Nonprofit center benefited Edwards

CHAPEL HILL -- John Edwards ended 2004 with a problem: how to keep alive his public profile without the benefit of a presidential campaign that could finance his travels and pay for his political staff.

Edwards, who reported this year that he had assets of nearly $30 million, came up with a novel solution, creating a nonprofit organization with the stated mission of fighting poverty. The organization, the Center for Promise and Opportunity, raised $1.3 million in 2005, and -- unlike a sister charity created to raise scholarship money for poor students -- the main beneficiary of the center's fundraising was Edwards himself, federal tax filings show.

But a spokesman for Edwards on Thursday defended the center as a legitimate tool against poverty.

The organization became a big part of a shadow political apparatus for Edwards after his defeat as the Democratic vice presidential nominee in 2004 and before the start of his presidential bid this time around. Its officers were members of his political staff, and it helped pay for his nearly constant travel, including to early primary states.

While Edwards said the organization's purpose was "making the eradication of poverty the cause of this generation," its federal filings say it financed "retreats and seminars" with foreign policy experts on Iraq and national security issues. Unlike the scholarship charity, donations to it were not tax deductible, and, significantly, it did not have to disclose its donors -- as political action committees and other political fundraising vehicles do -- and there were no limits on the size of individual donations.

Edwards, a one-term former senator from North Carolina, set out to keep his political options open by promoting issues he cared about, like poverty.

"He wanted to learn, travel and be in a position to be a viable candidate," said J. Edwin Turlington, a Raleigh lawyer and manager of Edwards' 2003 presidential exploratory committee. "He had the ability to raise money to fund his activities. He had a vision, and he knew it would take money."

Beyond the norm

But it was his use of a tax-exempt organization to finance his travel and employ people connected to his past and current campaigns that went beyond what most other prospective candidates have done before pursuing national office. And according to experts on nonprofit foundations, Edwards pushed at the boundaries of how far such organizations can venture into the political realm. Such entities, which are regulated under Section 501C-4 of the tax code, can engage in advocacy but cannot make partisan political activities their primary purpose without risking loss of their tax-exempt status.

Because the organization is not required to disclose its donors -- and the campaign declined to do so -- it is not clear whether those who gave money to it did so understanding that they were supporting Edwards' political viability as much or more than they were giving money to combat poverty.

The money paid Edwards' expenses while he walked picket lines and met with Wall Street executives. He gave speeches, hired consultants and attacked Bush. He led minimum-wage initiatives, went frequently to Iowa and appeared on TV. He traveled to China, India, Brussels, Uganda and Russia.

"He was not a U.S. senator; he had no office," said Ferrel Guillory, a political program director at the Center for the Study of the American South at the University of North Carolina. "So he set up a series of entities to finance his travel, to finance a political shop and to finance an issue shop. It all adds up to a remarkable feat of keeping a presidential candidacy alive without any of the traditional bases for it."