Pro-alts dark-money group takes jabs at fiduciary watchdog in report to IRS

As part of its ongoing push in support of opening 401(k) accounts to private investments, a conservative advocacy group is alleging a stalwart industry critic has breached IRS rules.

The Pinpoint Policy Institute — a 501c(4) nonprofit that isn't required to disclose its donors under the rules for social welfare organizations that have become the most common type of "dark money" groups in politics — sent a letter to the IRS last month about the Institute for the Fiduciary Standard and its president, Knut Rostad. In it, Pinpoint Executive Director Eric Ventimiglia accused Rostad's organization of failing to share its required annual nonprofit disclosures and called on the agency to review its tax-exempt status.

"It is in the public interest for the IRS to investigate this violation because the IFS actively seeks to influence public policy on financial advisor fiduciary duties and investor protection. These are critical issues impacting Americans' retirement savings, while IFS maintains close ties to high-level former regulators," Ventimiglia wrote in the Feb. 2 message to Treasury Secretary and acting IRS Commissioner Scott Bessent. "An IRS investigation would help ensure accountability for an organization with such regulatory connections and policy influence and protect the public confidence in nonprofit advocacy within the financial sector." 

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One drop in the ongoing flood of dark money

Ventimiglia served in the Departments of Agriculture and Education during President Donald Trump's first term, so the fact that Pinpoint is supporting the administration's executive order and Labor Department rulemaking to open more retirement plans to alternative investments such as private equity, private credit and real estate isn't in itself surprising. But a public campaign focusing on an influential but relatively small organization that isn't well known outside the planning profession raised the question of who is so passionately committed to expanding the menu of private investments for 401(k) plans that they're targeting Rostad and his group. 

For now, at least, there's no way to know. And the nearly $1.3 million in anonymous contributions and grants reported by Pinpoint in its own IRS filing for 2024 looks comparatively tiny to the roughly $1 billion that Brendan Glavin, the director of insights with nonpartisan campaign finance database Open Secrets, said came from dark money groups of every political ideology in that year's elections. For nonprofits who must file a Form 990 each year, it's "a pretty clear rule that you're supposed to make the 990 available," Glavin noted. However, in "the gamesmanship of politics," he's "starting to see more of this complaint activity" among 501c(4) groups and other nonprofits accusing each other of violating IRS rules or other laws, he said.

"C4's are set up to allow for nonprofits to do some political activity," Glavin said. "What we've seen in the last 20 years or so is that these groups have really been co-opted, this type of organization, this legal entity has been co-opted by those who want to use it to get into elections."

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A staunch industry critic

The IRS didn't respond to requests for comment on Pinpoint's allegations against the fiduciary advocacy group. 

No Form 990 for the Institute for the Fiduciary Standard appeared in searches of databases maintained by the agency or outside groups, and Rostad declined to comment on the allegations. A longtime advocate for applying tougher fiduciary standards across every form of financial advice, he has been criticizing the administration's executive order and the larger calls for so-called democratization of alternative investments for 401(k) participants.

For example, Rostad and Institute board member Phyllis Borzi, the architect of the Obama Administration fiduciary rule that was vacated in a federal appeals court in 2018, discussed their concerns in an interview this past fall with the Capitol Account newsletter. The publication asked Rostad how the fiduciary duty relates to the debate about alternatives in 401(k) plans.

"In a sense, it has everything to do with it," Rostad said. "As a clean starting point, go back to the executive order in August and look at what it does …. In those very few words — I counted them and I think there are just barely over 700 — it basically orders the Department of Labor to come up with new guidance to make it easier for a plan sponsor to add alternative investments. [It also] is looking for guidance to make it more difficult to litigate, should a plan participant believe they were not treated by a fiduciary."

The Labor Department has indicated, however, that the agency will move forward with issuing a rule proposal in line with the executive order by late April. Despite skepticism about the claims that alternative vehicles will deliver performance that outweighs the risks and cost of private investments from many others besides Rostad's group, the administration is taking steps to give more than 90 million participants in defined-contribution retirement plans what the order described as the same opportunities available to public pensions.     

"A combination of regulatory overreach and encouragement of lawsuits filed by opportunistic trial lawyers has stifled investment innovation and largely relegated 401(k) and other defined-contribution retirement plan participants to asset classes whose returns lack the very same long-term net benefits allowed for and achieved by public pension plans and other institutional investors," Trump wrote in the order. "My administration will relieve the regulatory burdens and litigation risk that impede American workers' retirement accounts from achieving the competitive returns and asset diversification necessary to secure a dignified, comfortable retirement."

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What, if anything, happens next?

Besides strongly backing the administration's proposal, Pinpoint has tried at least eight times since November to obtain the Form 990 for Rostad's organization, according to the letter Ventimiglia sent to the IRS. Pinpoint launched in April 2024 "to promote and defend the pillars of America's economic growth and prosperity" under founding Executive Director Gordon Gray, a former Senate staffer to Republicans and the onetime vice president of economic policy with the American Action Forum, a think tank led by former Director of the Congressional Budget Office Douglas Holtz-Eakin. 

Besides the 401(k) advocacy, the organization has joined calls to apply inflation indexing to the rules for capital gains taxes, criticized Trump's proposal for what it views as "price controls on credit cards," and spoken out against the idea of expanding requirements for deposit insurance at banks, its website showed. Vintimiglia joined the group in September.

In an email statement to Financial Planning, Ventimiglia didn't answer the questions of who is financially supporting his organization or why Rostad's group caught its specific attention.

"While it claims to advocate for transparency and accountability in the financial sector, the Institute for the Fiduciary Standard appears to be operating in blatant violation of IRS rules, refusing repeated requests to disclose its nonprofit tax returns — as required by law — over the course of months," Ventimiglia said. "It's clearly hypocritical for the Institute to flout its most basic disclosure obligations under federal law."

Whether that will spur any scrutiny or other actions by the IRS remains to be seen. Even though the Trump administration has aggressively pursued its aims in other areas, the IRS has sought to avoid situations like the "real political firestorm" of about a decade ago, when the agency's investigation of conservative nonprofits led to legal cases and public criticism, Glavin noted.

"Under any climate, it creates a situation where the IRS is probably unlikely to police this too much," he said. "Historically, the IRS is not really interested in doing a lot of oversight in this area."