-Caveat Lector-

>From http://www.cagw.org/Reports/Phony-Philanthropy/phony.htm

<Picture: colorlogo.gif (16534 bytes)>THROUGH THE LOOKING GLASS

Phony Philathropy: How Government Grants are Subverting the
Missions of Nonprofit Organizations

Nonprofit groups represent the best of American society. Alexis
de Tocqueville wrote, "Better use has been made of association
and this powerful instrument of action has been applied to more
varied aims in America than anywhere else in the world. Apart
from permanent associations such as townships, cities and
counties created by law, there are a quantity of others whose
existence and growth are solely due to the ini
tiative of individuals."1

Citizens donating time and money to help solve a particular
problem is truly an American tradition.  Billions of dollars are
donated each year to help nonprofit organizations fight
everything from illiteracy, hunger, alcohol disease abuse – even
government waste. The strength of these organizations is the
voluntary public support they receive. In 1997 alone, voluntary
giving to nonprofits amounted to more than $143.5  billion.2 In
recent years, however, the efforts and missions of many
nonprofits have been compromised by the increased in flux of tax
dollars. According to the Independent Sector, an association
which represents charities , religious groups and social welfare
organizations, total nonprofit revenues from federal sources
were approximately $130 billion in FY 1996.3 Unfortunately, many
groups use these tax dollars to conduct a particular program or
to fund their day-to-day operations such as paying rent and
payroll or purchasing supplies, while at the same time
advocating, lobbying or promoting policies that many Americans
would find untenable.
Uncovering the Truth
Many taxpayers don’t know how to look objectively at the
effectiveness of nonprofits and who is pulling their financial
strings. There are several ways to determine the efficacy of
nonprofit organizations. For example, the Council of Better
Business Bureaus and similar organizations issue criteria and
provide ratings on nonprofits. Another method is to review
the organization’s tax returns, which can differentiate between
those that truly receive voluntary public support, and those
that are subsidized by tax dollars, or involuntary
contributions. If the "initiative of individuals" of which
deTocqueville spoke is the historic and tru e basis of
associations, are those that accomplish their mission without
government support more worthy than those that take money from
taxpayers indirectly through government grants?

When trying to discover an organization’s funding sources, the
best place to start is the Internal Revenue Service (IRS) Form
990. This form is a financial snapshot of an organization. The
IRS requires most nonprofits to submit a Form 990, which is
equivalent to an individual’s Form 1040 tax return. The 990
includes useful information such as total revenue within a one-
year period, government funding, investments in securities,
salaries of the highest paid officials, and net assets (or fund
balance), which represent the "wealth" of an organization.
Organizations are required to allow anyone from the public to
view their 990 during regular working hours either at their
principal office or any regional office that has more than three
employees. In 1996, President Clinton signed into law the
Taxpayers Bill of Rights II. This new law requires organizations
to also provide a copy of their 990 to anyone who asks for it in
person or in writing.

Another valuable source of information is the organization’s
annual report, which will usually provide details on the
organization’s mission, activities, balance sheets, sources of
funding, and donors. In addition, more organizations are
starting to use the Internet as a vehicle to provide information
on their financials and activities.
Nonprofits — An American Tradition Compromised?

John Filer, head of the Commission on Private Philanthropy and
Public Needs, recognized the importa nt role nonprofits play in
our society, but also saw the problems that develop when the
government gets involved in fundin g nonprofits. When the
commission released its report in 1975, it found that the
government contrib uted about $23 billion to nonprofit
organizations; private sources contributed $25 billion. As
government contributions gr ew, nonprofits increasingly became
hybrids — part private, part public institutions, ever more
dependent on government funding and the strings attached
thereto. Nonprofit organizations that accept f ederal funding
subject themselves to political processes, pressures and

Federal grants to nonprofits result in significant trade-offs,
including the six detailed here:

•Federal grants are accompanied by pages of regulations that are
supposed to assure accountability, but instead usually guarantee
waste. The more money the nonprofit spends complying with the
govern ment regulations, the less the organization has to
fulfill its mission.
•Nonprofits that provide social services may be fo rced to
standardize their activities and use one-size-fits-all solutions
that hamper local decision -making and ignore local needs.
•The regulations may require strict qualification standards
for the grants or may insist t hat "credentialed" staff provide
certain services. Often, these requirements are not needed and
bec ome an added expense. M any times, they are the result of
labor unions and other special interests forcing their will on
Co ngress and government agencies.
•When conducting an audit, the government is often more
interested in the number of people served and on what the money
is spent, rather than actual results.
•The nonprofit may chase government dollars just to get more
money, diverting itself into peripheral activities and
ultimately los ing sight of its origin al mission. In addition,
shifting moods of public policy, or that year’s particular
"political corr ectness" hot button can force grantees to
address only certain policy concerns.
•Organizations that have strong religious or founding
philosophies may find their beliefs are compromised as soon as
they accept a government grant.5

In addition, nonprofits may be using government grants for
rather dubious schemes. When an organiza tion receives
government funding, it frees up funding obtained through
membership or other nongover nment sources to be used for more
controversial activities, such as lobbying or promoting a
particular philosophy. Some or ganizations even use government
money directly to promote their political and lobbying
EPA and Its Mission

This Looking Glass Report is the first in a series of exposés on
federal grants to nonprofit organi zations. It examines grants
awarded between January 1, 1995, and January 1, 1997, by the
Environmen tal Protection Agency ( EPA).

The EPA was established in December 1970 by bringing together 15
different divisions of five depart ments and independent
agencies.6 Although President Nixon explained that he normally
opposed creati ng new agencies, he fel t the country needed to
know more about stopping and controlling environmental
pollution. Nixon bel ieved the piecemeal structure that
existed at the time for implementing environmental policy was
not conducive to effectiv e action, which was the primary reason
why the country needed a single agency to oversee implementa
tion of environmental policy. Furthermore, since every part of
the government was concerned with th e environment in some w ay,
a separate agency would be valuable in coordinating and
standardizing decisions.7

Nixon stated that EPA’s role would be to establish and enforce
environmental protection standards; to conduct research on the
adverse effects of pollution and on the methods and equipment
for contro lling it; to gather inf ormation on pollution and use
this information to strengthen environmental programs; to assist
othe rs, through grants and other means, to stop pollution of
the environment; and to assist the Council on Environmental
Quality in developing and recommending new policies to protect
the environment.8

Since then, major new environmental laws and amendments to older
laws have expanded EPA’s authority  and responsibility. Like
other government agencies, its budget has grown exponentially
from $384 million in FY 1970 to $7.3 billion in FY 1998.
Grants at the EPA

The EPA distributed more than $4 billion in grants from January
1, 1995, to January 1, 1997. Of tha t amount, $236,089,446 was
used for 839 grants to nonprofit organizations.9 Many of these
organizat ions — some of which ar e government contractors — are
promoting agendas that many Americans might not agree with. Some
tra de associations that represent EPA-regulated industries have
received funding from the agency, whic h raises conflict of
interest questions. Other grants simply appear to be a form of
corporate welfare.

CAGW found nonprofit organizations with sizable fund balances
that were still milking the governmen t like a cash cow. Some
organizations lobby Congress for more appropriations for the EPA
or other g overnment agencies from which they receive grants. Of
course, if the coffers grow at the EPA or another agency, the
more likely a nonprofit organization will receive a grant so
they can lobby for more. . .well, you get th e picture.

In such circumstances, fraud, waste and abuse are bound to
occur. In March 1998, the EPA Inspector General (IG) released a
report on the National Rural Water Association (NRWA). It found
that the NR WA improperly used fede ral assistance to support a
very aggressive lobbying agenda.

Between 1991 and 1996, the NWRA received $2.3 million from the
federal government, which was used d irectly or indirectly to
lobby government officials at the federal and state levels on
behalf of pr ograms and legislative issues important to the
association. Some of this money was used to influence other
government offi cials to approve more federal assistance
agreements. There was even a full-time EPA employee detailed
to the NRWA through the Intergovernmental Personnel Act (IPA)
who inappropriately assisted the organization with its lo bbying
activities. Because the NRWA improperly commingled unallowable
lobbying expenses with allowa ble program expenses, i t was
impossible for the IG to determine the actual amount of federal
dollars used in NRWA’s lobbyi ng activities.10

The National Council of Senior Citizens (NCSC), which receives
millions of dollars from the governm ent for its "educational"
arm, the National Senior Citizens Education and Resource Center,
is anoth er illustration of the abuse of taxpayer dollars. The
NCSC advocates for such policies as national health insurance,
and t his so-called "nonpartisan" organization has given
thousands of dollars to Democratic candidates. T he NCSC was
fined by th e Federal Election Commission for violating campaign
laws in 1996 and has been implicated in money laundering in the
recent Teamsters election scandal.11

Your tax dollars are also wasted when EPA uses its muscle in
unorthodox ways to promote extremist e nvironmental policies
driven by the self-interest and personal goals of its leadership
without regard to science. For exam ple, according to a recent
report by the National Wilderness Institute, EPA has tried to
silence wh istleblowers within the agency, has coerced its
scientists into lobbying members of Congress – a violation of
federal law – and has leaned on nonprofit groups to convince
them to ask Congress to increase EPA’s budget and promote its

These examples should serve as a warning to other nonprofit
organizations that receive funding from taxpayers. They should
also serve as a "heads up" to Congress and  taxpayers, alerting
them that go vernment grants and contracts are not always being
used in an appropriate manner. While not all of the
organizations liste d in this report are using federal dollars
in nefarious ways, they certainly deserve greater scruti ny by
Congress and fede ral agency investigators.

There is value for advocacy from both liberal and conservative
groups, the young and the old, pro-b usiness and pro-consumer
concerns, godly and secular perspectives. Individuals can come
together an d promote their beliefs on a wide variety of issues,
including the environment. After all, the Constitution
guarantees all Americans the right to petition or "lobby"
 the government with their grievances. However, Americans should
not be forced to support agendas they may disagree with through
their tax dollars, and organizations which are en trusted with
that money should be held to the highest standards of

In an attempt to protect taxpayers from such abuses,
Representative Joe Knollenberg (R-Mich.) intro duced legislation
and fought hard in 1998 to prevent the EPA from using taxpayer
funds to lobby on behalf of the Kyoto Protocol and implement the
treaty by backdoor means. Through rules, regulations and
"advocacy outreach ," EPA has attempted to ignore the will
of Congress and force taxpayers to pay for the agendas of e

In 1995, Representative Ernest Istook, Jr. (R-Okla.) took a
broader view of the issue when he said in testimony before
Congress, "It is time to end taxpayer funded political advocacy!
Over 40,000 or ganizations receive over $39 billion in federal
grant funds directly. Preliminary examination of the problem
makes it appa rent that grant abuse is rampant and needs to be
addressed with systemic reform."13 Representative Istook
introduced the "Istook Grants Reform Amendment" that would have
imposed greater limitations on lobbying and politic al advocacy
by nonprofit organizations that receive federal grant money.
Even though the measure pa ssed the House three ti mes, it
failed in the Senate.
"A Billion Here, A Couple of Billion There – First Thing You
Know It Adds Up To Be Real Money"

— Senator Everett McKinley Dirksen

There are 105 organizations listed herein that received funding
from the 839 EPA grants that were a warded between January 1,
1995, and January 1, 1997. The sizes of these EPA grants range
from $1,00 0 to the African American Development Association in
Oakland to $21 million for the American Association of Retired
Person s to fund their Senior Environmental Employment (SEE)
program. The sheer volume of grants awarded b y the EPA is
staggering by itself. But what is more disturbing is that the
process is being repeated every year in other federal agencies,
costing taxpayers billions of dollars, with little
accountability for how the mone y is being spent.

EPA’s Grants Information Query Form website located at
<http://www.epa.gov/envirofw/html/gics/gics_ query.html >
enabled researchers to ascertain the dollar amount of the grants
awarded to individual  organizations.

In addition, CAGW researchers gleaned a great deal of
information by reviewing Form 990s and annual reports. In many
instances, despite clear laws requiring nonprofits to produce
their tax forms, many of the organizations contacted resisted
requests to review their 990s — or refused outright.

Using the data collected, researchers developed a good sense of
each organization’s sources of reve nue, wealth and activities.
CAGW established five main criteria to separate the EPA grants.
They are:

D I. Taxpayer Funded Advocacy: During the period reviewed, the
nonprofit organization received fund ing from the government,
either in the form of grants or government contracts, and
advocated for sp ecific public policy is sues. CAGW believes
Congress and the EPA need to take a closer look at how and if
these organizatio ns are using tax dollars to fund, either
directly or indirectly, lobbying and advocacy activities.

D II. Corporate Welfare: The nonprofit organization represents a
certain segment of business intere sts and the government funds
benefited that industry sector.

D III. Government Codependents: The nonprofit organization
received 50 percent or more of its fundi ng from government
sources. If an organization is unable to get sufficient direct,
voluntary suppor t for its activities fr om average citizens who
are interested in its cause and mission, CAGW questions whether
its activit ies deserve forced support from taxpayers.

D IV. Other: The nonprofit organization represents professions,
local or state governments, or anot her type of group and did
not fit into the first three categories. In many cases, these
groups rece ived substantial fundin g from the government.

D V. Who, What, When, Where, Why?: The nonprofit organization
did not provide a 990, annual report and/or any information
requested by CAGW. If organizations receive any money from the
government, t hey should supply minim al information on their
activities, especially given the law requiring them to provide
access to th eir 990s. If nonprofits can’t do this simple task,
can taxpayers trust them to be accountable for t heir

Information about organizations that fit into the first four
groups was placed into the following f ormat. Information that
was not available is reported as "unknown."

Name of Organization
Location:The city in which the office of the
organization that received the gra nt is located.
Status:Organizations that are exempt from taxation are
classified under Section 501 o f the Internal Revenue Code. For
example, a 501(c)3 organization cannot use any substantial part
of its funding for propag anda or to attempt to influence
legislation, except in special circumstances, or to participate
in a political campaign. A  501(c)4 is a civic organization or
league whose earnings can be used to  promote a charitable,
educational or recreational purpose. It can lobby legislative or
other government bodies. A 501(c)5 is a labor, agricultural o r
horticultural organization and a 501( c )6 is a business league,
chamber of commerce, or board of trade. These classifications
represent the bulk of the organizations that were reviewed.
There are several other classifications under Section 501, and
they are numbered up to 501(c)25.Source of Financials:In most
cases, the 1996 Form 990 was used. However, the organization’s
annual report was  also used in many instances.
Net Assets:This is also called the fund balance. This number
represents the organization’s net worth or "wealth" and can
include cash savings, property and investments in stocks and
Total Revenue:This figure re presents the total reve nue within
a one-year time period and was obtained from the source of the
financial information.
Government Funding:This figure represents the total amount of
government funding the organization reported in a one-year time
 period and the percentage of total revenue such funding
represents. The  information was obtained from the financial
information source.Cumulative EPA Grant(s):This figure
represents the total amoun t of grant money receiv ed between
the period of January 1, 1995, to January 1, 1997, according to
the EPA Internet query s ite. The shaded section contains
information that CAGW was able to glean from an organization’s
literatu re, articles or website.


Citizens Against Government Waste (CAGW)
Location:Washington, D.C.Status:501(c)3
Source of Financials :1997 Form 990
Total Revenue:$4,754,492
Government Funding:0 (0 percent)
Cumulati ve EPA Grant(s):0
CAGW is a private, nonprofit, nonpartisan organization dedicated
to educating the American people a bout waste, mismanagement,
and inefficiency in the federal government. It was founded in
1984 by J. Peter Grace and nationally syndicated columnist Jack
Anderson to build support for implementation of the Grace
Commission recommendations and other waste-cutting proposals.
The organization has more than 600,000 members and has helped
save tax payers more than $596 billion since 1984. The group
also has a 501(c)4 affiliate, which carries out its lobbying

Click here to view the list of organizations.

1. Alexis de Tocqueville, Democracy in America, J.P. Mayer, ed.,
New York, 1969, p. 189
2. Source: "Giving USA 1998," AAFRC Trust for Philanthropy,
Washington, D.C.
3. Alan Abramson and Lester Salamon, "The Nonprofit Sector and
the Federal Budget: Update as of Sep tember 1997," The
Independent Sector, Washington, D.C., Table 2.
4. John Filer, "The Filer Commission Report," The Nonprofit
Organization, ed. Gies, Ott, Shafritz, Belmont, California,
1990, pp. 73-74.
5. See: Joe Laconte, "The Seven Deadly Sins of Government
Funding for Private Charities," Policy Re view: The Journal of
American Citizenship, The Heritage Foundation, Washington,
D.C., March-April 1 997, No. 82, pp. 28-36.
6. United States Environmental Protection Agency ("EPA"), Access
EPA, Chapter 1- History of Agency, EPA Office of Information
Resources Management, Washington, D.C., 1995-1996 edition, p. 3.
7. President Richard Nixon, Special Message to Congress About
Reorganization Plans to Establish the EPA and the National
Oceanic and Atmospheric Administration, Washington,
 D.C., July 9, 1970, pp. 1-2.
8. Ibid., p. 2.
9. Query run on EPA Web Site in Sept. 1997,
10. See: Office of the Inspector General Audit Report, (E6DWG6-
04-0048-8400017), Environemental Pro tection Agency, Washington,
D.C., March 31, 1998.
11.James Martin, Donald Senese, "Taxpayers Fund Lobby for
‘Senior Friendly’ Government Pork, Progr ams and Perks,"
Organization Trends, The Capital Research Center, Washington,
D.C., January 1998, p p. 1-7; Kenneth Conboy,  "Election Officer
for the International Brotherhood of Teamsters," Latham and
Watkins, Washington, D.C., November 17, 1997, p. 4.,
12. See: National Wilderness Institute, "The People v. Carol
Browner: EPA on Trial," Washington, D. C., 1998.
13. Representative Ernest Istook, Jr. (R-Ok.), "Political
Advocacy with Taxpayer Dollars Violates t he Rights of All
Taxpayers," Testimony Before the House National Economic Growth,
Natural Resources  and Regulatory Affairs Subcommittee,
Washington, D.C., June 29, 1995, p.1.


Home | About CAGW | Join Us | Media | WasteWatcher Index |
Search |
Privacy Policy

For More Information Contact:
Citizens Against Government Waste
1301 Connecticut Ave., NW Washington, DC 20036
Tel: 1-800-BE-ANGRY
FAX: 202-467-4253

Copyright © 1998 Citizens Against Government Waste

The only real voyage of discovery consists not in seeking
new landscapes but in having new eyes. -Marcel Proust
+ + + + + + + + + + + + + + + + + + + + + + + + + + + +
A merely fallen enemy may rise again, but the reconciled
one is truly vanquished. -Johann Christoph Schiller,
                                     German Writer (1759-1805)
+ + + + + + + + + + + + + + + + + + + + + + + + + + + +
Forwarded as information only; no endorsement to be presumed
+ + + + + + + + + + + + + + + + + + + + + + + + + + + +
In accordance with Title 17 U.S.C. section 107, this material
is distributed without charge or profit to those who have
expressed a prior interest in receiving this type of information
for non-profit research and educational purposes only.

The only real voyage of discovery consists not in seeking
new landscapes but in having new eyes. -Marcel Proust
+ + + + + + + + + + + + + + + + + + + + + + + + + + + +
A merely fallen enemy may rise again, but the reconciled
one is truly vanquished. -Johann Christoph Schiller,
                                       German Writer (1759-1805)
+ + + + + + + + + + + + + + + + + + + + + + + + + + + +
Forwarded as information only; no endorsement to be presumed
+ + + + + + + + + + + + + + + + + + + + + + + + + + + +
In accordance with Title 17 U.S.C. section 107, this material
is distributed without charge or profit to those who have
expressed a prior interest in receiving this type of information
for non-profit research and educational purposes only.

CTRL is a discussion and informational exchange list. Proselyzting propagandic
screeds are not allowed. Substance—not soapboxing!  These are sordid matters
and 'conspiracy theory', with its many half-truths, misdirections and outright
frauds is used politically  by different groups with major and minor effects
spread throughout the spectrum of time and thought. That being said, CTRL
gives no endorsement to the validity of posts, and always suggests to readers;
be wary of what you read. CTRL gives no credeence to Holocaust denial and
nazi's need not apply.

Let us please be civil and as always, Caveat Lector.
Archives Available at:

To subscribe to Conspiracy Theory Research List[CTRL] send email:

To UNsubscribe to Conspiracy Theory Research List[CTRL] send email:


Reply via email to