Charity Sparks Questions

Posted March 2, 2004 at 6:42pm

Following his departure from Congress last summer, ex-Rep. Larry Combest (R) donated more than $650,000 in leftover campaign funds to a Texas-based charity created and controlled by him and members of his family, Federal Election Commission filings show — a controversial but legal maneuver exercised by only a handful of former lawmakers in the past several years.

Abiding by FEC guidelines — which grant candidates a wide degree of discretion in how they liquidate their campaign coffers so long as they aren’t converted to personal use — it has become standard procedure for departing lawmakers to return leftover campaign funds to donors, transfer the money to their party, or make charitable contributions to scholarship funds, churches, civic and other nonprofit groups.

Combest’s charitable transfer, however, is more unusual than most because he personally runs the nonprofit foundation benefiting from his campaign’s proceeds. Some campaign finance watchdogs say they are troubled by the scant public disclosure requirements for such organizations.

“I think there is a potential for abuse in the area,” said Larry Noble, the executive director of the Center for Responsive Politics and the former general counsel for the FEC. “You always become concerned when the money becomes parked some place and you can’t track it.”

According to his FEC records, the former chairman of the House Agriculture Committee transferred $650,000 to a group called How Firm Our Foundation in July 2003.

Articles of incorporation for the organization filed with the state of Texas show that Combest registered How Firm Our Foundation as a 501(c)(3) nonprofit corporation in April 2003. The forms list himself, his wife, Sharon, and his sister, Renee Brain, as directors of the group and his home address in Lubbock as the “registered office of the corporation.”

“The concern is he not use it to funnel money for his own personal use,” Noble said, but “it’s hard to figure out what’s going on” with money once it leaves the FEC’s purview.

Experts did stress, though, that the transfer to the How Firm Our Foundation, and Combest’s involvement in the group, are perfectly permissible — providing that neither Combest nor his relatives receive any sort of payment from the charity.

According to How Firm Our Foundation’s articles of incorporation, “no part of the net earnings of the corporation shall inure to the benefit of, or be distributable to its members, trustees, officers, directors, or other private persons,” with the exception of paying “reasonable compensation for services rendered.”

The group’s stated purpose is to make “charitable, religious, educational and scientific” contributions to other tax-exempt groups.

Combest, reached at his home last month, refused to talk about the group he formed or the use of his leftover campaign funds. He also would not talk more generally about how lawmakers dispose of their leftover campaign funds — saying he wanted “take a pass” on that topic.

“I’m really not interested in discussing that foundation with the press,” he said before ending the phone call.

Combest has kept a low profile since he exited the House unexpectedly last May, citing only vague personal reasons when he announced the departure in December 2002.

The statement he issued at that time explained only that “there have been a number of events that have happened to Sharon and me in the last year that have made us realize how fragile life and health are.”

“They certainly have caused us to rearrange our priorities and we want to spend as much time together while we have our life and health.”

In his post-Congressional life, Combest has turned up on the talk radio circuit, appearing every Tuesday morning from 6 to 8 a.m. on a local radio show on KFYO, a station in Lubbock, Texas, known as Newstalk 790.

In 1997, the FEC put its stamp of approval on a similar charitable arrangement by then-retiring Rep. Tom Bevill (D-Ala.), who with his wife and his daughter set up a nonprofit foundation with excess campaign funds called the Bevill Foundation.

An examination of the Bevill Foundation’s tax filings show that the charity has contributed $91,600 to other nonprofits — mostly Alabama churches — since 1998.

A similar organization set up by former Sen. Howell Heflin (D-Ala.) in the late 1990s has also been regularly making charitable donations over the past five years. Tax records show that Heflin’s Scholarship Foundation Inc. has contributed $130,500 to assist students with their educations at various Alabama colleges and universities since 1999.

Nonetheless, a search of campaign records for ex-lawmakers revealed few others who have seized upon the idea. That comes as a relief to Noble, who worked at the FEC when the agency approved such arrangements.

“I do know that when these things were discussed at the FEC, there was a concern raised about the problem that once [money] leaves the campaign, it’s very hard to trace what happens to it,” Noble said. “You don’t want this to become the way to convert money to personal use out of the public’s eye.”

Gary Ruskin, who heads up the Congressional Accountability Project, agrees.

“The disclosure on a [IRS Form] 990 is limited,” Ruskin said, explaining that it would be very easy for a lawmaker to draw a salary from their own foundation and keep it hidden from public view.

Moreover, if they can hang in long enough, it appears that lawmakers could legitimately earn money from their nonprofits.

FEC regulations forbid candidates from drawing a salary from nonprofit organizations they’ve set up with leftover campaign funds only until the organization has expended the entire amount originally donated to the 501(c)(3).

Therefore, if a former lawmaker invested wisely, he could start paying himself or family members a legitimate salary once he’d donated to charity an amount equivalent to the original transfer of campaign funds.