UAW restricts charities amid federal probe
Three of the five charitable foundations affiliated with top UAW executives have curtailed their Michigan fundraising, and UAW-affiliated nonprofits are no longer allowed to take donations from the union in the wake of a federal investigation.
The nonprofits run by UAW president Dennis Williams and vice presidents Cynthia Estrada and Norwood Jewell let their state registrations expire, according to the Michigan Attorney General’s office. Estrada’s lapsed July 31, and the others exactly one year earlier. They can distribute money already banked, but cannot legally solicit any more.
Authorities began looking into the nonprofits following the July 26 indictment of a former Fiat Chrysler labor negotiator and the widow of a UAW vice president, based on a federal investigation that began more than two years earlier. Alphons Iacobelli and Monica Morgan-Holiefield stand accused of siphoning $4.5 million from the UAW-Chrysler National Training Center, money meant to reach and teach blue-collar workers.
Some of the money, the indictment contends, was funneled through the Leave the Light On Foundation created by the late General Holiefield, the former UAW vice president who died of pancreatic cancer in March 2015.
The investigation has expanded into the operations at the corporate training programs run by GM and Ford in collaboration with the UAW, according to an earlier report in The Detroit News.
At least one more of the UAW-connected foundations has received money from an automaker’s training center.
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The Ashton Fund, founded by retired vice president and current GM board member Joseph Ashton, received $157,750 in 2012 from the UAW-GM Center for Human Resources. From 2011-13, an additional $41,750 from the UAW was routed through the training center to the Ashton Fund’s annual golf outing — donations in both cases that would no longer be permitted by the union.
The five foundations listed a combined $3.2 million in donations to other charities since 2010, according to publicly accessible IRS forms known as 990s. A sixth foundation, the 5 Game Changers Charity Fund, was registered in 2014 by Williams’ likely successor as president, Gary Jones, but lists no assets or income.
Supporters say the foundations are part of a legacy of community involvement that has led, among other things, to a UAW scholarship fund at Michigan State University.
Generosity aside, experts say the foundations have operated with mission statements that are too broad and are guided by boards of directors whose memberships are too narrowly focused, while filling needs that are too uncertain, such as the guidelines listed by the Washington, D.C.-based Council of Nonprofits.
“People typically start foundations because a family member has passed away. They want to raise money for a certain cause,” said Jason Fisher, a vice president at RDM Associates, a Clarkston-based accounting firm specializing in nonprofits. Absent that motivation, and given UAW vice presidential salaries in the $140,000 range, “It can be rather odd to have people at that level having their own charitable fund,” he added.
Matthew Downey, director of nonprofit services at Grand Valley State University’s Johnson Center for Philanthropy, further questioned other aspects of the UAW-related foundations.
None have websites explaining their goals, he noted, one of the basics the Better Business Bureau looks for when it evaluates a charity. The official statements of purpose seem almost comically vague, Downey said. Nineteen of the 21 board members listed for the five foundations work for or are otherwise connected to the UAW.
“It seems odd that if you’re so focused on the community, you wouldn’t have community people on the board,” Downey said. “It’s usually obvious why a nonprofit is doing what it’s doing, and here, it isn’t.”
The insular boards, he said, invite a perception of corruption even where none exists. “If I have four board members and all four are my colleagues at work, we might be into something together,” he said. “Or, they might not really care.”
The IRS 990s reveal a nonprofit’s total annual revenue, but typically offer few specifics on sources of income. Several of the UAW charities have conducted golf outings. Williams’ foundation holds a chili cookoff.
The five nonprofits all received donations from the UAW, according to the union’s reports to the U.S. Department of Labor, for a total of $376,432 since 2010 — about 3 percent of the UAW’s $12 million in charitable contributions, gifts and grants across that span. Earlier this year, the UAW adopted a regulation prohibiting such donations, and also forbidding charities controlled by UAW officials from accepting donations from joint training centers or vendors.
The founders and their five nonprofits include:
■James “Jimmy” Settles Jr., co-president of the UAW-Ford National Programs Center. He is president of JUST, whose mission is to “receive and administer funds through golf tournaments and other events to be used for charitable and/or educational purposes.”
Founded in 2007, JUST has been the most generous of the 501(c)(3) organizations, granting gifts of nearly $1.3 million since 2010. Its most recent filing, for 2015, shows income of $174,232 after expenses from a golf outing, and $62,787 from a gala timed to the Detroit auto show.
Its donations included $10,000 apiece to the Chosen Generations Community Center in Detroit, the Trade Union Leadership Council, the American Diabetes Association and Young Detroit Thinkers, and $6,000 to Hartford Memorial Baptist Church.
JUST has received $78,650 in donations from the UAW.
■Jewell, co-chairman of the UAW-Chrysler National Training Center. He operates Making Our Children Smile, dedicated to “children, veterans and seniors, as well as the poor, caring for the sick, and supporting charitable, educational, civic organizations and other organizations doing good works.”
Making Our Children Smile also held a golf outing. Its major donations for 2016 included $43,278 to Gleaners Community Food Bank and $24,809 for a backpack giveaway for schoolchildren at Clark Park.
Jewell’s foundation has received $12,000 in donations from the UAW, the least among the five.
■Estrada, co-president of the UAW-GM Center for Human Resources. She chairs the Cynthia Estrada Charity Fund, whose 990 says it assists schools, mentorship programs, veterans, the poor, the ill, the hungry and “other organizations performing good works.”
The fund reported one fundraising event in 2015, a dinner whose gross receipts of $357,506 included $322,206 in contributions from unspecified sources. The banquet itself brought in $35,300, but claimed expenses of $70,841, for a net loss of $35,541.
The fund’s outgoing donations included $60,000 to Children’s Defense Fund Freedom Schools, which has multiple programs in Michigan; $25,000 to the James and Grace Lee Boggs School in Detroit; and $10,000 apiece to a girls and boys’ club and a nonprofit gym in St. Louis, Missouri.
The Estrada Charity Fund has received $139,032 from the UAW, the most of any of the executives’ foundations.
■Williams, president of the UAW since 2014. He is president of the Williams Charity Fund, which according to its 990 is “organized exclusively for charitable purposes to include but not be limited to” veterans’ organizations, rescue missions, food kitchens, benefiting the poor and sick and supporting educational and civic organizations.
The fund reported $229,000 in contributions in 2015 as part of a $293,920 event simply called “Fundraiser.” It listed $25,000 donations to the Capuchin Soup Kitchen, Covenant House and the Detroit Rescue Mission.
The Williams Charity Fund has received $105,000 from the UAW.
The fund’s largest donation, $40,000, went to Mission 1:17, the housing arm of a Walled Lake agency called The New Foster Care.
Williams, a former foster child, “came out himself,” said executive director Khadija Walker-Fobbs. “He actually spent time meeting the boys.”
The donation was a shock, she said: “We were thinking, ‘Oh, hopefully they’ll adopt a room and maybe we’ll get a bed and a bureau.’ ”
Instead, Mission 1:17 was able to apply money to its Southfield residence for boys and open a house nearby for girls.
■Ashton, nominated to the GM board by the UAW Retiree Medical Benefits Trust. He was the founding president and is most recently listed as treasurer of the Ashton Fund, which supports charities that “provide benefit to the poor, caring for the sick and supporting charitable, educational and civic organizations.”
The Ashton Fund, according to an early November report in The Detroit News, is of particular interest to investigators. It stands apart from the others in several ways.
The fund is not chartered in Michigan, but in Ashton’s home state of New Jersey. Though the five foundations’ 990 forms offer few specifics on sources of income, an addendum in 2012 lists the Ashton Fund’s $157,750 donation from UAW-GM.
In 2015, the fund’s directors changed from two of Ashton’s UAW colleagues to two of his family members, including a son who works for the union. And unlike the other four foundations, it has stockpiled most of the money it has raised: of $1.3 million collected since 2010, it still controls $914,883, which is $310,000 more than the other four foundations combined.
Its balance is about $85,000 below the $1 million threshold that requires a 501(c)(3) nonprofit to submit to an annual independent audit.
The fund has received $41,750 from the UAW, the amount routed through the UAW-GM training center for golf outings.
The phone number listed on IRS forms for Ashton was answered by a woman who declined to identify herself. Calls to the listed representatives of the other funds were referred to the UAW, which had no comment.
The only two board members named in the five foundations’ most recent IRS filings without a direct or financial connection to the UAW are both academics. One of them, Ethriam Brammer, said he agreed to help oversee Estrada’s fund because “for me, it was about connecting sources of potential revenue streams to sources that have need.”
A Wayne State professor when the fund started in 2012, Brammer resigned in 2015 when he took a more distant job directing the TRIO Student Support Services Program at Eastern Michigan University.
“We had regular meetings,” he said, usually at UAW headquarters. “We functioned essentially like every other board I’ve been on.”
Voting on grants, “eight or nine times out of 10, there was a consensus. The Grace Lee Boggs School or children’s literacy initiatives in southwest Detroit seemed like no-brainers.”
Detroit attorney Bruce Miller was surprised to learn he is still listed as a board member of Settles’ fund.
A decade ago, “I set the fund up for him,” Miller said. “You can do it sleepwalking. All you do is fill out the form.”
Miller, still practicing at 90, pointed out that it was Iacobelli who controlled the money at the Fiat Chrysler training center, not Holiefield, “so why is it always played as a UAW scandal?”
“The UAW has had a great tradition of honesty,” Miller said — and also of philanthropy, he added, which might lend itself to creating personal foundations.
Every UAW local has a community service committee, and most elected officials start at the factory level. One former vice president ultimately endowed a scholarship fund at Michigan State, open to UAW members and their children, that provides a dozen or more grants each year of up to $2,500.
Calvin Rapson, who retired in 2010, raised money through a series of golf outings “because of his personal story,” said John Beck, an associate professor in MSU’s School of Human Resources and Labor Relations. “He started at MSU, but couldn’t afford to finish.”
MSU awarded Rapson an honorary doctorate degree in 2008, and invites him back every year to share a meal with some of the scholarship recipients.
“The only thing Cal gets out of it,” Beck said, “is a free lunch.”
nrubin@detroitnews.com
Twitter: @nealrubin_dn