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ACORN's Tangled Money Tree

By Matthew Vadum on 10.31.08 @ 6:08AM

(Page 2 of 3)

And even now after it was revealed earlier this year that ACORN founder Wade Rathke covered up his brother's nearly $1 million embezzlement, Rathke remains chief organizer of ACORN affiliate SEIU Local 100, president of ACORN International Inc., and president and a director of ACORN affiliate Affiliated Media Foundation Movement Inc.

There are plenty of other examples of directors and officers playing musical chairs throughout the ACORN empire. (See Foundation Watch, November 2008.)

Commenting on ACORN's complex administrative arrangements, Charlotte Allen observes in the Weekly Standard, "The potential for abuse in an interlocking arrangement governed top-down from New Orleans is as obvious as a thicket of 'Change' signs at an Obama rally."

ACORN takes recycling seriously, at least when it comes to money.

My research determined that ACORN affiliate Project Vote paid ACORN $10,861,825 from 2000 through 2006. Project Vote also paid ACORN affiliate Citizens Services Inc. $1,206,942 in 2005 and 2006, and paid $1,266,967 to ACORN affiliate Citizens Consulting Inc. from 2000 through 2004.

Since 2000 the American Institute for Social Justice, Inc. paid ACORN $1,926,831, Citizens Consulting, Inc. $362,464, and ACORN Associates, Inc. $258,593.

On its 2002 tax form, the Institute disclosed a $1,684,184 "community reinvestment" grant to ACORN, along with a $9,637 loan to SEIU Local 100. (On the same document, the Institute also reported receiving a $50,000 interest-free loan from the Tides Foundation for "purchase of equipment," and a $4,000 interest-free loan from Open Society Institute's Progressive America Fund Inc.) In an LM-2 (labor union disclosure) form last year, SEIU Local 880 revealed that it gave $60,118 to ACORN for "membership services."

On its 2006 tax form, the American Institute for Social Justice, Inc. disclosed that it provided a $4,952,288 "community reinvestment" grant to ACORN, the non-tax-exempt Arkansas nonprofit corporation that controls the ACORN network.

ACORN lawyer Elizabeth Kingsley raised the alarm about interlocking directorates and the perilously close ties between ACORN and Project Vote. As reported in the Oct. 22, 2008 New York Times story, Kingsley found:

[T]he tight relationship between Project Vote and Acorn made it impossible to document that Project Vote's money had been used in a strictly nonpartisan manner. Until the embezzlement scandal broke last summer, Project Vote's board was made up entirely of Acorn staff members and Acorn members.

Ms. Kingsley's report raised concerns not only about a lack of documentation to demonstrate that no charitable money was used for political activities but also about which organization controlled strategic decisions.

She wrote that the same people appeared to be deciding which regions to focus on for increased voter engagement for Acorn and Project Vote. Zach Pollett, for instance, was Project Vote's executive director and Acorn's political director, until July, when he relinquished the former title. Mr. Pollett continues to work as a consultant for Project Vote through another Acorn affiliate.

"As a result, we may not be able to prove that 501(c)3 resources are not being directed to specific regions based on impermissible partisan considerations," Ms. Kingsley said, referring to the section of the tax code concerning rules for charities.

She also found problems with governance of Acorn affiliates. "Board meetings are not held, or if they are, minutes are not kept, or if minutes are kept, they never make it into the files," she wrote.

Project Vote, for example, had only one independent director since it received a federal tax exemption in 1994, and he was on the board for less than two years, its tax forms show. Since then, the board has consisted of Acorn staff members and two Acorn members who pay monthly dues.

Letter to the Editor

topics:
Election 2008, Economics