When the Chesapeake Bay Foundation, the Johns Hopkins University and other Maryland nonprofits want to maximize the money they can spend in pursuit of their missions, they do what many wealthy individuals and businesses do.In the abstract, it's easy to excuse the non-profits for this behavior. If moving the money offshore helps them to preserve or grow the money that has been donated to them, they rationally send that money where they can safely shelter it from the long arm of the IRS.
They open investment accounts overseas.
Many of Maryland's wealthiest nonprofits — including the University of Maryland Foundation, the Baltimore Museum of Art, The Associated: Jewish Community Federation of Baltimore and two organizations that support the Naval Academy — maintain accounts in such tax havens as Bermuda, the British Virgin Islands, the Cayman Islands and Ireland.
Also on the list are several Baltimore-area private schools, including Gilman, McDonogh and the Calvert School, according to Internal Revenue Service filings.
The accounts allow such organizations to shelter a type of investment income that would normally be subject to taxes — even for nonprofits that generally do not pay such levies. By investing in hedge funds based in those countries, they can keep most earnings beyond the reach of the IRS.
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And a group that is battling the Chesapeake Bay Foundation over dredging the Susquehanna River focuses on the foundation's Caribbean holdings in an online video.
"We were just completely stunned actually, totally shocked when we found out that they have millions of dollars in offshore Cayman Island accounts. Millions," the narrator says.
However, these are the same NGOs, which like the Chesapeake Bay Foundation, constantly lobby the government to increase taxes on corporations and individual tax payers, and encouraging the regulatory regime, in many cases is cahoots with the various levels of government.
I believe that the world of non-profits is ripe for tax reform; too much money is disappearing into the grips of these largely unaccountable institutions.
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