“The recent Solyndra scandal highlights the need for further reforms,” Grassley said Tuesday at a Senate Finance Committee hearing. “With Solyndra, the government didn’t just lose out on its investment through the $535 million loan guarantee [from the Energy Department]. It also lost out on the tremendous subsidy it provided the George Kaiser Family Foundation through the charitable contribution deduction.”
In a letter to Treasury Secretary Timothy F. Geithner and IRS Commissioner Douglas H. Shulman, Grassley urged them to finalize rules governing what are known as supporting organizations.
Despite its name, the $4 billion George Kaiser Family Foundation, or GKFF, is not a private foundation under tax law. Instead, it was established as a “supporting organization” for another nonprofit group, the Tulsa Community Foundation.
Public foundations must pay out at least 5 percent of their endowment each year, or face penalties. Supporting organizations have no such requirement, and critics claim they serve mainly to allow wealthy families to warehouse wealth while earning lucrative tax breaks.
GKFF was founded by Tulsa billionaire George Kaiser, a fundraiser for President Obama and a frequent White House visitor. Investment funds associated with GKFF owned more than a third of Solyndra, an investment that in 2009 the organization valued at $342 million.
In some past years, GKFF has distributed as little as 0.2 percent of its assets to charity. Under current law, Kaiser would be entitled to tax write-offs for all cash and stock he donated to the organization.
GKFF Executive Director Ken Levit issued a statement Tuesday saying the organization was “prudently preserving resource capacity” as it studied the best ways to battle some of the nation’s most entrenched problems, including generational poverty and early childhood education.
“We are attempting to develop best practice responses locally and are bringing to Oklahoma the most creative approaches developed by others,” Levit said. “The effectiveness of some of these programs is unproven so they are undergoing objective study. We don’t want to throw money at ineffective ideas. All of these efforts are in ramp up stage.”
Last month, GKFF told The Washington Post in a statement that it expected to increase spending in coming years but stressed that it was under no “legal obligation” to do so. Since 2007, GKFF has made about $300 million in charitable grants and has spent millions more on loans and other direct support to community improvement projects.