When Oklahoma energy billionaire George Kaiser opened the Northeast Gateway liquid natural gas terminal in 2008, the floating depot’s first delivery was shipped on the Excellence, a 909-foot supertanker that holds 138,000 cubic meters of LNG -- enough gas to meet more than 4 percent of daily U.S. demand.
The Excellence is owned by the George Kaiser Family Foundation, a charitable organization that also owned a 36 percent stake in Solyndra LLC, the Fremont, California-based solar system maker that went bankrupt in 2011 after receiving a $535 million U.S. Energy Department loan.
The nonprofit organization paid $110 million for the tanker in 2003. It later gave control of the vessel to Woodlands, Texas-based Excelerate Energy LP, a for-profit gas delivery company Kaiser owns with publicly traded German electric utility RWE AG, according to RWE’s 2012 annual report.
“It is an excellent investment,” Frederic Dorwart, a trustee of the foundation and longtime attorney for Kaiser’s various banking and energy companies, said in a telephone interview. “It pays out this year and we’ll still own the vessel.”
The Excellence is also an example of how federal laws and U.S. Internal Revenue Service regulations forbid forms of self- dealing in one kind of tax-exempt organization while creating loophopes that allow them in another.
At least $1.25 billion of the charity’s $3.4 billion in assets is invested in ways that benefit Kaiser’s for-profit endeavors, according an analysis of the George Kaiser Family Foundation’s 2011 tax return by Bloomberg News. The charity invests alongside the billionaire’s stakes in some companies. In other instances, it directs funds in ways that support his for- profit businesses, such as the Excellence, which provides guaranteed shipping capacity.
“There are very wealthy people who play by the rules and others who don’t, who use public charities to further their business interests,” said Pablo Eisenberg, senior fellow at the Georgetown University Public Policy Institute. “One of the problems is the laws are so vague as to be absent of any serious regulation by the IRS or any state’s attorneys general. Almost anything goes.”
There are two primary types of philanthropic vehicles in the U.S. The most common is a private foundation, which allows the donor to manage the foundation’s assets and decide who gets its money. These entities must give away 5 percent of their assets annually, according to IRS regulations.