Unusual $5 Million Grant from Tax-Exempt ACORN Affiliate to Non-Tax-Exempt ACORN Central Organization

We’re not sure if this is improper but thought it unusual enough to get it out there in the blogosphere.

First, some background.

ACORN, that is, the Association of Community Organizations for Reform Now, is a nonprofit Arkansas corporation that is not tax-exempt. ACORN likes not being tax-exempt because that means it doesn’t have to give much in the way of public disclosure. It carries out its activities largely through its affiliates. One of its affiliated organizations is the American Institute for Social Justice Inc. The Institute is tax-exempt so it is required by federal law to disclose a great deal of important financial information in its annual tax return which is called an IRS Form 990.

The Institute disclosed at Statement 3 on page 20 of its 2006_990 form that it provided a $4,952,288 grant to ACORN, the non-tax-exempt Arkansas nonprofit corporation for “community reinvestment.”

It might not be illegal but it is certainly unusual for a tax-exempt entity to provide a grant to its non-tax-exempt parent organization.

ACORN is a strange organization.