A charity run by state Rep. Thaddeus Jones has repeatedly submitted inconsistent financial documents to the state and federal government, borrowed nearly $30,000 from his political campaign committee, and solicited donations when it was not permitted, a Daily Southtown investigation has found.
The Jones Foundation, according to its most recent charitable organization registration statement, exists “to educate on the awareness of HIV/AIDS and homelessness” and “to provide support to at risk students and promote community values.”
Since 2008, the charity has reported combined revenues of $254,390 and combined expenses of $271,166. In four of the past five years, the charity has met a state-mandated contribution threshold requiring submission of a financial report accompanied by financial statements, but has not consistently provided itemized accounting of its expenditures, available records show.
The only tax document the Jones Foundation has submitted outlining its charitable expenses — its 2015 IRS filing — reports spending $7,825 on “Community meals – feed the homeless,” $13,666 on “HIV/AIDS prevention,” and $7,000 on “Scholarship to students and families.” The form asks the charity to “describe the services provided, the number of persons benefited, and other relevant information,” but it did not elaborate on those items.
The state and federal government do not require nonprofits of the Jones Foundation’s size — its annual revenues have averaged around $30,000 over the past 9 years — to report this basic information.
When presented with the Daily Southtown’s findings, experts expressed concerns about the charity.
“There’s just too many unanswered questions,” Doug White, an author of four books about philanthropy and the former director of Columbia University’s Fundraising Management graduate program, said regarding the foundation.
Annual financial reports submitted by the Jones Foundation rarely added up or carried over consistently from year to year, the Daily Southtown found.
In some cases, calculations appeared to be just a few dollars off. In others, digits were transposed or values were reported as positive when they should have been negative. In still other cases, it’s unclear how calculations were made, the Daily Southtown found.
The foundation reported being nearly $30,000 in the red in 2010, but reported no debt the following year without offering an explanation, records show.
Jones, who is listed in records as the charity’s president and CEO and also sits on its board of directors, declined multiple attempts seeking comment for this article, saying via email he “will not be available for a interview with your wonderful newspaper.” In a letter to the attorney general’s office, Jones defended his organization and threatened possible legal action against a Daily Southtown reporter.
Attempts to obtain comment from Jones Foundation board members and the organization’s lawyer and accountant also were unsuccessful.
Loans from campaign
In 2009, Citizens for Thaddeus Jones for 3rd Ward Alderman, a Jones-controlled campaign committee used to finance his aldermanic campaign in Calumet City, began loaning money to the Jones Foundation in small increments, Illinois State Board of Elections filings show.
Between 2009 and 2015, Jones’ two campaign committees — Citizens for Thaddeus Jones for 3rd Ward Alderman and Jones for State Representative — made 49 separate small loans to his nonprofit totaling $26,683, according to campaign disclosure reports. His committees made payments of an additional $1,991 to the organization over that span for things such as “campaign work,” “constituent assistance with utilities” and “event ticket purchase,” filings show. According to recently amended campaign disclosure reports, Jones for State Representative also spent $1,359 for the purchase of White Sox tickets for the charity in July 2016, the most recent transaction on record.
The Jones Foundation did not report to the state or IRS that it had received loans from Jones’ campaign committees until early 2016, tax documents show.
Year after year in its annual state filings, the organization answered “No” to a question that asked whether it had been “a party to any transaction in which any of its officers, directors or trustees has a material financial interest.”
It also answered “No” to a question on its IRS Form 990-EZ that asked if the organization had borrowed from or made loans to any officer, director, trustee or key employee.
The organization disclosed the loans on its 2015 IRS Form 990-EZ — although it answered “No” to the question about having borrowed from a charity director.
In those tax documents, which the charity filed late, it listed a $27,500 loan from Jones for State Representative and another $67,500 loan from Thaddeus Jones for a combined $95,000 liability.
Both loans have an issue date of Jan. 1, 2015, carry a 5 percent annual interest rate and are due in full on Jan. 1, 2019, according to a promissory note Jones filed with the attorney general’s office. If the organization repays both loans on time and in full, it will owe around $20,000 in interest payments.
It’s not clear whether the $27,500 loan from Jones for State Representative is an aggregation of the 49 small loans for $26,682.50 that Jones’ committees provided the charity from 2009 to 2015, or a new and separate loan.
Tom Newman, director of campaign disclosure for the state elections board, said that while there’s no prohibition on a politician’s campaign committee loaning money to his nonprofit, he said he strongly suggests the committee enter into a formal loan agreement with terms of repayment for each loan before making it.
It was unclear whether Jones, a Calumet City Democrat, entered into such formal loan agreements for the first six years he reported loaning money to his nonprofit, records show.
“It sounds like, yeah, there’s a problem with the timing here,” Newman said. “The terms and conditions are supposed to be set forth in a written agreement. That would be presumably prior to making the loans as opposed to a couple years later, totaling things up and saying, ‘Here’s our loan agreement now.'”
He said the elections board reviews all campaign disclosure reports, but only would inspect a loan agreement if a complaint were filed against a committee.
“The general assumption is that if loans are made they’re required to have a loan agreement, so it’s assumed that they do,” he said. “But it’s not something we’d check up on.”
In addition to accepting money from Jones’ campaign coffers, the Jones Foundation has other ties to his political operation, records show.
For years the organization shared its headquarters with Jones’ district campaign office and it counts Jones’ campaign contributors and campaign workers among its board members, records show.
Six of the Jones Foundation’s 10 board members, including its vice president and secretary, have given money to Jones’ campaigns for alderman and state representative over the years, and three have been paid out of Jones’ campaign coffers, records show.
In photos from a Jones Foundation event the organization publicized on social media — a 2014 “Think AIDS” telethon held while the charity was not supposed to be operating — many individuals appear decked out in red Thaddeus Jones campaign T-shirts. Others, including Jones himself, wear blue Jones Foundation T-shirts emblazoned with, “Thaddeus M. Jones 29th District State Representative.”
A 2-minute video later posted on Facebook to promote the Jones Foundation and solicit donations resembles a campaign ad: “Uniting families and communities: Thaddeus, Thaddeus, Thaddeus Jones,” a chorus of singers croons over instrumentals.
Both Newman and Kent Redfield, an emeritus professor of political science at the University of Illinois at Springfield who has spent years tracking the role of money in politics, said that even properly reported loans between a campaign committee and a nonprofit raise questions.
Redfield said an arrangement like Jones’ is “clearly a conflict of interest” that creates a situation where it’s “hard to tell where the campaign fund stops and the foundation begins.” He said such loans create a negative appearance even when transacted in good faith.
Cancellation by state
The Jones Foundation was “canceled” by the state on April 17, 2014 for failing to submit required paperwork in a timely fashion and did not get back into good standing until Nov. 12, 2015, attorney general spokeswoman Eileen Boyce said.
“If it goes a certain amount of time and we don’t hear from them, then we need to cancel,” Boyce said. “And we let folks know that, maybe they missed the deadline … and they just have to re-register, which they did.”
Cancellation does not impact a nonprofit’s tax-exempt designation, but it does mean a charity should not be soliciting donations in the state until it has re-registered, she said.
According to the Illinois Charitable Trust Act, “upon cancellation the organization must cease operations.”
During the 18 months it was canceled, the Jones Foundation reported $52,193 in public support and contributions collected and $49,281 in expenditures, records show. It also was during this period the Jones Foundation entered into the formal loan agreement with both Jones and one of his campaign funds, and held its 2014 “Think AIDS” telethon.
Boyce said the attorney general’s office “wouldn’t know” if an organization was soliciting while canceled because the goal of its Charitable Trust Bureau is not to investigate or police charities, but simply to help bring them into compliance so that potential donors can review their information before deciding to donate.
Other than being assessed $800 in late fees for submitting required documents past the deadline on multiple occasions — a problem a spokeswoman for the attorney general said was “a constant issue” with many small charities — the organization has never faced sanction or disciplinary action from the state.
Illinois House Speaker Michael Madigan, the father of Attorney General Lisa Madigan, has given more than $40,000 in campaign funds to Thaddeus Jones’ aldermanic and congressional campaign committees over the years, board of elections records show. The attorney general’s office spokeswoman said political ties did not influence the level of scrutiny the Jones Foundation has received.
“We work with tens of thousands of charitable organizations across the state to ensure they are in compliance with Illinois law and to determine the cause of any issues and how they can be addressed,” the spokeswoman said in an email. “That is what we are currently doing with the Jones Foundation.”
The charity has until the end of August to provide the attorney general’s office the information it has requested.
White, the philanthropic adviser and author, said it’s important for potential donors to research charities before giving to them.
“They have to really take on the role of being an educated consumer,” White said. “People should look at the 990s, look at the website, see who the board is, see what they can say about their success in terms of their mission, visit the organization, do those things proactively.”
Twitter @ZakKoeske