Goldwater Institute "Lends" $1.9 Million to Rich Guy on Its Board

picresized_1363328705_barry.jpg
Barry Goldwater: Even dead, keeping Clint Bolick flush to the tune of $300K-plus

The eyebrow-raising part of the newly-released "Reporter's Guide to the Goldwater Institute," isn't that GI's executives make lavish six-figure salaries working for a non-profit 501c3, or that the Goldwater Institute is, according to the report, a tool of the Koch bothers and the American Legislative Exchange Council.

Read the Center for Media and Democracy's just-released report on the Goldwater Institute.

It's not even that the organization itself is a pillar of hypocrisy, arguing against the perils of intrusive government and opposing the expansion of social-welfare programs such as AHCCCS, while feasting on the public tit in the form of tax-deductible donations.

Read the Goldwater Institute's 2011 IRS Form 990.

That we all know. Or we should know. For the most part GI's philosophy is the traditional Republican one, which says the rich should rule, and government is bad, unless it's helping the wealthy get wealthier, and then it's A-OK.

Read the Center for Media and Democracy's IRS Form 990 for 2011.

No, the most intriguing revelation of this new report released by the Center for Media and Democracy (itself a 501c3, natch) and the AFL-CIO-backed group Arizona Working Families is that the Goldwater Institute has "loaned" close to $2 million to Shamrock Foods Co., a privately held company, owned by one of GI's board members, Norman McClelland.

Read the AFL-CIO's financial filing for 2011 with the U.S. Department of Labor.

Indeed, GI's 990 form, the "return" filed by non-profits, states that GI has chosen to invest its "excess cash" in "two promissory notes with a privately held corporation owned by a board member."

The first "unsecured revolving promissory note" is for $200,000, and "bears interest at 10 percent annum" paid monthly to the institute.

The second note is far more generous, a whopping $1,700,000 at a rate of 2.25 percent. Both notes come due in 2015.

The report claims that "McClelland has donated an untold sum of his personal fortune from his business endeavors to help the Goldwater Institute," and notes that McClelland helped found the institute in 1988 and chaired GI's board from 1992 to 1994.

GI's close ties to McClelland are not hidden. In fact GI's website states,

"Through the generous contributions of 48 friends and Goldwater Institute supporters, the Norman P. McClelland Distinguished Fellowship was established [in 2008] to ensure Mr. McClelland's legacy will continue in the next generation of young conservative leaders."

The report itself does not imply that there is anything illegal about this arrangement, and most of the info about the loans is available on GI's website for anyone curious enough to read through it.

Still, I'm guessing those promissory notes are not part of the pitch to potential donors.

GI spokeswoman Lucy Caldwell quibbled with calling the promissory notes "loans," and preferred seeing the notes as investments.

"The Goldwater Institute...is not `loaning' Shamrock money, as the report suggests," said Caldwell."The Institute invests its idle cash in promissory notes with Shamrock and while they are holding our cash, we earn an above market interest rate. We draw the funds down as we need them throughout the year. Investing idle cash where it can earn interest is a prudent financial strategy."


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23 comments
tjmurr
tjmurr

You have to just love these Jealous  Liberal whack jobs who think private money belongs to them ( the collective)!  So GI loans their own  money to shamrock and in turn GI receives a good return.  Now what the hell is wrong with that?   It's a lot better than our  Government loaning/giving  tax dollars (our money) to their cronies  in return for political donations,  Money that will NEVER BE PAID BACK!  Liberalism truly is a mental disorder!

marcy
marcy

Stephen,

If you were looking to make a lot of money, yes you are in the wrong line of work.   But you can also make a lot more that $300K/yr as a cardiologist so you might want to also argue that Clint Bolick is in the wrong line of work as well.

As for "How can an institution raking in so much cash argue that people below the poverty line should be denied medical care from the state's Medicaid program?", in what way would an argument that a particular government welfare program be abolished be diminished by the amount of money the organization making the argument has?

If the GI only had $100 in its bank account would its argument be more valid or are you claiming that only poor people can argue against welfare programs?  In which case can only the rich have valid arguments for raising taxes on the rich?

Do you check with the PNT accountants to see how much money they have in the bank before publishing an article?   Or if advertising revenue exceeds a certain amount per month do you find yourself unable to make certain arguments regarding social issues?



dennis20
dennis20 topcommenter

So when Brahm Resnik has his favorite GI rep on Sunday Square-off, he had damn well better be referring to them as lobbyists. He fell all over himself when someone pointed out he didn't call Julie Erfle a democrat for christ sakes.  He was very apolagetic unlike when he ripped off my video and claimed credit for it. But HEY! He's got nice hair. 

The Goldwater institute cares only about there own pocket books and that of the Koch brothers and ALEC.  


ReggieVV
ReggieVV

How long are the voters in this State going to continue to elect stooges for ALEC and their child, the Goldwater Institute? Conservative voters, they don't care about you, only their money making.

eric.nelson745
eric.nelson745 topcommenter

Barry would not be pleased to have his name on this outfit's letterhead.

JohnQ.Public
JohnQ.Public

So, instead of investing his own money back into the business, it appears that Mr. McClelland donated $1.7 million to the Goldwater Institute and takes the accompanying tax deduction, but arranges for the Goldwater Institute to make a corresponding $1.7 million loan to his company at a nice little 2.25% interest rate.  So it begins to look like McClelland gets to protect more of his personal wealth from taxes (which he wouldn't get to do if he personally loaned the money directly to the company) through the charitable donation, his company still gets the benefit of the access to capital and the Goldwater Institute gets a nice big chunk of change out of the deal to lobby and litigate for ways to further protect Mr. McClelland's personal wealth.  What a perfect arrangement..

MotherJones
MotherJones

@marcy The big difference, of course, is that PNT is a private co. U know, free enterprise and all that, what GI is supposed to be for? Instead GI is all about helping fatcats on the backs of the American taxpayer. That's the irony, Marcy, that u intentionally miss. PNT is not a tax write off. Let GI become a for-profit co instead of masquerading as a "charity." Then u can shoot ur mouth off. Of course, that'll never happen, because Bolick wld never make that kind of scratch in the real world.

sarum
sarum

@ReggieVV Why are you so sure that they didn't?  iow, what on earth makes you think elections aren't rigged?

MotherJones
MotherJones

@eric.nelson745 If Barry saw how much Clint Bolick was being paid, I suspect he'd strip his name or fire the lot of them.

marcy
marcy

@JohnQ.Public 

It's no longer his personal wealth, he gave it away.   He's paying the exact same interest rate on that loan as I'm paying on my HELOC to a major bank.  

In general you don't protect your "personal wealth" from taxes, other than estate taxes and property taxes you don't pay taxes on "wealth".   If you are tired of having to pay taxes on large amounts of capital that you are earning 2.25% interest on you are perfectly free to donate the capital so you no longer earn that interest.  You won't be financially better off for having done so.


marcy
marcy

@MotherJones @marcy 

The GI is not a charitable organization honey.

And they aren't masquerading as one either.

Free enterprise isn't limited to for profit businesses, not that non-profits can't make a profit. 

Hope that isn't all too confusing for you.  Now maybe you can go back and answer my questions.

JohnQ.Public
JohnQ.Public

@marcy @JohnQ.Public He is protecting his personal wealth. When he makes a charitable contribution he generally reduces the income that he pays taxes on by a corresponding amount thereby allowing him to further increase his personal wealth by the amount money he did not pay in taxes(if, of course, he chooses to use his tax savings in this way). Sorry I used "personal wealth" as shorthand instead of this long winded explanation - I didn't think I was writing a complete treatise on the matter. If you have access to Shamrocks financials you can tell me whether the company could have accessed capital in the commercial markets at 2.25%. The commercial lending market is significantly different than your home equity or mortgage market. For all you know, Shamrock would not have been able to access capital in the commercial market at 2.25% based on factors like running in the red, being over-leveraged or for other reasons. In fact, in my experience, the only reason a company would likely seek an alternative market source of funding like this is because of an inability to obtain funding from more traditional sources or in more traditional markets, or for other unusual reasons.

Thane.Eichenauer
Thane.Eichenauer

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."

Judge Learned Hand, (1872-1961), Judge, U. S. Court of Appeals

Source:in the case of Gregory v. Helvering

http://quotes.liberty-tree.ca/quote_blog/Learned.Hand.Quote.6BF7

JohnQ.Public
JohnQ.Public

@david_saint01 Because tax evasion makes it sound like its illegal, which is such a harsh way to look at it.  If it's not illegal, its just tax mitigation - no worse than you 99%ers  taking the personal deduction or mortgage deduction on your tax returns - entirely legal conduct designed to reduce our tax exposure.  No worse than me buying a show horse to dance in the olympics but forming a company to do it through and taking a passive busines loss deduction.  Or putting income-producing assets into a trust formed in a low tax country so I don't have to pay US taxes on the income those assets produce until I repatriate that income to the US (but only after I get my friends in Congress to declare a tax amnesty on repatriated income generated oversees).  So you see, David, that word "evasion" is just so harsh and unwarranted.  Now if you'll excuse me, Lovey Howell and I are going down to the marina for a three hour tour, a three hour tour.

JohnQ.Public
JohnQ.Public

@marcy @MotherJones The way you refer to Mother Jones as "honey" almost makes your argument with Mother Jones sound like a lovers quarrel. Unless of course, Marcy, your using that endearing term just to be condescending.

MotherJones
MotherJones

@marcy @MotherJones It's a 501c3, idiot. Tax-exempt. Sure, it ain't a charity, it's a boondoggle, one propped up by the taxpayers. On one hand, they preach against social programs, on the other, they've signed up for socialism. As for profit, Bolick sure is makin one. Why don't we remove the tax-exempt crutch and see how long GI survives?

JohnQ.Public
JohnQ.Public

And it begs the question, what type of underwriting did the Goldwter Institue do. Since it doesn't appear that they have a portfolio of loans made n the alternative lending market, what is their underwriting experience and how dd they underwrite this one.

Now it could also be that Shamrock had a liquidity crisis in 2008/09 when the commercial paper market was in complete disarray and turned to any capital source it could find, including the owners exclusive access to the Goldwater Institutes cash. But their secrecy doesn't help them convince anyone that the explanation is no more nefarious than this.

MotherJones
MotherJones

@Thane.Eichenauer On the other hand here you have in GI a pack of hypocrites who've signed up for a very lucrative socialism for themselves in the form of tax-write-offs for donors.

JohnQ.Public
JohnQ.Public

@Thane.Eichenauer The issue is not that someone may work to exploit the provisions of the federal tax code to pay as little tax as possible. The issue is that the lawmakers that write and revise the federal tax code have become beholden to lobbyist whose sole goal is to incorporate into the tax code, on behalf of their clients, provisions that enable this type of tax mitigation or avoidance.

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