Love It or Leavitt

Often in the media world one finds oneself chasing another media organization’s story.  And sometimes all that is found at the end of the chase is a wild goose.

Last year, pluperfect producer Avery Miller and I did a story for World News Tonight with Peter Jennings about a major tax loophole wealthy people are exploiting wherein they hide their assets in what is known in the Charitable Giving section of the tax code as a "Supporting Organization.

Rich folks can deduct the donation and the assets can sit there and do nothing. (Unlike, say, in a private charitable foundation where the organization is obligated to give to the needy a minimum of 5% of its assets a year.) HERE’S THE DOT-COM VERSION of that story from March 2005.

Today we learned from the Washington Post that Health & Human Service Secretary Mike Leavitt and his family were doing the same thing — hiding close to $9 million in a supporting organization — the Dixie & Anne Leavitt Foundation, named after the Secretary’s parents — and giving just teeny drops of it to charity, while also loaning one of the family’s private businesses $332,000.

The tax records available indicated that in 2002, the Leavitt Foundation — with $8,945,394 in assets — had given just $42,087 to charity. That’s a measly 0.47%.

Tax records from 2003 indicate that the Foundation — with $8,959,091 in assets — had given just $52,312 away (0.58%).

Wow. Great example of what Avery and I had reported last year. And despite the claims of the IRS that President Bush wanted to crack down on this abuse, it would seem a member of his Cabinet was engaged in it. We decided to look into it for World News with Charles Gibson, perhaps for this evening.

Great story.

BUT….it was not the full story.

Here is the full story. According to Dane Leavitt, the Secretary’s brother who runs much of the family business, the Foundation’s assets were in stocks, which the Leavitts wanted to give time to mature.

In 2005, the Foundation sold the stocks, which had been originally valued at around $8 million, for around $11.7 million.

That year, the Foundation’s giving skyrocketed to $567,185, according to Dane Leavitt, who also said that the Foundation had given away $691,221 just through June 30 of this year.

So assuming the Foundation was worth $11.7 million in 2005, it gave away 4.8% of its assets. Assuming it was worth about $11.2 million in 2006, it has already given away about 6.2% of its assets this year.

Leavitt could not produce tax records for 2006 for obvious reasons (the year is not over) and said the Foundation had not yet filed its returns for 2005, having gotten an extension.

Presented with this information — and obviously we’re relying on the word of Mr. Leavitt — Avery and I decided this was NOT a story.

We had studied those who abuse SOs (which by the way are perfectly legal, however crummy they can be). This did not appear to be the case with the Leavitts.

Huh. Anyway.

If it turns out that Dane Leavitt’s numbers are incorrect, then obviously this story will be worth a follow-up, but today was spent reporting enough information to decide NOT to report something for air. Which is often how reporters spend their time.

I should add, however, that the interest-free loan the Leavitt Foundation offered a Leavitt family for-profit business is exactly the kind of “abuse” that the IRS has assailed. Though it is legal.

Have a great weekend.

Jake