Tax Question, Can I be my own charitable organization ?

[frayne]

Clinton Charitable Giving is to Clinton Charity
By Amanda Carpenter
Friday, April 4, 2008


Hillary Clinton’s presidential campaign released their tax forms from 2000-2007 Thursday, which showed the Clintons earned more than $100 million in that time period and donated $10 million of that to their own charity.
The Clinton campaign reports donating $10,256,741 to the CFF between 2000 and 2006. During that time, CFF dispersed $2,530,100 in money to other charities and causes.
The names of other persons who donated to the CFF are not required to be disclosed.
Over the years, the CFF gave $80,000 to the Clinton Birthplace Foundation Inc., $20,000 to the Shakespeare Theatre, $40,000 to the School of the American Ballet, $5,000 to the YMCA of Martha’s Vineyard, $10,000 to Amnesty International.
The CFF also donated money to the Immanuel Baptist Church in Shackelford, Arkansas, Georgetown and Yale each year.
CFF lost a significant amount of money in the last two tax reporting years. CFF claimed $4.3 million assets on their 2005 IRS 990 forms. CFF reported much less, $255,890, on their most recent 2006 tax forms. It is not immediately clear from reading the forms where the money went or why assets were lost.
During that time, the Clintons removed themselves as senior officials of the foundation on their tax forms and moved CFF headquarters.
The 2005 tax returns show the foundation’s address as P.O Box 937 Chappaqua, New York—the city which the Clintons keep their New York home. The next year’s tax forms lists the CFF address as in Salinas, California.
On the 2005 forms and those from previous years, Bill Clinton was listed as CFF President, Hillary Clinton has the title of secretary/treasurer and daughter Chelsea Clinton was “director.” The 2006 tax forms list Gloria Clinton as CFF CEO and Manager, Erlinda Valdez as secretary and Catherina Hillman as treasurer.
Gloria Clinton was paid $252,500 according to the 2006 returns for her work that year.



Amanda Carpenter is National Political Reporter for Townhall.com. Be the first to read Amanda Carpenter's column. Sign up today and receive Townhall.com delivered each morning to your inbox.

Copyright © 2008 Salem Web Network. All Rights Reserved.

 

[lazygood4nothinbum]

aside from scale, is this much different than, say, the bill & melinda gates foundation?

 

[JB]

When McCain releases his tax return you will find that they did the same thing. Donating money to their foundation, then passing in along to causes they want to support. This is very common.

 

[FUEGO]

I don't see a problem with it. You can set up a charitable trust at Vanguard w/ as little as $25,000 in assets.

 

[clifp]

As much as I love the opportunity to bash a Clinton, nothing wrong here, donating 10 million to charity is good. Although 255K to Gloria Clinton as CEO is excessive compensation for a foundation with several million in assets.

Especially considering that the CEO of the Gates foundation Patty Stonesifer which is tiny bit bigger, and possible requires a tad more work, recieved no compensation in 2007 .

 

[packrat44]

As much as I love the opportunity to bash a Clinton, nothing wrong here, donating 10 million to charity is good. Although 255K to Gloria Clinton as CEO is excessive compensation for a foundation with several million in assets.

.

Isn't it also common for well paid sport stars to have "charities" set up in their name, then hire many of their unemployed relatives to run the charity? A means to support family members and not have to pay taxes on the income that was contributed to the charity.

 

[retire@40]

Isn't it also common for well paid sport stars to have "charities" set up in their name, then hire many of their unemployed relatives to run the charity? A means to support family members and not have to pay taxes on the income that was contributed to the charity.

But then those family members pick up their pay as income on their tax returns and pay taxes on it.

So taxes get paid out in a different form.

All the government cares about if for money to keep flowing in the economy so they can "wet their beak" with almost every transaction.

 

[clifp]

Hum, I am wonder can I set up my own charitable foundation. Then hire Elise [-]cleaning lady[/-] as treasurer, and Jose [-]gardener[/-] as CEO. Or would that be cheating

 

[packrat44]

But then those family members pick up their pay as income on their tax returns and pay taxes on it.

So taxes get paid out in a different form.

All the government cares about if for money to keep flowing in the economy so they can "wet their beak" with almost every transaction.

However, with the donation to the charity the donation is deductible to the sports star. If the sports star took the money (rather than donating) and gave it to his/her relative, the sports star would need to pay the income tax at a greater tax rate than the unemployed relative. Also, the annual gifting limit would come into play potentially increasing taxes due.

 

[clifp]

However, with the donation to the charity the donation is deductible to the sports star. If the sports star took the money (rather than donating) and gave it to his/her relative, the sports star would need to pay the income tax at a greater tax rate than the unemployed relative. Also, the annual gifting limit would come into play potentially increasing taxes due.

Option A.
Superstar celeb (or Presidential candidate) net assets 100 million, income 10 million. Gives 250K to brother Billy, cousin Chip, and sister-in-law Sue, and friend Frank. In addition to paying 35% on his 10 million in income, he'd owed $38,800 each for the gifts for his friends.

Option B. Set up a charitable foundation give $2 million to it, hire the same four folks and pay them 250K salaries. He gets $2 million x 35% + say 5 state income deduction reducing his out of pocket expenses to 1.2 million.

He looks like a nice guy since he gave $2 million to charity.
Now I'd imagine example I gave would probably trigger an IRS audit for abuse but it is still a net trick.

 

[igsoy]

Is much really gained by all this movement of assets through the foundation? While the relative who is employed will have to pay a lower income tax rate, there is the added burden of 15% FICA that needs to come from somewhere, isn't there?

So the high earner saves the taxes at their 35% rate, but the relatives running the foundation who are making, let's say 100k, have to pay taxes at 15%-20%, plus the total 15% for FICA gets paid, too.

So I don't really think this saves much in taxes, but it does make the high earner look like a swell person, and maybe gives said relative an actual, socially respected, perhaps resume enhancing position that they probably would not have ever landed on their own.

edited to add: I suppose there would be the 35% tax savings on non-taxable benefits the foundation would pay for the employee. i.e. health premiums, retirement plan, that can add up to some real money.

 

[clifp]

The foundation would also pay FICA.

I agree with you that there isn't a lot of savings, my point was if you want to help your relatives and look like a good guy setting up a foundation is nice angle.

It is not entirely clear if the Gloria Clinton actually recieved $255,000 for her CEO work it. If she did that is a ridiculous amount of money to pay somebody to give away a couple of million dollars.

The various children and former wife of Warren Buffett had 10-200 million foundations evern before Warren announced his give away plans. Several of them had professional manager who were typically paid ~100K.

Intel founder, Gordon Moore's foundation with a staff of 70, 6 billion in assets and almost $2 billion in grants and engaged in serious scientific work. The CEO made $500K and the chief counsel, investment officer, and scientist all got paid 250K. The Gates foundation pays similarily