizations or individuals at the behest of an elected official, another aspect of the practice that has drawn criticism from open government groups.
Although the payments demanded are for worthy causes, the companies elected by elected officials have asked to donate often have multi-million dollar contracts or other business before the state, creating the appearance of a payment system to play. Since state law does not address the use of donor-advised funds to make required payments, nor does it set additional disclosure requirements for those who use them, the public is not in a position to determine whether donors whose identities are protected by such accounts benefit from charitable contributions. made in the name of a politician.
The extent to which donor-advised funds were used to make payments requested from Newsom and other state officials is unclear. No rating is made in government deposits when a donor advised fund is used.
“From a public trust and confidence perspective, the more transparency around all sources of required payments, to the extent possible, the better,” said Mindy Romero, director of the Center. for Inclusive Democracy at USC.
Newsom’s office declined to comment on The Times’ questions for this story.
“The process is transparent and we comply with all applicable rules and regulations, including the timely sharing of these payments, which are available to the public for review,” Newsom spokesperson Daniel said. Lopez, in a general release on incentivized giving.
Last year, Newsom raised $ 226 million in voluntary payments, an unprecedented amount spurred by the COVID-19 pandemic and the willingness of businesses and philanthropists to help fund government and charitable programs. This money was directed by Newsom to help programs benefiting Californians during the pandemic, including funding to fight homelessness and a public safety campaign promoting the importance of wearing masks.
Documents filed by the state appear to show that the main donor of payments requested from Newsom in 2020 was tech giant Facebook, which donated $ 27 million for gift cards for frontline healthcare workers and for public health advertisements.
But a closer analysis of state records by The Times shows that the largest donor was actually Kaiser Permanente with $ 34.5 million donated in 2020 on behalf of Newsom, a total that includes a gift of $ 9.75 million. of dollars listed as Kaiser and an additional $ 25 million. that the company has given on behalf of Newsom using funds advised by donors it holds at the California Community Foundation and the East Bay Community Foundation.
Kaiser’s office and Newsom both promoted the $ 25 million donation in press releases and press conferences – the donation was for the governor’s program helping the homeless. When The Times asked Kaiser why the donation was not reflected in documents filed by the state, a representative for the health giant told The Times the charities through which the donation was made.
A spokeswoman for Kaiser said the company often gives charitable contributions through donor-advised funds and has no plans to hide the donations since their public announcement. It is the responsibility of the governor’s office to report donations to the FPPC, the spokesperson noted.
A spokesperson for the FPPC said donor-advised funds are not addressed in current regulations governing required payments and declined to comment on the examples raised by The Times.
“What we can say is that the principle in California is that the true source of funds must be disclosed and that is a principle that has been accepted and long established,” said FPPC spokesman Jay Wierenga.
The California Community Foundation said seven other donations on Newsom’s behalf last year came from the foundation itself and not from funds advised by donors. The East Bay Community Foundation, which did not respond to the Times’ request for information, made a second donation – for $ 100,000 on behalf of Newsom last year – but it is unclear whether that also came from a fund advised by donors.
East Bay Community Foundation marketing material promotes the ability to donate anonymously, noting that donor-advised funds “offer donors the benefit of 100% anonymity, unlike a private foundation.” Critics say unidentified contributions to a nonprofit may not raise public concern, but they should when large checks are issued at the behest of an elected official.
Fidelity Charitable and Vanguard Charitable, both of which offer donor-advised funds, declined to identify donors who made demanded payments last year that were intended to help the state’s students learn remotely during the pandemic. The donor Fidelity Charitable gave $ 250,000 on behalf of Newsom, while the Vanguard Charitable account gave $ 100,000.
“The privacy of our donors is one of our highest priorities and, as a policy, we do not discuss individual donors or nonprofits,” said Stephen Austin, spokesperson for Fidelity.
A spokesperson for Vanguard said donors have “the right to choose” whether they wish to be recognized for their donation.
The Silicon Valley Community Foundation, which organized a fund holder’s $ 1 million donation last year, said a second charitable donation of $ 50,000 was made through a fund advised by a donor on behalf of the governor in May 2020. The identity of the donor, however, is not released.
“Unfortunately, I am unable to provide any further information beyond that,” said Chau Vuong, spokesperson for the Silicon Valley Community Foundation, in an email. “We are unable to disclose the identity of our donors or the names of their funds, and we do not comment on the philanthropic activities of our donors without their express permission.”