Let the Donor Beware

by Tom Yamachika, President, Tax Foundation Hawaii

You may have heard the phrase “caveat emptor,” meaning “Let the buyer beware.”  It’s an old proverb, from the Latin phrase meaning that a buyer of something should make sure that the product is good, and that the seller has the right to sell it, before buying a product.  In modern contract law in this country, we legally obligate sellers to certain minimum standards like not telling demonstrable lies about the stuff they are selling, but a seller can be very misleading without actually telling lies.

Of these, one of my favorites is “A portion of every purchase will go to benefit XYZ Charity.”  This statement can be 100% true, but it does not tell you how much actually goes to charity.  A few years ago, for example, Amazon operated a program called “Amazon Smile.”  They signed up charities like the Tax Foundation and truthfully advertised that a portion of each purchase made under the Amazon Smile Program would go to the charity.  The actual amount that went to the Tax Foundation was 0.5%.  Better than nothing, perhaps.

The same principle applies to solicitations for donations.  The Lahaina Fire just happened.  People are sympathetic and want to give money toward fire victim relief.  Civil Beat recently ran a story about the Maui Community Power Recovery Fund.  It’s a great-sounding name, but what does the fund actually do?  A search for the fund directs the user to a page on ActBlue, a fund-raising platform used by Democrats here and nationally.  The page says, in bold type, “The Maui Community Power Recovery Fund exists to support leaders and organizations who have been leading to address the root causes of the Maui Fires devastation for years, and will continue to be there when the cameras fade away.”  It supports leaders and organizations.  It doesn’t say anything about supporting victims or rebuilding devastated areas.  It doesn’t say anything about providing food or housing for the displaced or funeral expenses for the bereaved.

The website goes on:  “The magnitude of this undertaking will demand investments in the billions.  As we grapple with these enormous costs, it's imperative that we actively participate in legislative, regulatory, and political arenas.”  That doesn’t sound like disaster relief.  It sounds like political action.  And, lo and behold, the site explicitly says, “Your contribution will benefit Our Hawaii Action.”  Our Hawaii Action is a Hawaii-organized nonprofit corporation the purpose of which, according to its DCCA filing, is to “educate, organize, advocate, and engage in elections to expose the corruption and complacency holding our islands back and advance an agenda to make Hawai‘i work for all of us, not just the wealthy few.”  It so happens that there is a Super PAC called Our Hawaii PAC, registered with the FEC and the Hawaii Campaign Spending Commission, that seems to be organized and run by the same fellow.   In other words, the Maui Community Power Recovery Fund is probably part of a Super PAC and will likely spend donations on political activities.

If you were expecting the Maui Community Power Recovery Fund to be a charity offering relief to Maui wildfire victims and you were surprised to see that it was a political action committee, you needed to look harder.  An entity describing its purpose might be misleading even where it is 100% telling the truth. Not all of them tell the truth.

Let the donor beware.