Issue: Government and Nonprofits

Today I saw an interesting news article from the Akron Beacon Journal's website, ohio.com, written by Dennis J. Willard (last accessed October 18, 2009). The May 16, 2009, article discussed what happened when the state of Pennsylvania found that two politicians used nonprofit  corporations to get money from the state's coffers and then solicited donations for personal and political gain.

The first case the Pennsylvania attorney general is litigating concerns a thirty-year senator, Vincent Fumo. Fumo, who was  indicted in federal court in March on 137 counts of corruption, and who served as Democratic Chairman  of the State's Appropriations Committee,  formed a nonprofit called the Citizens Alliance for Better Neighborhoods and is accused of using $1.9 million of the NPO's funds "for personal use and advantage" , as stated in the complaint. Senator Fumo and an accomplice received the money from a state- funded utility, public grants, and private donations. The money was used to purchase vehicles and farm equipment/machinery and office space.

The nonprofit was used to fund a holding company that bought trips to Cuba and influence to stop a project that would have reduced the value of his beach house in New Jersey. Fumo also used the NPO's money to spy on his political opposition through the for-profit holding company.

The article quoted Attorney General Tom Corbett, who  said, ''The purpose of Citizens Alliance for Better Neighborhoods was to promote the public health, housing, safety and education in Philadelphia. Using nonprofit money to fund a lavish lifestyle and finance political campaigns is unacceptable.''

The second case relates to 28 corruption charges pending for former Pennsylvania  Representative Mike Veon. He, too used a nonprofit, Beaver Initiative for Growth, to fund personal concerns. For example, he paid a firm for consulting services; the firm paid Veon's brother $160,000 a year.

A grand jury determined that Beaver Initiatives received $9.9 million dollars in state tax dollars over four years. Veon determined how the money was spent, according to Willard.

Governor Strickland wants Ohio governmental employees to be able to use nonprofit organizations nearly the same way- to solicit money for projects and operations- but Ohio employees would do it from inside the "walls of government." The Pennsylvania cases were outside of direction of the state- the particular politicians involved were acting independently of the state. In other words, the state of Ohio would use nonprofits created by employees with in the current regime to solicit money from corporations and individuals currently seeking contracts from the state and from those who are currently under contract to the state.

Strickland alleges that money would be traceable: Willard states that language inserted into the bill allowed the money to disappear from nonprofits into the for-profit companies with no way to trace it. "In other words, once a nonprofit hires a for-profit consultant or a for-profit vendor, the paper trail — the ability to track the public dollars — would stop," Willard asserts. There is a fine line when the state, who is awarding contracts to individuals and companies,  is also asking for donations and contributions from those same individuals and companies.

Personally, I think that politicians are better off staying away from forming nonprofits. The public tires of the constant corruption those in power always seem to be embroiled in. Politicians should solicit donations the honest way. Government is a reflection of the people: what does that say about us?