Corporate misbehavior remains much in the news. One day it is Enron; next it is the New York Stock Exchange. Big Labor, too, must routinely be called to account.
Now comes a study, “Green-Peace, Dirty Money: Tax Violations in the World of non-Profits,” from Public Interest Watch demonstrating the importance of scrutinizing non-profits. PIW charges the activist environmental group Greenpeace with misusing tax-exempt donations for political purposes.
Greenpeace, it says, is “the most egregious offender we reviewed,” and thus warrants a thorough investigation.
Greenpeace activists sometimes risk life and limb trying to blockade bases and ships and invade businesses and power plants. Alas, the group lacks an appreciation for the importance of protecting humans as well as whales and plants.
There may be no more avid antagonist to technological innovation than Greenpeace, which sees danger in every advance and most ferociously opposes changes that offer the greatest potential benefits. If the organization had its way, we’d all be living in primitive hovels with dirt floors, sharing our single room with farm animals while enjoying the wonders of cholera, smallpox and typhoid.
Greenpeace has long focused on genetically modified food, which offers the prospect of more abundant and nutritious products more resistant to the depredations of nature. The organization recently criticized nanotechnology, which deals with the introduction of man-made micromaterials into products.
Greenpeace advocates applying the reasonable sounding “precautionary principle” to nanotechnology. But in the group’s interpretation, this would ban virtually all technological change because no one can guarantee the absence of any possible problem in anything.
One of Greenpeace’s founders three decades ago, Dr. Patrick Moore, complains: The organization has adopted “a new philosophy of radical environmentalism.” As a result, he argues, Greenpeace’s “agenda is a greater threat to the global environment than that posed by mainstream society.”
The group obviously opposes free markets, even though statist economic systems have failed routinely and catastrophically. Indeed, the worst environmental destruction occurred throughout the Soviet empire. Greenpeace also opposes technology and science, even though innovation not only benefits humanity but also betters the environment.
Further, the group is anti-democratic. Explains Moore, it believes democracy to be too “human-centered.” Indeed, Greenpeace is fundamentally anti-civilization and anti-human, subverting “the most important lesson of ecology; that we are all part of nature and interdependent with it.”
While that is an agenda that few rational people support in a “human-centered” democracy, the members of Greenpeace are and should be free to advocate it. What they shouldn’t be able to do is manipulate the tax system to advance their agenda.
The IRS code allows 501 ©(3) organizations, to which contributions are tax deductible, to promote educational and other (e.g., charitable, educational, religious) purposes. The groups are not allowed to advance candidates or influence legislation. The latter activities can be conducted by so-called 501 ©(4) groups, which also are tax-exempt but to whom contributions are not deductible.
Public Interest Watch contends that Greenpeace has used two organizations, the Greenpeace Fund Inc. (3) and Greenpeace Inc. (4) to engage “in a form of money laundering.” That is, reports PIW, “they are used to illegally funnel tax-exempt contributions into taxable program activities.”
As a result, notes PIW, of $7.5 million raised by the Greenpeace Fund in 2000, the last year for which returns are available, $4.5 million went to Greenpeace Inc., $3.7 million to Greenpeace International, and $.8 million to foreign Greenpeace organizations (the 40 Greenpeace groups around the world collectively spent about $143 million in 2000).
Money can be transferred from a 501 ©(3) to a 501 ©(4) organization, but only if it is earmarked for legitimate educational expenditures. Notes PIW, “This is not happening with the wholesale transfer of funds from Greenpeace Fund Inc. to Greenpeace Inc.” There is no firewall between the groups; there is no designation of educational grant purpose.
In fact, concludes PIW: “it is near impossible for Greenpeace Fund Inc. to argue that these funds were earmarked for charitable purposes because its $3.7 million grant in 2000 was described in its Internal Revenue Service return as being made for ‘general support,’ as opposed to specific program activity.” Most of what Greenpeace does could be counted as political advocacy, always confrontational, frequently illegal and sometimes violent.
Both organizations are headquartered in California and Greenpeace’s behavior violates state as well as federal law.
Also at fault are foundations that subsidize Greenpeace but “are responsible for verifying that their funds are used appropriately,” contends PIW.
Any institution, from corporation to union to non-profit, can abuse its position. Alas, many “public interest” groups, such as Greenpeace, are actively working against the interests of most people. And Greenpeace apparently is twisting the tax law along the way.