Center Urges House Committee to Investigate Greenpeace

In a letter reproduced here, the Center for Individual Freedom urged the House Committee on Ways and Means investigate and hold hearings on abuses of tax-exempt status by non-profit organizations in general, and violations committed by the group Greenpeace in particular.

October 6, 2003

Hon. William M. Thomas

Committee on Ways and Means
U.S. House of Representatives
1102 Longworth House Office Building
Washington, D.C. 20515

Dear Chairman Thomas:

On behalf of the Center for Individual Freedom, I write to ask that the Committee on Ways and Means investigate and hold hearings on abuses of tax-exempt status by non-profit organizations in general, and violations committed by the group Greenpeace in particular.

While tax violations by for-profit corporations have for some time captured legislative, regulatory, media, and public attention, similar violations by non-profits have gone largely unnoticed. Because of the magnitude of the budgets involved — and the magnitude of the corresponding impact on taxpayers — it would be prudent to bring this issue to the forefront.

To explain how non-profits routinely circumvent federal tax laws, Public Interest Watch, a non-profit watchdog, recently issued a report on the financial practices of Greenpeace. The report documents how during a three-year period Greenpeace Fund, Inc., diverted over $24 million in tax-deductible contributions to related entities for use in non-qualifying programs. In doing so, Greenpeace Fund, Inc., violated both the letter and the spirit of the law under which it was chartered, IRC Section 501(c)(3), cheating taxpayers in the process.

What makes the practice illegal is the way in which Greenpeace collects money required by law to be applied toward "educational" programs, and then shifts that money for use by groups that instead conduct "advocacy" and "direct action" programs. These other groups, known as 501(c)(4) organizations, are allowed to conduct such activities, but not using tax-deductible funds.

Public Interest Watch explains that during the period examined, Greenpeace Fund, Inc., illegally made contributions to 501(c)(4) organizations as follows:

• $3.8 million to Greenpeace, Inc., in 1998;

• $4 million to Greenpeace International and other affiliates in 1998;

• $4.25 million to Greenpeace, Inc., in 1999;

• $3.8 million to Greenpeace International and other affiliates in 1999;

• $4.5 million to Greenpeace, Inc., in 2000;

• $3.7 million to Greenpeace International in 2000; and

• $0.8 million to Greenpeace affiliates in foreign countries in 2000.

Examples of "advocacy" and "direct action" activities conducted by Greenpeace, Inc., and Greenpeace International that do not qualify under 501(c)(3) include:

• Campaigning against genetically-modified crops;

• Blockading a naval base in protest of the war in Iraq;

• Boarding an oil tanker for a "banner hang";

• Breaking into the central control building of a nuclear power station; and

• Padlocking the gates of a government research facility.

In light of the scandals perpetrated in the corporate world, it follows that those with the authority should work to eliminate similar misdeeds in the non-profit world. If specific actions are not taken against specific violations, then those non-profit corporations that strive to operate within the letter and spirit of the law which governs our status are put at a deficit. We therefore urge the Committee on Ways and Means to hold hearings on the matter and take appropriate action to bring Greenpeace into compliance with the law.

We thank you for your consideration.

Sincerely,

Jeffrey Mazzella

Executive Director

cc: Speaker Dennis Hastert
cc: Majority Leader Tom DeLay

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