A coalition of New Orleans environmental and consumer advocates filed a formal complaint against the Entergy Charitable Foundation on Tuesday, asking for an investigation into whether the private nonprofit was illegally utilized to lobby the New Orleans City Council on behalf of Entergy Corporation and its subsidiary, Entergy New Orleans.
The complaint was filed with the the Treasury Inspector General for Tax Administration, a federal audit and investigatory body that provides independent oversight of the IRS.
The complaint is related to Entergy’s use of past charitable contributions — often made through the foundation — to leverage support for a power plant in eastern New Orleans, which the City Council approved in March.
“There is widespread evidence that Entergy repeatedly used its 501(c)(3) foundation, Entergy Charitable Foundation, to recruit recipients of its charitable donations to take public positions in support of the proposed gas plant as a quid pro quo exchange for donations,” Bill Quigley, the lawyer representing the coalition, wrote in the complaint. “The direct legislative lobbying appears to be illegal under the rules of the IRS for such tax exempt corporations.”
According to IRS guidelines cited in Quigley’s letter, nonprofits like Entergy Charitable Foundation are allowed to attempt to influence legislation without risking their tax-exempt status, as long as they don’t engage in “too much lobbying,” comprising a “substantial part” of their activities. That depends on a number of factors, including how much time and money went into lobbying activities.
But the Entergy Charitable Foundation is not only a charitable organization but a “private foundation,” which means it has to pay taxes on any lobbying expenditures, substantial or not.
“This tax is so significant that it generally acts as a lobbying prohibition,” the IRS website says.
Entergy did not respond to a request for comment on this story.
The list of organizations that signed the complaint includes many of the same groups that spearheaded the opposition to Entergy’s proposed plant and have since sued over the council’s March 8 vote approving it, including the Alliance for Affordable Energy, the Deep South Center for Environmental Justice, VAYLA New Orleans, and Justice and Beyond.
The complaint makes several references to past reporting by The Lens that illustrated the various ways that Entergy New Orleans sought to leverage its charitable giving to gain support for the power plant. In one example from 2017, Entergy New Orleans’ corporate and foundation contribution coordinator, Kim Mitchell, sent an email to Entergy executives asking for their help to recruit “community partners.”
She included a template letter to send to these beneficiaries that said, “As a company that’s been here for the community for many years and contributed millions of dollars to hundreds of nonprofits to support their programs, we find ourselves in need of your assistance.”
It’s unclear if the letter was sent to any beneficiaries of the Entergy Charitable Foundation, or just recipients of corporate donations from Entergy New Orleans. But ultimately, at least 19 organizations receiving corporate or foundation support from Entergy spoke at two key council hearings on the power plant in October 2017 and February 2018.
And just last month, Entergy asked Foundation grantees to write letters to City Council members in an attempt to avoid a $5 million fine from City Council for its role in a scheme to pay actors to speak at City Council meetings in favor of the proposed power plant.
The Entergy employee who requested the letters was Patty Riddlebarger, the vice president of corporate social responsibility at Entergy Corporation. Riddlebarger oversees the allocation of Entergy Charitable Foundation funds.
One of the letter writers told The Lens that Riddlebarger didn’t explain that the campaign was connected to the looming $5 million fine.
“I wasn’t aware of the fine,” said Joshua Joachim, the CEO of the Louisiana Region of the American Red Cross. “The Entergy rep reached out and asked if I’d be willing to write a letter. The only reason that was given was that there was some education needed on our partnership with Entergy.”
The Louisiana Red Cross received a grant from the Entergy Charitable Foundation in 2018.
“I think we were all shocked, not necessarily that they did this earlier in the process before the whistle was blown on them, but that they continued to do it now when the council is trying to decide how to respond,” Quigley said. “The IRS or Department of Treasury needs to clamp down on them and make them follow the rules.”
“Entergy plays a very big role in our community and our economy,” Quigley said. “And bless them for helping people, but you can’t be tax exempt and lobby at the same time. You just can’t do that.”