Nonprofit Imperative
…Your nonprofit browser
January 2015
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:
‘A real scandal down the road’
Charity Check Up:
Roxbury Comprehensive Community Health Center
A Thought or Two:
New Covenant Christian Fellowship Center
Nonprofit News-In Case You Missed It:
Princess Cristina of Spain; IRS Scandal; Giving…more
Political/Official Chicanery:
VA; WI; KY; CA; VT; MS; MN; NH; MA; Pa…more
What Do You Think?
A BANNER YEAR FOR FRAUD: Exposed embezzlement by paid employees and volunteer workers at public and for- and nonprofit organizations nationwide grew in 2013 by 5% according to the 2013 Marquet International Ltd. Report on Embezzlement. Nonprofits and religious organizations together account 11.9 percent of all cases. They represent only 5.4 percent of GDP. (Urban Institute) ------------------
A Harris Poll found that 17.6 million Americans lost an estimated $8.6 billion to phone fraud in 2013. Urgent requests for recent disaster relief efforts are especially common on the phone. (The Jackson Sun)
“To do good, donors must do their homework,” (source)
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).”
Nonprofit Sector Facing A Major Scandal?
The nation's nonprofit sector is proliferating, just as resources available to federal and state oversight arms shrink or stagnate. Marcus S. Owens has observed troubling trends since stepping down as director of the Internal Revenue Service's exempt organizations division 14 years ago.
The number of American nonprofits filing annual returns nearly doubled in the past decade, up to nearly 1.1 million in 2013, IRS data show.
Meanwhile, the IRS lost the equivalent of more than 12,000 full-time positions and nearly $1 billion. In 2013, the IRS examined 0.71 percent of charitable organizations, down from 0.81 percent in 2011 and lower than rates for individuals (1 percent) and corporations (1.4 percent), the Government Accountability Office wrote in a report this month.
“The agency's attitude toward tax-exempt (oversight) seems to be moving to one of, ‘It's not worth the hassle,' ” said Owens, who spent 25 years with the IRS before taking a job as a Washington attorney.
“I think it's setting the stage for a real scandal down the road.”
Its big money:
By the numbers
• $137 billion — Government paid to American nonprofits in grants and contracts for services in 2012
• $48 billion — Cost of federal tax deductions for contributions to charities in 2013
• 1.63 million — Tax-exempt organizations in United States
• 274,000 — Charities filed tax returns in 2013
• 0.71 percent — Charities audited by IRS in 2013 (source)
Charity Check Up:
Decimated Agency and Conflicts Ignored By Governor
In the last few years that Ronald L. Walker II served as chairman of the board of Roxbury Comprehensive Community Health Center, his own business — Next Street Financial — charged the center hundreds of thousands of dollars in consulting fees for board development and strategic planning, documents show. This ended in a financial collapse. In spite of that Governor-elect Charlie Baker named Walker the state’s next secretary of Labor and Workforce Development, Heralding his work as a cofounder of Next Street Financial, which is a merchant bank that invests in small businesses and advises entrepreneurs in urban areas.
Walker had been among those meeting with federal regulators, who detailed the many program requirements RoxComp was failing to meet and specifically cited Next Street’s contract as a concern, said one former employee who had direct knowledge of the situation.
The regulators also faulted the health center for failing to require board members to disclose potential conflicts of interest. Both concerns were echoed in a draft of the report later issued by the federal regulators.
By then, Walker apparently had stopped working with the board, although verifying the exact date is difficult given the lack of record-keeping at the center.
Board oversight and governance problems were heavily criticized in federal reports on the center that preceded its demise. Walker’s company was paid since 2008 to strengthen the center’s planning and governance. Board oversight and governance problems were heavily criticized in federal reports on the center that preceded its demise. Walker’s company was paid hundreds of thousands of dollars since 2008 to strengthen the center’s planning and governance.
The bureau faulted the health center’s board for lack of preparedness, saying they had “little if any formal Board orientation or ongoing training and development,” according to the draft report. “Not all of the Board members clearly understood their roles and responsibilities or liabilities as a Board member.”
The center still owed employees $266,722 and owed the city $25,859 and the state Division of Unemployment $761,400, according to court documents.
A Thought or Two:
Nonprofit Charter School Opens Up On “trade secrets”
After a massive and costly renovation of the 13,000-square-foot building and six months later, New Covenant Christian Fellowship Center, Church of God in Christ opened its doors. Just beyond those doors is a giant portrait of Pastor Wooten was hung.
Barely three years later, the church’s founder is behind bars, accused of embezzling $6.4 million from the city of Pasadena (CA), where he was employed as a management analyst in the Public Works Department. Using fake invoices, more than two-thirds of the fund’s total payments were stolen over the course of a decade, according to an audit of the fund.
Wooten allegedly directed more than $700,000 of the stolen funds to an account bearing the church’s name. Wooten also allegedly directed $2.1 million to the Southern California Evangelistic Jurisdiction Center. Despite its similarity in name to New Covenant’s parent organization, Bishop Milton says they are not related.He said the two churches named in the embezzlement scheme are “affiliated with Pastor Wooten alone.”
Beyond the churches, a lot of entities are affiliated with the name Danny Wooten. Karate companies, a preschool, a music studio, a magazine, various nonprofits — Wooten has started them all, according to state business license and tax records. And in addition to being a pastor and city bureaucrat, the North Carolina native is also an author and playwright. Some say womanizer, crook and maybe even abuser should be added to the list, according to city and court records.
And despite his varied entrepreneurial ambitions, court records also show Wooten has time and time again found himself in rough financial waters — facing bankruptcy, evictions, tax liens, and thousands of dollars in back child support.
The church is funded entirely through member offerings and receives no funding from the Church of God in Christ, Bishop Milton said. And though its website (taken down following Wooten’s arrest) said it has 100 active members, videos of Sunday sermons on its Facebook page show a more sparse crowd.
Tax forms for the non-profits show $0 in income, but they are incomplete and such forms are not even required for organizations that earn less than $50,000. (source)
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Nonprofit News…
In Case You Missed It:
1.
MADRID -Princess Cristina of Spain was ordered to stand trial along with her husband, Iñaki Urdangarint ---the first direct member of the royal family in modern history to answer charges in court. Cristina’s problems stem mostly from her role in Aizoon, a real estate and consulting company that she owned with her husband. Aizoon is one of the companies that Urdangarin is alleged to have created to siphon fees paid to his Nóos Institute, the foundation that he used to organize sports events.
2.
The House Oversight and Government Reform Committee released its latest report on the IRS “scandal” and its final report under the chairmanship of Darrell Issa (R-Calif.). After spending the last year and a half on its investigation, the committee has not found any evidence that the Obama Administration orchestrated the “scandal.” The most the committee could find is “flagrant and pervasive management failures by Washington [IRS] officials.” The report represents findings from the review of over 1.3 million pages of documents and 52 transcribed interviews with IRS, Treasury, and Justice Department employees. The report’s conclusion reads in part that Conservative organizations were not just singled out because of their political beliefs—they were targeted by IRS officials and employees who expressed a general loathing toward them even while begrudgingly admitting that those organizations were in compliance with the only thing the IRS should care about---the federal tax code.
3.
Online giving in December rose nearly 13 percent compared with the same month a year earlier, according to a sample of more than 10,000 groups that use the online-donation processor Network for Good. The total for December—$44.1-million—was boosted by particularly strong giving at the very end of the month. Network for Good said it processed $9.9-million in charitable donations on December 31, more than double the amount given on December 30, the next-most lucrative day that month. The last-day-of-the-year sum reflected donations from 42,559 people, an increase of more than 76 percent over the number of people who donated the previous day. The last week of the year netted $21.8-million in Network for Good donations, given by 101,968 people. The total for the month represented an increase of 49 percent above December giving in 2011. (source)
4.
Less than a year after the Detroit Institute of Arts promised to contribute $100 million to the so-called grand bargain rescue fund at the core of the city's bankruptcy restructuring plan, the museum has crossed the finish line.
We flagged these few examples of nonprofit mischief
1.
Pembroke Friends of Football (NH) $13,000
2.
Larimer County Child Advocacy Center (CO) $17,500
3.
Progressive Community Services (MO) unknown
4.
Newton County Community Services (IN) $38,000
5.
Spring Hill College (AL) $186,000
6.
Traverse City Area Public Schools (MI) $58,000
7.
CMS Cheer boosters (NC) unknown
8.
Association of Africans Living (VT) $34,000
9.
South Arsenal Neighborhood Development Corp (CT) $205,000
10.
Casper Youth Baseball (WY) more than $65,000
11.
Brotherhood of Locomotive Engineers and Trainmen, Division 261 (KS) $17,000
12.
Idaho Select, Inc. $1.6 million
13.
University of Nebraska at Kearney $32,049
14.
Advance (SD) $37,000
15.
Allied Veterans of the World (FL) $571,000
16.
McLean County Deputies Fraternal Order of Police $100,000
17.
American Postal Workers Union (APWU) (SD) $37,000
18.
Service Employees International Union Local 323 (OH) unknown
19.
Mary Bird Perkins Cancer Center (LA) $70,000
20.
Navy SEAL Foundation (VA) not disclosed
21.
Traverse City Area Public School (MI) $58,000
22.
Greater Cornerstone Community Development Project (OK) $1 million
23.
Friends of the Conservatory at Volunteer Park (WA) $86,000
24.
Association of Africans Living in Vermont $34,000
25.
Mighty Oaks Children's Therapy Center (NY) multiple thefts
26.
New Jersey Youth Club $190,000
27.
Harbor Humane Society (MI) $4800
Political/public official chicanery (just a few):
1.
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