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Taxpayer advocacy group “Stop Taxing Us” alleges misconduct on “Yes on EE” campaign

Wednesday, December 19, 2012
posted by Brian Brady

Press release from Stop Taxing Us alleges nefarious link between The MiraCosta College Foundation and the Yes on Proposition EE bond issuance campaign.

From the press release:

December 19, 2012:  (Carlsbad, CA)  The MiraCosta College Foundation appears to have violated the law and jeopardized its 501(c)(3) tax-exempt status by making a large political contribution to the Yes on EE campaign.  Stop Taxing Us successfully defended the taxpayers from this 1.5 billion dollar tax hike.

The MiraCosta College Foundation was established as a nonprofit tax-exempt 501(c) 3 in 1967 to receive and administer gifts and grants benefiting the college.  Contributions to the Foundation qualify for state and federal income tax deductions — and for estate tax savings.

Campaign filings for Yes on EE (link) show a $100,000 contribution from the MiraCosta College Foundation.  As a tax-exempt 501(c)(3) (link), the Foundation is restricted in contributing to political activities.  According to the IRS (link), a 501(c)(3) “may not attempt to influence legislation as a substantial part of its activities.”

$100,000 would seem “substantial” on its face, but in the context of the size and scope of the Foundation’s activities, the contribution is even more clearly substantial.  The most recent audited financials (link) show total annual program expenses of just $550,358, meaning this one political contribution amounted to more than 18% of the total prior year’s services.

According to Stop Taxing Us co-founder Dr. Gary Gonsalves, “Our research indicates that the use of College Foundation money for campaigning is an illegal use of deductible charity dollars.  This is not just a misallocation — it is an apparent crime and we are asking the proper state and federal authorities to investigate our findings.  If the average Joe taxpayer attempted to tax deduct their political contributions, it would not be long before the IRS came knocking on their door.”

Gonsalves further notes, “It’s possible that this act could invalidate the foundation, and retroactively eliminate deductions for contributions — even though they were made prior to the disbursement.  While this would harm well meaning donors, they in turn should be able to sue the administrators for violation of their fiduciary responsibility.”

The Proposition EE campaign would have instituted a $1.5 billion dollar tax hike on homeowners in North County. and it would have hit working families and renters in the form of higher rents. MiraCosta’s $100,000 donation was the single largest contribution to the campaign that raised $350,000. In spite of this substantial war chest, the proposition failed.

SOURCE DOCUMENT:  http://foundation.miracosta.edu/downloads/990Returnpublic-mcccf10-11.pdf

Author’s note:  Proposition EE was defeated at the ballot box by a slim margin this past November.  San Diego Rostra coverage, of the Prop EE campaign:

Propositions AA and EE are second mortgages on your home
Propositions AA, EE: Endorsing Organization’s Bias Questioned

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