In a story broken in December by Todd Feathers of the Union Leader, the Sununu Inaugural Committee, an IRS-registered nonprofit organization, was revealed to have paid more than $165,000 to the governor’s family and close associates, including his sister and father.
Besides optics of self-enrichment, such conduct can be illegal — both federal and state laws forbid self-dealing except when certain hurdles are cleared and carefully documented to ensure the funds are handled ethically. Charitable organizations can be punished for violating the public trust, which is part-and-parcel of nonprofit status.
Political theater has ensued with the governor being dogged at public appearances by giant checks representing the tens of thousands in committee funds paid to family and friends. The director of the N.H. Charitable Trust Unit has been reluctant to get involved so far, despite a parallel and directly on-point state law to the federal laws prohibiting such conduct (RSA 7:19-a). The state Senate, in a 22-2 vote, approved new rules to provide greater transparency for transactions between future inaugural committees and family members of a sitting governor. The bill met with unanimous approval in the House Election Law Committee and is expected to pass.
A quick way to clear the air on this matter would be to let the sun shine on whether the committee properly acted in such a way to avoid conflict of interest or whether there was unlawful self-dealing that’s steadily been compounded in the court of public opinion by a reluctance to allow lawmakers or the press to get to the bottom of things by examining the direct evidence. The secrecy is all the more unusual when the committee purports to be acting for the public welfare — part of the bargain to have federal nonprofit status.
Indeed, some funds pay for what in any other world should be government’s responsibility — things like the Governor’s Easter Egg Hunt — and the committee in part states in its IRS filings it will work on energy policy and on “official functions that benefit the State of New Hampshire … not funded otherwise through the governor’s office.” There is a reason legislators and the press continue to dig deeper.
Casey McDermott of N.H. Public Radio just broke the news that the inaugural committee did, in fact, have a conflict of interest policy — or at least has one now; the policy is undated though it appears to have a law firm document identifying number in the lower right page. The committee previously refused to disclose the policy until NHPR figured out that the committee had promised the IRS in its annual filings to make the conflict of interest policy available upon request. The policy seems to call into question the very actions that the committee undertook with the self-dealing payments that may — or may not — have been legal.
In a nutshell, should a nonprofit like the committee retain the services of close family or associates, such expenses are possible — if certain ethically driven conditions are met. Importantly, in the case of the governor’s sister, who received a substantial five-figure payment, she objectively would need to be very good at what she does to be preferred over all other vendors in the state. Did any other vendor even have a shot, or was a decision made to enrich the Sununu family with contributions through a nonprofit?
To the extent regulators have — or will — open an investigation, the following three requests could be of service in a subpoena:
1. Please release all minutes of the committee for the 2017 and 2019 inaugurals. Are the conflicts of interest contemporaneously discussed and documented? Did conflicted members recuse themselves from discussions and votes? Was there quorum for a decision? Did the decision obtain the required two-thirds threshold from disinterested members? And were the discussions free of favoritism or preference for family members and longtime associates?
2. Please release any records of whether other decorators or party planners bid for the work of the committee, as well as all emails and texts between committee members and the governor or his staff or agents in which the decision was made to hire the governor’s sister’s party-planning firm over any other such vendor.
3. Produce contracts or invoices for payments to family and close associates. Please also provide an explanation for how the fair market value of the services was determined pursuant to law.
These three simple requests and related questions will shed light on whether the transactions were aboveboard or not, under both state and federal law.