NY lawmaker questions Kennedy charity's exemption

New York's Assembly will examine whether a charity that U.S. Senate hopeful Caroline Kennedy helps run was properly granted an exemption that allows her and other officials in the organization to avoid disclosing details about their finances.

Democratic Assemblyman James Brennan questions the decision by the New York City Conflicts of Interest Board to exempt The Fund for Public Schools from a state law aimed at airing the financial dealings of charities.

Kennedy, who hopes to succeed Hillary Rodham Clinton in the Senate, is vice-chairwoman of the not-for-profit organization.

The law requires most volunteer directors of charities working with state and municipal governments to disclose investments, outside pay and other financial connections. It was passed partly to assure that charities aren't shadow agencies of the governments they support.

On Dec. 10, the city board told Brennan's Assembly committee that Kennedy's charity would be exempt from disclosure. The board decision came two days after Mayor Michael Bloomberg enthusiastically boosted Kennedy as New York senator should Clinton be confirmed as President-elect Barack Obama's secretary of state.

"I think it's a matter of concern as to whether the statute applies to them or not," Brennan said. "Certainly this needs to be rethought ... we'll check into it."

Kennedy spokesman Josh Isay didn't immediately respond to a request for comment.

If the Assembly determines the exemption was improperly granted and it can't negotiate a solution with the charity, it could sue for disclosure. It also could try to amend the law to eliminate the city's argument for exempting the charity.

The effort led by Brennan means there is likely support for action by Assembly Speaker Sheldon Silver, one of the state's most powerful leaders.

This was the first year the fund would have had to comply but a decision was delayed as the city considered exemptions that are allowable under the law. Neither Kennedy nor Gov. David Paterson, who will appoint the state's next senator, will discuss her financial information.

Much of the Kennedy's family wealth is tied up in trusts and other mechanisms that conceal its scope from public view. Caroline Kennedy is the last survivor in her family, making it likely she received an inheritance from her mother — once married to Greek shipping tycoon Aristotle Onassis — and from her late brother, John F. Kennedy Jr. She also assumed an oceanfront property her mother owned on Martha's Vineyard.

The Fund for Public Schools has raised more than $233 million since 2002 from individuals, corporations and foundations to better fund the city's public school system. Kennedy was hired as its chief fundraiser in 2003, getting a nominal salary, but is now vice-chair.

The 2006 state law seeks to reveal if government officials have "substantial operational control" of a nonprofit organization. The Conflicts of Interest Board determined the Kennedy charity should be exempt from disclosure laws because isn't affiliated with city government.

The chairman of The Fund for Public Schools is Joel Klein, the city schools chancellor, who was appointed to the city job by Bloomberg.

"That would seem to indicate substantial control," Brennan said when told of Klein's role as chairman. "We would certainly suggest to them (the city conflicts board) that they are making a mistake, excluding them from coverage."

"There's this gray area," said Dick Dadey, executive director of Citizens Union, a city watchdog group that has followed the issue.

"The letter of the law is being followed," Dadey said. But he added, "I think they probably should not be exempt."

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On the Net:

The Fund for Public Schools: http://schools.nyc.gov/fundforpublicschools/