A report filed recently with the Federal Election Commission shows that U.S. Rep. Frank Ballance of North Carolina donated $3,000 in campaign money to a nonprofit organization named for his mother.
The contribution to the Alice Eason Ballance Education and Justice Foundation on June 19 was listed on Ballance’s second-quarter campaign report filed with the commission Aug. 13. Ballance, D-1st District and former state senator from Warrenton, was elected to Congress in November 2002.
Ballance set up the foundation in October 2001, a few months before he filed to run for the U.S. House. According to records on file with the N.C. secretary of state, Ballance is the registered agent for the organization and the principal office is in an office building he owns in Warrenton. His mother, Alice; his wife, Bernadine Ballance; and his son, Garey Ballance, are all members of the foundation’s board.
George Smaragdis, an FEC spokesman, told Carolina Journal that the commission’s regulations permit expenditures for charitable organizations, but that a charitable organization cannot convert the money into personal use for the candidate or to any use that would be prohibited by the FEC.
Smaragdis referred CJ to a1997 FEC Advisory Opinion that was somewhat similar to the Ballance situation. The opinion stated that the foundation, as the recipient of funds from the campaign committee, is under the same statutory prohibition regarding its use of the funds as applies to the committee. Until the foundation has spent for any lawful purpose within its governing articles an amount equal to the $3,000 it received, it is governed by all the FEC regulations limiting the use of campaign funds.
Smaragdis also said that new regulations further restricting the personal use of campaign contributions went into effect January 2003 and that the FEC has not issued any new advisory opinions that may apply to the Ballance situation.
Determining the legality of Ballance’s contribution to his mother’s foundation is dependent on following the expenditures of the foundation.
Carolina Journal attempted to ask Ballance about the expenditure, but he did not return phone and e-mail messages left at his Washington, D.C. office.
The foundation’s stated purpose is “to engage in activities and promote programs designed for the educational, intellectual and social development of young people residing in counties in Eastern North Carolina.” Additionally, it is “to promote equal justice under the rule of law for all people: particularly poor and historically oppressed people,” and “to recognize the contributions of Alice E. Ballance, who has dedicated her life to helping others, to her community, state and nation.”
The foundation was at the center of previous Carolina Journal stories about Halifax Community College President Ted Gasper using state government resources to raise money for Ballance’s congressional campaign. A transcript of a meeting showed that Gasper and others also planned to funnel corporate contributions though the foundation. Corporate contributions to federal political campaigns are illegal in all states, according to campaign finance laws. CJ was unable to determine whether any corporate contributions actually were collected and deposited with the foundation.
Garey Ballance, a Warren County District Court judge, refused to answer questions about the activities of the foundation. When asked who has the financial records, he said, “I really have no idea who you can talk to. You can call the campaign office. I do not care to speak to you about it,” he said. When asked whom CJ should speak to, he replied, “I have no idea. I do not have any thing to say.”
Alice Ballance told CJ that the foundation’s treasurer, Norman Mebane, had the records. When asked whether she was aware of the $3,000 donation from her son’s campaign, she said, “Who? Oh, I guess so.” Asked about the use of the money, she said, “All of the money has been put into the bank that I know of.” She said the foundation had not received enough money to file annual federal reporting forms. She said that the board makes decisions on spending but that it had not spent any money. She also said the nonprofit had not received any money from corporations, but that the organization’s officers hoped to.
For the second quarter, Ballance’s campaign report showed total contributions of $36,450. Of that amount, $7,000 came from individuals, and the remainder came from political action committees. The campaign reported expenditures of $9,050, including the donation to Alice Ballance’s foundation. It reported $73,565 cash on hand at the closing of the period and a $50,000 outstanding secured loan from the State Employees Credit Union.
Another nonprofit founded by Rep. Ballance, the John A. Hyman Memorial Youth Foundation, is being investigated by state authorities for failure to fully account for almost $2 million in state funds that Ballance had secured since 1993. Federal authorities are believed to have launched an investigation because the foundation failed to file required Internal Revenue Service annual reports for the past decade. In August, CJ reported that the Hyman Foundation made grants to Kiddie World Child Development Center in Windsor, a business owned by Alice Ballance and housed in a building owned by Rep. Ballance and his wife.
The Hyman Foundation, based at Greenwood Baptist Church in Warrenton, runs a substance abuse program. Last week, however, the foundation’s director, Eddie Lawrence, told reporters that the foundation was shutting down the program at the end of September because of lack of money. The State Auditor’s Office is expected to release a report on the foundation within a few weeks.
Carrington is associate publisher at Carolina Journal.