The Investigative Project on Terrorism Responds

Letter

Published November 24, 2010.

Your Nov. 18 article, “Terror Expert Emerson Feels His Own Heat Over Finances,” continues to repeat the mistakes made last month by the Tennessean concerning the Investigative Project on Terrorism Foundation’s structure and finances. It perpetuates the fiction that Steve Emerson is somehow collecting more than $3 million for his private purposes and doing nothing else. That is demonstrably false. No one is “in the dark” about what the Investigative Project on Terrorism Foundation does or how much it pays its contractor for doing it.

The relationship between the Foundation and its contractor was vetted by experts in the field, including Ed Coleman, a former director of the IRS’ Exempt Organizations division, who said: “So far as IPTF is paying fair market value to the for-profit, SAE, and the for profit spends this money in furtherance of the exempt purpose of IPTF, and IPTF discloses on its 990 that it gives this money to SAE, if both organizations are headed by the same person, I don’t see the problem.”

The Forward, however, seemed determined to find a problem where one did not exist. For example, “Emerson did not provide the IRS with the signed and dated statement it requested,” it wrote. Emerson and IPTF responded by explaining that the statement the IRS sought was not necessary. The IRS answered by thanking the Foundation and recognizing the tax-exempt status it was seeking. The Forward had that correspondence, but made it seem that Mr. Emerson ignored the request instead of answering it.

IPTF’s publicly available Form 990 filing for 2008 shows how much the Foundation spends to further its goal “to research and expose the activities of terrorist networks and supporters in the U.S. and abroad and to educate the public about this threat.” Money paid to the IPTF’s contractor is used to provide a website open to the public; access to an unparalleled database of millions of documents; travel expenses to cover trials and events; and the expenses involved in producing books and documentary films.

Staff outsourcing arrangements are common in the nonprofit world, and there is nothing improper about this one. SAE Productions, our contractor, spends all of the money it receives from IPTF to further the Foundation’s tax-exempt purposes. IPTF has been compliant and transparent in its IRS filings, which are a matter of public record. IPTF is not obligated to make further disclosures, nor is any other charitable organization. The very nature of our work mandates that we protect the organization and its staff from threats posed by those that are the subject or our research by preserving the confidentiality of our methods. This is only common sense.

We provided the IRS with everything it needed to recognize our tax-exempt status. Nothing we have done since then changes our qualification for that status. The Forward had full access to our public filings and to our rebuttals of the many false statements and conclusions contained in the Tennessean story. It spoke directly with Steve Emerson who also made clear that IPTF is operated properly and in compliance with the law. It’s unfortunate, however, that the Forward decided to draw incorrect conclusions despite the clear evidence to the contrary. Anyone who is interested in learning more can read our responses to the Tennessean at our website – www.investigativeproject.org.

Ray Locker
Managing director
Investigative Project on Terrorism


The Forward replies:

Readers can find the original article here.

Locker alleges that, like an earlier story in the Tennessean, our article “perpetuates the fiction that Steve Emerson is somehow collecting more than $3 million for his private purposes and doing nothing else.”

In fact — and in contrast to the Tennessean article — our story faithfully reported Steve Emerson’s statement to the paper that his salary was $116,000 from SAE, the for-profit firm he controls that received $3.4 million in 2008 from the Investigative Project on Terrorism Foundation, the tax-exempt charity Emerson also controls. The article nowhere alleged that any other money from this flow was going to Emerson personally.

Locker objects that “no one is ‘in the dark’ about what the Investigative Project on Terrorism Foundation does or how much it pays its contractor for doing it.”

That would be relevant only if the Forward article alleged anyone was in the dark about these matters. The quote fragment Locker offers was applied to something entirely different: how Emerson’s for-profit firm, SAE, spends the revenue it receives from IPTF, Emerson’s charitable foundation. The article clearly notes what IPTF does and how much — $3.4 million — it pays SAE for doing it. The issue raised was the lack of disclosure IPTF offers the public as a charity regarding its expenditures. This is due to an arrangement under which almost all its revenues are simply channeled into SAE, which then conducts IPTF’s affairs and spends its money on the foundation’s behalf.

Locker states that the article failed to note Emerson’s response to the IRS’s request for a signed and dated statement affirming that IPTF’s subcontractor would be an “’an unrelated third party’ and, like the IPTF, a tax exempt organization.”

In fact, the article lays out Emerson’s response to the IRS in the sentence immediately following the one noting that he did not provide the IRS with the signed and dated statement it requested:

“[Emerson] instead noted that the subcontractor would, in fact, not be a tax-exempt organization precisely to avoid the need for public disclosures, due to security concerns. The subcontractor would be, however, organized as a ‘not-for-profit organization,’ Emerson wrote.”

Contrary to Locker’s claim, the article went on to note: “On January 26, 2007, the IRS approved Emerson’s application for tax exemption for the IPTF.” We indeed did have this correspondence. And we quoted from it.



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