Oct. 18 (Bloomberg) -- The George Kaiser Family Foundation, the biggest investor in Solyndra LLC, may not qualify for the favorable tax status it claims as a public charity, according to U.S. Senator Charles Grassley.
Grassley, an Iowa Republican, questioned the role of the foundation started by Kaiser, an oil billionaire and a 2008 campaign fundraiser for President Barack Obama, in backing Solyndra. The solar-panel maker filed for bankruptcy on Sept. 6, two years after receiving an Energy Department loan guarantee.
“The government didn’t just lose out on its investment through the $535 million loan guarantee,” Grassley said today at a Senate Finance Committee hearing. “It also lost out on the tremendous subsidy it provided the George Kaiser Family Foundation through the charitable contribution deduction.”
Donors of cash and publicly traded securities to public charities can deduct as much as 50 percent of adjusted gross income, according to Grassley. The percentage drops to 30 percent if the donations are made to a private foundation, according to Grassley, who said the organization doesn’t spend enough money on charitable endeavors.
The Tulsa, Oklahoma-based foundation Kaiser started owns about 36 percent of Solyndra, mostly through its Argonaut Ventures I investment fund. The foundation has said George Kaiser wasn’t an investor in Solyndra and didn’t lobby the administration for the loan guarantee the company received.
FBI, Congress Inquire
Solyndra of the Fremont, California, is the subject of inquiries by congressional committees and the Federal Bureau of Investigation.
“We are taking on some of the most difficult and expensive problems in American society,” Ken Levit, executive director of the George Kaiser Family Foundation, said today in an e-mailed statement. “Government, at all levels, is pulling back from its responsibilities in these areas and leaving a greater role for the private sector.”
The foundation has started three major civic projects with “several hundred million dollars of further obligation” and is studying what works, Levit said. “With all of these future commitments, we feel we are prudently preserving resource capacity.”
The George Kaiser Family Foundation used its role backing the Tulsa Community Foundation to convert from a private charity to a public “supporting organization” 10 years ago, according to Grassley.
The foundation’s “low level of support” for the Tulsa foundation “raises serious questions” about whether it qualifies for its favored status, Grassley said in a letter yesterday to Treasury Secretary Timothy Geithner and Douglas Shulman, commissioner of the Internal Revenue Service.
“If it had remained a private foundation, it likely would not have been able to invest as much as it did in Solyndra or the other private equity or hedge funds it invested in,” Grassley said today at the hearing.
The foundation claims assets of $4 billion and has given out less than 2 percent of its total assets in grants over three years, or about $215.4 million, according to Grassley’s letter. Of that, about $10.5 million was allocated to the Tulsa group.
Grassley urged the administration to tighten loopholes that let charities avoid payout requirements. Grassley, who first questioned the George Kaiser Family Foundation’s status in 2005, said he had his staff take a fresh look into its finances after Solyndra’s failure.
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