Some Nonprofits Rake In Millions, But Spend Little On Good Deeds

Beauty pageants? The NFL? Why are these organizations tax-exempt? A new report released today by Sen. Tom Coburn breaks down the 9,000-page tax code and calls for loopholes to be closed.

By
Kendall Taggart
by Kendall Taggart

BuzzFeed News Reporter

There are about 1.6 million tax-exempt organizations in the United States. While many provide vital services, some take in millions of dollars but spend little on good deeds. These include celebrity nonprofits, sports leagues, and country clubs, according to a new report from Sen. Tom Coburn (R-Oklahoma). Here are some examples:

Some celebrity nonprofits give barely anything to charity.

Carlo Allegri / Reuters

The Kanye West Foundation, which was founded to help teen dropouts, spent $553,826 in 2009 on salaries, travel, and other administrative expenses. Only $573 actually went to charity. The charity closed mysteriously in 2011.

Mario Anzuoni / Reuters

The Wyclef Jean Foundation paid the singer $100,000 to perform at his own benefit concert. Jean has defended the integrity of his charitable work. The charity is now defunct.

Sports leagues, like the NFL and the PGA Tour, don't pay taxes on huge portions of their revenue.

Eric Thayer / Reuters

That’s despite the fact that the NFL and PGA Tour make millions of dollars a year. Both organizations are classified as "trade organizations," granted tax-exempt status on the basis that they further the industry as a whole. A PGA Tour spokesman told ESPN that the tour's charitable donations far exceed any tax breaks it may get.

National Football League Commissioner Roger Goodell, pictured above, earned $44 million in 2013, according to the league's most recent tax filing.

What do beauty pageants, shooting clubs, a casino and racetrack, and lobbying groups have in common?

Adrees Latif / Reuters

All use the ==501(c)(4)== tax-exempt status to reduce their tax bill. These are called "social welfare organizations." While contributions to these groups are not deductible, they don't have to pay income tax.

Country clubs, fraternities, hobby clubs, and alumni associations can all be tax-exempt too.

Desert Mountain Club / Via desertmountain.com

The Desert Mountain Club in Scottsdale, Arizona, is the largest "social and recreational club" exempt under section ==501(c)(7)== of the tax code, according to the report. These organizations are supposed to be funded entirely by members and cannot engage in substantial business activity. But many operate essentially as businesses, Coburn's report said.

Desert Mountain Club's amenities include: "The Southwest's finest tennis facilities, considered the 'Wimbledon of the west,' a spa, and 'award-winning clubhouses.'"

Organizations that claim to help terminally ill children, veterans, and police sometimes spend just pennies on charity.

Kids Wish Network / Via kidswishnetwork.org

Kids Wish Network's mission is to provide wishes for terminally ill children. But of the $18.6 million raised in 2012, less than $240,000 was spent directly on granting wishes. Most went to for-profit telemarketers and other fundraisers. A spokesperson for the organization has said previously the it uses outside fundraisers so that its staff can focus on the children. Its name sounds similar to, but should not be confused with, the well-known charity Make-A-Wish Foundation.

Coburn's report calls on Congress to make the tax code less indecipherable and opaque.

"Taxes should not be determined by who has access to the craftiest accountants, lobbyists and politicians," Coburn wrote.

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