Monday, August 29, 2016

Nonprofit Hospital Board Conflicts Give Bad Appearance

by Gary Snyder


Based on IRS data, it was found that nonprofit hospitals have representatives of corporations with which they do business on their boards of directors far more often than other nonprofits. In fact, in 2014, of the more than 2,300 nonprofit hospitals in the country, almost half (or 46 percent) had at least one trustee with business ties, direct or through a relative, to the hospital. This is a much higher proportion of trustees with potential conflicts of interest than in nonprofits as a whole—where the rate is seven percent.

The practice of doing business with board members is problematic for any number of reasons and should be avoided whenever possible. There is no absolute rule against such a setup, so long as there is proper disclosure and deals are at market rate, but the article points out that the potential for violating the public trust or creating the perception that there are private interests at play makes the practice far less than ideal.

At 270 of the hospitals reported on, the deals were worth at least $1 million each.


Some have banned engaging in business contracts with board members so that their community can have full confidence that the board was acting in the community’s best interest. The ban has posed no problem in recruiting the most qualified board members. (Wall Street Journal, (nonprofitquarterly.org)



Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Charity Navigator, Vermont Public Radio, Miami Herald, National Public Radio (NPR), Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), “Betrayal”, (a movie), NBC (on Charity Fraud…TBD), FOX2, ABC Spotlight on the News, WWJ Radio, Marie Claire, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, Charity Navigator, The Chronicle of Philanthropy, St. Petersburg Times, Board Room Insider, USA Today Topics, Accountants News, Newsweek.com, Responsive Philanthropy Magazine, New York Times, Portfolio Magazine, The Virgin Islands Daily News, NANKAI (China) BUSINESS REVIEW, National Religious Broadcasters newsletter, The Charity Governance Blog, American Chronicle, Palm Beach Post, Detroit Free Press, Oakland Press, Nonprofit World, Socially Responsible Business Forum, PNNOnline, Ohio Nonprofit Resources, Nonprofit Good Practice Guide, Nonprofit Startup Guide, Nonprofit Blog, National Coalition of Homeless Newsletter, Finance and Administration Roundtable Newsletter, MichiganNonprofit.com, CORP! Magazine, Crain’s Michigan Nonprofit, ncrp.org, PhilanTopic, Nashville Free Press, Nonprofit Law Blog, Seniors World Chronicle, Carnegie Reporter, Assoc. of Certified Fraud Examiners Examiner, msnbc.com, Worchester (MA) Telegram and Gazette, Carnegie Corporation of America, EO Tax Journal, Wikipedia: Non-profit Organizations; Parent: Wise Austin, Accountants News, Veterans Today, Answers.com, Far-roundtable, #Nonprofit Report, nonprofithelpnews, nonprofit news; National Enquirer, Northwest Herald, The HelpWise Daily, The #Nonprofit Report, Wikipedia (Nonprofit Organization), Answers.com, Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)

Friday, August 26, 2016

American Red Cross, Again, Missing Its Mission; Being Revaluated

by Gary Snyder


Louisiana Gov. John Bel Edwards’s office said the state may “re-evaluate” its partnership with the American Red Cross following complaints from people attempting to volunteer and donate materials for flood victims, according to The Advocate. 

Volunteers’ comments to the Baton Rouge newspaper echoed claims on social media that the charity was turning away offers to help at shelters or provide meals and medical materials for people displaced by the disaster. The Red Cross is managing or assisting at 19 shelters and said it had served about 250,000 meals and snacks since launching its relief effort a week ago.

Red Cross spokeswoman Nancy Malone said some frustrated volunteers were confusing the charity with local partner groups and that there were liabilities to accepting cooked food that did not come from certified vendors. "It has to be about coordination. We are held accountable to state regulations," she said.


“We recognize the enormous task the Red Cross undertakes to help, and we are tremendously grateful to the many volunteers who jumped to our aid in the aftermath of this historic flooding. However, the governor has expressed several concerns with the Red Cross’s response to this storm," said Richard Carbo, a spokesman for Mr. Edwards. "Going forward, the state intends to reevaluate its partnership with the Red Cross to ensure displaced citizens of any future disaster receive the best support possible.”


Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Charity Navigator, Vermont Public Radio, Miami Herald, National Public Radio (NPR), Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), “Betrayal”, (a movie), NBC (on Charity Fraud…TBD), FOX2, ABC Spotlight on the News, WWJ Radio, Marie Claire, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, Charity Navigator, The Chronicle of Philanthropy, St. Petersburg Times, Board Room Insider, USA Today Topics, Accountants News, Newsweek.com, Responsive Philanthropy Magazine, New York Times, Portfolio Magazine, The Virgin Islands Daily News, NANKAI (China) BUSINESS REVIEW, National Religious Broadcasters newsletter, The Charity Governance Blog, American Chronicle, Palm Beach Post, Detroit Free Press, Oakland Press, Nonprofit World, Socially Responsible Business Forum, PNNOnline, Ohio Nonprofit Resources, Nonprofit Good Practice Guide, Nonprofit Startup Guide, Nonprofit Blog, National Coalition of Homeless Newsletter, Finance and Administration Roundtable Newsletter, MichiganNonprofit.com, CORP! Magazine, Crain’s Michigan Nonprofit, ncrp.org, PhilanTopic, Nashville Free Press, Nonprofit Law Blog, Seniors World Chronicle, Carnegie Reporter, Assoc. of Certified Fraud Examiners Examiner, msnbc.com, Worchester (MA) Telegram and Gazette, Carnegie Corporation of America, EO Tax Journal, Wikipedia: Non-profit Organizations; Parent: Wise Austin, Accountants News, Veterans Today, Answers.com, Far-roundtable, #Nonprofit Report, nonprofithelpnews, nonprofit news; National Enquirer, Northwest Herald, The HelpWise Daily, The #Nonprofit Report, Wikipedia (Nonprofit Organization), Answers.com, Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)

Friday, August 19, 2016

Nonprofit Imperative e-newsletter-mid August


Nonprofit Imperative
your nonprofit browser
    September 2016

The 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:
Hershey Trust; Wounded Warriors…more
Breaking the Silence:
Angel Fund
Charity Check Up:
USID; Birmingham Health Care
A Thought or Two:
Principle For Charities To Live By
Nonprofit News-In Case You Missed It:
Clinton Foundation, Southlake Christian Academy; American Red Cross; …more
Political/Official Chicanery:
MI; TX; NC; CA; WI; KS…more
What Do You Think?
·       To do good, donors must do their homework
·       Give without being taken

This a good read  from ProPublica about the problems associated with truth getting in investigative reporting.
                                    ---------------------------------
Skunk of the Month…
        “They came to do good and they did very well indeed (for themselves).”

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:
Hershey Trust Finally Reaches An Agreement
The board of the Hershey Trust announced that it has reached an unofficial agreement with the Pennsylvania attorney general's office that could head off a court battle over governance of the $12 billion charity that controls the namesake chocolate company, Reuters reports.
Trustees Joseph Senser, Robert Cavanaugh, and James Nevels will resign by the end of the year, according to Reuters, which cited unnamed sources familiar with the details of the settlement. Chairwoman Velma Redmond will step down before the end of 2017, along with trustee James Mead. The deal would also set a 10-year term limit for board members, give the attorney general 30 days to object to newly named trustees, and place restrictions on board pay.
The trust, established candy magnate Milton Hershey to operate a school for disadvantaged children, has voting control of Hershey Co. It has been a lightning rod for controversy in recent years, with state regulators investigating allegations of self-dealing and questionable financial moves and attempting to mandate changes in board membership and wages. In February, the attorney general's office sent trustees a letter threatening legal action if the organization did not agree to reforms on pay and if certain board members did not step down. 
A Different Twist At Charity Fraud
A UK funeral director has admitted failing to hand over thousands of dollars in donations given in the memory of loved ones and faking letters from charities in order to cover up her crime. Among the alleged victims said to have been deprived of donations are Weston Hospice Care, Help for Heroes, Action for Children, Alzheimer's Society, National Society for the Prevention of Cruelty to Children (NSPCC), Friends of Axbridge, Children's Society, Royal National Lifeboat Institution (RNLI), St Monica Trust and Brunelcare. (source)
Wounded Warrior Project Resetting
The new chief executive of the Wounded Warrior Project, one of the nation’s largest veterans charities, said he anticipates laying off an undisclosed number of employees and cutting the amount of financing it provides smaller veterans groups amid a restructuring that follows scrutiny of the nonprofit organization’s spending. Details of the restructuring will be announced in September, but employees already know that some jobs will be cut and the salaries of some senior officials will be reduced, he said. There are currently about 600 employees, with headquarters in Jacksonville and offices in other cities.
“We have a long road ahead of us, and the mission is huge, and it’s going to continue to grow,” Retired Army Lt. Gen. Michael Linnington said. “We have to be as nimble and as transparent and as responsive as we can possibly be.”
Linnington also was hired at a salary of $280,000, he said. That’s significantly smaller than the $473,015 and $369,030 others received in 2013, the last year for which tax documents are readily available. At least 12 employees made at least $147,000 at the time.
“I have a much different salary than my predecessors had, and I think that’s appropriate,” Linnington said. “We’re looking at all of the salaries of all of our executives now, and I think that you will see them all trend down, as well. That’s part of trying to squeeze every nickel out of every donor dollar and to get it where it’s most needed: with those who served.”
Breaking the Silence:
A Catholic priest will spend three to 20 years in prison for conspiracy to run a criminal enterprise in connection with the theft of money from a charity that helps poor people. The Rev. Timothy Kane was resentenced in Wayne County to over five years and two additional months. That would have totaled one year. Prosecutors appealed that sentence. Kane said that he has "been punished already" and that God has him "in the palm of his hand." Kane also was found guilty in 2014 of embezzling between $1,000 and $20,000 from the Angel Fund and other crimes.
Charity Check Up:
Aid To War-torn Region Suspended Because of Fraud
The U.S. government has put more than $200 million in contracts for humanitarian aid to Syria on hold amid fears that corruption is draining money from relief efforts, reports The Washington Post. The aid freeze has affected delivery of food, medicine, and other life-saving supplies to Syrian civilians as authorities pursue an investigation the government formally announced in April.
Details of the review and its impact emerged in a Congressional hearing this month. The U.S. Agency for International Development has opened 25 investigations, and contracts worth $239 million have been suspended. Global aid charities GOAL, International Medical Corps, and the International Rescue Committee are among the groups under review. They said they are cooperating with investigators. (Chronicle of Philanthropy)
Alabama charity $11 million fraud
The former chief financial officer of an Alabama clinic network--- Birmingham Health Care--- was sentenced to 17 years in prison for her role in steering $11 million from the charity to its CEO. She was also ordered to forfeit nearly $2 million she received in connection with the scheme and to pay more than $500,000 in back taxes. She admitted last year to stealing $1.7 million from the federally-funded center for the poor and homeless
A Thought or Two:
RAY DALIO at Bridgewater Associates shares some thoughtful fundamental life principles that are certainly applicable to today’s charitable environment. We will present one principle each newsletter. (principles)

Get Over “blame” and credit”
Get on with ‘accurate’ and “inaccurate”

Does somebody keep forwarding you this newsletter? Get your own copy. It's free! Sign up here. Send tips/stories to Nonprofit Imperative. Follow us on our blog or on Twitter---Nonprofits News

Nonprofit News…
In Case You Missed It:
1.     IRS officials are investigating the Clinton Foundation for alleged fraud after dozens of lawmakers asked the tax agency to open an inquiry. (source)
2.     A Huntersville (NC) headmaster pleaded guilty to a scheme that ripped $9 million from his school and church to fund a lavish lifestyle. Wayne Parker, Jr., of Mooresville, took over as headmaster at Southlake Christian Academy in 1996. He stepped down in 2014 after the Southlake officials launched an investigation on the discovery of missing funds. In a criminal complaint filed in federal court on Friday, prosecutors accused Parker of stealing funds for everything from homes, to luxury vehicles, to Carolina Panther's preferred seat licenses. Investigators said he built at least two homes for his family with School and Church money.
Prosecutors said in 2000, four years after taking over as headmaster, he was living in a trailer. He stole funds to build a 3,140 square foot house.
Investigators said in 2010, he built an even larger lakefront home. In order to properly fund it, he made all the school employees take a 5 percent pay cut and claimed it was due to tough economic conditions.
3.     Former Cleveland Brown Reggie Rucker was sentenced to 21 months behind bars for embezzlement. Rucker struck a plea deal with prosecutors. He admitted embezzling more than $110,000 from urban peacemaker groups he oversaw. Prosecutors believe he stole more but that's the amount they were prepared to prove in court.
4.     Three months after record floods swept through Louisiana in March, the government officials in charge of disaster response set up a post-mortem with area Red Cross staffers. There had been so much turnover at the Red Cross that government emergency managers didn’t know who to call for assistance; that Red Cross staffers didn’t call emergency managers back; and that the Red Cross didn’t provide enough shelter support. “American Red Cross was a HUGE disappointment,” Dawn Williams, the emergency manager for Richland Parish, said in a May 24 email responding to the call-out. “They made commitments that they didn’t keep and then chastised us for rejecting them. Nothing was resolved from our numerous sit-down meetings we had with [the American Red Cross] and their representatives.” (ProPublica)
5.     Attorney General Kamala D. Harris announced the arrest of Kevin Manzon felony charges of grand theft for embezzling money from multiple charitable organizations in the Sacramento area. According to the criminal complaint filed in Sacramento Superior Court, Manzon illegally directed $1 million in funds from Cathedral Pioneer Church Homes Inc., Cathedral Pioneer Church Homes Foundation, and the Pioneer Foundation to personal bank and business accounts and used the funds for personal expenses such as jewelry and cars.
6.     Remember Bobby Thompson? It’s the pseudym that was used by John Cody .He stole many millions of dollars under the noses of the FBI, IRS, State charity watchdogs and uncovered by the press. $50,000 that the government got from his looting of the United States Navy Veterans Association, a charity he ran in Tampa, Florida, is going to the Ohio Military Veterans Legal Assistance Project arranges legal services for low-income military veterans and active service members who can't afford an attorney. Illinois Attorney General Lisa Madigan announced a $100 million settlement with Barclays on Monday following an investigation into fraudulent manipulation of interest rates. Barclays Bank PLC and Barclays Capital Inc. manipulated LIBOR, a benchmark interest rate that affects financial instruments worth trillions of dollars and has a widespread impact on global markets and consumers, according to a statement from Madigan’s office. Government entities and nonprofits in Illinois and across the country were defrauded when they entered into swaps and other investment instruments with Barclays. Government entities and nonprofits that entered into LIBOR-linked swaps and other investment contracts with Barclays between 2005 and 2010 will be notified if they are eligible to receive restitution from the $93.5 million settlement fund, prosecutors said.
We flagged these few examples of charity misdeeds:
1.     The Providence Plan (RI) hundreds of thousands of dollars
2.     Sequoyah Fund (NC) $1 million
3.     Chronic Disease Fund (KY) $1.1 million
4.     Camarillo Fiesta (CA) $26,000
5.     Hero Program (CA) $90,000
6.     Family Visitation Center (ID) $45,000
7.     Simi Valley Community Foundation (CA) unknown
8.     Central Valley Community Foundation/ Ventura County Community Foundation (CA) unknown
9.     Miracles Club (OR) $144,000
10.  Blessed Sacrament / St. Francis Xavier (MI) $40,000
11.  Metropolitan Community Church (OR) $70,000
12.  Human First (NY) hundreds of thousands of dollars
13.  Putney Family Services (NH) $41,000
14.  Sedalia Girls Softball League (MO) $35,000
15.  Warrenton Foundation (VA) unknown
16.  Moorpark Little League (CA) $900
17.  Dallastown Cougar Athletics $5700
18.  Community Hospice (CA) $25,000
19.  Triangle Area Network (TX) $323,000
20.  St. Francis of Assisi School (NH) $152,0000
21.  Canadian County Court Appointed Special Advocates (OK) at least $10,000
22.  Gene Autry Museum (OK) $35,000
23.  Talent Managers Association $42,000
24.  Bricklayers & Allied Craftworkers union (IL) $250,000
25.  Utah Communications Authority (UCA) $1 million
26.  La Crosse Police Department $72,000
27.  American Legion (CA) $20,000
28.  Buckhannon Work Adjustment Center Inc. (WV) $25,000
29.  Baby Girl LLC $56,000
Political/public official chicanery (just a few):
1.            The former police chief of Shelby (MI), fired in January amid allegations of financial wrongdoing, was arraigned on six criminal charges, including embezzlement of an estimated $70,000.
2.            An external auditing firm is investigating a case of embezzlement at Palestine (TX) Independent School District.
3.            The head of Rockingham County's (NC) technology division was arrested today. David Whicker is charged with embezzlement by an officer, agent or employee of a local government, Rockingham County Manager Lance Metzler said. Whicker is Rockingham County government's chief information officer. Whicker is accused of selling county items at a pawnshop in Kernersville. 
4.            A former associate superintendent at the San Francisco Unified School District has pleaded guilty to 10 felony charges in connection with the alleged misappropriation of $15 million in public funds, while agreeing to cooperate in the prosecution of her co-defendants.
5.            A former bookkeeper at Janesville (WI) Craig High School was sentenced for felony fraud charges for embezzling more than $300,000 over nine years. She was sentenced in Rock County Court to two years in prison, three years extended supervision plus 12 years probation.
6.            Former Lawrence (KS) Mayor Jeremy Farmer has been charged with embezzling thousands of dollars from a Douglas County food bank.
7.            A former Oneida Township (MI) clerk will spend at least two years in prison for stealing township funds.
Readers, weigh in as to what you think…please continue the tips (they are very helpful) gary.r.snyder@gmail.com
Nonprofit Imperative gathers its information principally from media sources...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however there is money missing. These incidents include only a fraction of the estimated $40 billion of charity crimes. On rare occasions, there may be duplicates.
We’re noticed: Cites in various media:
Featured in print, broadcast, and online media outlets, including: Charity Navigator, Washington Post, National Enquirer, The Patriot-News, Vermont Public Radio, Miami Herald, New York Times, National Public Radio, Huffington Post, The Sun News, In Touch, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, msnbc.com, Marie Claire, Ethics World, Tactical Philanthropy, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, Board Room Insider, USA Today Topics, Accountants News, Newsweek.com, Responsive Philanthropy Magazine, , Portfolio Magazine, The Virgin Islands Daily News, NANKAI (China) BUSINESS REVIEW, National Religious Broadcasters newsletter, The Charity Governance Blog, American Chronicle,  Palm Beach Post, Detroit Free Press, Oakland Press, Nonprofit World, Socially Responsible Business Forum, PNNOnline, Ohio Nonprofit Resources, Nonprofit Good Practice Guide, Nonprofit Startup Guide, Nonprofit Blog,  National Coalition of Homeless Newsletter, The Michigan Nonprofit Management Manual, MichiganNonprofit.com, CORP! Magazine, Crain’s Michigan Nonprofit, ncrp.org, PhilanTopic, Nashville Free Press, Nonprofit Law Blog, Seniors World Chronicle, Carnegie Reporter, Assoc. of Certified Fraud Examiners Examiner, Worchester (MA) Telegram and Gazette, Carnegie Corporation of America, EO Tax Journal, Wikipedia: Non-profit Organizations; Parent: Wise Austin, Accountants News, Veterans Today, VPR News, National Enquirer,
  • Silence: The Impending Threat to the Charitable Sector (Xlibris, 2011)
…”This book should be read by everyone. It will send a shiver down the reader's spine to think that people with little money to spare have given generously…”
  • Nonprofits: On the Brink (iUniverse, 2006)
  • The Michigan Nonprofit Management Manual, Governance Section
Our intent is to keep you informed.... You may be removed from our contact list and future mailings by emailing to garysnyder4@gmail.com with the word "remove" in the subject line.
Email: gary.r.snyder@gmail.com; 248/324-3700;
Gary Snyder is the author of Silence: The Impending Threat to the Charitable Sector (Xlibris, June, 2011) and Nonprofits: On the Brink (iUniverse, February, 2006) and articles in numerous publications. The book can be bought at amazon.com, barnesandnoble.com, Barnes and Noble (store)
© Gary R. Snyder, All Rights Reserved, 2016