By Leslie Bonilla Muñiz, Indiana Capital Chronicle
Outside organizations donated nearly $3 million to a state economic development agency’s nonprofit arm over the last three years — but who the donors are, and how the agency spends their contributions are largely unknown under state rules that either don’t require or outright prohibit disclosure of that information.
The groups behind all but two of 16 transactions in records from 2020 through 2022, obtained by the Indiana Capital Chronicle, were permitted anonymity. And the Indiana Economic Development Foundation (IEDF) says that, because the funds are private donations, how they’re spent isn’t subject to public records rules.
The foundation and the Indiana Economic Development Corp. (IEDC) share the same staff and 12-member board of directors, as well as “the same mission,” spokeswoman Erin Sweitzer wrote in a statement to the Capital Chronicle.
That, she said, is “to advance Indiana’s economy and create more quality opportunities for Hoosiers and their families.”
Stodgy commerce department no more
Indiana had a traditional department of commerce until 2005, when then-Gov. Mitch Daniels, a Republican, signed into law legislation creating the Indiana Economic Development Corp.
Shortly after, leaders created the corresponding Indiana Economic Development Foundation, a 501(c)(3) nonprofit organization, according to Indiana Secretary of State records.
The corporation, considered a quasi-public agency, and its foundation operate as a public-private partnership.
State lawmakers allocated over a billion dollars to the corporation over the next two years in the most recent $44.5 billion budget; the largest appropriations were $500 million toward a deal closing fund and $500 million for a second round of the Regional Economic Acceleration and Development Initiative, better known as READI.
“The Foundation, however, is able to accept private donations, supplementing the IEDC’s funding appropriated by the Indiana General Assembly and enabling the IEDC to pursue its goals more aggressively,” Sweitzer said.
But that two-pronged structure has led to criticism.
“This is an area where a lot of money is involved. The state is offering big incentives involving our tax dollars to corporations, and Hoosiers deserve to know the backstory,” said Julia Vaughn, who leads government watchdog Common Cause Indiana. “But I think the IEDC and its foundation: their structure often stops that from happening.”
Vaughn said her organization expressed transparency-related concerns when the state swapped its commerce department for the corporation-foundation combination.
“I’m afraid our worst fears have come true,” she concluded. “… It’s simply another way for these corporate interests to flex their muscle, and in a way that happens completely in the dark.”
Separately, nonprofit organizations typically file Form 990s — with information on their missions, structures, revenue, expenditures, assets, liabilities and more — with the U.S. Internal Revenue Service.
But IEDC/IEDF Deputy General Counsel Andrew Lang said the foundation had gotten an exemption “as a nonprofit associated with a governmental unit” and that it was “not in possession” of any such filings.
Unknown donors
Ten donors gave the foundation about $2.7 million from 2020 through 2022, according to its records.
“Private donations to the Foundation allow more flexibility in how we use the funds and how quickly we’re able to access them, meaning we’re able to move quickly,” Sweitzer wrote. And she offered an example: “book[ing] a flight to the West Coast at a CEO’s request to close an economic development deal.”
Six organizations asked for anonymity, expressly allowed under state law — requiring the foundation to redact their names in public records. They each donated hundreds of thousands over the three years, records show.
Two didn’t request anonymity: Washington, D.C.-based think tank The Urban Institute donated $5,000 in 2021, and Indiana’s Battery Innovation Center, in Newberry, gave $12,000 in 2022.
Still, there are indications of which entities are likely behind some donations.
The corporation’s site, which includes a page for the foundation, features a thank-you note to foundation “sponsors.” They include the state’s “big five” investor-owned utilities: AES Indiana, CenterPoint Energy, Duke Energy, Indiana Michigan Power and the Northern Indiana Public Service Company.
“Utilities are, you know, a major component behind the funding and operations of the IEDC,” said Kerwin Olson, leader of the utility customer advocate group Citizens Action Coalition. “… It’s in the utilities’ interest to locate new heavy-energy users to the state. So they want to play that role, under the guise of economic development, in getting new factories, manufacturing facilities and other high-end users to the state.”
The foundation offers four tiers of donor titles: patron, supporter, partner and trustee. Sweitzer called the utilities “partners” that “give annually” but declined to give the eligibility requirements for each level.
That’s because organizations can donate money, but also sponsor events or provide in-kind services, she said — and because “listing the amounts publicly would interfere with a donor’s ability to remain anonymous.”
“The Foundation is cultivating a group of like-minded entities focused on advancing Indiana’s economy and quality of place through future-focused initiatives,” Sweitzer said.
Donation invoices, obtained in discovery during unrelated utility rate cases, frequently include donor disclaimers. They specify that donations are voluntary, don’t affect “ongoing” corporation matters and don’t affect future tax credits, grants or other programming administered by the corporation.
Vaughn, of Common Cause Indiana, was skeptical Hoosiers could know that for sure.
“These types of, you know, disclaimers, promises, legalese — you can’t enforce that if you don’t know the full picture,” she said.
Supplemental spending
The donations are a small amount compared to the corporation’s appropriated budget, but Sweitzer emphasized their supplemental nature.
“We’re able to ‘do more‘ and pursue more opportunities for Hoosiers, such as leading international economic development trips and market[ing] the state even more aggressively to new prospects,” Sweitzer wrote.
She said the money allowed the corporation to work “more quickly,” “more boldly” and “more strategically” in pursuing opportunities, marketing the state and engaging abroad.
The foundation’s expenditures aren’t public records, according to Lang, the counsel. He said that’s because the funds are private, not taxpayer dollars.
But Sweitzer highlighted spending on economic development-focused international trips as a “key strategy” to “mitigate the use of taxpayer dollars.”
“The results are telling,” she wrote: Indiana hosts more than 1,050 foreign-owned businesses, and the corporation got commitments in 2022 from 32 others to locate or expand within the state.
She said those foreign deals would create more than 6,400 jobs — more than a quarter of Indiana’s total new job commitments last year — and added up to $7.25 billion in planed investment.
This article originally appeared on Indiana Capital Chronicle.
