Aaron Sanderford
LINCOLN — The author of Nebraska’s tax credit program for donors funding scholarships to private K-12 schools says two of the state’s top donor families are improperly using tax-advantaged charities to fight the law.
State Sen. Lou Ann Linehan of Omaha, in a letter to the Nebraska Accountability and Disclosure Commission, accuses the Susie Buffett-chaired Sherwood Foundation of steering “funds from and thru Sherwood and its affiliates and connected organizations for the purpose of influencing politics and government in Nebraska.”
The letter also targets funding from the Weitz Family Foundation. That group is tied to University of Nebraska Regent Barbara Weitz and her daughter, Katie. The foundation donates to several organizations supporting public schools. The Buffetts and Weitzes are also major donors to Democrats in Nebraska.
Linehan, a Republican, wrote that she believes nonprofits are helping donors get around “at least the spirit of Nebraska’s campaign finance disclosure laws if not explicitly violating them.”
“Clearly, the Sherwood Foundation, in fact all of the Buffett family foundations, are working aggressively to impact politics, public policy and legislation in Nebraska…,” Linehan wrote.
Neither foundation immediately returned calls seeking comment.
Law allows issue advocacy
Federal law and Internal Revenue Service regulations allow private foundations such as Sherwood and Weitz to give money to tax-advantaged nonprofits. They also allow those nonprofits to advocate on specific political issues, with some of that money, up to 20% of their annual budget, including ballot measures.
Several lawyers said the letter puzzled them. They said the language used tries to blur the lines between legal definitions involving nonprofits and their tax status. The line that lawyers said could not be crossed, representing political donations, is direct donations to candidates, which the letter does not allege.
“She just said a lot of things that are true, but all those things don’t add up to something illegal,” one Nebraska lawyer said, speaking on the condition that he not be identified.
Linehan’s critics say she is being hypocritical. They say her new law, sought by many local donors to school choice efforts, provides a dollar-for-dollar tax break of up to $25 million annually to fund private school scholarships for needy Nebraskans.
Linehan’s letter identified gifts the Sherwood and Weitz foundations have given to OpenSky Policy Institute ($2.5 million since 2016 from Sherwood and more than $540,000 from Weitz), Stand for Schools ($1.26 million from Sherwood) and the Nebraska Civic Engagement Table ($962,000 from Sherwood and $865,000 from Weitz).
Rebecca Firestone of OpenSky said her group appreciates the NADC’s work on behalf of campaign finance transparency.
Guadalupe Esquivel of the Civic Engagement Table said her group is “well within our rights to lobby” and said it adheres to strict limits.
Dunixi Guereca of Stand for Schools said his group follows the law.
“This is just another attempt to distract from the fact that 117,145 Nebraskans, from every county in this state and across the ideological spectrum, used a mechanism guaranteed to them by the Nebraska Constitution to have their voices heard in November,” Guereca said. He said voters will decide whether to repeal the tax credit law, Legislative Bill 753, during the general election.
Critics say Linehan lacks self-awareness
Several Linehan critics said her letter lacked self-awareness. Her efforts to pass and protect the school choice law are funded by millionaires and billionaires on the right, including former Trump-era Education Secretary Betsy DeVos, the Ricketts family and foundations supporting religious education.
Others pointed to hundreds of thousands of dollars in political donations being sent to organizations such as the American Federation for Children, a group that has employed Linehan’s daughter, Katie, a longtime advocate for school choice.
Much of the $710,000 that a national school choice group sent to Nebraska to spend on legislative races in 2022 came from the family of DeVos and the owner of the National Football League’s Cleveland Browns, Jimmy Haslam.
Linehan said those donors are known because groups like American Federation for Children choose to be strict about how they interpret the law governing nonprofits and how they should participate in politics. That group said it runs its political advocacy under its 501(c)(4) organization, the type of nonprofit that does not offer tax deductions. It runs a separate PAC that gives to candidates and fully discloses donors.
The school choice group also has a tax-advantaged 501(c)(3), the American Federation for Children Growth Fund. That group gave Keep Kids First $391,571 in 2023.
Linehan says she distinguishes between tax-advantaged nonprofits, called 501(c)(3)s, that are supposed to limit their issue advocacy, and nonprofits without the tax advantages for donors, called 501(c)(4)s, that can legally spend more of their money on political action and activism.
Tax-advantaged nonprofits are typically limited to an educational role, public health or advocacy programs for the poor. The 501(c)(4) organizations have more flexibility. They can advocate for specific legislation and policies.
When donors give to groups supporting her Opportunity Scholarship law against the repeal effort, including Keep Kids First, those donations are not tax deductible, she said. When donors give to many of the groups opposing school choice, she said, they get a tax deduction.
Linehan says she wants transparency
She said people should know who is giving what to whom in political advocacy. And she said the IRS and the NADC ought to be clearer about what activities cross the line.
“Hiding who you are is the biggest thing,” Linehan said. “If you want to play on a stage and influence policy, we all should know who is writing the checks. We know when Ricketts is writing a check. We know when Betsy DeVos is writing a check.”
Ricketts and DeVos have also acknowledged donating to dark money groups on other issues. Those groups are not required to disclose their donors.
Linehan’s letter also targeted Bold Alliance, a nonprofit dedicated to environmental activism run by Jane Kleeb, who is also chair of the Nebraska Democratic Party. Kleeb said it makes no sense for conservatives to complain about donations being sent to nonprofit organizations for issue advocacy.
Kleeb pointed to the tax relief and fossil fuel advocacy of the conservative Americans for Prosperity, which describes itself as an educational group and does not disclose its donors. Democrats have fought for years to reveal the donors to AFP-Nebraska.
“She is angry because rich people on the left are doing the same thing rich people on the right have always done,” Kleeb said.
Big money on both sides
Jenni Benson of Support Our Schools Nebraska, one of the nonprofit groups Linehan’s letter mentioned, said Nebraskans are doing the best they can to counter millions of dollars in out-of-state money flowing into political efforts to divert public dollars to fund private schools through “voucher scheme bills.”
“Our public schools are important to Nebraskans and to these Nebraska organizations,” said Jenni Benson, Support Our Schools Nebraska. “We appreciate their support for the effort to keep public funds for public schools.”
The letter also highlighted Sherwood grants to the Nebraska Council of School Administrators and the League of Women Voters, among others. The League, in a statement late Monday, said its statewide organization has received no funding from Sherwood and that its metro Omaha chapter has received grant funding for operational expenses.
Linehan wrote another letter recently asking Secretary of State Bob Evnen and Attorney General Mike Hilgers to rethink their decision to allow the repeal measure onto the ballot, citing legislative prerogative to set laws on matters involving taxation. Evnen’s decision is expected soon.