Evening star., 1954-06-03
By Robert K. Mclsh


The House committee investi-
CATION of tax exempt foundations
took still another turn today
with efforts to determine whether
such organizations are being
used more to help business than
charity.
The special committee, after a
comparatively calm session yes
terday listening to Internal Reve-
nue. Commissioner T. Coleman
Andrews and Assistant Commits
sioner Norman A. Sugarman, re-
turned for a possible resumption
Of inter-party hostilities.
A staff report prepared for pre-
sentation- by Thomas M. Nc
Niece, assistant research direc-
tor, seemed likely to touch of
fresh fireworks. Mr.. McNiece. as
the scheduled witness, empha-
sized that he intended to draw no
conclusions but merely to report
such available facts as we have
been able to gather on the COM
plex subject"
Foundations Castigated.
His 45-page report prepared
for delivery, however, declared
much evidence seems to show
that a flow of money, men and
ideas" combined to promote a
social revolution during the last
20 years. The report said the
money came in large part from
tax-exempt foundations and that
the men and ideas in a great
measure came from the intellec-
tual groups and societies sup
ported by this money and found
their way into the. powerful
agencies of education and Gov
ernment."
Citing evidence to support our
view that the pattern is deter
mined at the top" the McNiece
report stated that "it is also
obvious that in education as in
Government the most effective
megaphones and channels of
communication are centralized
in the same places"
The report stated that about
IL associations in the educa-
tlonal or social science field re-
ceived $60.6 million in grants
from six large foundations from
1920 to 1852. That did not in
clude a much larger total in
grants to universities and for
fellowships.
Hays to Take Exception.
Representative Hays, Democrat.
OF Ohio, indicated in advance
that he would take exception to
this Interpretation of a founda-
ton pattern" He declared yes
terday that he objected to testi-
mony of earlier witnesses that
this whole operation of tax
exempt foundations has been a
New Deal, Fair Deal or some deal
plot"
Mr.. Hays. however. specifi-
caIly exempted Mr.. Andrews and
MIR. Sugarman from any charge
Of bias. The Ohio member more
over agreed with Committee
Counsel Rene A. Wormser who
cited a growing tendency" of
wealthy families or firms to use
foundations as a means of con-
trolling outside private busi-
nesses, mainly by investment
methods. and thereby easing
II not solving the tax problems |
Of such businesses. Mr.. Worm
ser explained he did not offer
that observation necessarily in
critical sense.
Mr.. Andrews and Mr.. Sugar.
man dealt with the laws and
regulations under which organi-
are eligible for tax ex-
They explained how
their agency. on the basis of
court decisions and other infor-
determines whether such
organizations conform to their
basic purposes and legal defini-
lions. Mr.. Sugarman reported
that during the 1852 and 1853
fiscal years the agency revoked
the tax exemption of only SIS
out of some 80, 900.
He and Mr.. Andrews added that
the task of checking on tax ex-
empt organizations is difficult
because of legal provisions that
are too general and the agency'S
own lack of sufficient funds and
facilities.
Position Explained.
"On the basis of judicial prec-
edents," Mr.. Sugarman said, I'VE
must conclude that it is reason
ably established under the law
hat an organization may have