Friday, October 15, 2010

Bogus Charge?: Thomas Accused of Running Fake Nonprofit

Today's Washington Post includes reports on the back of the Metro page that Ward 5 Councilmember Harry Thomas has been accused of his Republican opponent of running a fake nonprofit, Team Thomas/SwingAway LLC, for his own "slush fund."

I'm no fan of Harry Thomas, but these charges by Tim Day, an accountant who is challenging Thomas in the Nov. 2 general election, strike me as supreme B.S.  Day's evidence:
  • Thomas's organization is not registered as a 501(c)(3) with the IRS.  As an accountant, Day should probably not make the common error of confusing a nonprofit with a 501(c)(3).  "Nonprofit" is just a type of incorporation, which is registered with a state/DC government.  Nonprofits are not necessarily 501(c)(3)s, to which individuals can make tax deductible donations.  To become a 501(c)(3), a nonprofit must go through what can be a lengthy process with the IRS and agree to certain restrictions and reporting requirements.
  • Thomas's organization has not disclosed who donated to the organization and how the money has been spent.  So what?  Nonprofit organizations, like for-profit companies, have no obligation to publish their financial records to the world.  As a 501(c)(3), the organization would have to provide limited information in public filings, including how much was raised (but not the identity of donors), the salaries of top employees, and payments to largest contractors.  But Thomas's organization is not a 501(c)(3).
  • Thomas's organization is not in good standing with the Department of Consumer and Regulatory Affairs.  Join the club.  There are lots of small nonprofits organizations, that largely rely on volunteers, who overlook submitting paperwork and later correct it.  It's not as a crime.
  • And just to throw it in -- Day makes an unrelated accusation that Thomas's wife worked on his campaign and received a $4,500 fee as a consultant.  Another big "so what," particularly if she provided services to the campaign designing leaflets and brochure or otherwise.  It may be poor judgment to pay family members from campaign funds, but I'm missing the illegality or corruption.
Well, I guess Mr. Day got his day in the Post.  But his charges seem to hardly warrant even a back-page story.  A blog post... maybe.

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