Illegal Campaign Activity Suspected at Mira Costa Foundation
December 19, 2012: (Carlsbad, CA) The MiraCosta College Foundation appears to have violated the law and jeopardized its 501(c)(3) tax-exempt status by making a large political contribution to the Yes on EE campaign. An individual who identifies herself as a Foundation representative, denies our suspicions. Stop Taxing Us successfully defended the taxpayers from this $1.5 billion tax hike in the November 2012 election.
The MiraCosta College Foundation was established as a nonprofit tax-exempt 501(c) 3 in 1967 to receive and administer gifts and grants benefiting the college. Contributions to the Foundation qualify for state and federal income tax deductions -- and for estate tax savings.
Campaign filings for Yes on EE (link) show a $100,000 contribution from the MiraCosta College Foundation. As a tax-exempt 501(c)(3) (link), the Foundation is restricted in contributing to political activities. According to the IRS (link), a 501(c)(3) "may not attempt to influence legislation as a substant ial part of its activities."
$100,000 would seem "substantial" on its face, but in the context of the size and scope of the Foundation's activities, the contribution is even more clearly substantial. The most recent audited financials (link) show total annual program expenses of just $550,358, meaning this one political contribution amounted to more than 18% of the total prior year's services.
According to Stop Taxing Us co-founder
Dr. Gary Gonsalves, “Our research raises the question as to whether or not the use of College
Foundation money for campaigning constitutes an inappropriate and perhaps illegal use of deductible charity
dollars. This may be more than simply a misallocation -- we wonder if it might be a crime
and we are asking the proper state and federal authorities to
investigate our findings. If the average Joe taxpayer attempted to tax
deduct their political contributions, it would not be long before the
IRS came knocking on their door.”
Gonsalves further notes, “It's possible that this act could invalidate the foundation, and retroactively eliminate deductions for contributions -- even though they were made prior to the disbursement. Only duly constituted authorities can make such determinations.”
The Proposition EE campaign would have instituted a $1.5 billion dollar tax hike on homeowners in North County. and it would have hit working families and renters in the form of higher rents. MiraCosta's $100,000 donation was the single largest contribution to the campaign that raised $350,000. In spite of this substantial war chest, the proposition failed.