Federal Official’s Family Foundation Questioned

Through a charitable foundation created in 2000, Mike Leavitt, the U.S. Health and Human Services secretary, and his relatives were able to claim several millions of dollars in tax write-offs, while until recently the foundation gave away a very small percentage of its assets to charity, reports The Washington Post.

Using a controversial tax structure known as a Type III supporting organization, the foundation was initially supported by $9-million from holdings of the Leavitt family.

Unlike private foundations, which by law must give away at least 5 percent of their assets each year, supporting organizations are not required to give a specific minimum amount annually.

The Leavitt foundation gave less than 1 percent of its assets from 2002 to 2004, but in 2005 gave away 6.3 percent after making $11.9-million selling off Nevada water rights.

The foundation made a $332,000 loan to Leavitt Land and Investment, in which Mr. Leavitt has at least a $1-million stake. The investment company then made an interest-free loan of at least $250,001 to the secretary, according to the Post. (Read The Chronicle’s examination of loans made by supporting organizations.)

The Internal Revenue Service and Sen. Charles E. Grassley, chairman of the Senate Finance Committee, have moved to tighten the rules governing Type III supporting organizations, the newspaper notes. Federal officials have expressed concern that the funds are too loosely regulated and that some organizations are abusing tax laws.

Secretary Leavitt’s spokseswoman defended the giving by his family fund. “The foundation’s activities are totally legal and proper,” she said.