Investigation Request for Nonprofits Linked to George Soros
A conservative watchdog group is urging the Internal Revenue Service (IRS) to examine the tax-exempt status of two nonprofits associated with George Soros, claiming these organizations misuse their tax-free privileges to support leftist initiatives.
The group, Recovering American Freedom (RAF), which focuses on civil and constitutional rights advocacy, lodged a formal complaint with the IRS. They accuse the Private Equity Stakeholder Project (PESP) and its affiliate, Private Equity Stakeholder Action (PESA), of “serious and intentional” violations of federal tax regulations. The RAF asserts that both nonprofits exploit their tax-exempt status primarily to engage in political activities and provide questionable benefits to Democratic candidates.
A spokesperson for RAF stated, “The Private Equity Stakeholder Project has misused its tax-exempt status and intentionally shielded expenditures from public oversight.” They emphasized that the extent of these infractions warrants a thorough IRS investigation, suggesting that if the IRS concurs, the matter should be escalated to the Department of Justice.
Founded in 2017, Chicago-based PESP’s mission revolves around researching and analyzing the influence of financial services firms on various stakeholder communities, including aspects like human rights and environmental impacts, as noted in their IRS filings. Meanwhile, PESA, which is a 501(c)(4) group, describes its goals in its tax documents as working on legislative solutions related to environmental, social, and governance issues involving financial services companies.
Both organizations reportedly receive significant funding from large progressive foundations, including those connected to Soros. They have faced criticism, especially regarding their positions on private equity firms, which some argue harm American businesses.
According to federal law, 501(c)(3) organizations are prohibited from political campaigning. While PESA does keep its political spending under the 50% threshold stipulated for such organizations, the RAF claims that their primary aim from 2020 through 2022 was to engage politically, supporting Democratic causes rather than solely focusing on legitimate social welfare activities.
Specifically, they highlighted political contributions made by PESA, including $10,000 to the Democratic Treasurer Association in 2020 and over $54,000 in 2022 contributions directed at Democratic entities.
Though PESA claims its direct political expenditures are compliant, the RAF’s complaint suggests that its arrangement with PESP raises questions about whether they’re using tax-exempt funds for political purposes, thereby violating IRS regulations.
Moreover, the RAF contends that both organizations have conducted unrelated business activities without paying requisite taxes. Allegations include that both groups generate considerable revenue through consulting and research, possibly indicating taxable commercial activity rather than true nonprofit work.
The RAF also criticizes PESP for allegedly using inflammatory language in its educational content, which they argue contradicts IRS standards for nonprofit organizations. There are claims that PESP has not been transparent in its financial disclosures, thereby evading proper public oversight.
In response to the accusations, Jim Baker, executive director of PESP and PESA, stated they have not encountered any complaints and believe they are fully compliant with tax laws. Baker, however, did not elaborate further after being approached with the complaint.
In addition to its critique of the private equity sector, PESP and its staff have openly condemned Israel during the ongoing conflict with Hamas. They’ve referred to recent violence as “death and hostages” and have labeled Israeli actions as “war crimes against civilians.”
