Sierra Club officials pay no taxes on income the environmental nonprofit generates from solar panel sales by its commercial partners.
At the same time, the Sierra Club Foundation functions in a manner that illegally benefits private commercial interests, including some of the nation’s largest energy firms.
Both allegations are contained in a report released Wednesday by the Energy and Environment Legal Institute with its referral to the Internal Revenue Service asking the federal tax agency to investigate the potential violations of tax laws and regulations.
The legal institute is a right-leaning, Washington-based nonprofit that opposes many of the policies advocated by the Sierra Club and its foundation on environmental and energy issues.
The Sierra Club is a left-leaning 501(c)(3) educational nonprofit, while the Sierra Club Foundation is a (c)(4). The two groups share a San Francisco street address.
“The Sierra Club commits its most blatant violation by sending its members into communities to sell the products of a selected local solar panel company,” according to the report.
Trey Pollard, the Sierra Club’s national press secretary, could not be reached for comment.
“The Sierra Club and the Sierra Club Foundation are in potential noncompliance with the tax law,” the report said. “It appears the Sierra Club generates about a million dollars a year in taxable unrelated business income on which there is no evidence that it intends to or is paying taxes.”
The revenue is generated by the Sierra Club’s sales of merchandise and services and by the group functioning as “the marketing arm for two private companies selling solar panels.”
The report claims that “each of these activities is suspect. None of them involves the core purposes of the Sierra Club and both of them constitute participation in commercial businesses.”
The two companies cited in the report are Oakland, Calif.-based Sungevity and Salt Lake City, Utah-based Creative Energies.
The companies contribute to the Sierra Club in return for each customer referred to them by the nonprofit organization.
In effect, Sierra Club members function as a sales force for the selected solar panel companies in dozens of states, according to the report.
“This has been a great revenue-generating tool for the Sierra Club,” said Jesse Simmons, the nonprofit’s chief of staff, in a promotional video for one of the companies that is cited in the report.
Sungevity also partners with Lowe’s and the National Parks Conservation Association in the solar panels business.
The Sierra Club Foundation’s “Beyond Coal” campaign aims to stop power production in the U.S. using coal and to keep unmined coal “in the ground.”
The campaign also directly serves the commercial interest of natural gas firms like Chesapeake Energy, which in turn contribute millions of dollars to the Sierra Club Foundation, according to the report.
The Oklahoma City-based natural gas company contributed $26 million to the foundation for “the express purpose of forcing coal-fired electricity companies to switch to natural gas,” the report said.
“Eight of the Sierra Club Foundation’s 18 directors own or operate organizations that directly benefit from the” anti-coal program, the report said.
“These directors are the captains of the renewable energy industry. While the Sierra Club Foundation doesn’t pay these directors, their companies directly profit from the Sierra Club Foundation’s primary program,” the report said.
The report also pointed to David Gelbaum, the foundation’s largest individual donor, and noted that he “controls more than 40 ‘clean tech’ companies that directly benefit from forced shutdown of the coal-power industry.”
Mark Tapscott is executive editor of the Washington Examiner.
