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Monday, 16 January 2017 13:37
Cantrell's New Orleans organizational cronyism takes slight hit, for now
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cantrellDefending a fast-and-easy system that permits transfer of taxpayer wealth to questionable organizations seems the first order of business in the nascent mayoral campaign of New Orleans City Councilor LaToya Cantrell

At a recent City Council committee meeting, City Councilor Stacy Head made the reasonable suggestion that the city charge discounted rates to organizations claiming nonprofit status for city involvement with special events. Until now, the chronically cash-strapped city has waived all such fees, and still would waive it in some cases under the new fee structure.

 That notion generated little controversy, but sparked heated argument when it came to what qualified groups as nonprofits. Head wanted to count groups only with Internal Revenue Service charitable status. Until recently, this procedure, which costs $400 to obtain, required a detailed application, typically dozens of pages long, spelling out clearly the governance structure, decision-making rules, and purposes to which donated funds would go. 

However, last year the IRS began allowing groups with under $50,000 in gross receipts and $250,000 in assets to file a much simpler form, just three pages in length, asking many of the same questions as the longer form but requiring less detail. Once with this status, a group must file reports annually to retain tax-exemption: a simple form for those with a small amount of assets and activity, a more complex one for others. 

Cantrell took umbrage at this standard, saying that filing with the Louisiana Secretary of State should suffice. That entails filling a simple three-page for and paying $75, with annual reports the size of a postcard. She claimed filing for genuine 501(c)(3) status would prove too burdensome for organizations she alleged acted as charities. 

But the problem with that approach is this allows a number of organizations to hold themselves out as charitable in nature yet which behave in ways that hardly seem to transfer almost all of their receipts into serving the public. This becomes especially problematic when it’s taxpayer resources being transferred. Perhaps the most notorious recent example involved state Sen. Yvonne Dorsey Colomb, whose husband’s group, that so disregarded reporting requirements that the IRS yanked its 501(c)(3) status, over a decade took a million dollars from the state and Baton Rouge while spending almost all of that on personnel and buildings. 

That stands as proof even organizations that obtain temporary IRS tax-exemption status can abuse the system, so obviously the potential magnifies dramatically for groups that do not have it. If taxpayers make an in-kind donation to organizations, as the current New Orleans policy permits, at least the system can attempt to minimize the possibility that taxpayer resources go to subsidizing practices that largely do not enrich the public good. 

Yet Cantrell would have none of that, probably because of her positioning to run for mayor next year. By championing lightly-supervised groups – her background prior to election focused on working for and with such groups – she can draw upon their support for her future political endeavors. 

Fortunately, the council committee reviewing the ordinance rebuffed Cantrell’s objections and likely the entire Council will pass the measure with the stronger standard. Still, the incident provides a hint at the direction a city lead by Cantrell would go, and it’s not one that would move New Orleans away from a reputation for putting cronyism ahead of doing right by taxpayers and working for all citizens.


Jeffrey Sadow

Jeffrey Sadow is an associate professor of political science at Louisiana State University in Shreveport.   He writes a daily conservative blog called Between The Lines

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