Nonprofit
Imperative
…Your nonprofit browser
March 2014
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:
66% of donations don’t go
to charity; Maryland Bar Assoc.
Charity Check Up:
Telemarketing Co.
Slap on the Wrist
A Thought or Two:
Social Security
Numbers Leaked
Nonprofit News-In Case You Missed It:
IRS Enforcement; Catholic
Abuse…more
Political/Official Chicanery:
NJ; OR; MI; NC; CA; VA; MS; NY; TN…more
What Do You
Think?
“Only around a
thirtieth of charity fraud is detected,” BDO and the Centre for Counter Fraud Studies study,
Minimizing Fraud and Maximizing
Results for Charitable Purposes. It said that fraud could be reduced by
up to 40 per cent by changes in culture, more deterrents for fraudsters, and
improved design of anti-fraud measures.
-------------
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.”
2/3 of donations don’t make it to charity
For every $1 raised for charity, paid telemarketers working in New York
kept 62 cents on average, leaving just 38 cents to the charities themselves,
according to a new report by the New York attorney general's Charities Bureau. The
annual "Pennies for Charity" fundraising report that was recently
released by the New York Attorney General's Charities Bureau disclosed some
shocking news last week. According to the report, telemarketing firms raised a
record $249.3 million in 2012, which was the last year that data is available
for.
The 62 cents on
every dollar raised don’t necessarily go to the telemarketer directly but may
be distributed throughout the telemarketing firm contracted to make the calls.
As an example, the WSJ noted that In 2012, "91 campaigns netted more for
the telemarketers than for a charity. In 80% of campaigns, nonprofits either
lost money or retained less than half of what was raised."
It Took Five Years To Catch Her Charity Thefts: No One Was
Looking
A
former administrator at the Maryland State Bar Association has been sentenced
to prison for stealing $265,000 from the organization's charitable arm.
Everyone trusted her. She worked at the bar
association for 12 years, starting as an office clerk and working her way up to
a managerial position and a spot on the association's board. In her most recent
job, as administrative director, she oversaw three of its bank accounts.
She stole the money from
all three between September 2007 and July 2012. She simply wrote
checks to herself and to cash, and used withdrawal slips to remove funds from
foundation accounts
A
Charity Check Up:
A Mere Slap On The Wrist For Fundraisers
The
Southfield-based charity telemarketing firm Associated Community Services,
which has come under fire in several states, has reached a settlement with the
Michigan Attorney General’s Office to pay $45,000 for misleading senior
citizens it called to solicit donations.
ACS
was accused of 430 violations.
The
AG’s Office began investigating ACS after getting a tip from a former ACS
employee in January 2013 about an alleged telemarketing script the firm used.
ACS
has 900 to 1,000 employees, 65% of whom are callers
Callers,
who are trained for three weeks, make $500 to $600 a week, plus incentives.
As
of November, ACS had 40 clients, six of whom were based in Michigan. The
15-year-old charity telemarketing company retained, on average, 80% of the
money it solicited, 75% for corporate expenses and 5% profit.
Head Of Counter Fraud Caught Defrauding Charity
Oxfam's head of
counter-fraud has admitted
defrauding Oxfam out of nearly £65,000 while working as the charity's head of
counter-fraud.
A Thought or Two:
Be Aware of This
Mistake By Charities
According to Identity Finder, several nonprofit organizations have
inadvertently published more than half a million Social Security numbers in the
public domain in the last decade.
Identity Finder analyzed more than 3.8 million tax returns from
non-profit organizations, and found that 630,000 Social Security Numbers are
currently living online from filings dating back to 2001. The report says that
these individuals now face the prospect of living the rest of their lives at
risk for identity theft and fraud.
Nonprofits have to file Form 990 for each person they give money to
every year. These forms contain the recipient’s personal information in many
cases, and are legally required to be made available to the
public. Identity Finder reports that more than 130,000 nonprofits have
filed these forms since 2001 for money given to high school
and college scholarship recipients, board members, employees and in rare cases,
even donors, that include their Social Security Numbers instead of their
Preparer Tax Identification Number (PTIN).
When Identity Finder notified the IRS
of the problem, the agency reportedly said “there is low risk of SSNs being
improperly included in new Form 990s filings,” the report states. The agency
also reportedly promised to “aggressively reach out to remind exempt
organizations not to include SSNs or other unneeded personal information on the
filings,” in the future.
Nonprofit
News…
In
Case You Missed It:
1. The new IRS commissioner said that President
Obama’s request for more funding for his agency would help the tax collector
turn around sagging customer service efforts. “Every dollar invested in IRS
enforcement provides a strong return on investment in revenue collection, plus
an added protection in deterring potential fraud. It also halts the decline in
key enforcement personnel, and allows the agency to again invest in necessary
basic infrastructure and training.”
2. Parishioners, infuriated by what they call a
tone-deaf show of excess at a time when Catholic schools are closing and when
the pope has called on bishops to shed the trappings of luxury, The
Star-Ledger disclosed that Archbishop John J. Myers is building a 3,000-square-foot addition on the expansive home where he
will spend his retirement, it appears the work will cost the archdiocese far
more than the $500,000 allotted for construction.
3. The House is taking aim at nonprofit financial
practices with an eye toward putting more gifts directly to work for charities.
It would slap a tax on nonprofits that pay employees $1-million or more and
would require gifts to donor-advised funds to be deployed to charities within
five years.
The plan, announced by the head of the House
Ways and Means Committee, would levy a 25-percent surtax on nonprofits that
paid $1-million or more to employees. Large private-college endowments would
face an excise tax as part of an effort to put pressure on colleges to lower
tuition.
We
flagged these few examples of nonprofit mischief
1.
Archdiocese of Detroit < $20,000
2. The Breast
Cancer Society of
Mesa, Arizona +14 others $40 million
3.
California Virtual
Education Partners $75,000
4.
Los Angeles
Trade-Technical College $140,000
5.
Mad River Biologists/ Endangered Species Act/ Yurok Tribe
(CA) $852,000
6.
National Puerto Rican
Day Parade (NY) $1 million
7.
StudentFirst Academy
(NC) $92,000
8.
Community Foundation of
East Mississippi, Inc. $89,400
9.
Mattapoisett Fire
Department firefighters association $1,345
10. Woodruff Arts Center (GA) more than $1.1
million
11. Sunshine Optimist Club (AK) $11,550
12. Alaska Addiction Professionals Association more
than $60,000
13. North Bay Regional Center (CA) $400,000
14. Baler Band Booster Club (CA) $50,000
15. Angel Fund (MI) $20,000
16. Sandbox Veterans (IN) unknown
17. Bon Ton Stores Foundation (PA) $1.6 million
18. Los Altos-based Peninsula Symphony (CA) $240,000
19. East Orange Revitalization and Development
Corporation (NJ) $380,000
20. Chester United Methodist Church (VA) $760,000
21. San
Benito High School's band booster club (CA) $57,000
22. Natalie Rae Nance Scholarship Fund (MI) <$2000
23. Pembroke Friends of Football (NH) $13,000
24. James B. Sanderlin Neighborhood Family Center (FL) $ 200,000
25. Kennedy Little League (WI) $200,000
26. North Bay Regional Center (CA) $400,000
27. Shepherds Ministries’ (WI) half a million dollars
28. Larimer County Child Advocacy Center (CO)
$17,000
29. Nebraska AIDS Project $140,000
30. St. Vincent de Paul (WA) $500,000
Political/public official chicanery (just a few):
1.
A former troop commander for the New Jersey State
Police today plead guilty in embezzling $55,000 from Health & Welfare Fund he
oversaw for troopers and their families.
2.
A city recorder
embezzled more than $30,000 from the city of Westfir, OR. She was sentenced in
Eugene to two years in prison.
3.
A Kent County Commissioner has announced
that he will be resigning.
Michael Wawee Jr. is accused of stealing money from a West Michigan
non-profit. He was charged with embezzling up to $20,000 from the
Roman Catholic Diocese of Grand Rapids.
4.
Cherryville's
(NC) former finance director pleaded guilty and must make restitution of more
than $435,000 after being sentenced for embezzling money from the city.
5.
Former Carlsbad (CA)
city treasurer James Comstock allegedly stole more than $212,000 from
ArtSplash, a nonprofit arts group where he volunteered, but returned the money
before his arrest in December, a county prosecutor said
6.
The treasurer who stole
more than $700,000 from the nonprofit fundraising arm of the Virginia FFA
Association was sentenced in Montgomery County Circuit Court to serve five
years in prison.
7.
A woman has admitted
stealing more than $23,000 from a 2012 charity event at the Schnecksville
Community Fire Company
8.
A husband and wife were
charged with stealing about $240,000 from Village Ambulance Service
between 2006 and 2011 while the nonprofit company employed them.
9.
Businessman Scott
Walker pleaded guilty to fraud and conspiracy charges in two separate cases
involving the Mississippi Department of Marine Resources and the Mississippi
Marine Resources Foundation as well as allegedly defrauding the city of
D'Iberville out of $180,000 in federal grant money through phony invoices from
a consulting firm.
10. The
city’s Department of Investigation is probing Brooklyn Borough President Eric
Adams following complaints that he and his staff hit up local business and
community leaders for cash to fund pet projects with money to be funneled through a nonprofit
that doesn’t exist
11. The Richmond (CA) Housing Authority is running a nearly $7
million deficit and has to repay $2.2 million for past contracting mistakes.
The federal government is threatening to take control of the housing authority
this year if key financial benchmarks are not met. Richmond’s public housing
agency has been racked by years of mismanagement, financial abuse and conflicts
of interest, an investigation has found.
12. Bellevue Police claim the city's former recreation
program coordinator admitted to embezzling more than $100,000 in government
funds that were documented for children's sports T-shirts by the Procurement
Card (ProCard) Program
13. The former director of Southeastern Development
Opportunities Inc, a (TN) nonprofit housing agency, has been sentenced to a
year’s probation and ordered to pay $89,400 in restitution.
14. A
former troop commander for the New Jersey State Police plead guilty in
embezzling $30,000 from a charitable fund…Health and Welfare Fund... he oversaw
for troopers and their families.
15. New York State Sen. Malcolm Smith is under
indictment in connection with a plot to bribe Republican
elected officials in return for their support for him as a Republican mayoral
candidate. In conversations with undercover FBI agents, Smith asked for cash
to finance the bribes in exchange for using his position to obtain state funds for a road project in Spring Valley,
N.Y. Now Smith is under investigation for
advertising a "virtual golf outing in his
honor" on March 24. Participation in the event ranges from a $100
donation, which gets a donor "teesign/friend" status, to $500, the
level at which donors can become "sponsors." However it's not clear if there's any
"golf" involved -- or any other activity for that matter. There is no
listed location for the event and no other details beyond a picture of an
unnamed golf course and the golf-themed designations for
donations of various sizes.
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
there is money missing. On rare occasions, there may be duplicates.
Cites
in various media:
Featured in print,
broadcast, and online media outlets, including: Charity Navigator, Washington Post, The Patriot-News, Vermont Public Radio, Miami Herald, National Public
Radio, Huffington Post, The Sun News, 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, 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, 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,
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,
VPR News, National Enquirer,
- Silence:
The Impending Threat to the Charitable Sector (Xlibris, 2011)
- 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.
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, 2014
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)
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