Nonprofit regulations are intended to ensure that nonprofit organizations exist for the public benefit, and not for the enrichment of its creators.
But when Richard Berman creates nonprofit organizations with a dubious purpose, and diverts tax exempt donations into his own coffers, he circumvents the accountability that’s meant to protect the public from fraud and abuse.
That’s why Marcus Owens, former director of the IRS Exempt Organizations Division, says that Berman’s evasive scheme “clearly, in my view, is operating for his private benefit and for the private benefit of his clients… [That’s] a clear violation of the requirements for tax-exempt status.”
We tallied the payments to Berman and his for-profit PR firm from six of the nonprofit front groups he has created: the Center for Consumer Freedom (CCF), Center for Union Facts (CUF), Employment Policies Institute Foundation (EPI), American Beverage Institute (ABI), Employee Freedom Action Committee (EFAC), and the Humane Society for Shelter Pets (HSSP).
The results are shocking.
Payments to Richard Berman or Berman and Company, Inc.
| Year | CCF | CUF | EPI | ABI | EFAC | HSSP | Total |
|---|---|---|---|---|---|---|---|
| 2011 | $1,307,534.00 | $886,769.00 | $1,178,459.00 | $1,353,364.00 | $74.00 | $765,483.00 | $5,491,683.00 |
| 2010 | $1,707,511.00 | $587,334.00 | $1,658,383.00 | $1,395,519.00 | $268,873.00 | $0.00 | $5,617,620.00 |
| 2009 | $1,479,597.00 | $596,351.00 | $1,843,254.00 | $1,296,185.00 | $440,765.00 | — | $5,656,152.00 |
| 2008 | $1,061,604.00 | $784,602.00 | $523,910.00 | $1,292,850.00 | $897,496.00 | — | $4,560,462.00 |
| 2007 | $1,580,280.00 | $844,535.00 | $912,437.00 | $1,304,960.00 | — | — | $4,642,212.00 |
| 2006 | $1,208,512.00 | $283,016.00 | $1,020,547.00 | $1,220,079.00 | — | — | $3,732,154.00 |
| 2005 | $1,641,186.00 | — | — | — | — | — | $1,641,186.00 |
| 2004 | $1,453,056.00 | — | — | — | — | — | $1,453,056.00 |
| 2003 | $1,261,344.00 | — | — | — | — | — | $1,261,344.00 |
| 2002 | $1,044,553.00 | — | — | — | — | — | $1,044,553.00 |
| TOTAL | $13,745,177.00 | $3,982,607.00 | $7,136,990.00 | $7,862,957.00 | $1,607,208.00 | $765,483.00 | $35,100,422.00 |
Since 2002, Rick Berman has diverted over $35 million in supposedly nonprofit donations into his personal and corporate bank accounts. In some years, as much as 93% of an organization’s revenue has been funneled into personal gain.
Berman has not yet been held accountable for his abuse of nonprofit tax code. It’s a sad indictment of the Internal Revenue Service, its inability enforce its own regulations fairly and consistently, and its unwillingness to protect consumers.
To the see the raw numbers we used, consult the Form 990 tax returns for Berman’s organizations. These forms are gathered for your convenience in our Document Library, or you may obtain them from independent charity evaluators like Guidestar.org.
The relevant figures used in this table are:
- Gross Receipts: Line G
- Berman’s token salary: Part VII, Section A
- Funds diverted to Berman and Company, Inc.: Part VII, Section B (Independent Contractors)
- Grants to Berman-run organizations: Schedule I
Further reading
- Bloomberg: Non-Profit May Breach IRS Regulations
- ABC News: Lobbyists Hide Behind Nonprofit Fronts
- CREW: Consumer Deception
- Mother Jones: Donor Advisory Group Flags Berman Nonprofits
- NBC News: Pulling Back the Curtain to Reveal Who’s Attacking the HSUS
- NY Times: Nonprofit Advocate Carves Out Unusual For-Profit Niche
- Guidestar: The Private Inurement Prohibition
- Internal Revenue Service: Inurement/Private Benefit
