Last week I reported that Atlanta-based businessman and Catholic philanthropist Frank J. Hanna III both owns the company that publishes the venerable Official Catholic Directory and runs a foundation that—by virtue of its listing in the directory and a Form 990 exemption from the IRS—enables him to hide charitable donations from public scrutiny. The story of Hanna’s “official Catholic” nonprofit, the Solidarity Association, supplies an object lesson in how the USCCB’s failure to police the Official Catholic Directory has enabled the directory to become a shield for what in political circles would be called dark money.

The Official Catholic Directory is a thick and highly expensive annual volume, currently retailing for $395 in print and digital formats. Readers were surprised to learn from my blog post how this book, which normally serves only as a means for nonprofits to prove they are tax-exempt, gives Hanna—a longtime donor to the GOP and the Legion of Christ who is a board member of Napa Institute and EWTN—a means to avoid disclosing his grantmaking foundation’s finances.

Given the Church’s condemnation of usury, some readers were concerned that Hanna, one of the most prominent authors and speakers on Catholic philanthropy, made his fortune (estimated at $1 billion) through a subprime credit-card empire and paid $114 million to the federal government to settle charges of deceptive marketing. Most of all, readers wanted to know how it is even possible that the Official Catholic Directory is not owned by the U.S. Conference of Catholic Bishops, given that a nonprofit must be listed in the directory if it is to share in the USCCB’s tax exemption.

The USCCB Approves “Official Catholic” Nonprofits—But Doesn’t Police Them

The short answer is that the USCCB has control over which nonprofits are listed in the Official Catholic Directory. It dictates to the directory’s privately owned publisher which nonprofits are to be listed as “official Catholic” nonprofits. But it does not police the directory to ensure that those that are listed there are remaining true to their mission. Instead, as with so much of the USCCB’s activities, it delegates the responsibility for policing to individual bishops.

Because the USCCB thus recuses itself from monitoring “official Catholic” nonprofits, the Official Catholic Directory effectively operates on the Black Flag Roach Motel model: nonprofits check in, but they don’t check out. Only a bishop can remove a nonprofit’s “official Catholic” status, and that happens only about twice a decade, if that.

And membership in the Official Catholic Directory, unlike that in Hanna’s former credit cards, does have its benefits. Once a nonprofit gains “official Catholic” status, it not only shares in the U.S. bishops’ tax-exempt status but also—if it satisfies additional requirements (explained here by the USCCB)—is exempt from having to disclose its finances publicly. This further exemption is known as a Form 990 exemption. (Nonprofits are normally required to file IRS Form 990 to disclose their assets, board members, funds received, funds disbursed, and other information of interest to prospective donors.)

Hanna, as a member of the Napa Institute, ostensibly supports Napa’s mission to promote accountability and transparency in Catholic institutions. And it is, in fact, a great tragedy of modern American Catholic life that even the Solidarity Association’s gifts to EWTN—which must be substantial, given that Hanna is on the network’s board—thus qualify as dark money, as the network consistently promotes the political agendas of GOP partisans such as President Trump and Steve Bannon.

To understand how a foundation such as Hanna’s can escape accountability through being listed in the Official Catholic Directory, it is necessary to take a deeper dive into the history of both the directory and the Solidarity Association.

The IRS Gives the USCCB Power to Make Catholic Nonprofits “Official”

The Official Catholic Directory has existed in some form since 1817 and has always been privately published. After the IRS in 1943 exempted churches from having to file Form 990 (as this article describes), there was a need for the IRS to have a means by which it could easily determine who was and who wasn’t an official Catholic nonprofit. This issue was resolved in 1946 when the USCCB struck an agreement with the IRS.

Under the agreement, known as the “Group Ruling,” the IRS granted the USCCB a “Group Exemption” permitting it to include all official Catholic nonprofits under the collective umbrella of the USCCB’s own tax exemption. In exchange, the USCCB would approve the “official Catholic” status of nonprofits; approved nonprofits would be listed in the Official Catholic Directory; and the IRS would use the Official Catholic Directory as its official listing of organizations that participated in the Group Exemption.

It should be noted that the Group Exemption is an exemption from paying taxes—not an exemption from filing Form 990. However, in order to be exempt from filing Form 990, a Catholic nonprofit must first participate in the Group Exemption through being listed in the Official Catholic Directory.

Thus, a Catholic nonprofit that seeks to avoid disclosing its finances on Form 990 has to jump through two hoops: (1) it has to be listed in the Official Catholic Directory and (2) it has to fulfill the requirements for a Form 990 exemption. In the next section, we’ll look at what those requirements are—and how Hanna’s Solidarity Association, as it currently stands, fails to meet them.

An “Official Catholic” Nonprofit Goes Rogue

The only nonprofits exempt from filing Form 990 are those that fund a church, school, religious order, or “integrated auxiliary,” meaning a church-run nonprofit such as a hospital, pregnancy center, women’s club, etc., as this guide from the USCCB explains. Absent from this list is a charity that funds a range of organizations. To be exempt from Form 990, a charity must fund a single church, a single school (or school network), or a single hospital (or hospital network).

Exempt from Filing 990

This screenshot from the USCCB’s Request for Inclusion in USCCB Group Ruling lists the types of nonprofits that are exempt from filing Form 990.

Thus, a nonprofit cannot be exempt from filing Form 990 if it donates to a school and a women’s club and a pregnancy center, and so on. This will be a key factor in determining whether Hanna’s Solidarity Association qualifies for its Form 990 exemption.

IRS records indicate that Hanna founded the Solidarity Association in 2000. That same year, he founded the Solidarity School in his hometown of Atlanta. As I wrote in my previous report, the Solidarity School, at its peak in the late 2000s, gave an English-language immersion education to about ninety children from Spanish-speaking households whose parents “mostly [worked] in construction or fast food, as maids, or [as] day laborers,” according to a 2007 profile of Hanna.

My research indicates that the Solidarity Association’s original purpose—the purpose for which it jumped through both hoops, gaining a listing in the Official Catholic Directory and exemption from filing Form 990—was to fund the Solidarity School. One indication of this purpose is that, after the Archdiocese of Atlanta under then-Archbishop John Donoghue and the USCCB approved the Solidarity Association, the association was listed with the IRS under the category of “Specialized Education Institutions” (see screenshot from the nonprofit resource Guidestar).

NTEE Code

The Solidarity Association is listed with the IRS as funding a “Specialized Education Institution.”

However, as I noted earlier,

The Solidarity School closed in 2017, and today it does not appear that the Solidarity Association funds any school whose primary mission is special education. In fact, the Solidarity Association has drifted far from the mission under which it was listed in the Official Catholic Directory and granted its Form 990 exemption. It now funds a wide variety of nonprofits, including many such as the Cardinal Newman Society, Sophia Institute Press, and EWTN that, although Catholic-run, have ideological biases that at times run counter to Church leadership and even (in the cases of Sophia and EWTN at least) Pope Francis.

This mission drift is clearly opposed to both the letter and spirit of U.S. tax law as outlined in the USCCB’s guide to the requirements for the Form 990 exemption. Yet, although the Solidarity Association keeps its finances secret, its website makes no secret of how it spends its money: to “educate,” “form,” and “reinvigorate” the Church according to Hanna’s personal vision.

Under “Education,”* Solidarity Association’s website lists such grantees as the Busch School of Business and Economics at Catholic University of America but also two unaccredited institutions founded by Hanna himself, Holy Spirit College in Atlanta and the online-only Pontifex University (which, as I wrote, uses the Solidarity Association as a means for soliciting “donations” that it says it applies to “scholarships for prospective and existing students”).

Under “Formation,”* Solidarity’s recipients include the EWTN-owned Catholic News Agency as well as EWTN itself, whose recent firing of Gloria Purvis renewed discussion about problems of bias in Catholic media. And under “Reinvigoration,”* Solidarity Association boasts of its support for the National Catholic Prayer Breakfast, which regularly showcases GOP stars and this year honored U.S. Attorney General William Barr, under whose watch the federal government reinstated the death penalty. It also supports Sophia Institute Press, publisher of Taylor Marshall’s Infiltration, which, as D.W. Lafferty noted in his review for Where Peter Is, comprises “a contrived attack on Pope Francis.”

Prior to the publication of Infiltration, I wrote to Hanna asking him to use his role as a funder of Sophia Institute Press to raise his voice against its publication. In his reply (see screenshot), he claimed that he had assurance that the book was “not focused at aiming vitriol at the Holy Father” and added, “The Solidarity Association is committed to an authentic Catholicism that venerates the Office of the Papacy and recognizes the dutiful prayers and fealty owed to the occupant of the Chair of Peter.”

Whatever one may make of that meticulously worded statement, it does not sound like a ringing endorsement of Pope Francis, whose words Hanna has said “puzzle [him] at times.”

Conclusion: Whose Accountability? Whose Transparency?

Solidarity Association’s funding is not insignificant. In 2015-2016 alone, the Community Foundation of Greater Atlanta, which donates according to the wishes of its member foundations, gave Solidarity Association $700,000. (Although the Community Foundation’s gifts cannot be traced to individual donors, among its member funds is the Sally and Frank Hanna Foundation Fund.)

Additionally, there is the ownership of the Official Catholic Directory. In my previous report, I detailed Hanna’s purchase of the directory through shell companies. As of January 4, 2021, the business records of the State of New Jersey, where the Official Catholic Directory is published, indicate that he continues to own the publication. The records list Hanna’s lawyer, Brett Grayson, as president of Treasured Works, LLC, which publishes the directory, and gives its corporate address as that of Hanna’s company, Hanna Capital.

Screenshot from the State of New Jersey’s business records showing the corporate ownership of the Official Catholic Directory publisher’s parent company, Treasured Works, LLC.

It must be said that Hanna’s ownership of the Official Catholic Directory does not give him power to decide who is listed in the directory and who is not. That power comes through diocesan bishops and ultimately rests with the USCCB. But it does raise the question: if the Solidarity Association no longer merits inclusion in the Official Catholic Directory, who is going to inform Hanna? Is the USCCB going to approach the owner of the directory and ask him to remove his own listing from it?

Clearly, with regard to what the Official Catholic Directory’s mission is on paper and what it is in practice, the system has failed. I believe that the problem comes down to that of the contemporary buzzwords “accountability” and “transparency”—but beyond the usual manner where those words are applied.

Former CNA editor JD Flynn, in founding his new journalistic enterprise Pillar Catholic, typifies the usual approach to transparency. He seeks to shine a bright light upon “clerical entitlement—the kind of clericalism, however unintentional, that can have disastrous consequences.” Napa Institute’s Tim Busch likewise calls for “accountability” as he complains of “too much deference given to priests and bishops.”

I don’t doubt that “clerical entitlement” needs to be addressed; as a laywoman who has studied and taught at Catholic ecclesiastical faculties, I am well familiar with it. But what I have tried to do, in this investigation, is to show that transparency and accountability begins with us—the laity. It is lay money that funds the media narrative that influences Catholic public life. It is lay money that funds the educational and public-policy institutions that form the faithful. And it is the laity who need to lead the call for fellow laity to reshape Catholic funding models—in cooperation with the hierarchy—to ensure that Catholic apostolates and the Church at large are funded transparently and responsibly.

Some readers may ask, “What’s all the fuss about? Surely Hanna has a right to use his money as he sees fit? The Solidarity Association has funded many good works.”

These questions bring us to the heart of the matter. Yes, Frank J. Hanna III, like every individual, has the right to choose what to do with his money. And yes, as a philanthropist, he has much in which he can take pride.

But should he be above the law? Should his Solidarity Association be able to derive benefit from a Form 990 exemption that it clearly does not deserve, gaining influence in the worlds of Catholic education, media, and political life through large donations that are unavailable for public scrutiny?

(Note: An attempt to contact Hanna through a close associate on 1/4/2021 has thus far been unsuccessful.)

* Update March 1, 2021: Since this article was published, Frank J. Hanna III has revamped his websites to remove the names of organizations he supports. The three links to those pages in this article have been updated with links to archived versions to show how the sites appeared at the time the article appeared. -ML


Image: IRS


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Dawn Eden Goldstein, S.Th.D., is the author of several books, including The Thrill of the Chaste and My Peace I Give You: Healing Sexual Wounds with the Help of the Saints. She has taught at seminaries in the U.S., England, and India. Currently she is writing a biography of Father Edward Dowling, S.J., who was a spiritual adviser to Alcoholics Anonymous founder Bill Wilson.

Catholic foundation’s Form 990 exemption suggests lack of oversight
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