Nonprofit Imperative
…Your nonprofit browser
September 2014
Follow us: NonprofitsNews; Nonprofit Imperative Blog
The twice-monthly newsletter dedicated to:
exposing the crisis in nonprofit fraud leadership…a crisis of pervasive and monumental waste, fraud, abuse, mismanagement, and malfeasance throughout the charitable sector which costs taxpayers and contributors tens of billions of dollars annually; and,
seeking reforms that will restore the public’s lost confidence in the sector.
What’s Included:
Skunk of the Month:
Good Shepherd Lutheran Church; Background Checks, again; Autism Charities
Charity Check Up:
American Red Cross
A Thought or Two:
American Hero Caught
Nonprofit News-In Case You Missed It:
Breckenridge (CO) Film Festival; ‘Ice Bucket Challenge’; Livestrong …more
Political/Official Chicanery:
MI; PA; RI; OK; CA; WA; VA; NY; IN…more
What Do You Think?
“Boards are almost exactly as they were a hundred years ago: a collection of grey eminences who meet for a few days a year to offer their wisdom. They may now include a few women and minorities. There may be a few outsiders. But the fundamentals remain the same. Board members are part-timers with neither the knowledge nor the incentives to monitor companies effectively. And they are beholden to the people they are supposed to monitor. Boards are thus showcases for capitalism’s most serious problems: they are run by insiders at a time when capitalism needs to be more inclusive and are dominated by part-timers at a time when it needs to be more vigilant about avoiding future crises.” (August 15 issue of The Economist) (h/t EO Tax Journal) (see Nonprofits In The News, #7 below)
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Skunk of the Month…
Skunk of the Month is the twice-monthly designation made by Nonprofit Imperative, the organization dedicated to eliminating waste, fraud, abuse and mismanagement in nonprofits and government. The Skunk of the Month award is given to charities and government officials who show blatant disregard for the interests and trust of contributors and taxpayers. This month’s example is:
“They came to do good and they did very well indeed (for themselves).”
No Governance, No Enforcement But Who Cares?
Deborah Suchomel took more than $106,000 while serving as council secretary and preschool bookkeeper for Good Shepherd Lutheran Church between October 2005 and April 2013. During that time she had written checks to herself for cash. The embezzlement was discovered after the IRS contacted the church about unpaid taxes. In May she pleaded guilty and was sentenced recently to four years probation for embezzling thousands of dollars from the Romeoville (IL) church. She paid $26,987.26 in restitution to the church.
The Rev. Suzanne Anderson-Hurdle said that this embezzlement caused her to trust people less. I trust my instincts less. She further told the judge "The outlook our church will survive is not good."
This is a typical example of a total lack of good business practices, little governance and no accountability. There is little enforcement of charity crimes. The perpetrator gets off with a slap and seldom makes the organization whole. Where is the disincentive to not steal?
Background Checks Are A Must
Clayborn Collins, the chief executive of Emmanuel Community Services, has lied on his resume, omitted some of his criminal record on state disclosure forms and embellished his personal biography when applying for numerous government grants and contracts to fund his North Portland nonprofit. Collins has raised more than $1.2 million in public money over the past seven years. Collins has claimed he earned both a doctorate and a master's degree from the prestigious London School of Economics and Political Science. On a state background check last year, he touted a master's degree in divinity. None of this is true, records show. Collins has portrayed his organization as a protector of women and as an advocate for domestic violence programs. But records show two women have been granted restraining orders against him alleging domestic violence. He has been convicted of theft, forgery and a gun-related crime and owes more than $170,000 in penalties, interest and back taxes to the state of Oregon and the Internal Revenue Service. Where was the Board?
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Autism Charities Is Piggybank for Founders
For the second time, Brandie Christian was caught in a scam involving assistance to children with autism.
Just two years ago, the state Attorney General’s Office forced the closure of one charity, Autism Awareness United, following allegations of malfeasance there. Christian worked for that charity, which saw donated money misspent prior to its closure.
After that closing, Christian and her husband launched Autism Outreach Foundation. They incorporated the charity as a nonprofit in December 2012, naming friends and family to its board before beginning to collect donations. The charity brought in well over $400,000 since its founding, but only $4,000 has been distributed to needy families. She spent donations on designer jeans, trinkets from a Vantage gem shop, skin care products and shoes, according to a lawsuit and also made cash withdrawals from the charity account. Thousands of dollars in donations remain unaccounted for.
The state consumer protection investigators contend she and husband Joshua Hani have been scamming donors to the charity they launched. Attorneys for the state filed a civil lawsuit against the pair in an effort to shut down the Autism Outreach Foundation. The organization – which hasn’t issued a single grant to a struggling family in 2014 – appears to still be collecting money from donors. (source)
Charity Check Up:
American Red Cross Reverses Itself on ‘Trade Secrets’
Under immense amount of pressure from the New York attorney general's office and ProPublica, the American Red Cross reversed itself and has released new details on how the American Red Cross spent the more than $300 million it raised following Superstorm Sandy. Previously, the charity suggested that such information was a 'trade secret'.
The revelations are part of a 108-page document the Red Cross sent ProPublica, which for months has been pushing the group to further explain how it distributed funds earmarked for Sandy relief.
In an additional note provided with a letter, the Red Cross said that as of June 30, 2014, it had spent $239 million on post-Sandy relief and made "firm commitments" to spend almost all of the rest of the $312 million raised. It also broke its expenditures into seven categories, a level of detail not given in its annual reports or tax filings.
More than half the money spent, $129.6 million, went to financial assistance, food, and other relief items, the Red Cross said. The next-largest expenditures were $46.1 million for "deployment of staff and volunteers (e.g. air travel, rental vehicles, meals, lodging for volunteers)" and $30 million for "costs of permanent program resources included in Superstorm Sandy response."
The group said it spent smaller amounts to pay temporary disaster workers, to acquire or rent equipment, and on miscellaneous operational costs. Nearly $5 million went to professional and consulting services for events like telethons and direct mail fundraising.
The full letter from the Red Cross on Sandy fundraising and spending can be read here.
A Thought or Two:
American Hero Sentenced For Charity Theft
President Bill Clinton presented him with the nation's top recognition for volunteers, the President's Volunteer Action Award, in a Rose Garden ceremony at the White House.
And his program to take leftover food from restaurants, hotels and groceries and give it to the hungry — USA Harvest —was championed by stars ranging from the Goo Goo Dolls to actress Scarlett Johansson, who auctioned off her used facial tissue on Ebay for $5,300 to benefit the charity. He was a philanthropic superstar who was once honored by Dr. Norman Vincent Peale with an award dubbed the "Nobel Prize for Goodness."
Now Hugh Vanderbilt "Stan" Curtis was sentenced to two years in prison for stealing $183,354 from USA Harvest. Curtis, who pleaded guilty in June, also must pay restitution in that amount to Kentucky Harvest, another charity he founded but wasn't running at the time of the thefts from USA Harvest, which is now defunct.
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Nonprofit News…
In Case You Missed It:
1.
The former director of the Breckenridge (CO) Film Festival, who pleaded guilty to embezzling up to $300,000 from the non-profit, was sentenced to five years in prison. She also stole thousands of dollars from her ex-husband and his former business partner.
2.
A report issued in July by the Treasury Inspector General for Tax Administration reports that approximately 64,000 or 3.8 percent of all tax exempt organizations (numbered at 1.7 million in 2012 in this report) owed at least $875 million in unpaid taxes to the federal government as of June 2012. Sixty-nine percent of this debt was in unpaid payroll taxes. The remainder of the debt is made up of reporting penalties (4%), excise taxes, unrelated business income and other taxes. While the problems in the report are limited to very few nonprofits, this is a reminder to all of the obligation that nonprofit employers have to their employees and federal and state government to meet all tax filing and payment obligations,” said Kate Barr of the Nonprofit Assistance Fund,
3.
The “Ice Bucket Challenge” has lit social media on fire, raising both money and awareness for amyotrophic lateral sclerosis, commonly known as Lou Gehrig’s disease. People have shared more than 1.2 million videos on Facebook between June 1 and Aug. 13 and mentioned the phenomenon more than 2.2 million times on Twitter since July 29, according to those sites. Donations to the ALS Association have spiked. As of August 17th, the association said it had received donations over $100 million since July 29, compared with $1.7 million during the same period last year. It said there were hundreds of thousands new donors.
4.
The Livestrong Foundation announced that it is making a major strategic move — giving a $50 million gift to the University of Texas at Austin's new Dell Medical School to create the Livestrong Cancer Institutes. Originally called the Lance Armstrong Foundation, the cancer-fighting organization changed its name in 2012 following the infamous doping scandal involving its founder and namesake, who was ultimately pushed out as the organization’s chairman.
5.
Michelle Rhee had big ambitions but she leaves a trail of disappointment and disillusionment, as she prepares to step down as CEO at StudentsFirst. Her next step in life, which will be focused on “my family and supporting my husband,” Sacramento Mayor Kevin Johnson.
6.
Budget pressures at the Internal Revenue Service's Criminal Investigation Division are cutting the number of investigators there to the lowest level in four decades, and officials say the changes are forcing the division to scale back its fight of financial crime.
7.
An examination of the finances United States Tennis Association by The New York Times shows that several of the group’s current and recent board members have benefited from U.S.T.A. grants and contracts, raising questions about the unofficial perks available to the men and women at tennis’s highest rungs. The organization is largely exempt from paying federal taxes on about $213 million it generates in revenue
8.
Changes in medicine have eliminated the need for millions of blood transfusions, which is good news for patients getting procedures like coronary bypasses and other procedures that once required a lot of blood. Transfusions are down almost one-third over the last five years, to about 11 million units last year from about 15 million units, according to the American Red Cross, which has about 40 percent of the market.
9.
After Superstorm Sandy hit the East Coast nearly two years ago, the federal government quickly sent out $1.4 billion in emergency disaster aid to the hurricane's victims. The Federal Emergency Management Agency is scrutinizing about 4,500 households that it suspects received improper payments after the storm, according to program officials and data obtained by The Associated Press through a public records request. As of early September, FEMA had asked around 850 of those households to return a collective $5.8 million.
We flagged these few examples of nonprofit mischief
1.
Merced College (CA) $363,000
2.
Delta College (CA) $4600
3.
Harmony Thrift Shop (TX) about $15,000 a month
4.
Yosemite National Park Child Care Center and the Yosemite Child Care Center (CA) $43,000
5.
American Kidney Fund (AKF) (TX) $66,000
6.
Helping Out, LLC and Smiles for Kids Foundations (IL) $122,000
7.
Indian Knoll Elementary School’s PTA /Sequoyah High School girls soccer booster club $18,000
8.
Cornerstone Community Center (OK) $1 million
9.
Grayling High School Spirit Club/Grayling Little League (MI) <$20,000
10.
Joy Foundation (GA) $150,000
11.
Old Prison Museums (MT) $70,000
12.
Lander University (SC) $400,000
13.
Whistlestop (CA) $60,000
14.
Heartland Crime Stoppers (MO) $3300
15.
Lehigh County Conference of Churches (PA) $380,000
16.
Chad Oulson “Living Survivor” Fund (FL) $7000
17.
Hillsboro School Parent Teacher Organization (MI) $20,000
18.
River Oaks Christian Church (OK) $90,000
19.
Lifegate Church (NB) $9000
20.
Brookfield Church of the Nazarene (MO) $200,000
21.
First United Methodist Church of Stillwater (OK) $141,000
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