Doug Henwood Talks

New York Times - June 22, 2007

In Aiding Poor, Edwards Built Bridge to 2008 By LESLIE WAYNE

John Edwards ended 2004 with a problem: how to keep alive his public =

profile without the benefit of a presidential campaign that could =

finance his travels and pay for his political staff.

Mr. Edwards, who reported this year that he had assets of nearly $30 =

million, came up with a novel solution, creating a nonprofit =

organization with the stated mission of fighting poverty. The =

organization, the Center for Promise and Opportunity, raised $1.3 =

million in 2005, and =97 unlike a sister charity he created to raise =

scholarship money for poor students =97 the main beneficiary of the =

center’s fund-raising was Mr. Edwards himself, tax filings show.

A spokesman for Mr. Edwards defended the center yesterday as a =

legitimate tool against poverty.

The organization became a big part of a shadow political apparatus =

for Mr. Edwards after his defeat as the Democratic vice presidential =

nominee in 2004 and before the start of his presidential bid this =

time around. Its officers were members of his political staff, and it =

helped pay for his nearly constant travel, including to early primary =

states.

While Mr. Edwards said the organization’s purpose was “making the =

eradication of poverty the cause of this generation,” its federal =

filings say it financed “retreats and seminars” with foreign policy =

experts on Iraq and national security issues. Unlike the scholarship =

charity, donations to it were not tax deductible, and, significantly, =

it did not have to disclose its donors =97 as political action =

committees and other political fund-raising vehicles do =97 and there =

were no limits on the size of individual donations.

Mr. Edwards, a former North Carolina senator, set out to keep his =

political options open by promoting issues he cared about, like poverty.

“He wanted to learn, travel and be in a position to be a viable =

candidate,” said J. Edwin Turlington, a Raleigh lawyer who was the =

manager of Mr. Edward’s 2003 presidential exploratory committee. “He =

had the ability to raise money to fund his activities. He had a =

vision, and he knew it would take money.”

Mr. Edwards mixed policy and politics in a way that allowed his =

supporters to donate to the causes he believed in =97 and to the =

organizations he had set up. He also set up two political action =

committees, something commonly done by politicians thinking of =

running for president.

But it was his use of a tax-exempt organization to finance his travel =

and employ people connected to his past and current campaigns that =

went beyond what most other prospective candidates have done before =

pursuing national office. And according to experts on nonprofit =

foundations, Mr. Edwards pushed at the boundaries of how far such =

organizations can venture into the political realm. Such entities, =

which are regulated under Section 501C-4 of the tax code, can engage =

in advocacy but cannot make partisan political activities their =

primary purpose without risking loss of their tax-exempt status.

Because the organization is not required to disclose its donors =97 and =

the campaign declined to do so =97 it is not clear whether those who =

gave money to it did so understanding that they were supporting Mr. =

Edwards’s political viability as much or more than they were giving =

money to combat poverty.

The money paid Mr. Edwards’s expenses while he walked picket lines =

and met with Wall Street executives. He gave speeches, hired =

consultants, attacked the Bush administration and developed an online =

following. He led minimum-wage initiatives in five states, went =

frequently to Iowa, and appeared on television programs. He traveled =

to China, India, Brussels, Uganda and Russia, and met with Prime =

Minister Tony Blair of Britain and his likely successor, Gordon =

Brown, at 10 Downing Street.

“He was not a U.S. senator; he had no office,” said Ferrel Guillory, =

a political program director at the Center for the Study of the =

American South at the University of North Carolina. “So he set up a =

series of entities to finance his travel, to finance a political shop =

and to finance an issue shop. It all adds up to a remarkable feat of =

keeping a presidential candidacy alive without any of the traditional =

bases for it.”

Mr. Edwards depended for his activities in large part on donations =

from supporters. In addition to the two nonprofit organizations, he =

created a leadership political action committee and a 527 “soft =

money” organization that also shared the same name: the OneAmerica =

Committee. These two committees each allowed donors to give more than =

the $2,300 per person limit in a presidential primary or general =

election, and, in some cases, to give in unlimited amounts.

From 2005, when he established them, through 2006, the committee and =

the soft money organization raised $2.7 million, most of which paid =

for travel and other activities that helped Mr. Edwards maintain his =

profile.

“It’s a permanent campaign,” said Meredith McGehee, policy director =

at the Campaign Legal Center, a nonprofit group based in Washington. =

“It’s about shaking every money tree possible and finding every means =

to finance a permanent campaign. It’s like having different checking =

accounts, with different rules, and the goal of keeping your name and =

agenda in the public eye.”

The two foundations and the two political committees all shared an =

address in Washington and jointly raised around $4 million. Most =

donations to the political committees came from his core supporters, =

trial lawyers and unions, and in one case from an anonymous donor, =

who gave $250,000. Many donations ranged from less than $10,000 to =

$50,000. For example, Boyd Tinsley, the violinist and backup singer =

for the Dave Matthews Band, gave $50,000, as did the Service =

Employees International Union, whose organizing efforts Mr. Edwards =

has supported.

The Edwards campaign defended the activities of the nonprofit.

“One of the Center for Promise and Opportunity’s main goals was to =

raise awareness about poverty and engage people to fight it,” =

Jonathan Prince, deputy campaign manager, said yesterday. “Of course, =

it sent Senator Edwards around the country to do this. How else could =

we have engaged tens of thousands of college students or sent 700 =

young people to help rebuild New Orleans? It’s patently absurd to =

suggest there’s anything wrong with an organization designed to raise =

awareness about poverty actually working to raise awareness about =

poverty.”

“Of course, some of the people who worked for Senator Edwards in the =

government and on his campaign continued to work with him to fight =

poverty and send young people to college,” he added. “Perish the =

thought: people involved in politics actually trying to improve =

peoples’ lives.”

Mr. Edwards also developed mutually beneficial relationships with =

public and private institutions. He founded the Center on Poverty, =

Work and Opportunity at the University of North Carolina, which =

provided him with a platform. In return, he raised $3 million to =

sustain it. He was hired by the Fortress Investment Group, a New York =

hedge fund, to “develop investment opportunities,” according to a =

2005 Fortress news release. That led to meetings with such people as =

Chancellor Angela Merkel of Germany; Henry Kravis, founder of KKR, =

one of Wall Street’s most successful investment funds; and the chief =

executives of General Electric, Citigroup, Coca-Cola and =

DaimlerChrysler.

“Fortress became a vehicle for foreign travel,” Mr. Turlington said, =

“but it was also a way to spend more time with sophisticated =

financial people.”

The Edwards campaign declined to disclose the amounts raised or spent =

by the two similarly-named nonprofit agencies =97 the Center for =

Promise and Opportunity and the Center for Promise and Opportunity =

Foundation =97 since their 2005 tax filings, which are the most recent =

to have been filed.

The Center for Promise and Opportunity Foundation, which started with =

$70,000 in 2005, gave out $300,000 in college scholarships in 2006, =

said Pamela Garland, the executive director of the College for =

Everyone Program that is part of the foundation. The center, often =

praised for helping poor students in Greene County, N.C., get into =

college, is on track to give out $476,000 this year, Ms. Garland said.

Mr. Edwards broke his ties to that charity once he announced his =

candidacy for president. “It’s really just me now,” said Ms. Garland, =

who began her job last May. She credited Mr. Edwards with devising =

the program, raising the money and speaking to high school students, =

using his own up-from-poverty story to inspire them.

At the same time, the larger nonprofit group had a more politically =

active agenda. Its directors included Mr. Turlington, the Raleigh =

lawyer; Miles Lackey, Mr. Edwards’s former chief of staff; Alexis =

Bar, his former political scheduler; and David Ginsberg, Mr. =

Edwards’s current deputy campaign manager.

The $1.3 million the group raised and spent in 2005 paid for travel, =

including Mr. Edwards’s “Opportunity Rocks” tour of 10 college =

campuses, consultants and a Web operation. In addition, some $540,000 =

went for the “exploration of new ideas,” according to tax filings.

Nonprofit groups can engage in political activities and not endanger =

their tax-exempt status so long as those activities are not its =

primary purpose. But the line between a bona fide charity and a =

political campaign is often fuzzy, said Marcus S. Owens, a Washington =

lawyer who headed the Internal Revenue Service division that oversees =

nonprofit agencies.

“I can’t say that what Mr. Edwards did was wrong,” Mr. Owens said. =

“But he was working right up to the line. Who knows whether he =

stepped or stumbled over it. But he was close enough that if a wind =

was blowing hard, he’d fall over it.”

Of the explicitly political entities, Mr. Edwards’ OneAmerica =

Committee 527 organization allowed donors to give without =

limitations. The money was transferred to his leadership political =

action committee. Leadership committees were initially created to =

allow prominent politicians to raise money for distribution to needy =

office-seekers. But Mr. Edwards spent the entire $2.7 million he =

raised for OneAmerica, including $532,000 raised by the 527, on =

himself, an increasingly common trend among politicians.

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