Republican chair investigating Chamber of Commerce in seismic K Street shift

Republican chair investigating Chamber of Commerce in seismic K Street shift

A decade ago, a Republican committee chair investigating Washington’s biggest business advocacy organization would have been unthinkable.

But times have changed.

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

In a letter last Monday to Chamber president and CEO Suzanne Clark and foundation President Carolyn Cawley, Smith said that 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 chair investigating the Chamber and its foundation is a major shift from the historically close alignment between the group and Republicans. The probe also comes as the Chamber gears up for a massive lobbying blitz around the expiration of former President Trump’s 2017 tax cuts, a fight in which Smith and Ways and Means Republicans will have heavy influence.

If Republicans hold the House, Smith is expected to retain the Ways and Means gavel and run the House committee charged with tax policy. A sour relationship with Smith could compromise the Chamber’s ability to sway the 2025 tax fight and other priorities that fall before the panel.

The inquiry also represents a new phase in well-reported tensions that erupted after the 2020 election between the Chamber and an increasingly populist Republican Party, some members of which were unhappy with the Chamber’s efforts to improve its relationships with Democrats.

The Chamber and the foundation say the probe is based on a misunderstanding. Eric Eversole, president of the foundation’s Hiring Our Heroes program, told The Hill the funds the foundation received “were charitable contributions from corporations made to the donor advised fund,” a charitable giving vehicle that makes it virtually impossible to trace the ultimate source of the funds.

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

But Smith made clear he was not satisfied with the initial response.

“The mission statement for the Chamber is pretty obvious: to help American businesses,” he said. “Getting $12 million from Tides and then trying to say it’s really not from Tides, it’s from someone else, that makes me want to look harder.”

Smith set a Monday deadline for the Chamber’s response to the inquiry. 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’ll want to disclose all their funding.”

When The Hill asked the Chamber if it would disclose the ultimate source of Tides grants, however, they pushed back.

“There’s a pretty strong left-center-right consensus about the importance of First Amendment freedom of associational rights and not being required to disclose,” Neil Bradley, executive vice president and chief policy officer at the Chamber, told The Hill.

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

The Ways and Means Committee marked up a bill Wednesday focused on transparency into foreign funding of tax-exempt organizations, which included a provision that would prevent the federal government from collecting or requiring “the submission of information on the identification to a tax-exempt organization.”

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

How the Chamber came into the committee’s crosshairs

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

Smith told The Hill that the Chamber inquiry stemmed from responses to an August request for information on whether tax-exempt nonprofits are “operating in a manner consistent with the laws and regulations that govern such organizations.”

“We’ve been looking at 501(c)’s all over the board, from antisemitism to not-for-profits not following their voluntary care that they’re supposed to, and then also, of whether not-for-profits are following their mission statement,” Smith said.

In the past few months, the committee threatened to reconsider the tax-exempt status of Harvard University, the Massachusetts Institute of Technology, the University of Pennsylvania and Cornell University amid allegations the schools failed to crack down on antisemitism on their campuses. The committee also approved a bill in December that would revoke the tax-exempt status of American entities supporting terrorist organizations.

The panel also took up 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 foreign nationals and barring such nonprofits from donating to political committees, including super PACs.

Elevating the oversight agenda of the Ways and Means Committee was part of the pitch Smith made to the Republican Steering Committee when he ran for the chair, a source close to him told The Hill. The Chamber, however, stands apart from the panel’s other targets, which are more traditionally aligned with Democrats or liberal causes.

Founded in 1912, the Chamber was for decades the leading voice for big business in Washington. The Chamber’s board of directors includes executives from Deloitte, Microsoft, Meta, Ford, Fidelity, Pfizer, Shell and other household names, as well as some midsize companies. The Chamber reported spending more money than any other organization or business on federal lobbying last year, shelling out $70 million, 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 carries 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 getting in return for the U.S. Chamber of Commerce Foundation’s 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 opportunities, training and resources.

Since Hiring Our Heroes launched in 2011, the Chamber says 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 offers and promotions as a result of those certificates.

In 2022, the foundation reported $14.3 million in expenses for the program, including $2 million in grants, according to its most recent Form 990. The foundation is not required to publicly disclose its donors, but on its most recent Form 990, Tides reported giving a $175,882 grant to the foundation in 2022 for “equity, human rights and economic empowerment.”

From 2018-22, 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 “project support” in 2019, $100,000 for “equality, human rights, and economic empowerment” in 2020 and $10 million for “quality education” in 2021.

The Tides contributions to the foundation caught the eye of the committee because the left-leaning nonprofit has previously received money from Open Society Foundations, the nonprofit founded by the billionaire Democratic mega-donor George Soros, a frequent target of antisemitic conspiracy theories and the political right.

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

But the Chamber pushed back on the Breitbart report and Smith’s inquiry, saying Tides was just a vehicle for funds from corporate donors, not the donor itself.

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

Tracking the flow of money through donor-advised funds is akin to tracing its path through a washing machine. It is virtually impossible to follow the money that flows from start to finish with publicly available information: an individual donor into a massive donor-advised fund such as Tides, which ultimately distributes the money in the form of a grant to groups like the Chamber.

Tides took in almost $574 million and distributed $667 million in grants in 2022, according to its most recent Form 990. Open Society Foundations reported giving Tides around $1.4 million in 2022, according to its most recent Form 990, which detailed grants for specific programs unrelated to the Chamber, its foundation or Hiring Our Heroes.

Even if the committee confirms the funds did not originate with Open Society Foundations or even another left-leaning individual or organization, it might not be enough to assuage Smith’s scrutiny.

The Chamber’s “priorities seem misaligned,” said one of the people close to the investigation, who noted that while the committee is “not saying there’s necessarily a correlation there,” the funding source “certainly raises to the level of asking questions.”

But the Chamber stands by its work, and struck a positive tone for its future.

“The Chamber will respond to Chairman Smith and talk with all of our allies about how Breitbart got it wrong, the important work of Hiring Our Heroes, and the many shared priorities we have including preserving competitive tax policy that raises wages and incomes for Americans,” Bradley said.

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