It is common for U.S. think tanks, irrespective of political affiliation, to propose policy wish lists outlining what they hope will be accomplished by a new administration. The controversial Project 2025, authored by a conservative-leaning nonprofit organization, The Heritage Foundation, and 140 Trump staffers, calls for a radical restructuring of the government and includes hundreds of policy recommendations impacting access to abortion, deportations, government surveillance, voting access, censorship, racial justice, LGBTQ+ rights, and other social justice issues.
NONPROFITS & POLITICS DO MIX
While public charities are prohibited by law from endorsing specific candidates for public office, they often weigh in on issues of public policy. Liberal-leaning nonprofits like the American Civil Liberties Union (ACLU) and its related Foundation continue to rail against Project 2025, while conservative-leaning organizations passionately support it. Nonprofits whose missions compel them to support or oppose politically contentious issues are often comprised of networks of legally distinct, but related organizations with different tax designations under the Internal Revenue Service (IRS) code.
For example, the ACLU is affiliated with 50 nonprofit, tax-exempt organizations and has a presence in every state in the United States. These affiliates operate through section 501(c)(3) public charities and section 501(c)(4) social welfare organizations. The ACLU also operates a 527 political action committee (PAC), The ACLU Voter Education Fund. Each type of organization is subject to different rules with respect to how and to what extent it can involve itself in lobbying and other political activities.
CHARITYWATCH RATING OF THE HERITAGE FOUNDATION
The author of Project 2025, The Heritage Foundation, is a 501(c)(3) public charity. Its mission is to “formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense.” CharityWatch recently analyzed the fiscal 2023 consolidated audited financial statements and IRS tax Form 990 of The Heritage Foundation to understand how it is legally structured, how efficiently it operates, how much it pays its executives, and if it meets our benchmarks for governance and transparency.
LETTER GRADE RATING & FINANCIAL EFFICIENCY RATIOS
The Heritage Foundation narrowly failed to achieve top-rated status from CharityWatch based on our analysis of its 2023 financial reporting, the most current available as of the date this article was published. CharityWatch assigned The Heritage Foundation a rating of “B” on our “A+” to “F” rating scale for spending 70% of its cash expenses on its programs and 30% on overhead in 2023, while spending $29 to raise each $100 in cash donations.
CharityWatch’s rating of The Heritage Foundation includes the financial activities of the 501(c)(3) public charity entity, The Heritage Foundation, tax ID#23-7327730, as well as the financial activities of the related legal entities included in its consolidated audited financial statements: 3rd Street Properties, LLC; Massachusetts Avenue Properties, LLC; and Intern Housing, LLC. Transactions among the related organizations have been eliminated in audit consolidation.
CharityWatch’s rating does not include the financial activities of The Heritage Foundation’s related 501(c)(4) social welfare nonprofit, Heritage Action for America, tax ID#27-2244700; or the financial activities of its related 501(c)(3) public charity, The Heritage Institute, tax ID#52-1193835, as the financial activities of these legal entities are not included in The Heritage Foundation’s consolidated audited financial statements. CharityWatch’s rating also does not include the financial activities of American Dream Broadcasting, a related C Corp whose “Direct controlling entity” is Heritage Action for America, which owns 100% interest.
SALARIES & OTHER COMPENSATION
CharityWatch reports on the names, job titles, and compensation received by the three highest paid individuals at each organization we rate. The information is based on our analysis of the nonprofit’s IRS Form 990 and includes total of base compensation, nontaxable benefits, and other reportable compensation as reported to the IRS (Form W-2, 1099-MISC, and/or 1099-NEC), excluding any amounts already reported by the organization in a prior year IRS Form 990. When an employee receives payments from multiple entities controlled by or related to a charity, CharityWatch will calculate and report the total from all entities on which we have information.
| Name | Title | Compensation |
|---|
| Kevin Roberts | President | $953,920 |
| Derrick Morgan | Executive Vice President | $653,542 |
| Eric Korsvall | Chief Operating Officer | $536,238 |
According to The Heritage Foundation 2023 tax filing, the Foundation reports re: Compensation, Supplemental Information (IRS Form 990, Schedule J, Part III):
Regarding first class or charter travel for officers, directors, trustees, key employees, and highest compensated employees (Schedule J, Part I, line 1a):
“The Foundation allows first class travel or charter travel for certain approved staff in certain circumstances, such as international travel, and only when conducting official business for the Foundation…”
Regarding travel for companions for officers, directors, trustees, key employees, and highest compensated employees (Schedule J, Part I, line 1a):
“From time to time, the Foundation allows travel for spouses of certain officers of the organization…”
Regarding nonfixed payments to officers, directors, trustees, key employees, and highest compensated employees (Schedule J, Part I, line 7):
“A portion of management compensation is in the form of an annual bonus. Management bonuses are contingent on achieving the organization’s goals and objectives as well as on their own performance and achievement of established goals. Bonuses are not based on a fixed formula. Goals are reviewed mid-year and annually, and monthly reports of organization activities are provided to the Board.” (Schedule J, Part III).
The Heritage Foundation reports “Bonus & incentive compensation” payments to 19 individuals in 2023, including $300,300 paid to Kevin Roberts, President, whose reported total compensation for 2023 is $953,920. The remaining 18 individuals received “Bonus & incentive compensation” payments that range from $300 to $150,300, with associated reported total compensation ranging from $219,209 to $653,542 (IRS Form 990, Schedule J, Part II).
GOVERNANCE & TRANSPARENCY
CharityWatch evaluates certain criteria related to a charity’s Governance and Transparency. Donors may want to consider a charity’s willingness to be open and transparent with CharityWatch to be a good litmus test for determining its commitment to public accountability
To meet CharityWatch’s benchmarks for transparency, a charity must post a complete copy of its most current, independent audited financial statements on its public website. It must also provide complete copies of its IRS Form(s) 990 to CharityWatch upon request, and may be required to answer questions related to its financial reporting and/or provide additional documentation if such information is necessary for CharityWatch to complete a meaningful evaluation. See the Transparency Benchmark section for more specific information. The Heritage Foundation met CharityWatch’s benchmarks for fiscal 2023.
Nonprofits required to file a Form 990 with the IRS are asked to answer basic questions each year about their governing body and management, governance policies, and disclosure practices. CharityWatch reviews a charity’s tax form to see if it reports having certain policies in place, a sufficiently large and independent governing body, and other basic governance information that serve as standard benchmarks for large charities of national scope or interest. Meeting such benchmarks, in the opinion of CharityWatch, should be viewed by donors as the bare minimum standard rather than an assurance that a particular charity is well-governed. Charities must pass all nine benchmarks in order to meet CharityWatch’s overall benchmark for Governance. The Heritage Foundation met CharityWatch’s benchmarks for fiscal 2023.
RELATED PARTY TRANSACTIONS
CharityWatch’s analysts are degreed accountants who perform in-depth analyses of nonprofits’ audited financial statements and IRS Form 990 tax filings. They often review other documents such as state solicitation filings, annual reports, and fundraising contracts during their evaluations. Our analysts identified information about related party transactions and business transactions involving interested persons during their analysis of The Heritage Foundation’s financial documents.
According to The Heritage Foundation’s consolidated audited financial statements for the fiscal year ended December 31, 2023, Note 11, Related Party Transactions:
“The Foundation leases office space and provides administrative services to a related entity whose Board of Directors is independent of the Foundation’s Board of Trustees. The entity’s Board of Directors consists of three directors that are also trustees of the Foundation. The Foundation and the entity have a lease for office space that ended March 1, 2020. Subsequent to March 31, 2020, the lease for office space went month to month.”
“Lease revenue from the related entity totaled $138,490 for 2023 and 2022.”
“Contracts for administrative services are on an annual basis and begin on January 1, each year. Administrative service contract income totaled $1,752,606 and $2,082,856 in 2023 and 2022, respectively. Also, the Foundation contracted with the related entity for services to be provided to the Foundation. Total expenses incurred by the Foundation related to this contract totaled $3,500,000 and $767,496 for the years ended December 31, 2023 and 2022, respectively. During the years ended December 31, 2023 and 2022, the Foundation provided a $500,000 and $400,000 contribution to the related entity, subject to an expenditure control agreement.”
“The Foundation received material support in the form of contributions from members of the Board of Trustees and organizations associated with members of the Board of Trustees during the years ended December 31, 2023 and 2022, in the ordinary course of business.”
According to The Heritage Foundation 2023 tax filing, the Foundation reports for Business Transactions Involving Interested Persons:
(1) A transaction in the amount of $83,326 involving Melissa Bluey, the spouse of officer, Robert Bluey. The transaction is described as: “Employment.” (IRS Form 990, Schedule L, Parts IV & V).
[Robert Bluey is reported as VP, Communications, with total compensation of $384,767 in 2023 (IRS Form 990, Schedule J, Part II).]
HERITAGE ACTION FOR AMERICA
CharityWatch also rates The Heritage Foundation’s related 501(c)(4) social welfare organization, Heritage Action for America. Based on our analysis of its 2023 consolidated audited financial statements and IRS tax Form 990, we assigned the organization a rating of C-minus on our “A+” to “F” rating scale for spending 63% of its cash expenses on its programs, 37% on overhead, and for spending $53 to raise each $100 in cash support.
According to the Heritage Action for America (HAFA) consolidated audit of December 31, 2023 (Audit Note 1, Nature of Activities and Significant Accounting Policies, Nature of activities):
“Heritage Action for America and Affiliate (the Organization) consists of two entities: Heritage Action for America (Action); and American Dream Broadcasting, Inc. (ADBI).
Action was organized in 2010 as a District of Columbia nonprofit corporation. Action is an advocacy organization whose mission is to promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense. Action is a nonprofit organization qualified under Section 501(c)(4) of the Internal Revenue Code (IRC) and is, therefore, exempt from federal income taxes on its charitable, educational, and social welfare operations. In addition, contributions to Action are not deductible for federal income, estate and gift tax purposes…”
According to Heritage Action for America (HAFA) consolidated audit of December 31, 2023 (Audit Note 1, Nature of Activities and Significant Accounting Policies, Principles of consolidation):
“These consolidated financial statements include the accounts of Action and ABDI because Action has both control and an economic interest in ABDI. All significant intercompany accounts and transactions have been eliminated in consolidation.”
CharityWatch’s full report on Heritage Action for America can be read here.
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