TransCanada opponents not as poor as they pretend
2014-09-15 17:02 ET - Street Wire
by Stockwatch Business Reporter
A shadowy cabal of billionaires, hiding behind tax-advantaged charitable foundations, is showering money on purportedly homegrown green groups, according to a report by the Republican minority of the U.S. Senate Committee on Environment and Public Works (EPW).
The 92-page EPW report, released on July 30 and entitled "The Chain of Environmental Command: How a Club of Billionaires and Their Foundations Control the Environmental Movement and Obama's EPA," tears apart a common illusion about green groups: that they are grassroots citizens' efforts to bring down corporate bogeymen. The David-versus-Goliath angle is a core part of their fundraising. Yet these groups, says the report, are little more than willing mouthpieces for their billionaire backers, who rely on tax loopholes and an unknowing public to influence environmental policy.
The EPW report outlines how a group of incredibly wealthy far-left donors, which it dubs the "Billionaire's Club," finances many prominent environmental activists and nearly all the major environmental non-government organizations (NGOs), as well as several media outlets. In 2011 alone, says the report, 10 foundations linked to the Billionaire's Club donated $577-million -- over half a billion dollars. (Figures are in U.S. dollars unless otherwise noted.)
The report further describes a revolving door between radical environmentalists and the executive branch of the U.S. government, specifically the Environmental Protection Agency (EPA).
"These entities propagate the false notion that they are independent, citizen-funded groups working altruistically," says the EPW report. "In reality, they work in tandem with wealthy donors to maximize the value of the donors' tax-deductible donations and leverage their combined resources to influence elections and policy outcomes, with a focus on the EPA."
Part 1 of this two-part series of articles introduces the billionaires' machinations, their headline-grabbing puppet activists, and the way they aim to influence policy both at home and abroad.
Tax breaks
The money trail outlined in the EPW report begins with a select group of well-known environmental foundations. These are either 501(c)(3) private foundations or 501(c)(3) public charities. (Section 501(c) of the U.S. Internal Revenue Code exempts some types of non-profits from some federal income taxes.) The foundations meet and co-ordinate through the Environmental Grantmakers Association (EGA), the secretive "funding epicenter of the environmental movement," says the report. EGA members gave $1.13-billion to environmental causes in 2011. The identity of those members is not clear; the association withholds its membership list from the public and has even refused to disclose it to Congress.
According to the EPW report, the members of the Billionaire's Club have established about a dozen influential private foundations between them, including the Rockefeller Brothers Fund, the Park Foundation and the Sea Change Foundation. By doing this, the billionaires can make large contributions to their private foundation and enjoy a tax break of up to 30 per cent of their adjusted gross income. The foundation itself does not pay tax on the income. As well, the billionaires who attach their name to their organization (as most do) enjoy significant reputational boosts.
Private foundations also have substantial discretion over how to spend their money. The ones created by the Billionaire's Club do not generally donate altruistically, says the EPW report, but rather employ a "prescriptive grant-making" technique in which they seek out beneficiaries that will comply with a tightly defined agenda. Organizations that fit the bill are invited to come and get money; the rest need not apply. Examples of prescriptive grant-making by some of the Billionaire Club's foundations include a $200,000 grant from the William and Flora Hewlett Foundation to the Union of Concerned Scientists "for coal retirement and removing market barriers to renewable energy projects," as well as $50,000 grant from the Park Foundation to the New York Public Interest Research Group for the "continuation of its widespread public education campaign on the issue of gas drilling in New York." ("Education" is a misleading word for the work that activists do, as will be discussed in Part 2.)
Despite the advantages of private foundations, public charities are generally the vehicle of choice. They provide greater tax benefits -- up to 50 per cent of adjusted gross income -- and, unlike private foundations, public charities are not required to disclose donors. A public charity may be characterized as a foundation, such as the Tides Foundation or the Energy Foundation, or as another kind of non-profit, which will generally bill itself as an activist group. Examples mentioned in the EPW report include Greenpeace, the Sierra Club, the World Wildlife Fund, the Natural Resources Defense Council and the Center for Biological Diversity.
Greenpeace, the Sierra Club and other activist groups are the "public face" of the environmental movement. It is the Center for Biological Diversity, not the Wallace Global Fund, that sent a polar bear mascot to rap against TransCanada's proposed Keystone XL pipeline at a protest outside the White House. It is the Sierra Club and Bold Nebraska, not the Tides Foundation, that made headlines while building a so-called clean-energy barn in Keystone's path through Nebraska. (The barn was later found to get some of its energy from coal-fired power plants.) In Canada, it is members of Greenpeace, not the Rockefellers, who have frequently been arrested during protests in Ottawa or at the oil sands. These and other antics are regularly covered by Canadian outlets including Stockwatch's Energy Summary.
The U.S. billionaires, of course, are careful to avoid the cameras and goofiness. Their work goes on behind the scenes. Yet even in Canada, their influence is deeply felt.
Following the money
The EPW report does not discuss the funds that the billionaires send across the border, but that has been the focus of continuing research by Vivian Krause of North Vancouver, B.C. Over the past five years, according to articles she has published in the Financial Post and the Alberta Oil Magazine, she has examined over 100,000 pages of U.S. tax returns and traced over 2,000 grants from U.S. foundations to Canadian environmental and Indian groups bent on stopping all things oil sands, including pipelines.
By Ms. Krause's calculations, over three dozen U.S. foundations have granted over $425-million since the late 1990s, including at least $75-million between 2009 and 2013, to fight Canadian energy development. She notes that this figure understates the real amount of money. It does not include grants for general or unspecified purposes, or for large-scale land conservation initiatives, such as a $100-million donation from the Rockefellers Brothers, the Gordon and Betty Moore Foundation, the Hewlett Foundation, and the Packard Foundation to create the Great Bear Rainforest no-trade zone on the North Coast of British Columbia.
The Great Bear Rainforest, the Yukon to Yellowstone Initiative and the Canadian Boreal Initiative are Canada's three largest conservation initiatives. They seek to block roads, mining, forestry, and oil and gas development on more than one-third of Canada's territory. For all three, writes Ms. Krause, the main financier is a U.S. foundation, and the initiatives were financed in conjunction with efforts to stymie Canada's oil and gas sector.
Major U.S. backers of Canadian anti-oil groups include the Tides Foundation and the Rockefeller Brothers Fund. Since the late 1990s, calculates Ms. Krause, at least $10-million (U.S.) has been granted from the Rockefeller Brothers Fund to Indian and green groups in Canada. The Tides Foundation paid at least $25-million (U.S.) between 2009 and 2013 to 75 groups. The groups have specifically sent the money for such purposes as: "to campaign to support a moratorium on offshore oil and gas exploration [on the B.C. coast]" (from a Rockefeller grant to the David Suzuki Foundation) "to strengthen opposition to tanker expansion on the B.C. coast" (Tides to the Sierra Club), and to "build public opposition to tar sands and pipelines," "cultivate indigenous opposition," and "advance the narrative that tar sands expansion is problematic" (Tides to various).
Tides has even begun financing Canadian groups to try to influence European policy. In September, 2013, it paid $55,000 (U.S.) to a numbered company based in the Fort Chipewyan hamlet of Alberta "to build the case for rejecting the Shell and Teck Frontier mines; participate in regulatory processes and use legal tools to increase regulations; work with groups in Europe to support the Fuel Quality Directive; and build public opposition to tar sands and pipelines" [emphasis added]. The next frontier has been signalled.
Part 2 of this two-part series will discuss how the Billionaire's Club transforms tax-advantaged charitable donations into political outcomes, despite legal restrictions on exactly that.
You can send comments to Karen Baxter: karenb@stockwatch.com
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