AIDS nonprofit’s political spending comes under fire
Foundation has given millions to Measure S, and critics say the group has strayed too far from its mission.
The AIDS Healthcare Foundation oversees a global philanthropic empire that extends from its Hollywood headquarters to 15 states and 38 countries.
The 30-year-old nonprofit organization treats hundreds of thousands of patients. It hands out tens of millions of condoms annually. And it puts up provocative billboards urging people to get tested for sexually transmitted diseases.
But in recent months, it has become known for the kind of activism usually associated with homeowner groups, spurring criticism that it has strayed too far from its mission.
In April, the foundation sued to stop construction of two residential towers next to its headquarters on the 21st floor of the Sunset Media Center. A few months later, the group filed a lawsuit challenging plans for a 15story office building down the street.
And over the last year, the organization has been the driving force behind Measure S, which would impose new restrictions on the construction of housing, shops and offices in Los Angeles. As of last week, the group had spent more than $4.6 million — or nearly 99% of the campaign’s contributions — to support the measure, bankrolling billboards, door-to-door canvassers and splashy brochures, a Times analysis found.
Michael Weinstein, the foundation’s top executive, says the March 7 ballot measure falls firmly in line with the group’s mission to help residents with HIV and AIDS, as well as its track
record of waging “social justice battles against governments that fail to serve the people.”
Measure S, he argued, would take aim at highpriced development projects that are gentrifying neighborhoods and driving up housing costs. Those projects are making it difficult for people with AIDS and HIV to remain in L.A., Weinstein said.
“We have witnessed how San Francisco, where AHF has clinics for testing and treatment, has become a rich ghetto,” he said. “Lowincome people by the tens of thousands have been displaced, and diversity is harder and harder to find. The same thing is unfolding in Los Angeles.”
Opponents of Measure S accuse Weinstein of using millions in nonprofit money to pursue a personal grudge over a building that would block his office views. Weinstein, they say, is just another NIMBY obstructionist, restricting the supply of new housing and jacking up rents across the city.
If voters want to avoid San Francisco’s fate, they should reject the ballot measure, opponents say.
“Measure S is going to hurt the people” the foundation serves, said Silver Lake resident Bobby Peppey, a foe of Measure S who was diagnosed with AIDS more than a decade ago. “The people they serve are mostly lowerincome persons, and people of color. And this is going to affect their ability to get affordable housing.”
Proponents of Measure S say it would crack down on the city’s long-standing practice of amending the General Plan — the document that regulates what gets built citywide — to enable big projects proposed by well-connected real estate developers. Foes say the measure would eliminate thousands of jobs and halt construction of affordable housing, since those projects frequently need changes to the General Plan in order to get built.
The AIDS Healthcare Foundation has waded into politics before. In the last five years, it has spent millions on ballot measures to require condoms on pornography shoots in Los Angeles County and statewide. It has also backed campaigns in California and Ohio to restrict the prices that state agencies pay for prescription drugs.
During those fights, critics accused the foundation of flouting restrictions on political activity by charitable organizations. But the battle over so-called megadevelopments has spurred a new round of criticism of how the foundation and its leader are spending its money. The Los Angeles County Federation of Labor, one of the biggest opponents of Measure S, recently released a video accusing Weinstein of funding campaign activities that have “zero to do with healthcare.”
The foundation has defined its mission as “the provision of hospice and healthcare services to AIDS, HIV and other patients, and engaging in related educational activities,” according to state records. Michael Eisman, a critic of the group, said money spent on Measure S should have gone toward HIV medication or other services.
“Measure S is a blatant abuse of the resources of AIDS Healthcare Foundation, considering it has absolutely nothing to do with the mission of the organization,” said Eisman, who worked closely with the foundation as part of a volunteer group until 2015.
Foundation representatives say they have no difficulty serving their clients while fighting for Measure S.
The foundation has a wide array of operations, running 43 pharmacies and 20 Out of the Closet thrift stores across the U.S. It has nearly 400 clinics and employs more than 5,000 people worldwide.
Under federal law, nonprofits like the AIDS Healthcare Foundation are allowed to weigh in on legislation, but too much lobbying can jeopardize their tax-exempt status. To preserve their status, charitable organizations can either comply with spending limits or refrain from spending a “substantial part” of their time, money and other resources on influencing legislation.
Legal experts say there is no clear rule about what is “substantial,” though past cases have given attorneys some guidance. “If you start to engage more than 5% of your resources toward lobbying, it’s probably time to consider whether you’re violating the test,” said Gene Takagi, managing attorney of the NEO Law Group in San Francisco.
In federal tax filings, the foundation reported that it spent more than $253 million during 2015, dwarfing the nearly $7 million — less than 3% of the reported total spending — it said it spent to influence legislation that year. Financial statements provided by the group indicate that the foundation and nearly a dozen other affiliated entities collectively spent more than $983 million that year. Foundation spokesman Ged Kenslea said that, historically, no more than 2% of its expenditures go toward advocacy efforts — an “insubstantial” portion of its budget.
California also requires nonprofits to use donations for their “declared charitable purposes.” After the foundation launched its campaign for Measure S, a coalition of business, labor and community groups sent a letter to the California attorney general, accusing the group of misusing its charitable donations by funding the ballot measure.
That letter cited concerns raised by the Free Speech Coalition, an adult entertainment industry group that clashed with the foundation over condoms in porn shoots. That group has been urging state and federal authorities to investigate whether the foundation underreported its political spending and exceeded federal limits on such expenditures.
Kenslea said neither the IRS nor the California attorney general had contacted the group about any complaints. The group has relied on its independent accounting firm to determine how to categorize political expenditures, he said. Both the ballot measure and the lawsuit over the towers proposed next door are financed by revenue from its businesses such as its pharmacies and thrift stores, not grants or donations, Kenslea added.
The foundation entered the debate over L.A.’s recent real estate boom two years ago, after the Miami-based firm Crescent Heights proposed two 30-story towers next to the AIDS Healthcare Foundation’s headquarters.
City officials welcomed the 731-unit Palladium Residences project, noting that it would be a block from a subway station and go up on an empty lot, avoiding the demolition of existing apartments. But the foundation opposed the development, arguing that it was too tall and too dense for its location on Sunset Boulevard.
Early in that fight, public affairs consultant Steve Afriat, who was lobbying City Hall on behalf of Crescent Heights, asked for a meeting with Weinstein to hear his concerns. Afriat said that during that meeting, Weinstein complained that the Palladium would block his views of the Hollywood Hills.
“He said if we lowered it to 12 stories, he would no longer oppose the project,” Afriat said. “If we didn’t, he threatened to sue and do a referendum.”
Weinstein said he never said anything to Afriat about his view and did not recall mentioning a referendum. But he confirmed that he wanted Afriat to drastically reduce the size of the towers and thought a dozen stories would be “more acceptable.”
Within months, the foundation had dozens of people showing up at Palladium Residences hearings wearing AIDS Healthcare Foundation T-shirts. The group’s lawyer testified that construction in Hollywood had already caused her two-mile commute to drag out to 25 minutes.
Around the same time, the nonprofit drafted a ballot measure that would impose a moratorium on changes in city rules that permit buildings to be built bigger than ordinarily allowed — the kind being sought by Crescent Heights for its two towers.
The foundation began putting money into the Coalition to Preserve L.A., the campaign group set up to support the ballot measure, which it labeled the Neighborhood Integrity Initiative.
Crescent Heights quickly became the biggest donor to the opposition campaign, providing nearly half of the more than $3.2 million in money and services raised so far. Sunset Bronson Entertainment, another developer being sued by the foundation, has donated at least $100,000.
With the election two weeks away, it’s not entirely clear just how deeply the foundation is immersed in L.A. real estate fights.
In an interview with The Times, Weinstein refused to say whether his nonprofit is bankrolling a lawsuit by Friends of the Neighborhood Integrity Initiative seeking to overturn the city’s approval of a 1,210-unit residential complex on Jefferson Boulevard.
Weinstein also would not disclose whether his group is paying for a legal challenge against the Martin Cadillac project, which would bring offices, stores and 516 apartments to Olympic Boulevard on the Westside. In addition, he declined to say how many lawsuits over L.A. real estate development his group is funding.
“Whatever we’re doing is between us and our lawyers,” he said.