Ralph Nader, Philanthropist: Is the anti-corporate crusader funding his own nonprofit network?
By Cliff Kincaid
Since 1965, Ralph Nader has been the Left's most persistent and influential advocate. His activities have spawned numerous "consumer activist" nonprofits dedicated exclusively to fighting big business. But last June, when Nader was forced to disclose his personal finances, the public learned that he is among the wealthiest Americans and invests heavily in the free-market system. Nader claims that he gives most of his income to his network of nonprofits and similar groups which means his anti-corporate activity is funded by investments in major corporations.
Everyone, it seems, knows who Ralph Nader is. He's the consumer activist, king of a network of "Naderite" nonprofit advocacy groups. He's the enemy of big business, self-proclaimed friend of the common man.
And he's the multi-millionaire philanthropist.
That's something few people knew before Nader's run for the American presidency as the candidate of the Green Party. In June, Nader disclosed that he was worth at least $3.8 million and was heavily invested in technology stocks. It seems the backbone of Nader's wealth is invested in successful companies and the American capitalist system the targets of Nader's "consumer advocacy" groups.
Concerned that he might be perceived as a fat cat who had turned his back on the little guy, Nader quickly informed journalists that he isn't a hypocrite. He might be wealthy, but he insists that he doesn't hoard money for himself. Nader told the Baltimore Sun that he would have even more money in his bank account if he hadn't given away "several millions of dollars" since 1967. He told the Washington Post that he gave more than 80 percent of his after-tax income to nonprofit organizations. The millions he has stashed away in stocks and money market funds, Nader said, were for further charitable activities.
The message is that Nader is rich, but he is still the people's self-proclaimed champion against the powerful. A Washington Post headline labeled him "the little guy's millionaire."
But only Nader himself knows for sure if he has truly performed as a millionaire philanthropist and where his donations go. Citing his right to privacy, he refuses to release income tax returns to prove his charitable tax deductions, the usual practice of presidential candidates.
Show us the money
Nader has long been known for a simple lifestyle. A bachelor at the age of 66, he claimed until recently to live on only $15,000 a year, which he upped to $25,000 during a C-SPAN interview in June. But no one except Nader really knows for sure.
Physically, Nader looks lean and trim, even gaunt. He is reported to eat sandwiches nearly every day. It is said that he avoids fats and meats, abhors high-tech, uses a manual typewriter and only has a black-and-white television. The man whose name became a household word because of a book about cars, Unsafe At Any Speed, doesn't own one. The Associated Press reported that he has "little use for things." He also doesn't own a home, lives in a sparsely furnished apartment, but was also reported to have lived for a time in a $1.5 million Washington townhouse owned by his sister.
While his personal lifestyle is considered by some to be evidence of a sacrificial spirit, others find it strange. Writing in the New York Times, columnist Paul Krugman called him a "rebel without a life" who wants to impose his "virtues" on the rest of us. Jay Whitehead, the head of an Internet company who once admired Nader, now calls him "anti-technology" and an "analog man in a digital age."
Nader's critics have long suspected that he was not destitute, as he was sometimes described, and that his network of consumer groups has been well-funded by trial lawyers close allies of Nader's anti-corporate groups or other private sources. In 1990, a Forbes article titled "Saint Ralph and his Web of Interests" asserted that Nader ran a secretive "autocracy" of left-wing groups, that he was financially well-off, and that he was too cozy with trial lawyers. Nader called the article "malicious" and "amateurish," but Forbes was on the right track.
Nader's surprising status as a multimillionaire was disclosed this year when he filed a Public Financial Disclosure Report under the Ethics in Government Act with the Federal Election Commission. Nader ran as the Green Party presidential candidate in 1996 as well, but by limiting his spending to less than $5,000 from his own funds, he avoided filing a disclosure statement.
The report, which includes information about investments and sources of income, is designed to publicize potential conflicts of interest and let the public know of outside influences which may stand to gain if a particular candidate is elected. Nader submitted the report with a curious three-page "addendum" that the Washington Post's Mike Allen called "a catechism-style explanation." It was an exercise in spin control. Nader described the addendum as "going beyond the requirements of the Ethics in Government Act and further elaborating the enclosed contents for any interested parties."
In it, Nader claimed he had achieved status as a great philanthropist. "For nearly 30 years," he claimed, "my consistent practice has been to donate 50 percent of my adjusted gross income to 501(c)(3) charitable institutions. That is the maximum percentage of charitable donations allowed under the tax code. These contributions have amounted to several millions of dollars since 1967." He told the Washington Post that the real figure was actually 80 percent. But none of it could be verified, because he refused to release his income tax forms.
While going into detail about speaking and writing fees, amounting to as much as $15,000 for a speech and totaling $200,000 to $300,000 a year, Nader reported that he also received "some bequests" and invested them in money markets. He didn't identify these bequests or under what circumstances he received them. The Washington Post has reported that some people, including a retired coal miner, gave Nader their life savings because they thought he needed the money.
But in addition to Nader's net worth of nearly $4 million, one of the report's more interesting revelations is his extensive stock and money market portfolio. Because of it, Investor's Business Daily labeled the Wall Street nemesis a "market guru." Don Lambro of the Washington Times described Nader as a successful capitalist. During an appearance on the Fox Sunday program, journalist Brit Hume half-jokingly asked Nader for the name of his stockbroker, but Nader didn't want to give it out.
"[Nader] invests only in companies he considers socially conscious, based on what they produce and how they treat their workers," reported the Baltimore Sun. "He avoids those, like General Motors, that he is actively campaigning against." His portfolio includes Cadence Design Systems Inc. (a $1.1 billion company that designs software for semiconductors), Iomega Corp. (a $1.5 billion company that makes information storage devices) and Ziff-Davis Inc. (a $702 million media firm focused on technology, once a market leader but now selling off to CNET Networks).
"Number one, they're not monopolists and number two, they don't produce land mines, napalm, weapons," Nader told the Washington Post. But they are big business.
Nader also has a $1.2 million investment in Cisco Systems Inc., which makes products and software to power the Internet. Cisco dominates its market, perhaps even more than Microsoft's domination of the computer operating systems market. And yet Nader and the federal government have singled out Microsoft, depressing the company's stock price and throwing the U.S. stock market into a turbulent year.
"Cisco controls a bit more than half the overall data-networking market but has, for example, 89 percent of the market for high-end routers," reported Salon magazine. " Cisco's Washington lobbying has been concentrated on objectives like making it harder for disgruntled shareholders to sue their companies something Nader and his various groups have vociferously opposed. It has also focused on passing legislation to issue more H1-B visas to foreign workers, while Nader has taken a strong stand against the visas."
When some of these facts about Cisco were brought to Nader's attention, he and his associates acted surprised. "Nader's raiders," who take pride in their comprehensive investigations of big business, seem not to have done their homework on Cisco.
But Nader's reaction to Cisco's extensive operations in China was more nonchalant, despite the apparent contradiction between Nader's investment and his opposition to the China trade bill that paved the way for the country's membership in the World Trade Organization. When the bill passed in Congress, Nader associate Joan Claybrook, president of Public Citizen, said lawmakers had "sold out to corporate interests to help them rake in even bigger profits."
Cisco is one of the leading beneficiaries of the China trade bill. The company's operations in China include technology laboratories, manufacturing alliances and joint research and development programs. Cisco CEO John Chambers has bragged that the company's 15 Chinese manufacturing partners will provide $650 million worth of parts to Cisco this year, and sales in China will reach about $500 million.
Nevertheless, Nader defended his investment to CNN's Judy Woodruff: "I don't mind trade with China in non-weapons and non-toxic materials," he said. Nader contrasted Cisco to "multinational U.S. corporations who are taking factories and setting factories over there."
Nader eventually issued a statement blasting Cisco, but not over its trade deals with China. He opposed Cisco's corporate expansion plan near San Jose, California that was described as environmentally insensitive. This was an example, Nader said, of his willingness to "walk his talk" as a corporate shareholder. In fact, it was a diversion from the main question of how and why Nader chooses his corporate targets.
There is nothing improper, unethical or illegal about the manner in which Nader appears to have acquired his money. Indeed, he is to be commended for his successful investments in the American economy. What is disingenuous, however, is Nader's appearance as someone who is disinterested in money and the benefits of free markets. His followers might wonder why he also didn't encourage them to invest in America's businesses.
"I don't spend that much on myself," Nader told C-SPAN. "Most of the money that I raise goes into the projects over the years consumer projects, investigative projects and other worthwhile efforts."
Nader's financial disclosure report gives little detail about where his donations go.
But it suggests that he gives primarily to organizations he founded or controls, or which promote his ideological interests. Nader's philanthropy is hardly selfless. Indeed, it supports his own left-wing activism.
In the report, Nader lists several favorite causes, such as aviation safety. He reports that he gave an undisclosed amount to several Public Interest Research Groups. And he subsequently told the Washington Post that he donated $200,000 for "civic action projects" at his alma maters, Princeton and Harvard.
The report mentions donations in the 1970s to what Nader calls the "Congress Project"; the Washington Post says the Project received $500,000. The group no longer exists under that name. Today, "Congress Watch" is a division of Public Citizen, a group Nader founded in 1971.
In the report, Nader identifies himself as a member of the board of directors of the Appleseed Foundation and the Center for the Study of Responsive Law. The Appleseed Foundation is one of the latest Naderite groups, having been created in 1993. The network of "lawyers for justice" has formed 17 public interest law centers in 15 states with an "average annual budget" of $750,000. It claims to have "helped millions of people and affected billions of dollars," although it doesn't provide legal services to individuals.
The Center for the Study of Responsive Law, founded in 1968, was once described by Forbes magazine as "Nader's headquarters" and is at the center of the complex network of Nader-linked organizations. It promotes greater government interference in the American marketplace.
Although Nader discloses ties to only two groups, his reach is much longer. The New York Post estimated in 1996 that Nader controlled, to varying degrees, 29 organizations with combined annual revenues of $80 million. A 1982 book by Dan Burt, Abuse of Trust: A Report on Ralph Nader's Network, uncovered a network of 50 small corporations and organizations linked to Nader. Burt concluded, "Mr. Nader and his groups cannot have it both ways. On the one hand, they agitate for more and more corporate and governmental disclosure to the public. On the other, they do not feel a duty themselves to make such public disclosures."
Over time, the Naderite links are obscured or ignored, enabling Nader to exercise his influence through an assortment of fronts. On March 27, for example, ABC News reported Congress Watch director Frank Clemente's views on Vice President Al Gore's campaign finance reform plan while identifying the project's parent organization, Public Citizen, only as "a non-partisan public interest group."
Despite the unanswered questions, it may well be that Nader has been helping to fund all of these groups to the tune of "millions of dollars." But if we are going to believe Nader's claim that he has been a generous philanthropist over the last several decades, we have to take the word of a man who was secretly investing in the capitalist system and making millions of dollars while publicly attacking it.
None dare call it socialism
Nader has a credibility problem. His positions, and the positions of the Naderite groups, often harm consumers while claiming the mantle of consumer advocacy. Nader and some of his spin-offs seem less concerned with making America "safe" or protecting consumers than with making our lives austere:
If Nader is the generous philanthropist that he claims to be, he has tough standards to adhere to: his own. Over the years, Nader has been as outspoken on nonprofit activities and philanthropy as he has been on corporate and public policy issues.
Perhaps his most high-profile activity in the nonprofit sector was his 1998 lawsuit against the $45 million Connecticut-based Hoffman Foundation. Nader, who had served on the foundation's board for seven years, accused the fund's top officials of taking excessive payments for services and making grants in an unprofessional manner. Nader said two top officials awarded themselves nearly $900,000 over a six-year period for working no more than 30 days a year on foundation work. Their lawyer has denied the charges.
The suit seems a bit strange. The Hoffman Foundation had made grants totaling $725,000 to Nader's Center for the Study Of Responsive Law in the years before the lawsuit. Other grants were funneled to groups reflecting Nader's interests. The foundation seemed to follow the advice of the National Committee for Responsive Philanthropy to give some money to the radical left.
In July 1998, Nader made a big splash in the press by publicly urging Microsoft chairman Bill Gates to be more generous with his wealth. Nader complained about the "concentration of power and wealth" in society. Quoting from the book The Ownership Solution, Nader said, "Capitalism is very good at creating capital but terrible at creating capitalists." Little did Gates or the public know that Nader was one of those capitalists and part of what Nader called a "wealth disparity" in the U.S.
During an appearance on C-SPAN before he made his financial disclosure, Nader continued the façade by complaining, "The top one percent of the richest people in this country have financial wealth equal to the bottom 95 percent of Americans." Nader, it turns out, is probably in that one percent. But C-SPAN viewers had no way of knowing because Nader didn't tell them.
Accountable to his followers
Whatever the target, and whatever the audience, Nader's line never seems to change: in the alleged interests of consumers, he calls for increasing the authority of the legal establishment and big government at the expense of certain "corporate interests."
But given Nader's newly disclosed financial status, including his investments in big business, his activities are likely to come under greater scrutiny. When Nader goes after a corporate target, consumers will want to know whether Nader has any stock in its competitors.
Consumers will also want to know how Nader represents the little guy. When he criticizes the wealthy, his own activities will be held up in comparison.
Despite his anti-corporate rhetoric, it may be that frugal Nader truly understands the bottom line his own.
Cliff Kincaid is a veteran journalist and President of America's Survival, a nonprofit organization that examines global issues. Reprinted with the kind permission of the Capital Research Center.
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