By Mike Kaszuba
In the final days of 2017, President Trump and a Republican-led Congress passed a major new tax law that lowered the corporate tax rate for many U.S. businesses. And, in what was described as a show of its appreciation, U.S. Bank said it would donate $150 million to its foundation for charitable giving.
“We believe that tax reform is positive for the U.S. economy because it provides an immediate opportunity to benefit employees, communities and customers,” Andy Cecere, U.S. Bank’s chief executive, said in early January 2018, according to the Minneapolis Star Tribune. As part of its show of appreciation, the bank said it was also raising the minimum wage of its hourly workers to $15, and would pay a one-time $1,000 bonus to nearly 60,000 employees.
But records obtained by Public Record Media (PRM), a non-profit based in Saint Paul, along with statements from the bank show that much of the $150 million remained with the foundation nearly two years later even as the bank benefited financially from the tax law change.
Federal non-profit forms filed by the U.S. Bank Foundation showed that in 2018 – after the bank’s $150 million one-time contribution – the foundation gave $31.3 million in contributions, gifts and grants to community groups. The $31.3 million, according to the federal records, was similar in size to the $26.5 million the foundation gave to community groups in 2017, before the $150 million contribution from the bank.
Though official figures have not yet been released, a U.S. Bank spokesman said that the foundation had contributed roughly $26 million to community groups in 2019.
Headquartered in Minneapolis, U.S. Bank is the fifth-largest bank in the country and, according to the bank’s website, had more than 70,000 employees and $495 billion in assets as of Dec. 31, 2019. According to the most recent analysis by the Star Tribune, the total annual compensation for the bank’s chief executive was $13.7 million, down from $14.1 million the year before.
A U.S. Bank spokesman meanwhile confirmed to PRM that the bank – one year after giving the foundation $150 million – did not contribute any money to the foundation in 2018.
The federal documents filed by the U.S. Bank Foundation, which are known as 990 forms, were obtained by PRM from the Minnesota Attorney General’s office.
The bank defended what had taken place. A bank spokesman told PRM that the $150 million contribution was not meant to be distributed to community groups all at once, but instead was intended to make sure the foundation’s annual giving would be sustainable into the future.
“The $150 million that was donated to the foundation was designed to ensure that the foundation and its annual giving could be sustainable for years to come, regardless of business cycles,” the U.S. Bank spokesman said. “It also allows the foundation to be very confident and comfortable in making multi-year commitments to our non-profit partners. In addition, it provides the freedom to increase our charitable giving in times of need.”
Additional filings by the foundation seem to bear out that much of the money had stayed with the foundation in the two years following the contribution.
According to its 990 form for 2016 – the year before the $150 million contribution — the foundation listed $38 million as its end-of-year total net assets or fund balance. The next year, with the contribution, the figure jumped to $165.3 million. And in 2018, the most recent year for which data is publicly available, the end-of-year figure stood at $136.3 million.
The spokesman said the bank would not disclose how much it had contributed to its foundation in 2019 until its 990 form for that year was made public.
Scores of non-profits and charities benefit annually from U.S. Bank Foundation gifts – and not only in Minnesota.
In 2017, for example, the foundation gave money to the Hennepin History Museum (at least $1,000), the Minneapolis College of Art & Design (at least $2,000), the Children’s Hospital Association (at least $1,000), the Church of Gethsemane Shelf of Hope (at least $3,200), Cookie Cart in north Minneapolis (at least $3,050) and the Down Syndrome Association of Minnesota (at least $1,800).
During that same year, according to the foundation’s 990 form, the U.S. Bank Foundation president was paid $288,656, a figure that dropped to $206,478 the following year.
Shortly after Congress passed the new tax changes in the final days of 2017, U.S. Bank was among a number of large corporations nationally that stated it intended to pass onto workers and others some of the savings the bank anticipated from the lowered corporate tax rates made possible by the new tax law.
In Minnesota, U.S. Bank and TCF Financial both announced in early January 2018 that their foundations would receive more money for charitable giving as a result of the new tax law. TCF Bank, a regional bank that has since merged with Chemical Bank, said it would also double the matching contribution to charities that its employees donated to.
TCF Financial said it would provide $5 million for one-time bonuses for employees and also give $5 million to its foundation.
The TCF Foundation, according to its federal 990 form, made at least $1.4 million in contributions, gifts and grants in 2017 and at least $2.28 million in 2018.
TCF Bank’s net income attributable to the bank meanwhile jumped from $268.6 million in 2017 to $304.4 million in 2018 – the first year of the new tax law.
The TCF Foundation has similarly contributed to many community groups, both in Minnesota and elsewhere. The foundation’s 990 form for 2018 lists 14 pages of contributions, including the Minnesota Adult & Teen Challenge (at least $25,000), the Minnesota Ovarian Cancer Alliance (at least $7,500), Dayton’s Bluff Neighborhood Housing Services (at least $5,000), the Minnesota Homeownership Center (at least $15,000) and the In the Heart of the Beast Puppet and Mask Theatre (at least $5,000).
A TCF Bank spokesperson also explained the bank’s contributions to its foundation in light of the new tax law.
“TCF Bank donated only $282,000 to TCF Foundation in 2016 because the foundation already had a large cash balance at the beginning of the year, and TCF did not need to contribute additional funds to the foundation in 2018 or 2019 due to the $5 million donation at the end of 2017,” said Randi Berris, a senior vice president, and director of corporate communications.
“TCF will always be a champion for our customers, businesses and communities. The Foundation is a critical component of our strategy to give back to the communities where we live and serve, though it is important to note it is not our only vehicle. Last year alone, the TCF Foundation donated $1.6 million to more than 700 charitable partners and an additional $738,000 in team member matching gifts,” Berris said in a statement to PRM.
The new tax law, known as the Tax Cuts and Jobs Act, took effect in January 2018 and among other things cut the corporate income tax rate from a top rate of 35 percent to a single 21 percent rate. A Congressional Budget Office report in December 2017 estimated that the new law would reduce federal revenues by $1.65 trillion over a nine-year period ending in 2027, and would increase the federal deficit by $1.46 trillion over a 10-year period.
While supporters of the tax law change maintained that it would help boost the economy, critics stated it would instead benefit the affluent and large corporations more than average Americans.
The tax law change appears to have benefited U.S. Bank – whose income had already been rising through most of the past decade.
The bank reported that net income attributable to U.S. Bank rose from $5.88 billion in 2016 to $6.2 billion in 2017. In the first year of the tax law change, according to the bank, the net income attributable to the bank rose in 2018 to $7.09 billion – a 14.1 percent increase from the previous year. In 2019, the bank reported $6.9 billion in net income attributable to the bank.
During the past decade, going back to the 2009 recession, U.S. Bank had reported steady increases in net income attributable to the bank. In 2009, the figure stood at $2.2 billion and was $3.3 billion the following year. By 2012, it had risen to $5.65 billion and by 2015 was $5.879 billion.
Though the bank’s income has increased, the amount of money given by the U.S. Bank Foundation in contributions, gifts and grants has remained relatively steady.
Since 2012, according to the federal 990 forms, the U.S. Bank Foundation has regularly given at least $23 million annually in contributions, gifts and grants. The $31.3 million in 2018 was the most the foundation had given in contributions, gifts and grants since 2012.
The money that U.S. Bank has given to its foundation meanwhile has fluctuated, but generally increased.
U.S. Bank sent $24 million to its foundation in 2012, $16.7 million in 2014 and $28 million in 2015. Federal records show that $40 million went to the foundation in 2016, $150 million in 2017 – and then the amount dropped to zero in 2018.
The bank’s spokesman said U.S. Bank has, as of August 2020, contributed additional money to the foundation since the $150 million in 2017 – but said the figure would be disclosed when the foundation filed its 990 form for 2019.
Meanwhile, the spokesman said the bank’s foundation would increase its contribution this year to the community by at least $15 million because of the COVID-19 pandemic and issues related to the death of George Floyd, the Black man whose death while being arrested by Minneapolis police earlier this year touched off weeks of racial justice protests and rioting locally and across the world.