Iowa's leading anti-tax group – Iowans for Tax Relief – claims thousands of grassroots supporters but in reality the vast majority of its funds come from revenue – all untaxed – generated by multi-million dollar charitable endowments and private trusts established by the organization's founder, David M. Stanley.
Stanley, of Muscatine, died in August 2015, but his endowment funds and trusts continue to pour millions of dollars into the operation of Iowans for Tax Relief (ITR) and four other charitable organizations espousing a similar mantra of limited government and anti-tax messages, and funding like-minded conservative politicians for state and federal office.
The endowments underwrite more than a dozen management and staff positions in organizations pumping out a steady stream of propaganda on tax and government spending issues.
In addition to the nearly $600,000 in annual dividends and interest from the group's primary $30-million endowment, up to 5 percent of the fund can be sold each year to bankroll political activities, lobbying, white papers and "education" materials produced by ITR and its related organizations.
The primary multi-million endowment is listed as an asset of the Tax Education Support Organization (TESO), one of five non-profit organizations set up by Stanley and his associates to further their stated mission to "promote social welfare by educating the general public and lobbying our politicans about limiting taxes, limiting government spending, minimizing debt, balancing budgets, restoring limited government, controlling inflation, defending freedom and providing jobs."
While attacking any new tax initiatives and state budget increases, the charitable organizations now run by Robert H. Solt, of Muscatine, owes much of its steady stream of money to a tax code which treats charitable non-profits much differently than the individual taxpayers the group claims to represent.
Nearly all of the group's endowment fund are held in marketable securities (stock), and as a non-profit charitable 501C3 organization, proceeds from the stock sales aren't taxable. For an individual taxpayer, however, selling appreciated stock would require the payment of a capital gains tax of between 15 percent to 28 percent.
Individual taxpayers also must pay income tax, based on their tax bracket, on all dividend income generated by stocks. Iowans for Tax Relief and its related organizations avoid such taxes thanks to their charitable non-profit status.
In 2015, the latest period for which the group's 990 tax filing is available, the TESO endowment generated $588,000 in dividend and interest income. It also sold and recorded a gain of more than $1 million. No federal or state taxes were paid by TESO on the dividends and interest nor on the gain from the sale of stock.
While championing political candidates who commit to limiting government spending and taxes, the group's executives haven't taken a similar pledge to rein in spending judging from the organization's publicly available 990 tax reports.
Solt, as president and treasurer of TESO, was paid $407,871 in total compensation in 2015, that's up 36 percent since 2013. The organization's vice president and secretary, Richard R. Phillips, netted $188,246 in total compensation in 2015, a 9 percent increase from three years ago.
One of the other "related" 501C3 groups funded by a Stanley-provided endowment, Public Interest Institute (PII), paid its president, Dr. Donald P. Recheter, $143,208 in compensation in 2015. PII also paid its treasurer, Christopher Ingstad, $105,402 in total compensation in 2015. Ingstad was elevated to president of Iowans for Tax Relief in 2016, but his current salary isn't known since the most recent publicly available 990 tax filing dates to 2015.
"In the lobby (of the state capitol) we are the only organization asking legislators to stop spending; the others are there with their hands out asking for more of your money," Iowans for Tax Relief boasts on its web site.
Iowans for Tax Relief and related endowments established by David Stanley are not to be confused with The Stanley Foundation, also headquartered in Muscatine, which was established by his brother Richard and which seeks to advance "fair, just and lasting solutions to critical issues of peace and security" in the world.
The Stanleys' father was founder of Stanley Consultants, Muscatine, an international engineering firm, and HON Industries, an office furniture maker headquartered in Muscatine.
Before taking up his crusade for lower taxes and less government spending, David Stanley served as a state senator for 12 years, and ran unsuccessfully twice for the U.S. Senate in 1968 and 1974.
The web of charitable organizations set up by Stanley include:
• TESO, with the largest endowment of $33.4 million at the end of 2015, reported eight employees, an estimated 5,000 volunteers and $1.1 million spent on salaries, compensation and benefits during the year. The entity, a 501C3 organization, reported $1.8 million in revenue ($1.75 million coming from investments) and $1.35 million in expenses for the year.
• Tax Education Foundation (TEF), reported $98,000 in assets at the end of 2015. The 501C3 organization had revenue of $2,465 in 2015 and $4,309 in expenses. The primary activity listed in the TEF tax filing was conducting research on tax and government spending issues.
• Investor Protection Inc. (IP) reported assets of $3 million at the beginning of 2015, and its main function appears to be passing through money from one Stanley controlled entity to another. It gave Iowans for Tax Relief (ITR) $1.2 million in 2015, leaving the fund with $1.63 million at year end. Like ITR, Investor Protection is a 501C4 organization.
• Public Interest Institute (PII) reported assets of $6 million at the end of 2015, with five employees and an estimated 100 volunteers. The 501C3 organization had revenues of $439,000 and expenses of $419,000, including $376,000 for salaries and compensation. PII spent $98,000 to provide teachers for courses at Iowa Wesleyan University and hosting of the PII "independent think tank" on the university campus at Mt. Pleasant. The group also spent $122,000 on "education and reserch on taxation and government spending," and another $154,000 to fund a weekly Iowa newspaper column, monthly PII briefings, three quarterly publications, its website and a speakers bureau.
• Iowans for Tax Relief (ITR), a 501C4 organization, reported assets of $6.57 million at the end of 2015. It had revenues of $1.39 million for the period and expenses of $280,000, including $105,000 for "legislative and grassroots lobbying, taxpayer advocacy and public education." Another $106,000 was spent providing "information to lawmakers, our members and people of Iowa on current tax and spending issues."
+++++++++
What's the difference between a 501C3 charitable organization and a 501C4 charitable group?
Both are exempt from paying federal income tax, but donations made to 501C4 organizations by individuals are not deductible. A 501C4 organization can engage in unlimited lobbying so long as it pertains for the organization's mission. A 501C3 organization is not permitted to engage in political activity, endorse or oppose political candidates, or donate money or time to political campaigns.
The difference also can be seen when visiting the web sites of the Iowans for Tax Relief (www.taxrelief.org) where links are given to donate to Iowans for Tax Relief, Iowans for Tax Relief Political Action Committee and the Tax Education Foundation. Contributions to the ITR and ITR PAC are not tax deductible, as the site points out, while donations to TED can be deducted from your taxes.
+++++++++
Iowans for Tax Relief Political Action Committee relies heavily on private trusts controlled by Stanley and his associates
As with the ITR's dependence on Stanley's wealth, ITR's political arm – Iowans for Tax Relief Political Action Committee (ITR PAC) – has relied significantly on infusions of money from private trusts controlled by Stanley, large donations by Stanley and his late wife, Jean, along with contributions from officers and associates involved in ITR and the ITR PAC.
In 2013 alone, three trusts – Iowa Public Interest Trust, Trust for Taxpayer Defense and American Freedom Trust – poured $302,000 into the ITR PAC, which then used the money to fund candidates running for state and federal office. Not surprisingly, virtually all were Republican candidates who support ITR's belief that cutting government and lowering taxes will lead to an improved economy and more jobs.
While ITR's PAC likes to refer to its grassroots support and thousand of "members," a review of the past five years of financial contributions indicates otherwise.
By far, most of the money flowing into its PAC came from the Stanley-controlled trusts and individual contributions from Stanley, his wife Jean (who also died in 2015) and officers and directors of Stanley non-profit charitable organizations.
In 2012, the three trusts gave $54,000 to the political action group, while David and Jean Stanley donated a total of $40,000 that year. The donations amounted to more than 90 percent of the ITR PAC contributions in 2012.
The following year, the trusts contributed $302,000 to the political action committee fund and Stanley, Solt and another Stanley associate, Peter Voorhees, donated a total of $14,000. That amounted to 95 percent of all donations for the year.
In 2014, contributions from Stanley, Solt and Voorhees accounted for $19,000 of the $32,000 raised by the PAC.
In 2015, $5,750 of the nearly $10,000 in contributions to ITR PAC came from Voorhees and Solt.
Despite the fall off in donations to the PAC during the past two years, the group continues to spend freely in support of like-minded candidates. The PAC's latest report to the state Campaign and Ethics Board listed $213,000 on hand after donating $16,500 to campaigns in the fall of 2016.
However, without large periodic infusions of cash from the Stanley-related trusts, the political action group may be hard-pressed to continue to fund candidates at the same generous levels as in the past.
For example, in late 2010 and early 2011, the ITR PAC handed out $300,000 in political contributions, including more than $200,000 to the "Paulsen for State House Committee" (a PAC then State House Speaker Kraig Paulsen could use to dole out to other Republicans running for state office), $60,000 to "Friends for Dix" (the political campaign of Republican State Senator Bill Dix), and $30,000 to the "Committee to Elect Shawn Hamerlinck" (funding an unsuccessful campaign for a state senate seat in Davenport). Joni Ernst's campaign for U.S. Senate also got a $5,000 check.
During that same period, the group raised just $74,000, leaving it with a balance of only $22,000 in early 2011. That's when the private trusts stepped in donating $54,000 in 2012 and $302,000 in 2013 to refill the group's political donation coffers.
