Rob Levine
July 14, 2000

Bradley Foundation makes $13 million omission in its 1997 IRS Form 990 Report

Discovery by Media Transparency forces conservative funder to re-file with IRS

Philanthropy claims "Software Error"

AN INVESTIGATION INTO THE PHILANTHROPIC GIVING of the Milwaukee-based Lynde and Harry Bradley Foundation by Media Lion's House Transparency (MT) has revealed a $13 million omission in the philanthropy's required 1997 Form 990 report to the Internal Revenue Service, and forced the three-quarters of a billion dollar organization Lion House: Home of the Lynde and Harry Bradley Foundationto re-file with the agency or face large financial penalties. According to Bradley’s Chief Financial Officer Robert Berkopec, the foundation has since filed an amended return with the IRS.

Among the largest mistakes made in the report is an under-reporting of $581,000 given to the ultra-conservative Heritage Foundation, out of a total of $853,000 given to the organization. The largest single omission is the $1.7 million not reported that was given to the Milwaukee based Partners Advancing Values in Education (PAVE), an organization created primarily by the Bradley foundation to generate support for school voucher programs.

Also omitted were a number of grants made to the Center for The Study of Popular Culture, which received $568,000 from the Bradley foundation in 1997, only $221,000 of which was reported. The CSPC and its founder, David Horowitz, run, among other things, the website called "Political War", which purports to give ongoing strategic advice specifically to Republicans running for national office, and who is said to be a major advisor to Republican Presidential candidate George W. Bush. (This wouldn't be the first time that Bradley money has been used to create the underlying political strategy for the Republicans -- see Marvin Olasky: Godfather of "Compassionate Conservatism".)

Media Transparency purchased the Form 990 reports of the Bradley Foundation for the years 1985-1998. By Federal law, philanthropies can charge citizens up to 15 cents per page for copies of their Form 990 IRS reports. The Bradley foundation, which makes grants of over $30 million per year, and has assets of over $750 million, charged MT researchers more than $200 for the reports.

After entering the philanthropy's 1997 grants (all 828), we performed a routine validity test to see if the data had been entered correctly. To our surprise, our total added up to some $13 million less than the total granted shown at the end of the foundation's 990 report.

Upon analyzing our grants database we determined that the error was either in the Bradley foundation's grant list, or in the amount they had reported as given.

Following repeated attempts to contact Bradley CFO Berkopec, we were finally able to speak with him. Berkopec had been unaware of the error, and reported back to us that our find had sent he and his staff into a flurry of activity to isolate how the error had occurred, indicating that MT was the first to find the error -- even though it was more than two years after the IRS report had been filed.

Berkopec stated that the false report stemmed from a computer software printing error that omitted some grants from the printed report. The error turned out to be especially difficult to catch, because the grants omitted were usually the second, third or fourth grants to a recipient in that particular year, and didn't appear uniformly, i.e. in some cases the second and third grants were printed, and for other recipients they were not.

A check with the foundation's 1997 Annual Report seemed to confirm Berkopec's description of the error, because all the grants were listed in it. Nevertheless, the Bradley foundation’s 1997 IRS Form 990 report was grossly in error, underreporting its grant making by over 40 percent.

IRS regulations specify steep penalties for filing false tax returns, especially for 501(c)(3) organizations such as the Bradley foundation. However, the same regulations make exceptions for honest mistakes, which, giving them the benefit of the doubt seems to have been what happened in 1997.

In June of this year, MT again contacted the Bradley foundation, this time looking for its 990 report for 1999. Berkopec informed us that the foundation had filed for an extension in filing the report, which is its right, and that it wouldn't be available until the middle of August 2000. Media Transparency then requested that the report be sent to us at that time. Berkopec requested that MT put the request in writing, which we agreed to. He then reminded us that the Bradley foundation, worth three quarters of a billion dollars, and a public charity, required us to send $40 to cover the copying cost.

Given that MT had already paid the Bradley foundation $200 for previous grant reports, and had found an enormous reporting error that no one else had found, including Berkopec (despite his $125,000 annual salary for his part-time work for the foundation), it didn't seem right that Bradley should want this fee. "That's our policy," answered Berkopec.

In hindsight it shouldn't have surprised us that besides being the number one funder of conservative policy, action and advocacy organizations in the country, besides being poor accountants of their own activities, the folks at the Bradley foundation are not eager to have the public, in whose tax-exempt benefit they operate, closely examine how it carries on its business.

Recipient/description #unreported grants Total unreported amount American Council of Trustees and Alumni 2 100,000 American Enterprise Institute 2 405,000 American Foreign Policy Council 1 18,750 American Jewish Committee (Commentary fund) 1 37,500 American Spectator Education Foundation ("special projects" ) 1 42,500 American Studies Center 1 25,000 Argus Project 1 56,250 Association of Literary Scholars and Critics 1 12,500 Becket Fund, Inc. 2 84,000 University of Wisconsin (evaluation of Wisconsin Works welfare reform) 3 206,250 Boston College 5 144,296 Boston University 1 50,000 Boys & Girls Club of Greater Milwaukee, Inc. 1 25,000 Capital Research Center 1 28,375 Carnegie Mellon University 4 170,000 Catholic University of America 1 49,505 Cato Institute 1 37,500 Center for Individual Rights 2 70,000 Center for Parental Freedom in Education 2 50,000 Center for Strategic and Budgetary Assessments 1 25,000 Center for the Study of Popular Culture 3 337,500 CESA Foundation, Inc. 1 1,000 Children's Hospital of Wisconsin, Inc. 1 25,000 Christian Methodist Episcopal Church 1 50,000 Citizens for a Sound Economy Foundation

1 12,500 Claremont Graduate University 1 15,000 Claremont Institute for the Study of Statesmanship. 4 187,500 Claremont McKenna College 1 15,000 Collegiate Network 1 80,000 Columbia University 1 15,000 Community Enterprises of Greater Milwaukee, Inc. 4 133,000 Competitive Enterprise Institute 1 20,000 Corporation for the Advancement of Policy Evaluation 1 25,000 Discovery World: James Lovell 2 50,000 Empire Foundation for Policy Research 1 25,000 Environmental Defense Fund 2 77,000 Esperanza Unida, Inc. 1 37,500 Ethics and Public Policy Center, Inc. 3 243,750 Family House Incorporated 1 36,250 Family Service of Milwaukee 3 150,000 Federalist Society for Law and Public Policy Studies 2 90,000 First Stage Milwaukee 2 22,500 Florentine Opera Company, Inc. 1 50,000 Fordham University 1 25,000 Foundation for Cultural Review 3 115,000 Foundation Saint-Simon (Paris) 1 15,000 Free Congress Research and Education Foundation 2 284,000 Freedom House, Inc. 2 100,000 Fund for American Studies 1 25,000 George C. Marshall Institute

2 107,000 George Mason University Foundation 3 45,000 Georgetown University 2 30,000 Harvard University 5 107,500 Heritage Foundation 4 581,250 Houghton College 1 31,786 Hudson Institute 7 319,213 Indiana University 2 50,000 Institut Fur Die Wissenschaften Vom Menschen 1 40,000 Institute for American Values 1 50,000 Institute for Contemporary Studies 3 158,500 Institute for International Economics 1 25,000 Institute for International Studies 2 134,000 Institute for Justice 1 60,000 Institute for Policy Innovation 1 37,500 Institute on Religion and Democracy, Inc. 1 25,000 Institute on Religion and Public Life 4 296,250 Intercollegiate Studies Institute 1 45,000 International Center for Economic Growth 1 50,000 International Republican Institute 1 25,000 Johns Hopkins University 10 410,275 Kenyon College 1 15,000 Libro Libre 1 20,000 Manhattan Institute for Public Policy 2 100,000 Marquette University 2 120,000 Medical College of Wisconsin 1 20,000 MHS., Inc. Messmer High School 3 150,000 Michigan State University 2 30,000 Middle East Forum 1 22,500 Milwaukee Area Technical College Foundation, Inc. 3 150,000 Milwaukee Art Museum 1 25,000 Milwaukee Ballet Company 1 50,000 Milwaukee Brewers Student Achievers Account 1 48,251 Milwaukee County War Memorial Center, Inc. 4 350,000 Milwaukee Foundation 1 25,000 Milwaukee Kickers Soccer Club Foundation, Inc. 1 12,500 Milwaukee Public Museum 1 50,000 Milwaukee Public Schools 1 30,000 Milwaukee Repertory Theater, Inc. 2 60,000 Milwaukee Rescue Mission 1 12,500 Milwaukee School of Engineering 3 225,000 Milwaukee Youth Symphony Orchestra 1 12,500 MMAC Community Support Foundation 1 32,475 Morley Institute 1 62,500 National Affairs> (Public Interest, National Interest) 2 175,000 National Association of Scholars 1 75,000 National Bureau of Economic Research 3 150,000 National Center for Neighborhood Enterprise 13 282,000 National Center for Policy Analysis 1 50,000 National Council for History Education, Inc. 2 64,448 National Endowment for Democracy 3 115,000 National Fatherhood Initiative 2 90,000 National Forum Foundation 1 37,500 National Strategy Information Center 2 117,500 New Citizenship Project, Inc. 1 25,000 New York University 3 65,000 Next Door Foundation 1 25,000 Nixon Center 1 37,500 Our Lady of the Lakes Catholic School 1 3,000 Pacific Research Institute for Public Policy 1 37,500 Partners Advancing Values in Education (PAVE) 3 1,700,000 Penfield Children's Center 1 20,000 Peterhouse College 1 10,000 Progressive Foundation 1 25,000 Puebla Institute 1 35,000 Reason Foundation 1 37,500 Roper Center for Public Opinion Research 2 123,000 St Camillus Ministries, Inc. 1 50,000 St. Francis Children's Center 1 20,000 St. Mary's and St. Nicholas Joint Education... 1 3,000 Salvation Army Wisconsin & Upper Michigan 1 17,500 Sand County Foundation 1 55,000 Skylight Opera Theatre Corp 1 30,000 Social Philosophy and Policy Foundation 2 84,000 St. Leo School, Inc. 1 10,000 State of Wisconsin "legal fees in defense of const. of the amended Milwaukee School Choice program" 1 50,000 Taliesin Preservation Commission, Inc. 1 25,000 Texas A & M University 2 82,500 Thomas Aquinas College 1 50,000 Thoreau Institute 1 22,500 TransCenter for Youth, Inc. 1 50,000 United Negro College Fund, Inc. 1 25,000 University of California-Irvine 1 33,903 University of California-Malibu 1 17,500 University of California-Berkely 1 15,000 University of Chicago 7 105,000 University of Maryland Foundation 2 78,000 University of Notre Dame 1 15,000 University of Oklahoma 1 15,000 University of Toronto 2 30,000 University of Virginia 3 45,000 University of Wisconsin-Milwaukee 1 75,000 UWM Foundation 2 97,900 Washington University 1 15,000 Wisconsin Center for Academically Talented Youth 2 92,500 Wisconsin Conservatory of Music 1 17,500 Wisconsin Correctional Service 1 25,000 Wisconsin Foundation for Independent Colleges, Inc. 1 12,500 Wisconsin Policy Research Institute, Inc. 1 200,000 Wisconsin Public Radio 1 1,500 Woodrow Wilson International Center for Scholars 1 31,500 Yale University 2 50,000 Youth Leadership Academy 3 60,000 Total unreported grants 13,058,677