21 Aug 2008 The Chicago Annenberg Challenge’s Mysterious Files

As an executive of a non-profit foundation I read with interest the article by Stanley Kurtz of the Ethics and Public Policy Center about the mysteriously flexible ownership of 132 boxes of files of a now-defunct non-profit called the Chicago Annenberg Challenge.

Mr. Kurtz wishes to review these files, which are in the possession of the Richard J. Daley Library at the University of Illinois at Chicago (a publicly-supported institution), because he is researching the relationship between a former member of the Weather Underground, Bill Ayers, and the junior U.S. Senator from Illinois. Both men were officials of the Chicago Annenberg Challenge, a non-profit organization, before the group closed in 2001.

A bit of a mystery has developed because the Daley Library, having not long ago gone out of its way to make the Chicago Annenberg Challenge files available to Mr. Kurtz for his research, suddenly withheld its permission. The ins-and-outs of the story are best learned by reading Mr. Kurtz’s article, but the short version is that a concern by the Daley Library that it does not have the legal right to display the material has suddenly emerged. The library told Mr. Kurtz it was working with the donor to resolve this problem, but it declined to tell Mr. Kurtz the identity of the donor.

Mr. Kurtz then speculates that, among other possibilities, Mr. Ayres himself, a former CAC executive, may be the donor.

That’s the part I noted with interest, because I don’t think he is likely to be. Bill Ayres could only legally donate the CAC documents to the Daley Library if he had legal ownership himself. Odds are that he doesn’t have it and never has.

Under the tax laws, if a non-profit goes out of business, it must transfer any remaining assets to another non-profit. It can’t just give its assets to a person, unless the assets are transferred as taxable compensation and properly declared, or it is returning a contribution (which would be irrelevant here).

If Bill Ayres has the physical property of a closed non-profit, he MIGHT properly have it because he took the files as part of his taxable compensation (or because he bought the property from the non-profit for its fair market value), but the odds that he did so are not great. Few employees accept old files as taxable compensation, and few non-profit executives would want to pay cash for 132 boxes of a dying group’s old files.

Buying the non-profit’s property would be particularly dicey for Ayers, too, because as an executive of the non-profit, he’s an “insider,” and thus subject to stiff penalties if the IRS ever were to determine that he bought assets from the group for less than its fair market value. So if he bought the files he would have incurred a legal (tax) risk to do so, only to then donate — however ineffectively — the files he’d just bought to the Daley Library. It’s just not likely that he took a risk to buy the files, just to give them away.

IF Ayres actually is the “donor,” he probably kept the files when he shouldn’t have (itself unlikely because 132 boxes of files wouldn’t be convenient to cart about), and then gave them to the Daley Library. If that’s the case, he wasn’t entitled to keep them nor to give them to the Library, and the Library has stolen property. If this is the case, Ayres wouldn’t personally have the legal authority to give or not give consent over whether the files now are open for public viewing, and under what conditions, because they aren’t his files and never were.

My guess is that Ayres isn’t the donor at all, even if in his capacity as an official of a non-profit he once played a role in their transfer to the library (I have no idea if he did). I further suspect that no individual person donated the files. I believe they were donated either by the non-profit Chicago Annenberg Challenge itself or by the non-profit to which (as Mr. Kurtz reports) the CAC transferred its remaining assets upon its closure, the Chicago Public Education Fund.

The Chicago Public Education Fund is a non-profit, as is the Daley Library. As such, it would have been perfectly legal for the CAC to give its files to the Chicago Public Education Fund, and for the Chicago Public Education Fund to, in turn, give the files to the library. A CAC-Daley Library transfer would have been equally legal and quite understandable, as CAC executives may have seen the files as part of the group’s legacy, and may have have wanted the group’s work to be remembered.

Such a donation of files to the Daley Library could have been arranged by Bill Ayres himself or someone reporting to him in his capacity as a CAC official, but even if Ayres personally carried all 132 boxes from CAC offices to the library on his bicycle, the donation legally would have come from the non-profit.

Now that CAC is closed, any authority any CAC executive or officer had as a CAC official over CAC assets has evaporated. So, unless its staff knew nothing whatsoever about the law, the Daley Library would not now contact Ayres or any other ex-CAC official acting in that capacity to get a signed “deed of gift” or to request permission to do anything whatsoever with the CAC files.

If the Chicago Public Education Fund truly was given all of CAC’s remaining assets when CAC closed, as Mr. Kurtz’s article says, and if the CAC files weren’t properly or fully gifted to the library (as library official Ann C. Weller implied to Mr. Kurtz), the files probably belong to the Chicago Public Education Fund.

A list of the Fund’s board can be found here.

As the Fund is a non-profit barred from electoral activity, the Fund’s board presumably would want to be very careful not to make any decisions regarding document access that are less than scrupulously neutral.

If, on the other hand, the Daley Library owns the files (as it apparently believed it until very recently), its governing board will face the same need to be scrupulously neutral on political matters, assuming the University of Illinois system operates as a non-profit to which donations are tax-deductible under federal tax laws, as many universities do.