Empire Health Community Advocacy Fund: Alleged violations of RCW 42.17A.207, .235 and .240 by failing to timely register & report as an Incidental Committee for 2023 (EY23, Oct23)

Case

#144373

Respondent

Empire Health Community Advocacy Fund

Complainant

Susan Madsen

Description

A complaint was filed against the Empire Health Community Advocacy Fund alleging violations of: (1) RCW 42.17A.207 by failing to timely file a statement of organization (PDC Form C-1ic) as an Incidental Committees as required within two weeks for contributions made to Justice Not Jails Committee, a 2023 local ballot measure committee registered with the PDC, in opposition to  Spokane County Proposition #1 that appeared on the November 7, 2023 general election ballot; and (2) RCW 42.17A.235 and .240 by failing to timely file Incidental Committee reports (PDC Form C-8) disclosing the monetary or in-kind contributions made from the Incidental Committee, and the ten largest sources of payments received above $15,000 during the calendar year as required for the sponsor.

On Oct. 2, 2023, Justice Not Jails filed a C-3 report disclosing a Sept. 26, 2023, deposit that included a contribution of $240,720 from Empire Health Community Advocacy Fund.

RCW 42.17A.005(28) defines “incidental committee” as “any nonprofit organization not otherwise defined as a political committee but that may incidentally make a contribution or an expenditure in excess of the reporting thresholds in RCW 42.17A.235, directly or through a political committee.”

RCW 42.17A.207 describes the reporting requirements of incidental committees and states, in part, that “An incidental committee must file a statement of organization with the commission within two weeks after the date the committee first: “Has the expectation of making any expenditures aggregating at least twenty-five thousand dollars in a calendar year in any election campaign, or to a political committee; and (emphasis added) “Is required to disclose a payment received under RCW 42.17A.240(2)(d).”

Reporting thresholds in RCA 42.17A are periodically adjusted for inflation by the Commission. The thresholds applicable to incidental committee reporting as of the time of the EHCAF contribution were: $35,000 in campaign expenditures and $15,000 for a payment. Both thresholds must be met for incidental committee reporting to be required.

Mr. Daley stated that Empire Health Foundation (EHF) is a nonprofit corporation that is organized under the statutes of the State of Washington and is a tax-exempt Private Foundation pursuant to IRS Code Section 501(c)(3).  He stated that EHF “operates for charitable, scientific, and educational purposes, as set forth in its Articles of Incorporation.”  He stated that Empire Health Community Advocacy Fund (EHCAF) “is nonprofit corporation organized under the laws of the State of Washington, as a tax-exempt Social Welfare Organization pursuant to IRS Code Section 501(c)(4).”  He stated that EHCAF’s primary purpose is to address “health-related social welfare needs of the people in Eastern Washington, as set forth in its Articles of Incorporation.”

Mr. Daley stated that EHCAF was not subject to incidental committee reporting because it received no qualifying payments during 2023.  He added that “on December 20, 2022, EHCAF and Inatai (formerly known as the Group Health Foundation) entered into a written grant agreement. Pursuant to that grant agreement’s explicit terms, EHCAF received a grant of $200,000 “with donor restrictions.”  

As noted above, Mr. Daley stated the grant was made on December 20, 2022, that EHCAF booked the grant funds as having been received in 2022, and EHCAF has confirmed that Inatai (the grantor) “booked the funds as having been awarded in 2022.” However, he stated, “due to logistical issues, EHCAF did not actually receive the funds until January 12, 2023.”

According to Mr. Daley, the Inatai grant was restricted to such an extent that it could not be used for election campaign purposes. The grant was explicitly provided for EHCAF’s “Special Capital Leverage Fund,” and that the fund was established to support Take Up the Cause, a Washington State nonprofit corporation. Daley stated Take Up the Cause was established to provide low-income housing by purchasing and developing an apartment complex known as the “Beloved Sunset Apartments.”

Mr. Daley stated the written grant agreement confirmed that the grant was “solely and exclusively” for the purpose of assisting Take Up the Cause in purchasing the Beloved Sunset Apartments. He stated that EHCAF was “explicitly prohibited by contract” from using the Group Health Foundation grant “for election purposes.”

Mr. Daley also noted that EHCAF was established with an initial endowment of $20 million, that EHCAF has a current asset balance of approximately $19.3 million, and EHCAF’s 2023 operating budget was $2,016,911. Therefore, the Group Health Foundation’s grant of $200,000, represented “less than twenty-five percent” of EHCAF’s total budget.

Under RCW 42.17A.240(20(e), “Payments from private foundations organized under section 501(c)(3) of the internal revenue code to an incidental committee do not have to be reported if:

(i) The private foundation is contracting with the incidental committee for a specific purpose other than election campaign purposes;
(ii) Use of the funds for election campaign purposes is explicitly prohibited by contract; and
(iii) Funding from the private foundation represents less than twenty-five percent of the incidental committee's total budget;”

Finally, Mr. Daley stated that no payments, inter-fund transfers, grants, or other transfers were made from Take Up the Cause to EHCAF in 2023, and he added that the “Special Capital Leverage Fund is not an entity separate from EHCAF; instead, it was a fund established by EHCAF for the sole purpose of directing the restricted grant funds from the Group Health Foundation to Take Up the Cause, so that Take Up the Cause could pursue acquisition of the Beloved Sunset Apartments.”  

Mr. Daley added that “once the funds were delivered to Take Up the Cause, the Special Capital Leverage Fund was closed. However, to directly answer the question: no payments, inter-fund transfers, grants, or other transfers were made from the Special Capital Leverage Fund to EHCAF and/or to other funds within EHCAF in 2023.”

Based on these findings staff has determined that EHCAF did not have payments during 2023 that would have prompted incidental committee registration and reporting once the contribution was made to Justice Not Jails.

In this instance, the facts do not warrant any further review or investigation into these allegations or any enforcement action, and the PDC has dismissed the allegations against the Empire Health Community Advocacy Fund in accordance with RCW 42.17A.755(1).   
 

Disposition

Case Closed with No Evidence of Violations

Date Opened

November 01, 2023

Areas of Law

RCW 42.17A.207, RCW 42.17A.235, RCW 42.17A.240

Documents

• 144373 Empire Health Community Advocacy Fund Complaint.pdf
• Empire Health Community Advocacy Fund Complaint Return Ltr (Madsen) PDC Case 144373.pdf
• Empire Health Community Advocacy Fund Response (PDC Case 144373).pdf