Billionaire Kaiser Exploiting Charity Loophole With Boats
IRS regulations and federal laws that could allow a form of self-dealing for tax-exempt organizations has critics saying these charities are exploiting a loophole. The George Kaiser Family Foundation, a public charitable foundation, made $110 million off an investment in a natural gas tanker named the Excellence and has over $1 billion in assets. According to IRS rules, public foundations are not required to donate money. When the Excellence was purchased in 2003, the Kaiser Foundation donated about one-tenth of one percent of its assets.
Wealth Planning Partner David Scott Sloan says that in his 25 years of advising clients on charity and trusts, he can't recall one that has asked about establishing a public charity. Tax-Exempt Organizations Partner Richard Sills says that George Kaiser could have sidestepped hundreds of millions of dollars in personal federal taxes.
"There is a smell test -- the IRS really has to be satisfied that the charity is really engaged in charitable activities and these other businesses are really separate from the day-to-day activities of the charity,” said Mr. Sills.