New law would impact Leavitts
Recent media reports have uncovered questionable — although not illegal — activity by the family of Health and Human Services Secretary and former Utah Gov. Mike Leavitt through the Dixie and Anne Leavitt Foundation, which supports the Southern Utah Foundation and other charities.
According to Internal Revenue Service documents, the Leavitt Foundation made donations to Southern Utah University for housing scholarships that put students in apartments owned by Cedar Development Co., which is also owned by the Leavitt family. The foundation also donated to the family's genealogy society, while getting tax deductions for charitable contributions.
"Just because it's legal doesn't mean it is right," said Rick Cohen, executive director of the National Committee for Responsive Philanthropy, who has reviewed the foundation's tax returns.
The family has maintained it has done nothing wrong, but Cohen has taken issue with the practice, and lawmakers have used the publicity to highlight pending reforms in Congress.
"This arrangement helps many, hurts no one and is consistent with the law," the memo said.
"The perspective initially forwarded in media coverage of the Dixie and Anne Leavitt Foundation arose from those wanting to focus on abuses in Type III supporting organizations," the memo said. "Their goal was to rally public sentiment toward change."
Charities use Type III supporting organizations like the Dixie and Anne Leavitt Foundation to avoid a private-foundation classification by the IRS. That classification carries stricter federal regulation than a public charity, according to the IRS.
Bruce Hopkins, a lawyer in Kansas City, Mo., said there are more incentives to be a public charity than to be a private foundation.
Cohen explained that private foundations have to pay taxes, and contributions are not as attractive as those to public charities.
But the IRS has identified Type III supporting organizations as among what it calls "Dirty Dozen" schemes, and the Senate Finance Committee has been examining these and other charities for two years under the direction of the committee's chairman, Sen. Charles Grassley, R-Iowa.
The Leavitt memo states that "should changes in the law arise from this debate, the Foundation will comply with the changes."
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