Monday, February 3, 2014

Unusual Alert By District Attorney

Gary Snyder

A Northampton County, Pennsylvania grand jury is calling on the state to review and possibly dissolve the nonprofit group behind the National Museum of Industrial History proposed for Bethlehem, saying it may be fatally plagued by negligence.

While the grand jury discovered no evidence of criminal activity, its members felt they needed to alert the public of the mismanagement within the organization, District Attorney John Morganelli said.

The museum has spent $2.4 million alone on benefits and salary for CEO Stephen Donches since 2002, according to the grand jury report. By comparison, the nonprofit has spent somewhere between $2.5 million and $3 million on exterior renovations. The grand jury recommends Donches possesses no qualifications or experience needed to oversee the start up of a nonprofit, the report states. The grand jury recommends in its report he resign immediately or that the board terminate him. In either case, the board should hire a more qualified chief executive and reconsider the museum's future, the report states.

The grand jury also recommends the board hire an attorney and consider suing Donches for negligence and breach of contract for mismanaging funds donated to the museum.

The museum's board of directors faces problems of its own, the report found.The board provided little oversight to Donches while placing blind faith in a man with little to no qualifications for the job, the grand jury found. "The museum was a resting place for soon-to-be unemployed officials of the (Bethlehem Steel) corporation who continued to benefit from high-paying salaries, retirement benefits and other benefits at the expense of the organization," the report states. Several members of the group presented conflicts of interest by bidding on paid contracts to complete work for the museum.

The Express-Times reported in 2010 the museum had spent $8 million on operating costs over a decade but still did not have a completed museum. The same article reported Donches' salary of $180,000 was more than double the earnings of the executive director of the similarly sized nearby America on Wheels museum. 

An audit of the National Museum of Industrial History found that 80 percent of its budget -- about $15 million -- has covered operational costs.

A review of the books found much of that money was wasted by poor planning, 
  •  Some $257,000 was spent to move donated artifacts from the Smithsonian Institution in Washington, D.C., between 1999 and 2010. However, the artifacts could not be stored in the unfinished building, forcing the museum to spend another $350,000 to lease climate-controlled storage space
  • The museum also spent about $1 million to hire four different businesses to bolster the organization's fundraising efforts between 1999 and 2011, the report states. For its investment, the consultants netted the museum just $75,000. 

After 17 years of planning, the museum has only $770,000 left in its account, even though the museum's most generous donor, Priscilla Payne Hurd, died last year after giving a total of $9 million.

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,, 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,, CORP! Magazine, Crain’s Michigan Nonprofit,, 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,, Far-roundtable, #Nonprofit Report, nonprofithelpnews, nonprofit news; National Enquirer, Northwest Herald, The HelpWise Daily, The #Nonprofit Report, Wikipedia (Nonprofit Organization),, Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)
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