Public needs to know more about nonprofits tied to legislative leaders
As part of an ongoing investigation, the FBI last week charged two aides to powerful state Sen. Vincent Fumo, D-Phila. The aides face charges of obstruction of justice for allegedly erasing e-mails from computers used by Fumo in his office in Harrisburg, his office in Philadelphia and at a vacation home on the New Jersey shore. They allegedly also erased all e-mail messages from the hand-held Blackberry devices used by Fumo staffers and from computers at the offices of Citizens Alliance for Better Neighborhoods, a charity closely linked to Fumo and the target of an FBI probe.
Federal investigators are trying to find out how much control Fumo exercised over the charity and if it spent money in ways that benefited Fumo politically or privately.
Also, investigators are looking into a $17 million donation to the charity from regional energy company PECO (Philadelphia Electric Co.) at about the same time that Fumo, a top legislator, switched from opposing to supporting energy deregulation, a position pushed by PECO.
Though it cannot be known where the FBI investigation into Fumo's activities and his relationship with Citizens Alliance for Better Neighborhoods will lead, the revelations about state grants and a huge "donation" from a utility company should focus greater attention on these pet charities of powerful Harrisburg lawmakers.
Two Harrisburg reporters for a Pittsburgh newpaper reported earlier this year about how six state lawmakers had been able to funnel $29 million in state taxpayers' dollars to their favorite nonprofits, in most cases created by or partially controlled by those same politicians.
Fumo was one of those lawmakers who was able to direct state grant money to his favorite nonprofits. Others include House Speaker John Perzel, R-Phila., and House Minority Whip Mike Veon, D-Beaver Falls.
Describing the process of directing millions in tax dollars to the nonprofits, the newspaper report explained that in Harrisburg, "a specific pot of cash is set aside in the budget every year and divided among Republican and Democratic leaders in the House and Senate. The leaders divide the pot for pet projects behind closed doors."
This description, if accurate, raises immediate concerns about a handful of powerful state lawmakers treating the public's tax dollars like their own private piggy bank. It appears there is no consensus from the full legislature on how this money is spent — and no oversight.
The taxpayers of this state should demand an investigation into these favored nonprofits — and answers. Who decides which nonprofits receive taxpayer money? Are the projects that are receiving funding the most deserving? Where is the oversight if this process takes place behind closed doors? Are the nonprofits receiving state grants audited by a third party to determine if they are legitimate organizations or simply vehicles for powerful politicians to funnel money and favors — in return for more of the same? Is there any follow-up analysis to determine the effectiveness of the state grant money?
One example of this troubling use of nonprofits from Western Pennsylvania is found in Beaver Falls, where Veon has reportedly directed millions since 1999 to three nonprofits he has founded. One of his nonprofits, the Beaver Initiative for Growth (BIG), has received $10.6 million since 1999.
The first troubling fact concerning BIG is that Veon and state Sen. Gerald LaValle of Rochester are the organization's only directors. So the same people who funnel state money to the nonprofit determine how it is spent. Not a good system.
Legal experts say that having two directors is not illegal, but is highly unusual and demonstrates a clear lack of independence and outside oversight.
Another oddity:BIG was not organized as a 501c3, the most common form for nonprofits, but was instead formed as a 501c6 organization.The difference means it still is tax- exempt, but also can engage in political activities — and form political action committees (PACs), which contribute to political candidates.
According to published reports, most of BIG's money is budgeted for operating costs such as salaries, public relations and consultant fees.
The manager of Veon's district office reportedly earned $37,000 working part time for BIG for two years. The same district office manager also received more than $20,000 from Veon's re-election campaign for consulting services.
It also has been reported that BIG paid $200,000 to a consulting company that employs Veon's brother.
One law professor, who was given a description of BIG's funding, make-up and staffing suggested that the organization looked like "an old-style political machine." And as such, state Attorney General Tom Corbett reportedly has been looking into BIG's operation.
Last week's news about an FBI investigation into Fumo and his relationship to a nonprofit, and the many eyebrow-raising facts surrounding BIG and Veon's relationship to the nonprofit, seem to be obvious targets for aggressive investigations by the state attorney general's office — and further coverage by the media. Responding to the status of such an investigation, a representative of the attorney general's office would say only that "we cannot confirm or deny the existence of a criminal investigation."
Though common knowledge among Harrisburg insiders, the public has only recently learned how a handful of political leaders from both parties fund their pet nonprofits, which in some cases appear to be thinly veiled political machines designed to keep the lawmakers in their posts for as long as they desire.
The lack of oversight is glaring, and the potential for abuse is obvious. People working for reform in Harrisburg have their plates very full, but these nonprofits and the secretive mechanism that funds them should be added to their agenda.
