Posted on January 11, 2006

United Farm Workers: A Broken Contract

Miriam Pawel, Los Angeles Times, Jan. 9, 2006

KEENE, Calif. — Paul Chavez lives a stone’s throw from the two-bedroom home where he grew up and his mother still resides. His commute is a short walk across a bucolic compound here in the Tehachapi Mountains to the nondescript building where he oversees charities founded by his father, Cesar Chavez.

Down the hall, Paul’s brother-in-law, Arturo Rodriguez, runs the United Farm Workers union and several related charities. Rodriguez also lives on the sprawling grounds, as does Paul’s younger brother, Anthony, who runs radio stations owned by a UFW affiliate.

Paul’s sister Liz works here too. She learned accounting as a teenage volunteer and went to work after high school for the movement her father ran. Today she is comptroller for the UFW and also handles the finances of several charities.

From their remote perch amid rolling hills and gnarled oaks 30 miles east of Bakersfield, Cesar Chavez’s heirs run a thriving family business that has prospered even as the labor union has floundered. They have capitalized on the Chavez name and developed a complex financial web that helps enrich the organizations they oversee.

In dollars, energy and passion, the charities are the heart of the network known as the Farm Worker Movement. Between them, Rodriguez and Paul Chavez head more than a dozen tax-exempt groups that bring in $20 million to $30 million a year. Their primary business is to build and manage affordable housing projects, run Spanish-language radio stations and invest in projects that burnish the image of Cesar Chavez.

A charity does not pay taxes because it serves a public good. Charities are legally required to get the best value for the people they serve.

Instead, the Farm Worker Movement operates more like a family business, making financial decisions in order to expand the enterprise and enhance the founder’s reputation.

The entities enrich one another, buying services from each other that are not necessarily the best available deal. The various organizations reported paying more than $1 million to the UFW-sponsored health plan in 2004, for example — insuring hundreds of employees in a fund that was designed to help farmworkers but now has only a few thousand participants because the UFW membership has dwindled.

The UFW and its related charities do business with friends. Records show they have sold real estate at below-market rates without seeking independent appraisals or opening up the bidding process; in one case, insiders resold a parcel for a $1.1-million profit.

The charities prop up the labor union, which struggles for members. The affiliated organizations buy services such as accounting and human resources — yielding more than $500,000 in income for the UFW in 2004 — although several state reviews have criticized financial management provided by the union.

The Farm Worker Movement’s financial strategy flows from a mission statement adopted a few years ago: Change the world by achieving economic and social justice and help 10 million Latinos by the year 2015.

“Before the vision statement, I was going crazy. I was thinking, ‘I’m not doing my part,’” said Paul Chavez, who worried because his charitable efforts were not aimed primarily at farmworkers. “Now I can go to bed at night knowing that while I feel for the union and I want them to grow and all that, I understand that my contribution has to be made on the service side.”

The bulk of the movement’s income is on the side of the ledger that Chavez oversees. He runs the National Farm Workers Service Center, which collects rents on the apartments it owns and operates, along with fees for housing development and management, and revenue from radio ads and sponsorships.

In 2003, for example, the Service Center earned $10.8 million from managing property and $6.8 million from the radio stations and spent roughly the same amount operating those enterprises, according to financial statements. In 2004, the Service Center reported spending $1.1 million on management costs and $9.87 million on programs, primarily the housing projects and radio stations. After payroll, the largest expenses are rent, travel and interest on loans.

Chavez also heads the Cesar E. Chavez Development Fund, which sits on almost $10 million and uses the interest to help support the Service Center and other related charities — even as the UFW issues desperate pleas for the donations that make up one-third of the union’s $7-million budget.

The business of organizing farmworkers has become almost an afterthought, like the junked cars and abandoned school bus that once transported boycott volunteers and now litter a back field on the UFW’s 180-acre campus.

“At times people might wonder and question the resources that go into other things,” said Mark Splain, an AFL-CIO official who was on loan to the UFW in 2004 to set up a training program for the union’s organizers. “I’d be slow to jump to the broad-based critique that these things don’t matter or don’t fit. This is a movement.”

The movement’s founder has been dead for more than a decade, but Cesar Chavez is key to how the organizations raise and spend money today.

Invoking his name and legacy has helped attract public money (more than $10 million in state grants in recent years), private support (more than $3 million from one philanthropic organization, the California Endowment, in the last few years) and individual donations ($2 million a year to the union alone). Last fall, the Kellogg Co. donated $25,000 to the Cesar E. Chavez Foundation and featured his likeness on a cornflakes box for Hispanic heritage month.