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    MassFiscal’s biggest funder is a nonprofit it founded

    Rick Green, former Republican candidate for the Third Congressional seat from Massachusetts, is the founder of MassFiscal.
    Jim Davis/Globe Staff
    Rick Green, former Republican candidate for the Third Congressional seat from Massachusetts, is the founder of MassFiscal.

    Massachusetts Fiscal Alliance, the vocal conservative group that has long fought efforts to identify its donors, quietly created a separate nonprofit that in less than a year became its single biggest source of cash, adding a new layer to its already guarded financing.

    The $460,000 in contributions that Fiscal Partners Inc. gave MassFiscal in 2017 tether together what tax experts call an unusual relationship between nonprofit organizations, and could make it more difficult for campaign finance regulators to determine who’s fueling the group’s cash flow should it dip into election-related work.

    MassFiscal, itself a nonprofit, is generally not required to publicly identify its donors. Before a law was passed creating new disclosure rules, it regularly fanned out mailers to voters targeting Democratic legislators, riling the state’s majority party, and in one case drawing scrutiny from state campaign finance officials.

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    Launched in late 2016, Fiscal Partners Inc. — also a nonprofit — is a “more behind-the-scenes” business group, compared to its related entities, according to president Paul D. Craney. It has no website, shares the same address and some leaders as MassFiscal, and does not disclose the members who paid the registered 501(c)(6) organization hundreds of thousands in dues during 2017 as part of its $826,000 in reported revenue.

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    Most of those funds, however, didn’t stay with the organization. Records from 2017, the most recent available, show that Fiscal Partners gave $460,000 in “targeted grants” to a single entity: MassFiscal. It accounts for more than 70 percent of the $640,000 MassFiscal reported in total contributions for that year.

    By taking grants from a separate nonprofit arm, as opposed to money directly from donors, it may accomplish something else: Provide contributors to MassFiscal another buffer from disclosure.

    Groups that make so-called electioneering communications, such as mailers, are required by a 2016 state campaign finance law to identify their top donors if they’re sent within 90 days of an election. MassFiscal stopped sending mailers that would fall under the law in 2016, though it’s now suing the state to overturn certain disclosure requirements.

    Craney, Fiscal Partners’ president, said the business group was not created to shield donors to MassFiscal, arguing it’s a “separate entity completely.”

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    “The answer is no,” he said, adding that MassFiscal doesn’t plan to send out electioneering communications — and thus need to disclose its supporters — “with the current laws in place.”

    Fiscal Partners, according to Craney, is still growing and in the process of seeking out organizations to support and fulfill its mission statement, which includes promoting “fiscal responsibility, transparency and accountability.” That wording nearly mirrors MassFiscal’s own formally stated goals of advocating for “fiscal responsibility and further government transparency.”

    The organization also paid roughly $121,000 to Craney, who had served as MassFiscal’s executive director and still is its spokesman.

    “It’s going to be more behind-the-scenes as an organization,” Craney said of Fiscal Partners, adding that MassFiscal and a third nonprofit it created, the Fiscal Alliance Foundation, “are out front and are spending money being out in the public.”

    The foundation, for example, is helping a separate legal challenge that MassFiscal founder and former congressional candidate Rick Green is bringing to overturn the state’s ban on corporate donations to political candidates.

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    “Why take away from those groups?” Craney said. “We want to find areas in the business community that aren’t being served. Broadly speaking, using nonprofits in a way to push for change is underutilized across Massachusetts.”

    But the creation of Fiscal Partners — and the amount of money that flowed through it to MassFiscal — raises questions about what whether its true “effect and intent” are to shield donor identities, according to one good-government watchdog.

    “And intent isn’t specifically required. It’s how does it actually work?” said Pam Wilmot, executive director of Common Cause Massachusetts, which has pushed for campaign disclosure laws.

    “It wouldn’t be the first time organizations have tried to create pass-throughs to try to disguise the true nature of their donors,” she said.

    It’s not uncommon for one tax-exempt organization to rely on another arm for fund-raising purposes, and Craney argued that even a “series of complex nonprofit organizations” working together isn’t new.

    But that MassFiscal, a registered social-welfare nonprofit, is relying on contributions from a nonprofit business league, as Fiscal Partners is registered, is uncommon — if not unheard of — according to tax experts.

    “I’ve never seen it,” said Bruce R. Hopkins, a Kansas City attorney and author who specializes in nonprofits. Normally, he said, a business league “uses the money for its own purposes, rather than donate a big chunk to another entity. I don’t know why they would set that structure up.”

    Peter J. Martin, an attorney who advises nonprofits, said when a nonprofit forms a related organization, it normally involves a charitable foundation registered as a 501(c)(3).

    “This is a little unusual in my experience,” said Martin, a partner in Bowditch & Dewey’s Worcester office.

    MassFiscal has long been involved in spats over its donors. In August 2016, weeks before it created Fiscal Partners, it resisted an order from the Office of Campaign and Political Finance to identify one $500 contributor.

    The organization had sent out a fund-raising e-mail referencing “an all-out blitz” just days before special elections in Fitchburg and Peabody that March. The OCPF determined that, under state law, the door hangers and handbills the group purchased shortly after the Feb. 23 e-mail was sent were electioneering communications.

    After the 2016 campaign finance law was passed, mandating more stringent reporting, MassFiscal tried a different tactic, fanning out postcards that did not target a particular candidate but instead directed voters to its website, where it posted a scorecard rating legislators. Last year, Democrats filed a complaint with the state after MassFiscal sent out a different round of mailers.

    More recently, it sent fliers to residents urging them to call their legislators and oppose a proposal from Governor Charlie Baker, a Republican, to increase the state tax on real estate transfers by 50 percent. The plan, Baker said, could bring in $1 billion over a decade to help cities and towns guard against climate change.

    Setting up Fiscal Partners, however, may ultimately provide an additional benefit. It could allow its members to take tax deductions on the dues they pay, said Laura J. Kenney, who works with tax-exempt clients for the accounting firm BlumShapiro.

    “Members of a business association can possibly take a tax deduction on association dues as ordinary and necessary business expenses,” she said. With a social-welfare nonprofit, like MassFiscal, “they can’t as easily.”

    Matt Stout can be reached at matt.stout@globe.com. Follow him on Twitter @mattpstout.