IRS Complaint Filed Against Jeb Bush's Ed Reform Foundation

| Tue Oct. 15, 2013 3:05 PM PDT
Former Florida Gov. Jeb Bush speaking at CPAC 2013

Jeb Bush has long been on the short-list of potential Republican presidential candidates. He was a popular Spanish-speaking governor of a big swing state, Florida, and since leaving office he has focused on education reform through his Foundation for Excellence in Education (FEE). The foundation has provided a platform for working on a bipartisan public policy front—and access to potential donors among big companies (including those owned by Fox News Corp.'s Rupert Murdoch) trying to privatize public schools and tap into billions of tax dollars. (See this Mother Jones story for a closer look at the way Bush has used his foundation to break down barriers to the growth of troubled online charter schools.)

This week, as Bush is back in the limelight in Boston kicking off his foundation's annual education reform summit, a New Mexico advocacy group, ProgressNowNM, has filed a complaint with the IRS alleging that Bush's foundation has failed to publicly disclose on its 990 tax forms thousands of dollars it paid to bring public school superintendents, education officials and lawmakers to foundation events where they had private "VIP" meetings with the foundation's for-profit sponsors. Nonprofits are required to disclose payments for public officials' travel and entertainment if it exceeds $1,000. Public records unearthed by the New Mexico group show payments for travel exceeding that amount for several state education officials whose travel wasn't reported on FEE's 990 form.

The complaint alleges that Bush's foundation disguised travel payments for officials as "scholarships" to hide the fact that the nonprofit was basically facilitating lobbying between big corporations and public officials who control local tax dollars. The complaint notes:

The unorthodox manner of these scholarships—and the fact that they are used as a vehicle to meet with for-profit education corporations—further raises suspicions around the Foundation's failure to properly disclose payment of travel expenses in 2010 and 2011. Additionally, it is possible these unreported payments to the government officials may be deemed to provide a private inurement in violation of IRS regulations.

In its complaint, ProgressNowNM notes that New Mexico’s education secretary Hanna Skandera received foundation funds to travel to Washington, DC, to testify before a US House committee on the expansion of "virtual" education in her state. Skandera asked House members to consider providing more flexibility in federal funding to pay for virtual schools. Some of the for-profit providers of those virtual schools—among them the troubled K-12 Inc.—in New Mexico are also donors to FEE. Using tax-exempt funds to subsidize congressional testimony, ProgressNowNM says, is an "apparent violation" of IRS regulations. 

“This tax-exempt organization is serving as a dating service for corporations selling educational products—including virtual schools—to school chiefs responsible for making policies and cutting the checks,” ProgressNowNM's Patrick Davis says in a statement. “Just like [the American Legislative Exchange Council] brought together gun manufacturers with legislators to pass ‘stand your ground’ laws, FEE is using it’s tax-exempt status to hide thousands of dollars it’s using to connect big private education businesses to government policy makers."

FEE did not respond to a request for comment.

*UPDATE: Jaryn Emhof, communications director for the Foundation for Excellence in Education, released a statement Tuesday night responding to the IRS complaint. She said, "It’s not surprising that Progress Now New Mexico, a partisan organization that has a history of opposing education reforms that put students first, would attack efforts to improve the quality of education for children across America...We fully comply with IRS rules when providing policy research and expertise and will continue to do so. This is nothing more than a politically motivated complaint by opponents of education reform."

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