Republican Chairman Investigates Chamber of Commerce in Seismic K Street Shift

Ten years ago, a Republican committee chairman investigating Washington's largest business advocacy organization would have been unthinkable.

But times have changed.

House Ways and Means Committee Chairman Jason Smith (R-Mo.) has demanded that the U.S. Chamber of Commerce answer questions about the more than $12 million the Chamber of Commerce Foundation received from the Tides Foundation between 2018 and 2022 , a left-wing nonprofit. .

In a letter from last Monday Speaking to Chamber President and CEO Suzanne Clark and foundation President Carolyn Cawley, Smith said the Tides grants appear to conflict with the Chamber's mission to support American businesses and raise questions about the groups' tax-exempt status.

A GOP chairman examining the House and its foundations is a significant shift from the group's historically close alignment with Republicans. The investigation also comes as the House prepares for a massive lobbying blitz surrounding the expiration of former President Trump's 2017 tax cuts, a battle in which Smith and Ways and Means Republicans will have major influence.

If Republicans gain control of the House of Representatives, Smith is expected to retain the House speaker's gavel and lead the House committee responsible for tax policy. A sour relationship with Smith could jeopardize the House's ability to pass the 2025 tax fight and other priorities before the panel.

The research also represents a new phase well reported tensions that erupted after the 2020 elections between the House and an increasingly populist Republican Party, some members of which were dissatisfied with the House's efforts to improve its relations with Democrats.

The Chamber and the foundation say that the investigation is based on a misunderstanding. Eric Eversole, chair of the foundation's Hiring Our Heroes program, told The Hill that the funds the foundation received were “charitable contributions from corporations to the donor-advised fund,” a charitable fund that makes it virtually impossible to identify the ultimate source of the donation. funds.

A spokesperson for Tides told The Hill that Smith's investigation is “a politically motivated public relations tactic during an election year, driven by actors who disagree with the social justice work of Tides and our partner organizations.”

But Smith made it clear he wasn't satisfied with the first answer.

“The chamber's mission is pretty clear: to help American businesses,” he said. “Getting $12 million from Tides and then trying to say it really isn't from Tides, it's from someone else, that makes me want to look harder.”

Smith set a deadline Monday for the House's response to the investigation. When asked if he would be satisfied if the foundation did not disclose the ultimate source of the funds it received through Tides, Smith said: “They will want to make all their funding public.”

However, when The Hill asked the House if it would reveal the ultimate source of Tides funding, they pushed back.

“There is a pretty strong left-center-right consensus on the importance of First Amendment freedom of association rights and the obligation to make this public,” Neil Bradley, executive vice president and chief policy officer at the Chamber, told TheHill.

In recent years, the Supreme Court has upheld the privacy of donors to tax-exempt organizations, striking down a California law that requires nonprofits to disclose their donors by 2021.

The Ways and Means Committee on Wednesday advanced a bill aimed at transparency in the foreign financing of tax-exempt organizations, which includes a provision that would prevent the federal government from “submitting identification information to a tax-exempt organization to collect or demand'. .”

While Smith acknowledged that the House “can do whatever they want,” he said, “we can also act accordingly.”

How the House ended up in the committee's crosshairs

The investigation has been in the works for two to three months, two sources close to the investigation told The Hill.

Smith told The Hill that the House investigation stemmed from responses to an August letter request for information on whether tax-exempt nonprofits “operate in a manner consistent with the laws and regulations governing such organizations.”

“We looked at 501(c)s across the board, from anti-Semitism to nonprofits not following their voluntary care as they should, and then also whether nonprofits are. in pursuit of their mission,” Smith said.

In recent months, the committee threatened to reconsider the tax exemption of Harvard University, the Massachusetts Institute of Technology, the University of Pennsylvania and Cornell University, amid accusations that the schools had failed to address anti-Semitism on their campuses. The committee too a bill passed in December, that would revoke the tax exemption of U.S. entities that support terrorist organizations.

The panel too confiscated four bills this week, that would crack down on foreign money flowing into U.S. elections, such as requiring tax-exempt organizations to disclose contributions from foreigners and banning such nonprofits from donating to political committees, including super PACs.

Elevating the Ways and Means Committee's oversight agenda was part of the pitch Smith made to the Republican Steering Committee when he ran for chairman, a source close to him told The Hill. However, the House is separate from the panel's other goals, which more traditionally align with Democratic or liberal goals.

Founded in 1912, the Chamber was the leading voice for big business in Washington for decades. That of the Chamber Board of Directors includes executives from Deloitte, Microsoft, Meta, Ford, Fidelity, Pfizer, Shell and other household names, as well as some mid-market companies. The House reported that it spent more money last year than any other organization or corporation on federal lobbying $70 millionThat's more than $17 million more than the National Association of Realtors, the second-largest spender, and more than twice the third-largest spender, the American Hospital Association, according to the money-in-politics research group OpenSecrets.

The Chamber has a 501(c)(6) tax status, reserved for membership organizations, including business associations and professional football leagues, while the foundation operates as a 501(c)(3) for the purpose of serving the public.

Smith said he wants to know how the organizations used Tides funds, their reasons for accepting the funds and what “taxpayers get in return for the U.S. Chamber of Commerce tax-exempt status.”

Both Tides and the Chamber say the primary purpose of the grant was to support the foundation's Hiring Our Heroes program, which connects the military community with employment, training and resources.

Since Hiring Our Heroes launched in 2011, the program has provided free training to more than 9,000 service members, issued more than 5,000 certificates and reported nearly 2,400 positive job outcomes, including job openings and promotions as a result of those certificates, according to the Chamber.

In 2022, the foundation reported $14.3 million in expenditures for the program, including $2 million in grants, according to its most recent report. Form 990. The foundation is not obliged to make its donors public, but it is obliged to disclose the most recent ones Form 990Tides reported making a $175,882 grant to the foundation in 2022 for “equality, human rights and economic empowerment.”

From 2018 to 2022, Tides' contributions to the foundation totaled more than $12 million. In addition to the 2022 grant, Tides reported sending the foundation $450,000 for “economic development” in 2018, $1.5 million for it “project support” in 2019, $100,000 for “equality, human rights and economic empowerment” in 2020 and 10 million dollars for it 'quality education' in 2021.

Tides' contributions to the foundation caught the committee's attention because the left-wing nonprofit has previously received money from Open Society Foundations, the nonprofit founded by billionaire Democratic megadonor George Soros, a frequent target of anti-Semitic conspiracy theories and the political discussion. right.

The right-wing newspaper Breitbart News, which first reported on the Tides subsidies to the House, argued that the contributions from a “Soros-funded organization” were evidence that the House has “turned hard to the left in recent years.”

But the House pushed back on the Breitbart report and Smith's investigation, saying Tides was merely a vehicle for funds from corporate donors, not the donor itself.

“Chairman Smith has asked a series of questions based on an article published by Breitbart that was factually incorrect, and we appreciate the opportunity to set the record straight on this false and misleading article,” Bradley said.

Tracking the flow of money through donor-advised funds is akin to tracing the path through a washing machine. It's virtually impossible to track the money flowing from start to finish with publicly available information: an individual donor in a massive donor-advised fund like Tides, which ultimately distributes the money in the form of a grant to groups like the Room.

According to the most recent report, Tides received nearly $574 million in 2022 and distributed $667 million in grants. Form 990. Open Society Foundations reported that Tides gave approximately $1.4 million in 2022, according to its most recent Form 990, which details grants for specific programs not related to the Chamber, its foundation or the hiring of our heroes.

Even if the committee confirms that the funds did not come from Open Society Foundations or even any other left-wing person or organization, this may not be enough to assuage Smith's criticism.

The House's “priorities do not appear to be aligned,” said one of the people close to the investigation, who noted that while the committee “is not saying there is necessarily a link,” the funding source “certainly raises the level of asking questions.”

But the Chamber remains committed to its work and has set a positive tone for its future.

“The House will respond to Chairman Smith and talk to all our allies about how Breitbart got it wrong, the important work of Hiring Our Heroes, and the many shared priorities we have, including maintaining competitive tax policies that support wages and increases incomes for Americans. Bradley said.

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