Should the highest-paid officials of a tax-exempt nonprofit reaping millions from attacking U.S. national security policies be more transparent?
For the American Civil Liberties Union (ACLU) criticizing Trump’s national security agenda has been fantastic for its bottom line. Immediately after the election, the organization issued a virtual ‘declaration of war’ against the just-elected President, mainly because of what they believed were his intentions about national security issues.
It proved to be a financially-rewarding strategy as in short order it generated $7.2 million in donations. At the time, the ACLU said “[a]ll of this support will be put to good use protecting the rights of all Americans.”
And the windfall from opposing the new Administration’s security initiatives wasn’t over. On January 28th the ACLU filed a lawsuit attacking the executive order which the White House said was aimed at “Protecting the Nation from Foreign Terrorist Entry into the United States.” Doing so resulted in an enormous financial bonanza for the nonprofit. Here’s how the New York Times reported it:
The A.C.L.U. has raised more than $24 million in online donations since Saturday, the first full day of the immigration ban, said Stephen Smith, a spokesman for the group. That is nearly seven times as much raised online in 2015, roughly $3.5 million, he added. (Italics added.)
With all that unprecedented amount of money flowing into the ACLU, a business case for opposing the Administration’s security policies seems pretty obvious: it generates a vast influx of donor money. Wouldn’t it be hard to stay nonpartisan and altruistic when the financial enticements scream just the opposite?
To be sure, the ACLU has a storied history of supporting causes important to the civil liberties of Americans. Still, should we be concerned about the impact on it of sudden, unexpected wealth? Is there an organizational form of “sudden wealth syndrome” that could adversely affect the ACLU’s outlook and operations? To what extent will its employees expect to personally share in the jackpot? Will the palpable financial rewards of criticism provide a troubling incentive?
Government, the target of their attacks, hardly suffers from “sudden wealth syndrome,” but it is concerned about individuals exploiting their positions for personal gain. To ensure that such temptations don’t infect the thinking of its top employees, government not only requires searching background investigations for the security clearances officials need, it also demands extensive public disclosure of personal financial information. As the Congressional Research Service puts it:
High-level officials in all three branches of the federal government are required to publicly disclose detailed information concerning their financial holdings and transactions in income producing property and assets, such as stocks, bonds, mutual funds, and real property, as well as information on income, gifts, and reimbursements from private non-governmental sources. Covered federal officials must disclose this information not only for themselves, but also must disclose much of the same required financial information with regard to their spouses and dependent children.
Not so with tax-exempt, non-governmental organizations (NGOs) like the ACLU. Yes, they are required to publically disclose certain financial information about the organization itself, and they do provide audited financial statements, but unlike those who lead the government’s national security enterprise, very little is divulged about the personal finances of high-level officials beyond salary information.
Is now the time to call for – on a voluntary basis – more transparency about their personal finances from the top officials who lead the largest nonprofits that enjoy tax-exempt status? I’m talking about voluntarily disclosing no more than exactly the same kind of personal financial information that high government officials are required to reveal.
Let’s not forget that some nonprofits pay their top people healthy salaries. For example, the 2015 IRS Form 990 Return of Organization Exempt From Income Tax reveals that the American Civil Liberties Union pays its executives serious money, so to speak. Here are a few illustrations:
ACLU Executive Director $483,127.00
ACLU Deputy Executive Director/Asst Sec $408,076.00
ACLU COO & General Counsel/Asst Treas $363,770.00
The ACLU’s Form 990 also reports 11 other executives who made between $167,994 and $344,045 from the ACLU or “related organizations.” The ACLU Foundation’s (a distinct entity as explained here) separate Form 990 also has executives salaried in six-figures.
The ACLU is not, by the way, the only such nonprofit with highly-paid executives. The most current Form 990 posted for Human Rights Watch covered 2014, and it shows the Executive Director as making $469,356, with about a dozen more of its uppermost officials being paid from $176,478 to $338,991. The Form 990 for Amnesty International shows its Executive Director making (a relatively modest) $274,603 in 2015, with a half dozen other executives also pulling in six-figures.
I don’t know what you think of these salaries, but for comparison the average teacher in the U.S. makes $55,000, the average firefighter, $44,573, and the average soldier, just $32,664. But what about high-level leaders in the government’s security sector – the senior civilians and the generals – that is, those in positions somewhat akin to the ACLU’s leadership?
It might (but maybe not) surprise you that the absolute maximum most senior civilians and all military officers (that is, those who are required to file the comprehensive financial disclosure forms) can make is significantly lower than at the big nonprofits like the ACLU.
Why? Military (and most civilian) salaries are limited by Level II of the Executive Schedule to $15,582.20 a month in basic pay, or $186,986.40 a year. (Yes, there are other benefits for those serving in the armed forces, but the figures above for the ACLU and the others also reflect only basic compensation).
Indeed, the most anyone can make in government is $207,000, except the Vice President ($240,000), and the President ($400,000). (Trump has offered to work for $1 a year, but – believe it or not – he’s being criticized for doing so.) Although the President has not made public his tax returns as perhaps he should, he has completed his 104-page financial disclosure report.
In the disclosure documents senior military and civilian officials must file, personal investment activity is tracked and reviewed to ensure that there is no conflict between an employee’s own financial interests and his or her role in government. Potential conflicts may require disinvestment or recusal with the aim of making sure that individuals are not able to improperly orchestrate their responsibilities to the public for personal financial gain.
There seems to be money to be made in the stock market these days, and there could be something of a paradox in this regard. You decide, but after unrelenting criticism of the new Administration by most NGOs, the media, and even governments, Market Watch nevertheless reports that since November “[g]lobal stock markets are up $3.1 trillion.” Is this simply correlation or is it an example of causation? Again, you be the judge.
Not everyone, however, has profited. George Soros, the wealthy financier of what the Wall Street Journal calls “liberal causes” reportedly “lost nearly $1 billion as a result of the stock-market rally spurred by Donald Trump’s surprise presidential election.”
Can public criticism impact the marketplace? Could some sort of reverse psychology be at play here? Fortune magazine says, for example, that Ivanka Trump’s perfumes are “the No. 1 and No.2 best sellers, respectively, on Amazon.” Interestingly, it further observes that:
The surge in buying comes even as protest groups call for consumers to boycott Trump-branded products, while retailers such as Nordstrom are pulling Ivanka Trump’s clothesline off the shelves — or at least making it less conspicuous in store. Meanwhile, Trump-branded wines have sold out at two Richmond-area Wegmans stores, even as protesters urged shoppers to steer clear of the product.
To be crystal clear, there is no indication that anyone at the ACLU or the other nonprofits have done anything improper or have tried to somehow orchestrate the market. Still, in today’s unusual political environment, isn’t more transparency about financial dealings a good thing for all concerned?
I do think that an argument can be made that the high-level officials of organizations seeking tax-exempt status ought to be required to make the same kinds of public financial disclosures that senior members of the armed forces and other government officials are required to reveal. However, I personally don’t think they should legally be obliged to do so at this time.
Why? There are a lot of nonprofits with tax-exempt status, and most of them are not engaged in public activities that are of the same scope or, importantly, as potentially remunerative as those of the ACLU and similarly large organizations. I would not want to burden all nonprofits with the paperwork. Even for organizations like the ACLU, only those at the very top should be asked to voluntarily disclose. However, a refusal of a senior official to be transparent about his or her finances ought to be public. Very public.
At any rate, the ACLU has an opportunity to lead the way in this regard. Would their leaders be willing to share their personal financial data about their investments as well as other disclosures like those required by government and military leaders? Wouldn’t that add to public confidence to their pronouncements?
To reiterate, the ACLU and other left-of-center nonprofits have not infrequently done extraordinarily positive things for the protection of the civil liberties of all Americans. Even if one disagrees with the positions the ACLU and other similarly-disposed high-profile nonprofits take, they do inject a vital measure of tension and, I would argue, restraint into the activities of government. In the larger political dialogue that can be responsible and productive. And, of course, nowhere is it more important to have responsible and productive discussion than in national matters.
But haven’t we’ve seen how money, especially the sudden influx of it, can create realities or perceptions that undermine the noble intentions of organizations and individuals? Aren’t the caution lights flashing as unexpected millions fill the coffers?
So let’s ask ourselves: shouldn’t the high officials of a major nonprofit reaping millions from criticizing national security policies be, on a voluntary basis, as transparent as to their personal finances as their counterparts in the national security establishment they are criticizing are obliged to be?
As always, you be the judge!