May 17, 2017
The Lynde and Harry Bradley Foundation has been giving money to groups critical of labor unions for more than a decade — long before Gov. Scott Walker began his efforts to curb the power of labor groups in Wisconsin.
But internal records hacked from the Bradley Foundation server show that a couple of major grant recipients have listed as a goal to “defund” labor organizations, something one expert says could be problematic for the Bradley Foundation.
Marcus Owens, who ran the Internal Revenue Service’s tax-exempt organizations division in the 1990s, said union-busting doesn’t count as a charitable purpose.
“Private foundations like the Bradley Foundation are required to use their funds for purposes that are charitable under Section 170 of the Internal Revenue Code,” Owens said. “There’s nothing in that section about labor unions — funding or defunding, either way.”
According to the foundation’s internal records, the Bradley board gave $1.5 million over three years to the Freedom Foundation to “educate union workers themselves about their rights — which, if and when exercised, would defund Big Labor.”
Two Colorado-based groups — the Independence Institute and the Steamboat Institute — that received grant money from the foundation in 2015 have the stated goal “to defund teachers unions.”
Rick Graber, president and CEO of the Bradley Foundation, said these grants are fine because the recipients have been classified 501(c)(3) organizations, which are by definition charitable groups under federal law.
Such organizations are not to engage in partisan political activity and are to provide a public benefit, not a private one. Donations to such groups are tax-exempt.
“His former employer deemed these to be 501(c)(3) organizations,” Graber said of the IRS in response to Owens’ remarks. “Look, if there ever came a point in time when an organization we were giving to was no longer a valid 501(c)(3) or were doing things that were not appropriate as a 501(c)(3), we’d stop giving them money.”
Owens, a partner with the law firm Loeb & Loeb in Washington, D.C., said there’s some truth to that — to a point.
“If the Bradley Foundation knew nothing more about its grantees than they were tax exempt (by the IRS), that would be a pretty good defense,” Owens said. “My sense is the Bradley Foundation is quite familiar with the context of what is going on.”
Owens noted that another Bradley-funded group, the National Right to Work Legal Defense Foundation, which represents workers who oppose compulsory union membership, has kept its tax-exempt status despite a legal challenge. The right-to-work group’s purpose, he said, has been found to represent individual’s rights, not to defund unions.
The group has received more than $1 million from the Milwaukee-based foundation over the years.
Also possibly problematic, Owens said, were the Bradley Foundation’s donations to American Majority. Among other things, American Majority recruits and trains conservative candidates to run for political office.
The foundation, which gave $1.8 million to American Majority since 2010, calls them “pro-freedom” candidates in its internal records. In Wisconsin, the group has trained more than 6,000 local political leaders and helped candidates run for everything from municipal judge to state lawmaker.
Owens — a registered Democrat who does not give campaign donations — said the question is whether the organization’s activities are helping one particular political party. He noted the IRS won a lawsuit stripping the American Campaign Academy of its tax-exempt status for this very reason.
To provide direct support for a candidate or political party would be considered a private benefit under the law, not a public one, he said.
Graber said it would be incorrect to assume that American Majority is all about helping Republicans. American Majority also trains people interested in such nonpartisan positions as judge and school board member.
“These organizations aren’t supporting Republicans or Democrats,” said Graber, a former state Republican Party chairman and U.S. ambassador under President George W. Bush. “They are supporting conservatives.”
He said there is “very often” an alignment between Republicans and conservatives, but they are not the same.
Michael W. Grebe, who stepped down as the Bradley Foundation’s CEO last year, said he understands the concerns about giving grants to a group that helps candidates. But he said the concerns are misplaced.
“It is clearly not partisan,” said Grebe, a former counsel to the Republican National Committee. “I do not have and have not had any issues with it.”