Nonprofits Funded Labor Council Political Campaigns

Funds from two local non-profit health care foundations made their way to phone banks and mail campaigns of the South Bay Labor Council in 2012 after routing the money through a Measure A’s campaign committee.

Non-profit organizations are prohibited by law from using their tax-exempt donations to support campaigns of candidates for office. They may, however, support ballot initiatives. The eventual recipients of some of the funds engaged in both types of activities.

Both the VMC Foundation—which raises money to support the county’s public hospital system—and the Santa Clara Family Health Foundation gave more than a quarter-million dollars each last summer to support an 1/8th cent county sales tax measure, Measure A.

It’s impossible to know whether the funds benefited any candidate campaigns after the money moved out of Measure A committee bank accounts because neither nonprofit’s executives—nor the labor-aligned political organizations that conducted the campaigns—are willing to discuss how the funds were used and how decisions were made.

Chris Wilder, executive director of the VMC Foundation, said his board will not agree to discuss or release meeting minutes of its vote to give $289,000 to the pro-Measure A “Committee for the Future of Santa Clara County.” The tax measure passed in November, with 56.6 percent of the vote.

“It’s not a precedent we want to set,” Wilder said, before adding that the board vote was unanimous.

Kathleen King, who sits on the VMC board and is executive director of the Santa Clara Family Health Foundation, provided even fewer details. Her foundation gave $250,000 to the “Yes on A” push, but King denied a request to see her organization’s meeting minutes and cancelled an in-person interview in favor of an email exchange.

“I discussed your request for a copy of our minutes with my chair (Dana Ditmore) and he did not want to do this,” King wrote in correspondence with San Jose Inside. “He serves on many boards and his answer was no.”

A representative of GuideStar, a Washington, D.C.-based organization that promotes accountability in the nonprofit community, said the organizations were not required to release their minutes. Guidestar spokesperson Lindsay Nichols noted, however, “A transparent organization would give it to you.”

An incestuous tangle of organizations, directors and consultants characterized the transactions, with common decision-makers on both the giving and receiving ends. 

During a three-month window last year, from August through the end of October, the VMC Foundation and SCFHF contributed a total of $539,000 to the “Yes on A” committee, whose goal was to raise the county sales tax and, by extension, fund the county Health and Hospitals System, which eats up about half of the county’s $4.1 billion annual budget. Ongoing budget cuts have threatened health initiatives for children and low-income families in Santa Clara County.

Former San Jose vice mayor and South Bay Labor Council CEO Cindy Chavez currently heads up the nonprofit SBLC-linked Working Partnerships USA (WPUSA). She also sits on the SCFHF board as well as the board for the Health Trust, another not-for-profit organization that directly partners with and funds WPUSA.

Last October, the “Yes on A” committee made two $45,000 payments to the South Bay AFL-CIO Labor Council Issues Account, which Chavez helped oversee at the time.

In addition, Chavez’s Working Partnerships USA appears to have received $378,000 from Health Trust. In 2002, Health Trust awarded WPUSA a grant “to enroll uninsured contingent workers in Silicon Valley in a subsidized health plan and to research portable health insurance options.” In fical year, 2010, Health Trust awarded $78,000. The most recent publicly noted transaction was a $150,000, 24-month grant for WPUSA’s Healthy Eating Strategies project “to increase the availability of healthy foods at small retail outlets (i.e. corner stores) in high poverty census tracts through the adoption of a County Healthy Corner Store Policy.”

SBLC’s issues committee also received tens of thousands of dollars from other PACs that wanted to increase San Jose’s minimum wage (Measure D) and the number of card room tables in the city’s two casinos (Measure E). Campaign disclosure documents show that the SBLC Issues PAC then took the $90K from “Yes on A” and, in turn, provided the county sales tax committee with $92,414.26 in non-monetary services, such as “salary, overhead, office & phone bank expenses,” according to campaign forms.

Meanwhile, the SBLC Issues PAC says it spent more than $177,000 in non-monetary contributions last year for Measure D and $44,000 on Measure E. Many of the transactions were to purchase food for campaign volunteers and it’s impossible to sort out which measures or candidates benefited from the volunteers’ political activities.

Also during the first few weeks in October, the “Yes on A” committee routed $350,000 of the contributions to AMS Communications, Inc. of San Francisco. Formed in 1992, AMS shares an office building and at least one principal with Ambrosino, Muir & Hansen (AMH), a San Francisco-based political direct mail firm whose clients, in addition to the county sales tax measure, include Bay Area congressmembers Lynn Woolsey and Zoe Lofgren, Senators Tom Daschle and Harry Reid, and Presidents Obama and Clinton.

King said that “over 700K mailers for Measure A” were sent out by AMH, which partners with local political consultant Ed McGovern. McGovern told San jose Inside he worked on Measure A and Measure E campaigns, but not Measure D.

The money trail becomes even trickier to track once it went to AMH, as printing and mailing houses are ironically notorious for eating up paper trails.

Both Wilder and King say there was no hidden motive in using SBLC resources to boost Measure A, even if there the respective boards share interlocking directors. Assemblywoman Nora Campos, Cindy Chavez, and Kathleen King and Chris Wilder all sit on the Santa Clara Family Health Foundation’s Board of Directors, while King sits on the VMC Foundation Board.

“Our job as a foundation is to support the Santa Clara County Health and Hospital System, and that’s half the county’s budget,” Wilder said. “We did this because, and only because, we thought it was a great way to fund county health.”

“(South Bay Labor Council) didn’t lead it,” he added. “They certainly did a lot of groundwork for it.”

But in a YouTube video published Jan. 13 of this year, newly installed SBLC CEO Ben Field talks with Steve Preminger, chair of the Democratic Central Committee. In the video, replete with a very ’80s Night Court intro theme song, Field goes on record about Measures A and other initiatives, saying:

“The field campaign was run to a large extent by the Labor Council.”

In addition to the ballot measures, SBLC supported 70 candidates for local and regional offices in the November election.

VMC Foundation

Nonprofit organization (Federal Tax ID 77-0187890) raises donations on behalf of Santa Clara Valley Medical Center (VMC) and Santa Clara Valley Health & Hospital System. “Foundation seeks funds for programs that support community well-being, improve the quality of care and promote access to medical treatment for all residents of Santa Clara County.”

Total 2010 Revenue: $4.8 million
Total 2011 Revenue: $10.5 million (includes a $5 million donation from the Sobrato Foundation)

2011 Funders:

El Camino Hospital
Health Trust
Kaiser-East Bay Community Foundation
Sobrato Family Foundation

Santa Clara Family Health Foundation

Total 2011 Revenue: $1,291,304 (source: Guidestar)

Funders:

Blue Shield of California Foundation
The California Endowment
Cisco Systems, Inc.
City of Cupertino
City of Los Altos
City of Milpitas
City of Mountain View
City of San José
City of Sunnyvale
County of Santa Clara
The David & Lucile Packard Foundation
El Camino Hospital
FIRST 5 Santa Clara County
The Health Trust
Kaiser Permanente Northern California Region
Kaiser Permanente San José
Kaiser Permanente Santa Clara
Lifeguard Charitable Fund
Lucile Packard Children’s Hospital
Mission Community Fund
Palo Alto Medical Foundation
Rotary Club of San José
SanDisk Corporation
Santa Clara Family Health Plan
Sobrato Family Foundation
Wells Fargo
Westly Foundation
Xyratex International, Inc.

Documents:

Committee for the Future’s Form 460 Political Disclosure Statement.

VMC 2011 Foundation Financial Statement

Campaign Disclosure Form for South Bay Labor Council Issues PAC.

12 Comments

  1. Wow.  Another great investigative piece by Metro.

    Most damaging quote:

    Guidestar spokesperson Lindsay Nichols noted, however, “A transparent organization would give it to you.”

    Are you sure the boards won’t comment or is it just the exec directors covering themselves.  That happens a lot you know.

    • Shameful.  How can a non-profit agency, a group that enjoys a tax free status be allowed to stay secret with their proceedings?  Aren’t all 501.c3 non profits obligated to provide public accounting of their board meetings to continue their tax exempt status?

  2. More shenanigans by the group of self styled Mexican Mafia.  Chavez, Shirakawa, Garcia, Campos, Coto.  Pay attention to the names people.  Add their affiliates Fields, Loftgren, Kalra, Chu and apparently Preminger (Mr Preminger any follow up to your assertions in a previous interview that you & the Democrats stood by Shirakawa, that he was a great man who’d done great things for the community and a friend of labor & democrats.  Turns out he’s a thief for nearly two decades, so where’s your statement now? Or are we the public just supposed to keep bending over and taking it?)
    SBLC knew full well the people who donate to support Measure A did so with the expectation that the funds would be used for THAT issue not their other labor backed initiatives.  It may not be illegal but it surely is immoral but what do you expect from the people who dine regularly with Shirakawa. 

    Thieves.  Public fleecing.  Intentional disregard and bending of rules to suit their purposes.  You should be ashamed of yourselves but since it seems apparent that you all live without shame, I will be ashamed for you.  You will never have my support, my vote, my donations again.  I will search out the candidates and issues I support and make sure if they have a connection to you that I never give them another dime. 

    SMARTEN UP SAN JOSE!

  3. Great job!

    I looked at the 2011 Form 990 filing for the WMC Foundation:

    http://207.153.189.83/EINS/770187890/770187890_2011_08cea005.PDF

    There’s lots of things that I wanted to investigate, but this caught my attention.

    Under Schedule I, Part II, Santa Clara Valley Health & Hospital System (County of Santa Clara) was listed a “Related Tax-Exempt Organization”.

    Part VII lists the compensation of officers, directors etc.  E Christopher Wilder, Michael Elliott and Elizabeth Nielsen were listed as having worked 40 hours/week for the organization and were listed as having “Reportable Compensation from related organizations”.

    According to the Mercury News’ public employee salary database:

    http://www.mercurynews.com/salaries/bay-area/2011

    Wilder, Christopher is a Health Education Specialist for Santa Clara County

    Nielsen, Elizabeth is a Contractor, Valley Medical Center.

    I did not find Michael Elliott in the Merc’s database.  Christopher Wilder’s County pay did not match the amount of pay received from related organizations in the Form 990, but Elizabeth Nielson’s base County pay did match the $119,912 reported for her in the Form 990.

    Does the VMC Foundation use County facilities?  The VMC Foundation lists 2400 Moorpark Avenue No 207 as its address in its Form 990 filing.  2400 Moorpark Avenue happens to be Valley Medical’s street address.

    If the VMC Foundation uses office space in the Valley Medical facility isn’t there a prohibition against using public property for political lobbying, and for public employees to engage in political lobbying while on the job?

    • Regarding the use of “public resources” for campaign purposes, it’s covered in this FPPC document

      http://www.fppc.ca.gov/manuals/manual2_chapters/ch09.pdf

      Misuse of Public Resources

      The Political Reform Act prohibits public financing of campaigns, except for elections in charter cities and counties. In addition, laws outside the Act prohibit the use of public resources, such as office equipment, staff time, etc., for campaign or personal purposes. (Gov. Code Section 8314; Penal Code Section 426.)

      Government Code Section 54964 prohibits an officer, employee or consultant of a local agency from expending or authorizing the expenditure of any local agency funds to support or oppose a ballot measure or a candidate.

  4. The Santa Clara Family Health Foundation and its public counterpart are the same entities that administer and fund the Children’s Health Initiative.

    http://www.scfhp.com/plans/HealthyKids/default.aspx

    That’s the same program that the County asked San Jose to continue funding to the tune of $2 million a year.

    http://www.sanjoseinside.com/news/entries/2_15_13_mayor_reed_ken_yeager_healthy_kids/

    It’s probably a wonderful program, but how can these people justify diverting $250,000 from children to political campaigns?

    The Santa Clara Family Health Foundation board includes Nora Campos, Cindy Chavez, Judy Chirco and Susie Wilson.  People that should know about FPPC regulations.

  5. Ms. King obviously does not understand the transparency San Jose residents expect of their city government and non-profit organizations receiving city funds.

    We need a new rule in San Jose that any non-profit organization receiving funds from the city of San Jose must have a demonstrated commitment to transparency by posting their form 990’s and board meeting minutes on the organization’s web site.  The organization must agree to continue this policy for one year after receiving city funds.

    Could Mr. Wall make this happen in the Rules Committee?

  6. They’ve got us in a circle and made jerks of us all.

    Consider: Charitable soul donates $1000 to the VMC foundation, resulting in $1000 in usable capital for the foundation and a 35% tax break for the donor ($350 less to the tax man). VMC foundation sends $1000 to “Yes on A” committee which uses this money ($650 from donor, $350 from tax man) to convince voters to increase the sales tax (on themselves). At year’s end the federal government checks its books, reports the tax man must do better, raises income tax.

    The SOB’s have figured out a way to get taxpayers to unknowingly finance a campaign to dupe themselves into paying more taxes by way of a process that will ultimately result in even more taxes.

    If only these crooks could be so efficient at governance.

  7. The Santa Clara Family Health Foundation seems to have a similar relationship with the Santa Clara Family Health Authority, a government agency.

    Consider the Santa Clara Family Health Foundation’s 2011 Form 990 filing:

    http://www.healthyfamilyfund.org/sites/default/files/IRS Form 990-FYE 2012-Public.pdf

    Elizabeth Darrow, a board member, received $277,054, in “Reportable Compensation from related organizations”.  In Schedule R, Part V, it reported that the Santa Clara County Health Authority paid $335,681 in total wages.  The transaction type was: “Sharing of paid employees with related organization(s)”

    The Santa Clara Health Authority is a public agency established by the County Board of Supervisors on August 1, 1995.  Its main office is the same address that the Santa Clara Family Health Foundation listed as its address in its 2011 990 filing. 210 E. Hacienda Ave., Campbell, CA.

    http://www.scfhp.com/about/board.aspx

    So once again there is a reason to believe that public facilities and public employees were engaged in illegal political lobbying.

    Given that we’re talking about more than $539,000 between the two nonprofits and their government counterparts, it doesn’t seem to be a small matter.

    Thank you SanJoseInside.com for exposing these relationships!

  8. In the VMC Foundation’s 2011 Form 990 filing, Schedule O, Supplemental Information:

    FORM 990, Part VI, Section B, Line 15.  “THE ORGANIZATION MAKES ITS GOVERNING DOCUMENTS, CONFLICT OF INTEREST POLICY, FINANCIAL STATEMENTS AND FORM 990 AVAILABLE TO THE PUBLIC UPON REQUEST”

    The VMC Foundation claims that it makes its governing documents available to the public upon request in its Form 990 filing, but apparently that isn’t the case.

    http://207.153.189.83/EINS/770187890/770187890_2011_08cea005.PDF

    In the Santa Clara Family Health Foundation’s Form 990 filing, Schedule O, Supplemental Information:

    FORM 990, PART VI, SECTION C, LINE 19: THE ORGANIZATION POSTS ITS IRS FORM 990 AND AUDITED FINANCIAL STATEMENTS ON GUIDESTAR.ORG. THE ORGANIZATION DISTRIBUTES ITS IRS FORM 990 TO FUNDERS AND ANY OTHER ENTITIES OR INDIVIDUALS WHO REQUEST IT. IT ALSO DISTRIBUTES ITS AUDITED FINANCIAL STATEMENTS AND GOVERNING DOCUMENTS TO ITS BOARD OF DIRECTORS AND FUNDERS. WHEN REQUESTED, THE ORGANIZATION DISTRIBUTES ITS CONFLICT OF INTEREST STATEMENTS TO ENTITIES AND/OR INDIVIDUALS

    So if they make governing documents available to “Funders”, SanJoseInside can get board minutes from any of the Santa Clara Family Health Foundation’s government funders via public records requests.  Your list of funders include The Health Trust as well as the cities of Cupertino, Sunnyvale, Santa Clara or San Jose.

    http://www.healthyfamilyfund.org/sites/default/files/IRS Form 990-FYE 2012-Public.pdf

  9. But in a YouTube video published Jan. 13 of this year, newly installed SBLC CEO Ben Field talks with Steve Preminger, chair of the Democratic Central Committee. In the video, replete with a very ’80s Night Court intro theme song, Field goes on record about Measures A and other initiatives, saying:

    “The field campaign was run to a large extent by the Labor Council.”

    You missed the most damaging quote at 20:05 when Ben Field says:

    “The Labor Council really ran the campaigns for Measure A, Measure B, Measure D, and a number of candidate campaigns.”