October 07, 2003, 8:39 a.m.
Seeing Greenpeace
The IRS may board the Rainbow Warrior.

Greenpeace soon may find itself less green — in the pocketbook.

Public Interest Watch, a Washington, D.C.-based charitable oversight group, filed a "tax challenge" with the commissioner of the Internal Revenue Service on September 22. PIW's complaint questions the tax-exempt status of Greenpeace Fund, the nonprofit wing of the global environmental activist organization.

"We looked at several high-profile, well-known nonprofits for violations, and Greenpeace's was by far the worst," says Mike Hardiman, executive director of PIW. "This was a target-rich environment," he adds by phone, "because Greenpeace's violations are so blatant and egregious."

Specifically, PIW accuses Washington-based Greenpeace of shifting tax-deductible donations from Greenpeace Fund — its reputedly educational, public-interest-oriented 501(c)(3) — to Greenpeace, Inc., a more directly political and activist unit. As such, the Internal Revenue Code designates the latter as a 501 (c)(4).

"Greenpeace has devised a system for diverting tax-exempt funds and using them for non-exempt — and oftentimes illegal — purposes," Hardiman said in unveiling the grievance. "It's a form of money laundering, plain and simple."

Concurrent with its IRS filing, PIW released a report titled "Green-Peace, Dirty Money: Tax Violations in the World of Non-Profits." The ten-page paper details PIW's claim that Greenpeace Fund, Inc. directed $24 million in tax-exempt contributions into Greenpeace, Inc.'s non-exempt programs during tax years 1998, 1999 and 2000. According to the most recent tax returns available for both groups, in 1999, Greenpeace, Inc.'s total revenues equaled $14.2 million. "Of this amount, $4.25 million (or 30 %) came from Greenpeace Fund, Inc.," PIW's report states.

The problems arise, PIW believes, when supposedly educational money winds up underwriting educationally dubious projects. These include many of Greenpeace's so-called "campaigns." They are almost always flamboyant and frequently illegal.

PIW offers the following examples of allegedly unlawful activity funded and executed by Greenpeace and its activists:

Greenpeace members rallied last May 28 at ExxonMobil's Irving, Texas headquarters. They blocked the building's entrance and mounted the building's roof. Police arrested 36 Greenpeace activists.

Greenpeace impeded the NDS Progress in Rotterdam, Holland on February 20. They claimed the American military equipment aboard the freighter was Iraq-bound. Greenpeace members swam and steered dinghies in front of the vessel and anchored the Rainbow Warrior II in its path. Dutch police arrested 19.

Some 30 Greenpeace demonstrators breached the central control building of the Sizewell B nuclear-power plant in Suffolk, England on January 13. The previous October, approximately 150 Greenpeace protesters were arrested after penetrating the same facility. (Who says that's not educational? Imagine the lessons such efforts teach terrorists with atomic aspirations.)

The U.S. Coast Guard stopped three Greenpeace boats that blocked the Singapore-registered APL Jade just outside the Port of Miami on April 6, 2002. Six Greenpeace members were convicted that June of boarding the vessel without permission before it docked. They reportedly believed (mistakenly) that the ship carried illegal mahogany from the Amazon. Meanwhile, a federal grand jury indicted Greenpeace USA last July 18 for illegally boarding the APL Jade and conspiring to do so. If convicted, Greenpeace could face a $10,000 fine and five years probation on each count.

These stunts, PIW argues, "are conducted solely for advocacy purposes and, in the case of demonstrations and direct actions, have been clearly ruled by the IRS no to qualify for tax-exempt status."

Greenpeace, not surprisingly, disagrees.

"There really is no story there," Greenpeace spokeswoman Melanie Janin tells me. "There's no merit to what they [PIW] are accusing us of." She also furnished a September 22 statement that says "Greenpeace USA acts in full compliance with all relevant U.S. and state laws." The group apparently has been speaking with its attorneys. "Given the severity of these accusations by Public Interest Watch, Greenpeace USA is now considering its various legal options," the statement continues.

If Greenpeace runs afoul of tax authorities, it will not be the first time. Revenue Canada withdrew the tax-free status of the Greenpeace Environmental Foundation in 1989. The Canadian federal tax unit ruled that tax-exempt organizations there had to provide some public benefit, and that Greenpeace did not.

"I do not think it can be assumed that remedying any and all forms of pollution always conveys a public benefit," wrote Carl Juneau, assistant director of the charities division, according to Stewart Bell's account in the June 5, 1999 National Post. "At the least, the possibility of countervailing detriment to the public has to be entertained and competing interests weighed. For example, closing down a polluting mill may make for a cleaner town and a healthier population, but it may also propel that population into poverty."

After the Greenpeace Environmental Fund, chartered in 1976, lost its tax-free status in 1989, the Greenpeace Canada Charitable Foundation sprung into action. It, too, had its charitable status yanked.

"This opinion resulted from an audit which raised serious concerns about the charity's compliance with the Income Tax Act," John Duncan, a Reform-party member of parliament from British Columbia, said at the time. "The audit revealed that the charity had failed to devote all its resources to charitable activities."

After losing its tax-exemption in 1995, Greenpeace Canada Charitable Foundation unsuccessfully petitioned to restore its tax status. It eventually gave up and withdrew its appeal in 1999.

All of this should trouble the gold-plated American charities that finance Greenpeace and its activities. Despite its groovy, incense-fueled image, Greenpeace relies on multi-billion-dollar foundations to pay its bills. Many of these, ironically, were launched by spectacularly wealthy capitalists, the very bogeymen against whom Greenpeace ceaselessly rails. Among Greenpeace Fund, Inc.'s underwriters, PIW identifies the following:

John D. and Catherine T. MacArthur Foundation
The John Merck Fund
Charles Stewart Mott Foundation
The David and Lucile Packard Foundation
Rockefeller Brothers Fund, Inc.
Turner Foundation, Inc.

"Because of the clear violation of the intended use of the contributions by Greenpeace Fund, Inc., the issue becomes one of foundation accountability," PIW's report notes. "That is, did the foundations and their directors realize that their contributions to a 501(c)(3) organization would be applied to non-501(c)(3) activities?"

"If so, then the foundations and their directors clearly abetted an illegal activity. If not, the foundations and their directors clearly lacked appropriate grant oversight protocol to ensure that their funds were applied appropriately."

While Greenpeace's Melanie Janin dismisses Public Interest Watch as "a fringe group," this year-old organization has raised serious, detailed questions about one of America's most prominent environmental-policy outfits. The IRS and Greenpeace's well-endowed supporters should place it under a microscope and assure that it keeps its tax-free promises.