Foundations invest in offshore tax havens

It’s tax day, a good time to examine tax avoidance by large nonprofits.

While 501(c)(3) organizations are exempt from most taxation, they are taxed on unrelated business income, which can include investments in hedge funds and private equity. So to bolster their investment revenue, many wealthy organizations send their money overseas, to places generally known as offshore tax havens.

The practice, which is legal, is common among community foundations in Upstate New York. Examples, drawn from foundations’ most recently publicly available tax returns, include:

• The Adirondack Foundation, based in Lake Placid, which has invested $1.6 million with Canyon Value Realization Fund in Cayman.

• The Community Foundation for Greater Buffalo, with almost $150 million in Central America and the Caribbean.

• Central New York Community Foundation in Syracuse, which has $36 million in the Cayman Islands.

• The Community Foundation for South Central New York, in Johnson City, which has $2.2 million in the Caymans.