After a year in which financial improprieties gobbled up headlines like never before, it would stand to reason that a brewing scandal involving a major international organization, millions of dollars, and alleged tax evasion would receive similar treatment. But if that major international organization is famed environmental group Greenpeace, the media goes mute.
Two months ago, nonprofit watchdog Public Interest Watch (PIW) filed a complaint with the Internal Revenue Service alleging that Greenpeace has engaged in massive transfers of money between its many subgroups in order to skirt U.S. tax laws. PIW simultaneously issued a companion report, called “Green Peace, Dirty Money: Tax Violations in the World of Non-Profits,” which details how the environmental group transferred $24 million in tax-exempt contributions over a three-period to fund non-tax-exempt activities.
Much like Enron’s dizzying array of shell organizations and dummy corporations, Greenpeace has a multitude of entities established throughout the world—all unified by Greenpeace International, which in 2000 had an operating budget of $134 million.
In the U.S., there are two primary groups: Greenpeace Inc. and Greenpeace Fund Inc. Neither has to pay U.S. taxes, but there is one key difference between them: donations to the latter entity are tax-deductible, whereas contributions to the former are not. In IRS-speak, this means that money given to Greenpeace Fund Inc., known as a 501(c)(3) organization (named for the corresponding provision in tax law), can reduce the amount one pays in taxes, whereas funds given to Greenpeace Inc, known as a 501(c)(4) entity, cannot.
Just as common sense would dictate, it is much harder to raise money for a 501(c)(4) group, because donors cannot deduct the contributions from their taxable income.
That’s why the IRS has very strict rules about how tax-exempt donations to a 501(c)(3) entity can be used. 501(c)(3) groups are essentially limited to religious, charitable, or educational activities. Such groups can transfer funds to 501(c)(4) entities, but money from those grants are bound by the same restrictions 501(c)(3) organizations face on all their activities.
Here’s where things get sticky with Greenpeace’s green: almost all the tax-exempt money the environmental group raises, according to PIW, is transferred to its sister organization, a 501(c)(4) group that cannot itself solicit tax-exempt contributions. And it is the sister organization that does all those splashy—and typically illegal—media-driven stunts such as trespassing and destruction of property, activities which would seem to be neither charitable nor educational.
According to the 1999 tax returns for both Greenpeace Inc. and Greenpeace Fund Inc.—the most recent available—over $4 million changed hands between the groups. The 501(c)(3) Greenpeace Fund Inc.—which obviously had an easier time raising funds because its donors get tax write-offs—gave its 501(c)(4) Greenpeace Inc. sister organization $4.25 million, which constituted roughly 30 percent of the latter group’s 1999 budget.
Based on the data Public Interest Watch collected from various Greenpeace tax and disclosure forms from 1998-2000, the 501(c)(3) arm, Greenpeace Fund Inc., transferred a total of $24 million to other Greenpeace subgroups that cannot solicit tax-exempt contributions.
PIW Chairman Mike Hardiman has a simple description of Greenpeace’s accounting gimmicks: “It’s a form of money laundering, plain and simple.”
That $24 million diverted to non-tax-exempt purposes is of little interest to the media should be surprising. More surprising still, though, is that the media’s interest didn’t perk up given the list of big-name Greenpeace donors. Foundations established by such high-brow last names as Rockefeller, Merck, Mott, MacArthur, Packard, and Turner have all given large sums—tax-exempt—enabling Greenpeace to move its funds around more easily.
But because those groups have a legal duty to make sure that tax-exempt funds are used appropriately, the amount of salivating copy this mess could generate is substantial. Yet the media collectively yawns.
A quick search of news archive Nexis revealed that only a dozen stories—in both print and television—covered PIW’s Greenpeace complaint. And the only thorough rendering was written by tireless columnist Deroy Murdock at National Review Online.
It’s possible, of course, that Greenpeace will be cleared of malfeasance. But maybe it won’t. Old-fashioned investigative journalism would seem to dictate some digging take place. Too bad the media’s evident bias makes clear that won’t happen.