Under the law, nonprofit groups are barred by tax rules from trying to influence legislation as a major part of their objectives or activities and such groups may not participate in any campaign activity for or against political candidates.
The investigation is currently being conducted by the charities bureau of the New York Attorney General’s office. Under the law of New York, charities that do business in New York, or raise money in the state must annually file reports with the attorney general’s office and provide an IRS form if they solicit more than $25000 at a time in contributions.
The furor is over a series of acts first reported by the New York Times, which showed that in 2010, an organization named Starr Foundation, chaired by former American International Group Inc head Maurice Greenberg had contributed about $19 million to a nonprofit, the National Chamber Foundation. The National Chamber Foundation had then loaned $18.1 million to the U.S. Chamber of Commerce, and there was no indication that any considerable part of the loan had been repaid.
Thomas Collamore, the vice president for communications for the Chamber of Commerce said that the subpoena was “curiously timed” given that it was just a few months from the elections. In an issued statement, Collamore said, “In the midst of a highly charged political season, it comes as no surprise that the New York State Attorney General would use his office to rehash a very old story about the Chamber’s finances.”
The alleged matter had already been brought to the notice of the IRS by a watchdog group called U.S. Chamber Watch, in 2010. The Starr Foundation or others concerned were not available for comments.