The Enron of nonprofits

May 12, 2003

Watchdog group charges Greenpeace with tax code violations
by Paul K. Driessen
Knight Ridder/Tribune Information Services
September 2003

WASHINGTON, DC, September 2003 Its famous name and high-profile campaigns convinced legions of people to invest in it – because it was devoted to the public interest. But complex corporate structures enabled it to violate tax laws with impunity, and engage in illegal activities on a regular basis.

Enron? Global Crossing? The Soprano family? Hardly.

The culprit, according to a story in The Sunday Times of London, is none other than Greenpeace. The Times reports that Public Interest Watch, a nonpartisan Washington, DC group that monitors non-governmental organizations, has analyzed Greenpeace’s operations and requested that the Internal Revenue Service investigate the organization.

“The Rainbow Warriors have deliberately, systematically and illegally solicited and transferred millions of dollars a year in tax-deductible contributions into non-tax-exempt entities, in support of improper and sometimes illegal activities,” says PIW executive director Mike Hardiman.

The Tax Code, longstanding IRS practices and California law all clearly differentiate between taxable and tax-exempt contributions and how they can be used. Headquartered in Washington, DC but chartered in California, Greenpeace is subject to all these laws.

Donations to tax-exempt 501(c)(3) organizations are deductible on individual, foundation and corporate tax returns, but recipients must operate solely for charitable, educational, scientific or religious purposes. They may not engage in lobbying, advocacy or “direct action” activities.

Non-tax-exempt 501(c)(4) groups may conduct these activities, as long as they are legal. But contributions to them are not tax-deductible.

However, Greenpeace is organized specifically so that it can raise money via its exempt arm, and then divert funds into its non-exempt entities, Hardiman argues. “It’s a plain case of money laundering.”

In fact, tax-exempt Greenpeace Fund appears to be nothing more than a shell corporation. Its only purpose is to collect money from foundations and big donors – then transfer the funds (minus hefty fund-raising and management costs) to Greenpeace Inc. and other non-exempt groups, whose activities consist primarily of lobbying, pressure campaigns, and illegal actions like breaking into nuclear power plants, disrupting a US Trade Rep press conference during the 2003 WTO meeting in Cancun, Mexico, and destroying crops developed under multi-million-dollar biotechnology programs.

In 1999, Greenpeace Fund raised $7.5 million. The $4.25 million it diverted to Greenpeace Inc. represented 51% of the latter’s total operating budget for the year (exclusive of its own fund-raising costs). The Fund failed to earmark its grants for tax-exempt purposes, and ensure they are used properly, as required by law.

It likewise failed to cease claiming that funds are being raised to “protect wildlife,” when in fact virtually none are so used. Such blatant false adverting would be prosecuted, were the perpetrator a for-profit company. But Greenpeace (and other Green groups) get a free pass.

On the donor side of this racket, the MacArthur, Packard, Rockefeller, Turner and other liberal foundations that donate lavishly to Greenpeace Fund are obligated to ensure that those funds are used for educational and other proper purposes. So are corporations. They apparently are not doing so – suggesting that their directors are derelict in their fiduciary duties or simply assume the IRS will do nothing.

The result is that honest, hard-working Americans are forced to subsidize blatant violations of law. Even worse, they are forced to support an ideological agenda that literally keeps millions of people mired in poverty, disease and premature death.

“The environmental movement has lost its objectivity, morality and humanity,” laments Greenpeace co-founder Patrick Moore. And its power is magnified by its blatant flouting of the law.

Moore notes that Canada revoked Greenpeace’s tax-exempt status a few years ago, for reasons similar to those cited by PIW. These organizations should be subjected to “an independent certification process to verify scientific accuracy and accountability,” he believes.

“Greenpeace alone spends $140 million a year pressuring companies and governments to deny the benefits of modern technology to impoverished nations that are wracked by malaria, dysentery, malnutrition and a near absence of electricity,” says Niger Innis, national spokesman for the Congress of Racial Equality (CORE). “It knows its agenda devastates families and communities – and kills millions every year. But it won’t budge.”

Malaria kills 2 million people a year in developing countries – half of them children, Innis points out. Dysentery claims another 4 million lives annually, malnutrition and starvation millions more. Worldwide, 2 billion people still do not have electricity, and 4 million die every year from lung diseases caused by burning dung and wood.

DDT, sprayed once a year in tiny amounts on the inside walls of homes, can reduce malaria rates by 80 percent. Genetically engineered plants can resist insects, replace crop varieties killed by viruses, and provide extra nutrients for malnourished people. Adequate supplies of affordable electricity can reduce lung disease and power water purification plants.

CORE presented Greenpeace with a “Green Power – Black Death” award during the recent WTO meeting in Cancun, Mexico, for “bringing misery and death to developing countries.”

Where are the watchdogs – the IRS, journalists, California attorney general and others who are supposed to be protecting us and the world’s poor from these callous crooks and charlatans? It’s high time they investigated and punished the wrongdoers. Dare we hold our breath?