Goldwater Institute "Lends" $1.9 Million to Rich Guy on Its Board
Here follows my email interview with Goldwater Institute spokeswoman Lucy Caldwell:
I've answered your questions below--thanks! Let me know if you need anything else--sorry to be sending from email, but I'm out of town and am going on hour 4 of dead cell phone!
Lucy Caldwell | Communications Director | Goldwater Institute | www.goldwaterinstitute.org | o: (602) 633-8986
"The Goldwater Institute is simply in the liberty business - and there's no institution in the country that performs that business better." - Columnist, journalist and author George Will
On Mar 14, 2013, at 8:15 PM, "Stephen Lemons"
Going through the report and comparing it to GI's 990 for 2011, most
of the dollar amounts re: wages, bonuses and loans seem correct.
I'd like for you to respond to these allegations from the report:
1) Regarding the $1.9M in loans to board member Norm McClelland, the
reports claims this is improper and a conflict of interest for these
reasons: McClelland has donated money to GI, and GI is the recipient
of taxpayer funds in the form of its nonprofit status and attorney's
fees it gets from suing governments. How does GI respond? Is this
practice an abuse of your taxpayer status? If not, why?
The Goldwater Institute invests is not "loaning" Shamrock money, as the report suggests. 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.
The Institute follows all standard non-profit accounting rules and practices, that is why Charity Navigator gives us a 4-star ranking, the highest ranking possible for responsible financial stewardship.
2) The report also states that GI employs people who lobby for GI, yet
GI reports very little in lobbying expenses. why is this?
The IRS requires 501c(3)h organizations (nonprofits that engage in lobbying) to report how much of the budget is spent on lobbying. There is no single employee at the Goldwater Institute who works as a lobbyist exclusively, so the amount spent on lobbying is determined as a prorated calculation of percentage of a staff member's time spent lobbying ie if a staff member spent 5% of his time lobbying, we would report 5% of his compensation as going toward lobbying and so and so forth (that's just a hypothetical). That figure is an accurate representation of the funds that are spent on lobbying as a prorated calculation of salaries of those who lobby and resources spent toward lobbying.
The Goldwater Institute is in full compliance with both IRS lobbying reporting standards (which are actually far more comprehensive that Arizona's requirements, which do not require us to register our policy analysts as lobbyists) as well as state requirements.
Let me know if you need more explanation on this.
3) How does GI respond to the charge that it is essentially a tool of
the Koch brothers and ALEC?
The report highlights the fact that the Institute is supported by individuals and foundations that fund other conservative organizations. This fact is hardly a suprise: The Goldwater Institute is a conservative organization so naturally we receive funding from and work with other conservative organizations.
4) What is your response to the allegation that GI is heavily financed
by out of state interests?
We don't operate exclusively in Arizona, though we are proud to call the Land of Goldwater our homebase. We work in statehouses and with policymakers across the country--we've impacted policy in over 40 states. So we are proud to have supporters in all fifty states.
5) What's GI's response to the charge of hypocrisy, that GI
consistently argues against the rights of workers, the amount of money
public employees are paid, the expansion of AHCCCS, and yet, GI itself
pays exorbitant salaries and offers its top employees lavish bonuses?
The Goldwater Institute is a private organization funded by private individuals--not a public body funded by taxpayers.
Charity Navigator, America's leading independent charity evaluator, gives the Goldwater Institute a 4-star ranking, the highest possible rating in the industry. Ratings are based on transparency, accountability, ratio of administrative costs to program costs, among others. Less than 1% of U.S. charities have earned this ranking. In addition, the Goldwater Institute has passed an IRS audit without any findings. We continue to make our IRS Form 990 available on our website along with audited financial information.
6) Is there anything in the report that you fees is inaccurate that
you wish to address?
Neither the Center for Media and Democracy nor Arizona Working Families attempted to contact the Goldwater Institute in the course of producing the report, which may have contributed to the multiple errors the report contains.
The report criticizes the Goldwater Institute for accepting attorney's fees in legal cases we win.
The Goldwater Institute acts in the public interest to defend the constitutional rights of citizens. When government entities violate those rights, they become responsible for the legal fees associated with the defense of those rights. Any expenses recovered by the Goldwater Institute are applied to the further defense of taxpayers in future cases. The Goldwater Institute always warns governmental entities before engaging a lawsuit. However, when governments willfully violate constitutional rights, the Institute will not compromise on attorney fees due to the need to deter future illegal activity and encourage government to abide by the law.
8:53 PM (40 minutes ago) to Lucy
Thanks for this, one follow-up re: this statement, "The Goldwater
Institute is a private organization funded by private individuals--not
a public body funded by taxpayers. "
But you are a tax-exempt organization, and donations to GI are
tax-deductible, right? I mean, it's not as if you're a private
business and pay corporate tax, correct? So the taxpayers do give you
a break, a huge break, and if you have "promissory notes" as they're
called in your 990, aren't you doing that in part with tax-exempt
9:16 PM (18 minutes ago)
Our supporters are private individuals who choose to donate to us, not taxpayers, as in the case of government.
I'm not sure what you're getting at, but it certainly is completely typical for a non-profit to invest for the future (this is why, for instance, many non-profits have endowments), so hopefully that answers your question.