Closing the Clinton Foundation

Why should the CF be liquidated?

The conflict of interest between being a Director of a Foundation with US$440 million in
total assets and being President of the United States is unmanageable1. Attempting to manage
that conflict will force the next President to spend too much time on the Foundation, even if there
are good-faith efforts by Secretary Clinton and her family to recuse themselves from any role in
the Foundation. It will be most transparent and efficient to liquidate the Foundation
immediately.
How can the CF be liquidated?
The Foundation has the unusual feature that it operates projects through its own staff; this
is unlike most other foundations and development banks, which make grants or loans to agencies
that implement projects. This feature makes it easy to close the Foundation with minimal
disruption to its ongoing portfolio. The Clinton Presidential Center would remain the sole
activity of the former Foundation2 and it is not discussed here.

How to liquidate the Foundations assets

I assume the Foundation has liquidation procedures in the legal agreements it has signed
with its donors. Because I know nothing of those agreements, I start from the assumptions that
they do not specifically forbid anything in what follows and that liquidation would comply with
IRS Form 990/Schedule N.

1 I am assuming that Hillary Clinton wins the election. If she loses, this modest Foundation will be among
the least of our worries. Yes, I know she resigned as Director of the Foundation on April 12, 2015 but that is beside
the point. Funding numbers are rounded to the nearest whole million; percentages are rounded to the nearest whole
percentage point.
2 The Clinton Presidential Center spent US$13,501,618 in 2014, equal to 5.4% of total expenses in 2014.

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The 2014 CF balance (Table 1) shows total assets of US$440 million. Within that total,
the balance sheet shows cash and cash equivalents of: (1) unrestricted cash of $43 million; and
(2) restricted cash of $83 million.
The Foundation can give the unrestricted cash to its existing programs, thereby
liquidating 10% of its total assets. One option is to distribute unrestricted cash pari passu by
initial program size; a second would be to distribute unrestricted cash in inverse proportion to the
undisbursed program balances so as to give more of the unrestricted cash to programs that have
used most of their initial allocations.
It might be possible to distribute the restricted cash among current programs, thereby
liquidating another 19% of its total assets. This depends on the agreements with the original
donors. If the original agreement specifies how uncommitted donations are to be used if the
Foundation is liquidated, then (1) respect that agreement. If the original agreement does not
specify use of the unused donations, then (2) return them to the donors. If the donors reject the
refund, then (3) disburse the unused donations in the same manner as the unrestricted cash. This
avoids extended negotiations between donors and the CF about how to liquidate the restricted
cash. If the Foundation argues that none of those three options is feasible, then it should fire its
lawyers and get new ones to renegotiate the agreements.
Investments are endowments of US$56 million and programmatic and other
investments of US$21 million3. The endowments can be sold and (1) the proceeds distributed
to the existing programs. If the legal agreements with the donors to the Foundation do not allow
distribution to the existing programs, then (2) return the proceeds from sale of the endowments to
the donors. This would liquidate 13% of existing total assets.
Programmatic investments are, I suppose, funds committed to existing projects but not
yet disbursed. These can be given to the projects, thereby liquidating 5% of total assets.

3 There is an inconsistency between the balance sheets in the Clinton_foundation_report_public.pdf (page

2) and the 2015_ar_2015financials_upd.pdf for the year ending on December 31, 2014. The former shows US$1.20
million in programmatic and other investments; the latter shows US$21.20 million. The difference between the two
documents occurs, with the opposite sign, in the endowments so that the total net assets and liabilities match
between the two.

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Inventory and prepaid expenses are only US$4 million. The inventory can be
auctioned. Proceeds from inventory sale and prepaid expenses (pre-paid rent and purchases of
bulk travel?) can be donated to community groups near the Foundations headquarters.
Multiyear pledges and grants receivable are US$122 million. Dispose of these as with
restricted cash donate to existing programs or return to donors, thereby liquating another 28%.
Would liquidation be unfair to staff of the Foundation?
Those working on existing programs would continue on their current contracts until the
programs end. These are presumably the terms on which they were hired. Those not working
directly on programs for example, those employed on Foundation management or fund-raising
-- could receive severance pay from unrestricted cash or a job with an existing program.
Would liquidation prevent achievement of the Foundation's objectives?
Liquidation would not prevent achievement of the objectives of existing Foundation
programs. Those programs would be fully funded until their completion dates, which is the
probably the premise on which they began. Some programs might even receive additional
support until their completion resulting from the liquidation of cash and other assets of the
Foundation.
Second, there are many partners who can do this work (health, climate change,
agriculture), as the Foundation's reports make clear. Given the well-known commitment of the
donors to the Foundations objectives, it should be no problem for the partners to raise money to
continue the work of the liquidated Foundation. The one exception is the Clinton Presidential
Center which can perhaps be provided for from the US$56 million in endowments on the 2014
balance sheet of the Foundation.
It cannot be argued that the Clinton Foundation is doing anything that is unique, in focus
or in scale, that cannot be done by existing institutions or programs. The 2014 Annual Report of
the Foundation gives examples of capable partners who can continue the Foundations work after
it is liquidated.

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The Alliance for a Healthier Generation (Alliance) works with the

American Heart Association, which had revenue of US$808 million in
2015.

The Clinton Climate Initiative (CCI) spent US$8 million in 2014; the
Green Climate Fund had revenue of US$1.76 billion in 2015.

The Clinton Development Initiative spent less than US$5 million on small
farmers in East Africa; this is a small fraction of agricultural spending
from governments of those countries and from international development
banks.

The largest Foundation program is the Clinton Health Access Initiative,

which spent US$143 million in 2014. The approved WHO budget for
2014-2015 was about US2 billion per year. The Global Fund invests
nearly US$4 billion annually in the fight against AIDS, tuberculosis and
malaria. Donors to the Clinton Health Access Initiative can make new
commitments to WHO or to the Global Fund and achieve the same
objectives.

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TABLE 1
2014 Clinton Foundation Balance Sheet
ASSETS
Cash and cash equivalents
unrestricted
restricted
Fixed assets and other
property and equipment, net of AD
Investments
endowments
programmatic and other investments
Total investments
Inventory and prepaid expenses
Multiyear pledges and grants receivable
Accounts receivable
Total Assets

$43,152,198
$82,969,105
$107,951,664
$55,661,415
$21,203,454
$76,864,870
$3,595,928
$121,917,951
$3,053,579
$439,505,295

LIABILTIES AND NET ASSETS

Liabilities
accounts payable and accrued expenses
deferred revenue
Total liabilities
Net assets

$13,668,039
$53,878,588
$67,546,627
$371,958,668

Total liabilities and net assets

$439,505,295

Source: Clinton Global Foundation, 2015 Annual Report, year ended December 31, 2014,
Statement of Financial Position.
https://www.clintonfoundation.org/sites/default/files/2015_ar_2015financials_upd.pdf

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