EDITORIAL: Illinois Policy Institute nonprofit tax status begs for FBI probe

Even if you think taxes are the root of all evil, you can’t just flout federal tax laws.

We honestly don’t know if John Tillman and his Illinois Policy Institute, a conservative think tank that abhors almost all taxes, have broken any laws in the dizzying way they have steered millions of dollars from five interconnected nonprofits to for-profit ventures in which Tillman and his associates have a financial stake.

But the arrangements smell, and we urge state Sen. Chris Nybo, a Republican, to f0llow through on his threat to push for investigations by the FBI and the IRS.

If, as reported, money from Tillman’s nonprofit Illinois Policy Institute was given to a second nonprofit, Tillman’s Think Freely Media, which then lent money — including at no interest — to a for-profit venture that Tillman also controlled, Crowdskout, that sounds like cozy self-dealing.

And if this sort of insider funneling of funds from nonprofits to for-profits occurred repeatedly, also as reported, we have to wonder why the Illinois Policy Institute and the others nonprofits still qualify for tax-exempt status. Intentional or not, this looks like tax-dodging.

The complicated dealings of the Illinois Policy Institute, which held great sway in Gov. Bruce Rauner’s administration until a falling out last year, were detailed this weekend in an investigative report by Tina Sfondeles of the Sun-Times and ProPublica.

Sfondeles and ProPublica revealed the questionable shuffling of funds between various Tillman-connected nonprofits and for-profits, which tax experts say is, at the very least, frowned upon. They also report that Tillman’s compensation for his work for the five nonprofits — $366,631 in 2015 — exceeds the top pay of executives in similar organizations. And that pay does not include whatever money he’s received from the for-profit entities in which he has a stake.

Illinois Attorney General Lisa Madigan is reviewing the revelations in the Sun-Times/ProPublica story, but she’s in a compromised position on this one. Her father, House Speaker Michael J. Madigan, has often been the target of Tillman’s conservative wrath.

But we definitely look forward to seeing what the FBI and IRS make of all this.

Send letters to: letters@suntimes.com.