Charity's Land Deals To Be Scrutinized

By Joe Stephens
Washington Post Staff Writer
Saturday, May 10, 2003

The Senate Finance Committee's chairman and its ranking Democrat said yesterday that they are troubled by reports that the Arlington-based Nature Conservancy sold scenic properties to its own trustees and that they will demand an accounting from the charity's leaders.

Committee Chairman Charles E. Grassley (R-Iowa) and Sen. Max Baucus (D-Mont.) are drafting a letter to the Conservancy, the world's richest environmental group, seeking answers to a range of concerns about the deals and other issues. The senators' interest stems from a three-part Washington Post series, which detailed this week the organization's rapid growth and described the charity's financial transactions with its supporters, including Fortune 500 companies.

"The Post reports shed light on very questionable practices by this charity that many have viewed as a pillar," Grassley said in a statement issued yesterday. "I'm committed to holding the Nature Conservancy accountable."

While the Finance Committee focused this week on President Bush's tax cut plan, the senators and their staffs found time to discuss a range of possible responses to the reports on the respected conservation group, which boasts a million members and assets worth more than $3 billion.

"I'm very concerned by reports that individuals and organizations are improperly benefiting from tax breaks on charitable donations and developing on environmentally sensitive lands," Baucus said.

"It's very important that we dig deeper to examine what's going on in these situations. If the allegations are as serious as they appear on the surface, we must look at ways to increase enforcement of laws that are already on the books. I also won't hesitate to move forward with additional legislation to protect the integrity of our natural resources and halt tax abuses if we find that's needed."

The Post series, titled Big Green, reported that the Conservancy had, time and again, bought ecologically significant tracts of land, attached some development restrictions and then resold the properties to trustees and supporters at greatly reduced prices. The sales were part of a program that limits intrusive development but generally allows buyers to build homes on the land.

The buyers then gave the Conservancy cash that was roughly equivalent to the amount of the discounts. That allowed the new owners to take significant tax deductions for charitable gifts.

The articles described how the Conservancy has logged forests and drilled for natural gas in Texas, under the last native breeding site of an endangered species of bird.

One article detailed how the Conservancy had given conflicting reports about the compensation of its president, Steven J. McCormick, and had underreported the interest rate on a $1.55 million home loan the organization extended to McCormick. McCormick's compensation totaled $420,000 last year. The organization said he will make less this year and that he recently paid off the loan.

Senate Finance Committee members have grown concerned by the appearance that Conservancy officials have dismissed the controversy, without issuing any public statement that the nonprofit plans a self-examination. Committee staffers focused in particular on a full-page advertisement published Friday in The Post and paid for by the Conservancy's board.

"For 52 years, The Nature Conservancy has taken action in pursuit of a clear mission -- to preserve the diversity of life on Earth," the ad states. "The job is far from complete, but the accomplishments are real.

"The Nature Conservancy has worked to protect over 116 million acres of the world's most ecologically important places. Those who know conservation recognize the invaluable contributions we have made in preserving the natural world."

Grassley is the sponsor of legislation, backed by the Conservancy, that would expand tax breaks for conservation. The measure would provide a variety of tax breaks for charitable donations, including a 25 percent reduction in the capital gains tax on the sale of undeveloped land for conservation purposes.

Grassley's bill passed the Senate by a vote of 95 to 5 on April 9, but final language for the legislation -- known as the Charity, Aid, Recovery and Empowerment Act -- must be hammered out with the House.

"With the significant new tax incentives provided under the CARE Act, taxpayers have the right to know how the Nature Conservancy conducts its business," Grassley said. "I'll be overseeing the charity's actions, asking tough questions and following through until satisfactory answers are given."

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