Subject: Facts about Clinton Foundation Forms 990
From: Clinton Foundation Press Office <[email-masked]>
To: Clinton Foundation Press Office <[email-masked]>
Date: Tue, 17 Nov 2015 02:19:40 +0000

Hi everyone - As you may know, each year charities like the Clinton Foundation are required to submit an information return with the IRS called a Form 990. Please find attached a fact sheet and letter to Foundation supporters from Donna E. Shalala describing this year's Form 990 and our decision to voluntarily amend our returns from prior years.  All of our financial information can be found here: https://www.clintonfoundation.org/about/annual-financial-reports.

In addition, here is some relevant previous coverage about these issues, and as always please contact us with any questions:

*         A Forbes piece describes how political attacks on the Foundation illustrate misunderstanding and pure political targeting:

                "So why should the IRS now target the Clintons? And launching an audit in response to a clerical error would clearly be political targeting."

                "This particular lapse on the part of CHAI is clearly trivial and pushing the IRS to make a big deal of it is irresponsible."

        Read "Republicans Want IRS To Target Hillary Clinton" - http://www.forbes.com/sites/peterjreilly/2015/11/07/republicans-want-irs-to-target-hillary-clinton/

*         Another Forbes article discusses the implications of amending tax returns:

"Did the Clinton Foundation's tax forms have major errors that resulted in "under- and over-reporting, by millions of dollars" as reported by Reuters? ... If the foregoing is correct, it would appear that the Forms 990 were substantially accurate; the issue relates to consolidating rather than specifically identifying certain donor information. There is no information indicating that the aggregate amount of reported contributions was somehow inaccurate."

        Read "Clinton Foundation To File Amended Returns, Should You?" - http://www.forbes.com/sites/irswatch/2015/04/25/clinton-foundation-to-file-amended-returns-should-you/

*         A piece in The Hill explains how the work of the Clinton Foundation stands on its own, independent of political rhetoric:

"The work of the Clinton Foundation stands on its own. We shouldn't let global good become subject of failed reporting or a casualty of political rhetoric. Organizations like the Clinton Foundation can            do good precisely because of the generosity of donors. As it improves lives in the United States and around the world, the Clinton Foundation provides a great model of public leadership."

        Read "The Clinton Foundation does life-changing work worldwide" - http://thehill.com/blogs/congress-blog/presidential-campaign/255654-the-clinton-foundation-does-life-changing-work

Letter from Clinton Foundation President Donna Shalala

Dear friends:

For more than a decade the Clinton Foundation has worked around the world helping to address many of today's greatest challenges. This has meant empowering girls and women, helping farmers connect with markets and improve their incomes, making medications accessible to millions who previously could not afford them, working with communities to adopt renewable energy, convening leaders across all sectors to take collective action through the Clinton Global Initiative, and promoting healthier communities and nutritional food and beverage choices in schools. The Foundation has made a difference in the lives of millions of people. I invite you to learn more about our specific initiatives by visiting www.clintonfoundation.org<http://www.clintonfoundation.org>.

Each year, charitable organizations must file an information return with the IRS known as "Form 990." This form provides information on how charitable organizations work. What you will see on the Foundation's Form 990 is our commitment to doing the work on the ground. As an operating foundation, rather than a grant-giving one, we have the flexibility to maximize our impact. As in past years, in 2014 approximately 80 percent of our spending went directly to implement our programs. The Better Business Bureau's standard for charities is that at least 65 percent of total expenses go to program activities.

As we file our 2014 Form 990, I want to thank you for your support and interest in the work we do every day. And I want to thank the entire Foundation team who makes this work come to life.

In addition to filing our 2014 Form 990, after a thorough review the Foundation has decided to voluntarily amend its returns for 2010, 2011, 2012, and 2013. This review was the result of an error in the first three of those years being brought to our attention. Before going into further details, there are three main points I want to make:

  *   Although the exhaustive review found several additional errors, our external tax reviewers informed us that the errors did not require us to amend our returns;
  *   There is no change in our bottom line numbers: assets, liabilities, and net assets; and
  *   We do not owe any taxes.

Despite that, we decided to refile. Our decision was based in large part on the role the Form 990 serves as a public disclosure document for our friends, supporters, partners, and the general public.

Let me briefly take you through our 2014 return as well as our amended 2010, 2011, 2012 and 2013 returns.

First with regard to 2014, the Form 990 shows that strong support allowed the Foundation to scale and expand its work around the world; both growing our reach as well as deepening our impact:

  *   Approximately 80 percent of our spending went to fulfilling our programmatic work;
  *   Approximately 90 percent of our donations in 2014 were $100 or less;
  *   We have been able to further secure the ability of the Foundation to continue impacting the lives of millions in the long-term through increased support for an endowment.

With regard to 2010, 2011, 2012, and 2013:

We undertook an external review of our Forms 990 for 2010, 2011, and 2012 - the years for which we inadvertently included government grants as part of the reporting of all grants. There is nothing to suggest that the Foundation intended to conceal the receipt of government grants, which we report on our website.

Today's amended returns reflect the work of an external review led by Kathy Keneally, the former Assistant Attorney General for the Tax Division of the U.S. Department of Justice, who now is the Chair of Civil and Criminal Tax Litigation in DLA Piper's global tax group.

Amended Returns for 2010, 2011, 2012, and 2013

The work of the Foundation is only possible because of its commitment to address problems in the way that has the greatest impact. That is why we have individual initiatives. It is why we work around the world. And it is why we use innovative philanthropy to impact lives. Just as we are committed to the communities in which we work, so too are we committed to transparency and accountability.

Our Forms 990 are one way that we are transparent and accountable to the general public. Earlier this year, we began a review of our returns for 2010, 2011, and 2012. The review, as noted above, was led by a top tax lawyer, who in turn engaged CohnReznick, a top accounting firm that had previously not worked with the Foundation.

The initial scope of the review was for 2010, 2011, and 2012 - years for which the government grants line (Part VIII, line 1e) was left blank in error. Our reviewers advised us the Foundation has no legal obligation to file amended returns, but that if we did file an amended return it would be important for us to correct errors found in the review.

The exhaustive review went line-by-line through each return. Ultimately, in addition to amending 2010, 2011, and 2012, the Foundation is also amending its 2013 returns, in large part to reflect the changes in previous years. Our actions today reflect a deep organization-wide commitment to making sure the public understands our work and our supporters understand how their resources are used.

Multiple third party charity evaluators, including GuideStar and Charity Watch, have praised the Foundation for our "commitment to data transparency"<http://www.guidestar.org/organizations/31-1580204/william-j-clinton-foundation.aspx> and "for keeping its overhead and fundraising costs low."<http://www.nytimes.com/2015/10/19/us/politics/rwanda-bill-hillary-clinton-foundation.html> After a thorough look at our work in Rwanda a few weeks ago, The New York Times concluded that we do "vital, often pathbreaking work."<http://www.nytimes.com/2015/10/19/us/politics/rwanda-bill-hillary-clinton-foundation.html>

On a personal note, having spent my entire professional career leading large organizations and dealing with complex regulatory filings, I appreciate that this has been an extraordinary, extensive, and exhaustive review. The amended returns reflect what I believe to be a deep commitment to disclosure, consistency, and thoroughness.

The following pages will provide additional details on the amendments, but first let me repeat our findings:

  *   Our external tax reviewers informed us that the errors did not require us to amend our returns;
  *   There is no change in our bottom line numbers: assets, liabilities, and net assets; and
  *   We do not owe any taxes.

I am extremely proud of our commitment to provide clear, accurate and thorough information and of the life-changing work that we do every day.

On behalf of everyone at the Clinton Foundation, thank you for your support and interest. I look forward to continuing our work together toward a better world.
Donna

Fact Sheet: Clinton Foundation Amended Returns: 2010, 2011, 2012, and 2013

The Clinton Foundation's amended returns reflect a commitment to disclosure and thoroughness. The review of these returns was led by Kathy Keneally, the former Assistant Attorney General for the Tax Division of the U.S. Department of Justice, who now is the Chair of Civil and Criminal Tax Litigation in DLA Piper's global tax group. She in turn engaged CohnReznick, a CPA firm that had not previously worked with the Foundation. This review looked at the Form 990 for 2010, 2011, and 2012, which were prepared by BKD. In addition to refiling those years' returns, the Foundation is also amending, in large part for consistency, the 2013 Form 990 as prepared by PricewaterhouseCoopers.

This quote is attributable to Kathy Keneally:

"I advised the Foundation that it had no legal obligation to file amended returns. I also advised the Foundation, as I would advise any client, that if it decided to file amended returns, those amended returns should correct any and all errors. The Foundation voluntarily undertook a thorough review of the returns for those years in which the line on the return concerning government grants was left blank. Foremost, we found nothing to suggest that the Foundation intended to conceal the receipt of government grants, which the Foundation reports on its website. Because foundations, like people, make mistakes, and because return preparers may differ on how best to present information, the review identified other items that the Foundation has decided to clarify or to correct. It is important to note that the review affirmed that the overall financial information - assets, liabilities and net assets - as they appear in Part I lines 20-22 were correct on the original returns and have not changed on the amended returns. The Foundation's decision to file amended returns reflects an extraordinary commitment to disclosure and thoroughness."

The nature of these amendments to the Foundation past years' returns falls into four major overarching categories.

Government grants and contributions:
For many of the issues that the Clinton Foundation works on - such as climate change and economic development - governments are often the largest funders of this work worldwide. For example, governments hire charities to work in developing nations to lead reforestation efforts in countries impacted by climate change, build health clinics, and train workers in new skills. This is how global development works.

While the line on Form 990, under the Statement of Revenue, at Part VIII, line 1e for government grants - both domestic and foreign - was left blank in 2010, 2011, and 2012, the total amount from government grants was included in the Foundation's reporting on the line immediately below for "All other contributions" (Part VIII, line f). Put simple, the amount of government grants was included on the Foundation's original returns as part of the aggregate amount of all contributions, but not separately broken out.

In the amended returns, the Foundation breaks out the total for government grants and reports that on Part VIII, Line 1e.

Government grants and contributions for the Foundation were voluntarily disclosed on the Foundation's website, and many of these grants have been covered by the press.

Revenue from speeches:
President Clinton, Secretary Clinton, and Chelsea Clinton have supported the Foundation by giving speeches on its behalf. In 2010, 2011, and 2012, this funding was listed under the statement of revenue as part of other charitable contributions. The 2013 return reported speech fees as income-specifically part of "miscellaneous revenue." The Foundation has amended its 2013 return to specifically break this out on a separate line as "speech revenue."

The Foundation's amended returns reflect the conclusion that information on the 2013 return is consistent with contracts with the speech host, which present the engagement as a fee-for-service. Consistent with this treatment as a fee-for-service and not a donation, the Foundation did not send any donor acknowledgement letters to these speech hosts. The amended 2010, 2011, and 2012 returns reflect this approach.

The amended returns use an open line under "miscellaneous revenue" that allows the Foundation to break these payments out and specifically identify them as "speech revenue" on Part VIII, Line 11 of Form 990.

This amendment reflects the Foundation's conclusion that for the sake of transparency and disclosure, this information should be broken out and reported consistently.

The amount the Foundation is reporting as fees from speeches is unchanged. All of these speeches are listed on the Foundation's website, and updated quarterly.

Changes to Schedule B:
Upon review of Schedule B, mistakes were discovered that included errors in the amount of donations and some omissions.

Some of these changes led to the listing of additional donors. In several cases because the speech fees were moved from contributions to other income, therefore decreasing the two percent threshold for reporting on this schedule. Some were the result of other mistakes that have been corrected.

All contributions were previously accounted for as revenue on other parts of the Form 990. In addition, all of the donors now added to Schedule B had previously been disclosed on the Foundation's website.

Again, these changes to Schedule B do not have an impact on the overall financial status of the Foundation as reported on Part I, Lines 20 to 22.

Listing of related entities:
The last category of major amendments to the returns is the listing of related entities. As the Clinton Foundation engages in philanthropic work around the world, it has set up and invested in entities that help it do work on the ground. When a foundation engages in activities in certain countries, it is required to work through an entity established in that country.

In other instances, the Foundation has created social enterprises that help fill gaps in supply and distribution chains, and reinvest any profits into the enterprise. This means having an entity that can buy seeds and fertilizer, and sell them at discounted prices to farmers; or purchasing goods and produce from farmers and fishermen, and selling them at a fairer price to large distributors and businesses. These entities facilitate the charitable work of the Foundation on the ground, and can generate returns that are immediately reinvested in these programs, thereby supporting their long-term sustainability.

The Foundation's relationships with these entities have been public information and discussed in Foundation materials, press releases and press coverage for years. Last week, President Clinton visited one of these social enterprises in El Salvador and met a Salvadorian farmer who has doubled his income thanks to this enterprise. These entities' innovative work supports entrepreneurs and small-holder farmers, and strengthens families and communities in Latin America, the Caribbean and East Africa.

As part of its review, the Foundation determined that, to serve transparency and disclosure, it should include its relationships to these entities on its amended Forms 990.