How the Trump Foundation Illustrates the Limits of Charity Regulations

Since 2008, nearly every donation Donald Trump’s foundation has made near his Mar-a-Lago mansion and club in Florida funded charities that hosted events there, according to recent investigative reporting.

This pattern, first reported by The Palm Beach Post, follows an accusation New York Attorney General Barbara Underwood made when she filed a lawsuit against the foundation, Trump and three of his adult children for an alleged “pattern of persistent illegal conduct.”

I am a scholar of nonprofits who has researched their regulation since I served in the Treasury Department’s Office of Tax Policy in the late 1980s. I find these reports about the Trump Foundation disturbing because they give the impression that the foundation was benefiting Trump’s business interests. And that is at odds with the purpose of philanthropy.

At the same time, based on the evidence currently available, I do not believe that the Trump family will have to pay penalties, much less face criminal charges, even if the reports of self-serving charity are true.

A Suspicious Pattern

The newspaper found that eight charities received donations, typically of $25,000, from the Trump Foundation after they changed plans to hold their galas and other events at Mar-a-Lago instead of at other venues.

The most notable on the list was the Red Cross Ball, although that organization did cancel its 2018 soiree altogether and it will hold its next ball at the Norton Museum of Art.

These gifts from the Trump Foundation to the nonprofits that doubled as Mar-a-Lago’s clients make it seem as if the donations were a quid pro quo for doing business with Trump. Even if the charities managed to use that glitzy venue at a bargain rate, any explicit arrangement would still violate relevant tax laws that prohibit transactions that benefit foundation insiders.

The nonprofits, however, deny that there were any strings attached to their gifts…

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