In Sununu's Inaugural Fundraising, An Overlap Of The Political And The Nonprofit

Jan 13, 2019

A law that passed the year he was elected made Chris Sununu the first New Hampshire governor required to disclose the activities of his inaugural committee. And to hear Sununu tell it, that committee - the Sununu Inaugural Celebration, Inc. - has more than delivered when it comes to transparency.

“It is a private nonprofit, it is not campaign-driven,” Sununu told WMUR last week. “It has nothing to do with politics, there is a very clear line there, and we treat ourselves more openly than any other private nonprofit in the state.”

What the committee has disclosed, however, raises questions about the extent to which the same people overseeing the nonprofit organization have profited from its activities. The structure employed by Sununu’s inaugural committee - a 501(c)(4) organization - means it’s not subject to as much oversight as many other nonprofits in the state when it comes to laws designed to police potential conflicts of interest.

And the records for Sununu’s fund, while in some ways more exhaustive than that of his predecessors, highlight the nebulous role that inaugural committees play for New Hampshire governors: as a nonprofit corporation; a political fundraising vehicle; an event-planning piggy bank; and, occasionally, a personal reimbursement account, all in one.

Payments to trustees

Filings with the New Hampshire Secretary of State and the IRS show the Sununu Inaugural Celebration, Inc., paid out nearly $98,000 to its own board members. That amounts to roughly one quarter of the organization’s reported spending, which totals $409,929 to-date.

As first reported by the New Hampshire Union Leader, Sununu’s inaugural fund paid roughly $50,000 to an interior design company operated by the governor’s sister, Catherine Sununu. A longtime political ally to the Sununu family and senior advisor to the governor, Paul Collins, has also received almost $48,000 from the inaugural fund.

But Catherine Sununu and Paul Collins aren’t just clients of the inaugural committee who happen to have close personal and professional ties to the governor. They also hold another important role: Both are members of the inaugural organization’s five-person governing board, according to registration paperwork filed with the state’s corporation division and the Internal Revenue Service.

A 990 tax return filed in November 2017 — covering the calendar year 2016 — specifically identifies Catherine Sununu as the chair of the Sununu Inaugural Celebration, Inc., and Paul Collins as its treasurer.

The same IRS filing lists Harold Parker, Christopher Ellms and Christopher Collins - each of whom has worked or currently works for the Sununu gubernatorial administration - as “directors.” In addition to being colleagues on the inaugural board and in the governor’s office, Paul and Christopher Collins are siblings.

NHPR asked Sununu’s office for more details on how the inaugural fund’s leaders were chosen, what their responsibilities entailed and what role Catherine Sununu and Paul Collins played in approving spending decisions that they benefited from.

Collins, in his role as the fund’s treasurer, provided the following statements through a spokesman for the governor’s office:

“All Directors were chosen based on their past experience with fundraising, event planning, and community outreach. All Directors have a shared responsibility to oversee the planning of inaugural events and the responsible spending of surplus funds. Certain Directors provide additional services for which they receive compensation Such arrangements are made in full compliance with State law, IRS regulations, and the organization’s bylaws and conflict of interest policy.”

Sununu’s team declined to share a copy of their bylaws and conflict of interest policy.

“As a private nonprofit, the organization’s internal governing documents are confidential,” said Sununu’s gubernatorial spokesman Ben Vihstadt, who was recently named to the inaugural fund’s board himself and also worked for Sununu’s re-election campaign in 2018.

Vihstadt told NHPR that Parker resigned from his seat on the board in mid-October, and the remaining members voted to appoint Vihstadt to fill that vacancy “shortly thereafter.”

There is no publicly available record of this leadership change in paperwork at the state or federal level.

State’s watchdog role varies

The governor - who himself has been paid about $39,000 for “expenses” and “travel expenses” from his inaugural fund - maintains that no special treatment was involved in paying his sister and senior advisor through the inaugural committee.

“They got paid exactly, and in fact probably a little below market value, but we’ll just say market value, for exactly the services they provided,” Sununu told NHPR last month.

But the nonprofit structure Sununu inaugural committee used for its inaugural fund - registering as a 501(c)(4) - allows it to avoid the kind of state oversight that could have imposed stricter rules on payments that present potential conflicts of interest.

The New Hampshire Attorney General’s Charitable Trust Unit does not actively regulate 501(c)(4) nonprofits. But it does oversee 501(c)(3) organizations. While the two kinds of nonprofits often appear similar in nature and mission from the outside, state laws makes it much more difficult for the 501(c)(3) entities to engage in the kind of payments to board members that the Sununu inaugural committee made to its directors.

The New Hampshire Charitable Trusts Unit’s “Guidebook for New Hampshire Charitable Organizations” provides detailed instructions on how nonprofits should comply with state laws governing payments between a nonprofit and the board members who run it.

According to that guidebook, if a nonprofit pays one of its directors more than $500 in a fiscal year, it needs to take a series of steps to ensure that director isn’t involved in “the discussion or vote on the transaction.” The nonprofit must also maintain “written minutes regarding its actions and must keep a list of all members with whom the organization does business.”

Additionally, “a two-thirds majority of a quorum of the board, who have not themselves sold goods or services to the charity in the last fiscal year, must find that the transaction is in the charity’s best interest.”

Despite this advice, Tom Donovan, director of the charitable trusts unit with the New Hampshire Attorney General’s office, said most 501(c)(4) organizations operating in the state needn’t meet the legal obligations that apply to other kinds of nonprofits.

“We would not have any oversight authority over such an organization, a 501(c)(4), that is not registered with us,” Donovan told NHPR. “We just have no oversight whatsoever.”

The Charitable Trust Unit’s website advises all New Hampshire nonprofits, regardless of type, to register as a charity with state regulators if their purpose is “benevolent,” “civic” or “educational,” among other categories.

The Sununu inaugural committee’s tax-exempt filing with the IRS states that its purpose is to “support activities for the good and welfare of the State of New Hampshire.”

But Donovan said the Sununu committee’s mission does not appear to fit any of the categories -- “benevolent,” “civic,” etc -- that would require oversight from the charitable trusts unit.

“I’m not going to do an analysis of that for you,” Donovan said, “but I’ll just tell you it doesn’t appear to be charitable, something like that.”

A Focus on Energy

The Sununu inaugural committee’s description on its IRS filing also includes language signaling an intent to use the money toward issues that would seem to meet the definition the state charitable trusts unit applies to other charities under its watch.

“The Organization intends and will support activities for the good and welfare of the State of New Hampshire as well as inaugural activities. Seminars, meetings and town halls will be used to accomplish these goals,” the IRS filing states. “The Organization will addres [sic] the cost of energy in the State of New Hampshire and investigate alternate means of enery [sic]. The high cost of living for families and individuals will be looked at. The Organization will support official functions that bebefit [sic] the State of New Hampshire that is not funded otherwise through the governor’s office.”

Energy companies were among the largest contributors to Sununu’s inaugural fund: In its first year alone, the committee reported $25,000 in donations from Eversource; a combined $25,000 from NextEra and its affiliates; $10,000 from Unitil; and $5,000 from Liberty Utilities. The committee also received more than $100,000 from local lobbying firms, companies and other industry groups with business before New Hampshire state government.

Collins, in a statement to NHPR, said the inaugural committee initially considered putting some of its money toward “examining the high cost of energy and the high cost of living for families in the State of New Hampshire” but later changed plans.

“The organization ultimately decided to use surplus funds solely to support official functions of the governor’s office not otherwise funded and to make donations to charitable and other nonprofit organizations in the State of New Hampshire,” Collins said. “The organization ultimately chose not exercise the option of using surplus funds to examine the high-cost of energy and the high-cost of living in New Hampshire.”

The filing that references energy and cost of living issues as potential uses for the inaugural funds shows that Catherine Sununu signed off on its accuracy on Nov. 14, 2017 - 10 months after the governor’s first inaugural celebration was held in January 2017.

The committee’s IRS filing also says it spent $11,105 on “Meetings” in 2016. When asked for more details on those meetings, the governor’s office said that money actually went toward inaugural party expenses: $6,000 in “event deposit[s]” to the Omni Mount Washington Resort and Sheraton Portsmouth Harborside Hotel; $2,400 on “camp mugs” from Kurier; $1,625 on candy from Dancing Lion Chocolates; and $1,079.59 in fees to Paypal.

“While the organization is not sure why the tax accountant classified these expenses broadly as ‘meetings,’ all expenses from 2016 were related to setting up inaugural celebrations,” Collins said.

Collins said all of the money reflected in the IRS filing is accounted for in the fundraising reports on file with the New Hampshire Secretary of State’s office.

Sununu calls scrutiny “unfair”

The governor himself has been adamant there is nothing untoward about any of the inaugural committee’s activities and quick to dismiss any concern as politically motivated.

“We’ve followed the law exactly as it should be, exactly as it’s prescribed, so frankly to be scrutinized and criticized for that is just political - I mean, it’s just fishing for something that really isn’t there. So yeah, I think it’s unfair,” Sununu told WMUR. “Look, if they want to change the laws, and do something different - then by all means, do that, and we’ll follow the law, exactly as prescribed.”

It does not appear that the either of Sununu’s immediate predecessors - Democratic Govs. Maggie Hassan and John Lynch - took steps to file paperwork with the IRS, as Sununu’s inaugural fund did. While Lynch voluntarily filed spending reports for his inaugural fund, Hassan did not. Republican concerns over Hassan’s refusal to detail her inaugural fund’s spending prompted a change in the law that now requires Sununu to disclose more information about his inauguration.

Now, concerns over Sununu’s committee, may prompt lawmakers to heighten transparency requirements for inaugural funds yet again.

Sen. Dan Feltes, a Democrat from Concord, is sponsoring a bill to add more disclosure requirements to inaugural funds - including notice on any payment from a committee in excess of $1,000 and requiring back up material, including receipts, for any payment from the inaugural committee to a governor-elect or a member of their immediate family.