Donors

Clinton Foundation in campaign tailspin

Donors are having second thoughts about big giving as accusations fly about Hillary Clinton’s role.

By Kenneth P. Vogel

A handful of deep-pocketed donors are reconsidering their gifts to the $2 billion Clinton Foundation amid mounting questions about how it’s spending their money and suggestions of influence peddling, according to donors and others familiar with the foundation’s fundraising.

One major donor who contributed at least $500,000 to the foundation last year said a 2015 donation is less likely because of revelations about sloppy record-keeping and huge payments for travel and administrative costs.

“There are a lot of factors and the reputational is among them,” said the donor, who did not want to be identified discussing philanthropic plans that have not been finalized. “We had some questions about how the money was being spent — and that was long before the problems were in the press.”

At least three other major donors also are re-evaluating whether to continue giving large donations to the Bill, Hillary & Chelsea Clinton Foundation, according to people familiar with its fundraising.

They say increasing financial pressures and escalating outside scrutiny have sparked sometimes intense internal debates about the priorities and future of a pioneering charitable vehicle that was supposed to cement the family’s legacy.

The uncertainty comes at the beginning of what was supposed to have been a four-month victory lap of sorts — starting with Bill and Chelsea Clinton’s trip to Africa with major donors this week. Next week’s splashy Clinton Global Initiative conference in Marrakesh was originally supposed to have been followed by a lavish reception and conference in Athens in June, and finally a September extravaganza in Manhattan featuring an appearance by Elton John.

Instead, it’s turned into heartburn for Hillary Clinton’s campaign for the Democratic presidential nomination and for the foundation, which has been under increasing pressure to distance itself from its more controversial partners.

It scrapped early internal conversations about borrowing a private plane owned by Canadian billionaire donor Frank Giustra — whose business ties to Russia have brought recent scrutiny — to fly the delegation to Africa, according to sources with knowledge of the foundation’s planning (the foundation would not say who owns the plane that was ultimately used, which suffered engine problems Wednesday and was forced to make an unscheduled landing).

And it canceled the Athens conference amid what foundation sources describe as concerns about damaging Hillary Clinton’s campaign by collaborating with a Greek government that is increasingly close to Russia’s combative president Vladimir Putin.

Bill Clinton did not want to cancel the meeting, the sources said. They said the foundation had already booked a hotel and secured more than $1 million in funding from former Greek parliamentarian Gianna Angelopoulos, a major foundation donor who is friendly with the former president.

Meanwhile, the Clintons’ daughter, Chelsea Clinton, objected to a suggestion that a high-profile program she spearheads, the Clinton Global Initiative University, be scaled back because it is as much as $700,000 in the red, say the sources. At a foundation staff meeting this month the day after her mother stepped down from the foundation board and announced her campaign for president, Chelsea Clinton defended CGI U’s value, calling the program, which holds free college events to encourage student participation in service projects, the most “pure” platform at CGI, according to the foundation sources familiar with the meeting.

This story is based on interviews with more than a dozen donors, staffers and operatives who have interacted with the foundation or continue to do so. Taken together, their accounts portray an organization scrambling to address concerns about its budgeting, fundraising and donor-vetting while being buffeted by a raging political storm.

The paradox is that Bill Clinton’s unparalleled fundraising ability — the secret to the foundation’s extraordinary global growth and programmatic successes — is now fueling the very questions and allegations complicating both the foundation’s efforts and his wife’s presidential campaign. Critics — emboldened by frenzied media scrutiny of the Clinton’s personal and charitable finances and a new book on the subject from a conservative author — are alleging without hard evidence that deep-pocketed individuals, companies and foreign governments wrote checks to the foundation or paid speaking fees to the former president to win favorable treatment from Hillary Clinton’s State Department.

Some Clinton allies argue that the former president should dial back his foundation role — even his appearances at CGI meetings, which he has embraced as his signature showcase — during the presidential campaign and any subsequent Clinton presidential administration.

“You can only imagine the scrutiny they’d face if she were president,” said a former Clinton aide, who was not authorized to speak for the foundation or the former first family. “They’d have to dramatically limit their universe of donors. But if she wins, that’s kind of a high-cost problem that they can survive,” said the former aide, suggesting the foundation’s appeal would be even greater for donors after the Clintons leave the White House for the second time.

The worst case scenario for the foundation, its allies say privately, would be if Clinton lost her presidential campaign in a manner similar to the way she lost her 2008 race to then-Sen. Barack Obama, which at least temporarily tarnished the family’s political brand. Unlike 2008, a losing 2016 campaign would effectively end the political ambitions of Bill or Hillary Clinton. That would thrust responsibility for the foundation’s future squarely into the hands of their daughter. While she is being groomed to take over the family’s political dynasty, thus far she has not demonstrated her parents’ fundraising prowess or leadership ability, say foundation sources.

In response to questions from POLITICO, Clinton Foundation officials disputed that the foundation is in turmoil or suffering from a budget crunch. They also rejected suggestions that Bill Clinton might limit his CGI role after the September meeting, pointing out he “has publicly said many times he wants to continue his work with CGI and the Clinton Foundation.” They pointed out that Elton John was invited to the New York meeting not to perform, but to collect an award for his two decades of work fighting AIDS.

Additionally, they rejected the idea that concerns about the Greek government played any role in the cancellation of CGI Athens, and said CGI U will continue at college campuses across the country. It “has never been an event designed to generate profit,” they said. “We don’t charge admission fees for students, and sponsors underwrite the ability for over 1,000 students from all 50 states and around the world to attend,” they said, explaining that “through the CGI University Network, the Resolution Project Social Venture Challenge, and other opportunities, more than $900,000 in funding opportunities were made available directly to select CGI U 2015 student commitment makers to help them turn their ideas into action.”

The foundation has combined Bill Clinton’s star power with its unique structure to bring moneyed interests together to finance major advances in causes such as the fights against AIDS and childhood obesity, for which it brokered agreements to decrease prices for HIV medication and remove sugary drinks from schools, respectively. The Africa trip — which includes stops in Tanzania, Kenya, Liberia and Morocco — will highlight foundation work on economic development, climate change, and empowerment of women and girls.

Yet, results have been mixed in the foundation’s efforts to increase its transparency and pave the way for its future work.

The foundation raised a $250 million endowment to sustain it during Hillary Clinton’s campaign and a possible second Clinton presidency, and it has promised to release donor names more frequently during the presidential campaign. Additionally, it pledged to stop taking donations from most foreign countries and suspend CGI meetings abroad after next week’s meeting in Marrakesh with King Mohammed VI of Morocco, marking the end of the Africa trip. As POLITICO revealed, the Marrakesh event is to be funded partly by a donation of more than $1 million from a Moroccan government-owned phosphate company — a donation that has drawn fire from critics who contend that Moroccan phosphate extraction in the adjacent disputed territory of Western Sahara amounts to exploitation.

The foundation has also come under scrutiny for failing to clear all foreign government donations through an agreed-upon State Department vetting process when Hillary Clinton was secretary of state, and for failing to identify foreign government donations on tax returns. Fact-checkers this week challenged the foundation’s claims that it’s barred by Canadian privacy laws from revealing the names of more than 1,000 mostly foreign donors to a joint Clinton-Giustra nonprofit registered in Vancouver, British Columbia.

It acknowledged in response to POLITICO’s questions that it mischaracterized as foundation donations money from the China Overseas Real Estate Development and the U.S.-Islamic World Conference. That money was actually honoraria paid for Bill Clinton speeches by those entities, said foundation officials, who added this week those were the only mistakes “we are aware of.”

When Chelsea Clinton was asked last week about allegations that the foundation accepted funding in return for favors from the State Department when her mother headed it, she erroneously claimed that the watchdog group Transparency International said “we’re among the most transparent of foundations.” Transparency International this week issued a rebuke to Clinton, in which it noted that it has not “focused on the transparency of nonprofit charitable foundations, including by any ranking.”

Sources familiar with the foundation’s inner workings worry that it has failed to rein in program costs or substantively expand fundraising to support its sprawling initiatives, which include everything from fighting elephant poaching to measuring female political participation.

One major philanthropy player, Apple, was courted for months by the foundation and agreed to sign up as a CGI member (which typically costs $20,000). But it has not donated more significantly, as the foundation had hoped, say sources familiar with fundraising.

“Too much money is being asked for at the same time, especially right after the endowment was just raised, and access to the Clintons is getting more limited,” said a source familiar with fundraising and budgeting. “Do less, but twice as well is not something that goes over well at CGI.”

Andrew Tobias, a longtime Clinton ally who has given between $250,000 and $500,000, said that far from being defensive over the former president’s foundation work, he thinks the campaign should tout it as a strength.

“It’s AMAZING what he’s done since leaving office,” Tobias, a personal finance author and the treasurer of the Democratic National Committee, wrote in an email. He contrasted the post-administrative efforts of Clinton, as well as fellow Democrats Jimmy Carter and Al Gore — who have worked to eradicate diseases in the developing world and raise awareness about the climate change, respectively — with the post-White House work of recent Republican presidents and vice presidents.

“They’re very nice people, I’m sure, but what, really, have the Bushes and Dan Quayle and Dick Cheney done since leaving office?” asked Tobias, who declared himself “proud to have helped a little bit” at the foundation, and said he was planning to attend the CGI meeting in New York in September. “I’m all paid up and looking forward to it. I’ve been at every one (or all but one) since the first.”

But Clinton loyalists fear that the meeting, which comes as the presidential campaign approaches the first primaries, could be — in the words of the former Clinton aide — “a media whack-fest. … Even donors that seem pretty anodyne — like the Norwegian companies that give because they don’t have their own version of USAID — are going to get a ton of scrutiny if they lobbied the State Department.” Still, the former aide predicted, even if CGI loses some sponsors, others will remain either out of loyalty to the Clintons or a desire to capitalize on the attention. “Because of the platform, where you get to stand up and announce your commitment, you’ll get a bunch of companies that will weigh the pros and cons. And, if they’re cold-blooded, they’ll say, if anything, there will be more cameras there.”

Expected sponsors of the September meeting in New York include the Swedish and Dutch Postcode Lotteries, which have jointly donated more than $31 million to the foundation, and Angelopoulos, the former Greek parliamentarian who has donated as much as $10 million through personal and foundation accounts.

Neither sponsor seems particularly concerned by recent foundation scrutiny. Angelopoulos, the wife of a billionaire shipping and steel magnate, is in talks about how to redirect her generous contribution to the canceled Athens meeting to other programs. And the Swedish and Dutch lotteries, which allocate part of ticket buyers’ purchases to charities including the Clinton Foundation, prominently feature a website endorsement from Bill Clinton and a Chelsea Clinton speech to their 2013 annual gala. The lotteries recently evaluated their foundation partnership and extended it through 2019, according to a spokesman, who praised the foundation’s efforts to fight poverty and climate change, and improve global access to medicine, food security and sustainable agriculture.

Some donors enmeshed in recent foundation controversies are considering attending the New York meeting, including Giustra, a Canadian mining billionaire, and Victor Pinchuk, a Ukrainian oligarch.

Pinchuk’s company Interpipe Group, which makes pipes for oil and gas industries, did business with Iran in 2011 and 2012, according to a Newsweek report. It suggested that company dealings could have posed a conflict for Hillary Clinton as secretary of state because her department oversaw aspects of U.S. sanctions applicable to Interpipe.

Pinchuk’s foundation has donated $8.6 million to the Clinton Foundation and pledged a further $1.5 million or more to Ukrainian projects through CGI. It has sponsored CGI’s annual meetings in past years, though it was not listed as a 2014 sponsor and will again not be among the sponsors this year.

Pinchuk might attend the New York meeting, said a spokesman for his foundation, adding the organization has no plans to end its relationship with the Clinton Foundation.

A source close to Giustra said he hasn’t decided whether to sponsor or attend the New York meeting.

Hillary Clinton, a foundation board member between her tenure as secretary of state and her presidential campaign launch this month, has occasionally participated in CGI meetings. She attended the 2007 annual meeting during her previous presidential campaign, while Obama and his Republican rival, Sen. John McCain, participated in 2008. Foundation sources say it is an election-year tradition to invite both parties’ presidential nominees to address the annual CGI meeting, but they said Hillary Clinton “is not planning to speak” in New York this year.

And don’t expect to see Kentucky Sen. Rand Paul, who is seeking the GOP nomination, at CGI, a spokesman said.

Paul has attacked Clinton over the foreign government donations to the foundation, calling them “thinly veiled bribes.” Asked whether Paul might attend CGI if invited, his campaign spokesman Sergio Gor said, “He isn’t allowed to accept money from foreign governments and wouldn’t really want to pay his own way, so probably not.”