Where does Clinton Foundation money go?
Republican presidential candidate Carly Fiorina says that “so little” of the charitable donations to the Clinton Foundation “actually go to charitable works” — a figure CARLY for America later put at about 6 percent of its annual revenues — but Fiorina is simply wrong.
Fiorina and others are referring only to the amount donated by the Clinton Foundation to outside charities, ignoring the fact that most of the Clinton Foundation’s charitable work is performed in-house. One independent philanthropy watchdog did an analysis of Clinton Foundation funding and concluded that about 89 percent of its funding went to charity.
Simply put, despite its name, the Clinton Foundation is not a private foundation — which typically acts as a pass-through for private donations to other charitable organizations. Rather, it is a public charity. It conducts most of its charitable activities directly.
Fiorina has been shadowing Hillary Clinton on the campaign trail in order to contrast herself with her Democratic rival. In a Fox News interview, Fiorina was asked about a New York Times story about Sen. Marco Rubio’s finances, and Fiorina responded that she wished the New York Times would do more to investigate the Clintons’ finances, and particularly “what they’ve been doing with their donors’ money to the Clinton Global Initiative.”
Fiorina, June 10: I mean, honestly, the question, I think, now for the Clintons is, ‘What else don’t we know? What don’t we know about your donors? What don’t we know about the conflicts of interest that those donors represent when Mrs. Clinton is serving as Secretary of State?’ We are now finding out that so little of those charitable donations actually go to charitable works.
Asked for backup, the CARLY for America super PAC noted that the Clinton Foundation’s latest IRS Form 990 shows total revenue of nearly $149 million in 2013, and total charitable grant disbursements of nearly $9 million (see page 10). That comes to roughly 6 percent of the budget going to grants. And besides those grants, the super PAC said, “there really isn’t anything that can be categorized as charitable.”
That just isn’t so. The Clinton Foundation does most of its charitable work itself.
Katherina Rosqueta, the founding executive director of the Center for High Impact Philanthropy at the University of Pennsylvania, described the Clinton Foundation as an “operating foundation.”
“There is an important distinction between an operating foundation vs. a non-operating foundation,” Rosqueta told us via email. “An operating foundation implements programs so money it raises is not designed to be used exclusively for grant-making purposes. When most people hear ‘foundation’, they think exclusively of a grant-making entity. In either case, the key is to understand how well the foundation uses money — whether to implement programs or to grant out to nonprofits — [to achieve] the intended social impact (e.g., improving education, creating livelihoods, improving health, etc.).”
Craig Minassian, chief communications officer for the Clinton Foundation, said the Clinton Foundation is “an implementer.”
“We operate programs on the ground, around the world, that are making a difference on issues ranging from poverty and global health to climate change and women’s and girls’ participation,” Minassian told us via email. “Many large foundations actually provide grants to the Clinton Foundation so that our staff can implement the work.”
Asked for some examples of the work it performs itself, the Clinton Foundation listed these:
To bolster its case, CARLY for America noted that the Clinton Foundation spent 12 percent of its revenue on travel and conferences and 20 percent of its revenue on salaries. That’s true. But the Form 990 specifically breaks out those travel, conference and salary expenses that are used for “program service expenses” versus those that are used for management or fundraising purposes.
For example, nearly 77 percent of the $8.4 million spent on travel in 2013 went toward program services; 3.4 percent went to “management and general expenses”; and about 20 percent went to fundraising.
As for conferences, nearly 98 percent of money spent was tabbed as a programming expense. And when it comes to salaries — which includes pension plan contributions, benefits and payroll taxes — about 73 percent went to program service expenses.
“I am not the expert on what portion of the Clinton Foundation activities are truly charitable,” Vince Stehle, executive director of Media Impact Funders and a board member of the Center for Effective Philanthropy told us via email. “But I can say that it is not appropriate to simply calculate that based on what portion goes out in grants. Certainly all types of foundations are able to engage in direct charitable activities in any event. But as I understand it, the Clinton Foundation is a public charity, despite the name. Many charities call themselves foundations, which can be confusing, as they might seem like private foundations.
“The organization carries out programs,” Stehle said. “I am not intimately familiar with those programs, but assuming they are genuine, those would be considered charitable activities.”
Fiorina isn’t the only one making this charge about the Clinton Foundation. Fox Business Network’s Gerri Willis, for example, also claimed only 6 percent of the Clinton Foundation’s 2013 revenue “went to help people.” Willis claimed that charity experts have looked into whether the Clinton Foundation “wisely spen(t) charitable dollars” and weighed in with a “resounding no.”
“Charity Navigator … [has] placed the Clinton Foundation on a watch list,” Willis said. “They think there are problems with this nonprofit. They don’t like the way it runs itself. They say the money is not spent wisely.”
She said Charity Navigator concluded the Clinton Foundation “does not meet their criteria as an organization that does charitable work.”
But that’s not what Charity Navigator said.
Here’s what the Charity Navigator site actually states:
Charity Navigator: We had previously evaluated this organization, but have since determined that this charity’s atypical business model can not be accurately captured in our current rating methodology. Our removal of The Clinton Foundation from our site is neither a condemnation nor an endorsement of this charity. We reserve the right to reinstate a rating for The Clinton Foundation as soon as we identify a rating methodology that appropriately captures its business model.
What does it mean that this organization isn’t rated?
It simply means that the organization doesn’t meet our criteria. A lack of a rating does not indicate a positive or negative assessment by Charity Navigator.
We spoke by phone with Sandra Minuitti at Charity Navigator, and she told us Charity Navigator decided not to rate the Clinton Foundation because the foundation spun off some entities (chiefly the Health Access Initiative) and then later brought some, like the Clinton Global Initiative, back into the fold. Charity Navigator looks at a charity’s performance over time, she said, and those spin-offs could result in a skewed picture using its analysis model. If the foundation maintains its current structure for several years, she said, Charity Navigator will be able to rate it again.
The decision to withhold a rating had nothing to do with concerns about the Clinton Foundation’s charitable work. Further, Minuitti said citing only the 6 percent of the budget spent on grants as the sum total spent on charity by the foundation — as Willis and Fiorina did — is inaccurate.
She referred us to page 10 of the 2013 990 form for the Clinton Foundation. When considering the amount spent on “charitable work,” she said, one would look not just at the amount in grants given to other charities, but all of the expenses in Column B for program services. That comes to 80.6 percent of spending. (The higher 89 percent figure we cited earlier comes from a CharityWatch analysis of the Clinton Foundation and its affiliates.)
“That’s the standard way” to measure a charity’s performance, Minuitti said. “You have to look at the entirety of that column.”
Minuitti said it is also inaccurate to assume all money spent on travel and salaries does not go toward charity. Depending on the nature of the charity, she said, travel and salary could certainly be considered expenses related to charity.
It’s true, as Willis said, that Charity Navigator put the Clinton Foundation on its “watch list,” but not because of concerns about insufficient funds going toward charity. Mainly, it was put on the watch list due to questions raised in the media about foreign donations to the foundation and the potential for quid pro quo when Hillary Clinton was secretary of state. The site also linked to a story about the abrupt resignation earlier this year of the foundation’s CEO. (Go here to see a full list of articles that led to the decision by Charity Navigator to place the foundation on its watch list.)
According to the Charity Navigator site, it “takes no position” on the allegations raised in the media reports, nor does it “seek to confirm or verify the accuracy of allegations made or the merits of issues raised.” Minuitti said the watch list was more like “news to know” for potential donors.
None of the articles cited by Charity Navigator has anything to do with a low percentage of funding going to charitable work.
Another philanthropy watchdog, CharityWatch, a project of the American Institute of Philanthropy, gave the Clinton Foundation an “A” rating.
Daniel Borochoff, president and founder of CharityWatch, told us by phone that its analysis of the finances of the Clinton Foundation and its affiliates found that about 89 percent of the foundation budget is spent on programming (or “charity”), higher than the 75 percent considered the industry standard.
By only looking at the amount the Clinton Foundation doled out in grants, Fiorina “is showing her lack of understanding of charitable organizations,” Borochoff said. “She’s thinking of the Clinton Foundation as a private foundation.” Those kinds of foundations are typically supported by money from a few people, and the money is then distributed to various charities. The Clinton Foundation, however, is a public charity, he said. It mostly does its own charitable work. It has over 2,000 employees worldwide.
“What she’s doing is looking at how many grants they write to other groups,” Borochoff said. “If you are going to look at it that way, you may as well criticize every other operating charity on the planet.”
In order to get a fuller picture of the Clinton Foundation’s operations, he said, people need to look at the foundation’s consolidated audit, which includes the financial data on separate affiliates like the Clinton Health Access Initiative.
“Otherwise,” he said, “you are looking at just a piece of the pie.”
Considering all of the organizations affiliated with the Clinton Foundation, he said, CharityWatch concluded about 89 percent of its budget is spent on programs. That’s the amount it spent on charity in 2013, he said.
We looked at the consolidated financial statements (see page 4) and calculated that in 2013, 88.3 percent of spending was designated as going toward program services — $196.6 million out of $222.6 million in reported expenses.
We can’t vouch for the effectiveness of the programming expenses listed in the report, but it is clear that the claim that the Clinton Foundation only steers 6 percent of its donations to charity is wrong, and amounts to a misunderstanding of how public charities work.