posted on: Tuesday, July 14, 2009

Gary Snyder

Some random thoughts:

• Is the sacred self-regulation mantra gone forever in favor of the endorsement of the charity sector leadership endorsing stronger government intervention?

• Are the “accountability and transparency” efforts of GuideStar now being picked up by the IRS?

• Why is the IRS monitoring and giving training programs to charities when there is a large network of organizations (IS, Board Source, state associations, more) that are doing the same?

• Is the IRS being “helpful” and “watchful” going to eliminate the taint on charitable sector?

• In view of record malfeasance, why are the state regulatory bodies’ efforts being so poorly funded?

• Where are the efforts to instill confidence to a sector that has diminishing trust by donors?

• Has the upsurge in charitable organization applications for tax-exempt status served the sector well?

• Has the vast amount of money spent on board training shown any benefit?

• Why does the IRS say that no regulation fits all organizations, but proposes regulations that are to fit all charities?

• Why does everyone embrace empirical evidence but so few are gathering it?

• Why does everyone talk about dialog within philanthropic sector and large sections are not at the negotiating table or even consulted?

• Is the federal government’s belief that an active and independent board is the best defense against the misuse of charitable assets as well as bad press valid? What is the staff’s role in that regard?

• Why is there such an uproar when there are suggestions about how old and tired approaches should be changed?

• Is strategic planning a good activity, or expenditure, when the results frequently sit on the shelf?

Not sure what to think...

Gary R. Snyder is the author of Nonprofits: On the Brink. He is a frequent lecturer and author of articles in numerous publications and blogs. His email is http://gary.r.snyder@gmail.com; website: http://www.garyrsnyder.com/, phone: 248.324.3700.

posted on: Thursday, March 12, 2009

By Gary Snyder

I received a call from a student in a Master’s program in journalism at a prestigious university. She saw several articles that I had written. They peaked her interest. We spent a protracted period of time discussing my background, her interests and her needs to complete her project on investigative journalism. I sent her some background material.

Her call was similar to many that I have received from students, journalists and other media, over the years. Many resulted in inaction. Most were dissuaded or stopped in their attempt to tackle the unlawful acts in the charitable sector.I suggested that her professor would probably not let her engage in a topic that was as controversial as nonprofit malfeasance.

A journalist future career is plagued by uncertainty in the face of the declining readership. She is faced with personal obstacles as well as the challenges of the current climate of nonprofit investigative journalism.

For decades we have taken newspaper investigations as a way of life. Large newspapers such as the Washington Post and the New York Times have exposed major corruption in the charitable world. Regional and smaller newspapers like the San Jose Mercury News, Palm Beach Post, The Sun News (South Carolina), Atlanta Journal Constitution, Philadelphia Inquirer, The Virgin Islands Daily News, St. Petersburg Times are just a few gutsy newspapers that I have worked with that are willing to stand up against considerable pressure and publish stories that that have resulted in indictments and convictions.

Newspapers are in danger. Our flagships dailies---New York Times and the Washington Post--- are in trouble. The Tribune Co. (Chicago Tribune, Los Angeles Times, Baltimore Sun) is cutting staff. The growing list of papers shutting down, or about to, are the Rocky Mountain News, San Francisco Chronicle, Seattle Post-Intelligencer, Minneapolis Star Tribune and the Miami Herald. Unfortunately, these are just the tip of the iceberg.

With the U.S. newspaper industry has entered a period of precipitous decline, the public good is going to suffer. With the retrenchment at the newspapers comes the reduction of journalists that are assigned to charitable investigative reporting. Fewer journalists have the unique skills to plow through the piles of documents to decipher nonprofit corruption. With the loss of the reporters, sources that enable journalist to break great stories are gone

An article in the New York Times highlighted the corruption in the charitable world and generated national and provocative responses. With denial from the nonprofit leadership there was virtually no follow-up, which precluded thoughtful and substantive debate. With the shrinkage of hard media journalists this creates an environment rife for charitable abuse.

Pablo Eisenberg of Georgetown University has suggested buying and stabilizing newspapers as a “contribution to the health of our democratic society.” Others have suggested that capital from philanthropists or foundations pay for the training and salaries may be the answer.

Without courageous newspapers and journalists and the alarms that they generate, charity misbehaving will increasingly become the norm.



Gary R. Snyder is the author of Nonprofits: On the Brink. He is a frequent lecturer and author of articles in numerous publications and blogs. His email is http://gary.r.snyder@gmail.com; website: http://garyrsnyder.com, phone: 248.324.3700.

posted on: Thursday, July 03, 2008

By Niki Jagpal

The issue of appropriate levels of compensation for nonprofit executives and CEOs is making headlines once again after investigative reports by WCNC-TV and The Charlotte Observer. The United Way of Central Carolinas’ (UWCC) president and CEO Gloria Pace King will receive more than $1.2 million, following the addition of $822,507 to her retirement plan. As the two media outlets have noted, the increase in Pace King’s benefits package places her level of compensation above that of many other United Way executives in different parts of the country.

UWCC board chair Graham Denton defended Ms. Pace King’s compensation, saying she deserved the package given to her.

The Chronicle of Philanthropy’s 2007 survey of executive compensation, however, shows that among the various chapters of the United Way, Pace King’s compensation relative to her organization’s fundraising is significantly higher than that of her counterparts in similar-sized United Way chapters. The Charlotte Observer provides the following examples of other United Way CEO salaries compared to their annual fundraising in FY 2007:

• UWCC raised a record $44 million and Pace King’s salary was $365,000 (excluding benefits).
• In metropolitan Atlanta, the United Way chapter raised nearly $79 million; their outgoing CEO was paid a lump sum of nearly $1.6 million when he retired, on top of a salary of $352,611.[1]
• The United Way of Greater St. Louis raised close to $69 million; the CEO was paid $254,487.

The Observer also highlights a 2002 study it conducted in which the newspaper’s investigations revealed that Pace King was the fifth-highest paid executive of the 50 chapters they analyzed. Her current compensation package places her third among the nation’s 42 United Way chapters as noted by WCNC. These figures raise many questions, including to what extent should the level of fundraising be tied to CEO compensation? And if Denton defends Pace King’s salary on the basis of her fundraising, why is there no consistency in the pay rates of other UW CEOs who out-fundraised her?

So, what are the appropriate ratios to determine a ‘fair’ level of compensation for nonprofit executives? NCRP received a note defending UWCC, highlighting the small percentage of the UWCC budget that comprises Pace King’s compensation. Based on the organization’s 2006 990 form, according to the note, Pace King’s salary was 1.25 percent of her organization’s total operating budget. The writer compared this figure to NCRP’s 2006 990, which showed its executive director’s salary at 15.47 percent.

S/he raised a valid point for consideration in the discussion of what constitutes an appropriate level of compensation and what factors are considered to determine it. For example, while a CEO’s salary may only account for a fraction of an organization’s total budget, is there an absolute figure after which this statistic becomes irrelevant? What of the nonprofit operating with a very small budget that employs only one person who has the title of ‘CEO’? Surely this person’s compensation would comprise a significant proportion of her or his budget, perhaps even 50 percent, give the “multiple hats” the CEO wears in this scenario. In short, is the CEO’s salary as a percentage of the overall budget a valid measure to determine appropriate levels of compensation?

The author of the comment also pointed out that NCRP’s overhead costs in 2006 (17.1 percent) were higher than UWCC’s (13.6 percent). The rate and what constitutes overhead or administrative costs[2] that keep an organization functional vary from organization to organization. It can cover not just staff salaries and benefits but also other costs that enable an organization to work and thrive, such as rent, technology infrastructure, staff training and unplanned program expenses. Moreover, the transaction costs of conducting business in different parts of the country make the local context far too important to ignore. Keeping a small nonprofit in the greater DC metropolitan area functional, paying employees competitive wages based on the local market and cost of living will affect a nonprofit’s overhead.

Finally, the comparison of NCRP with the UWCC assumes that a nonprofit that depends largely on foundation grants should have the same metrics for reasonable compensation as an organization that receives majority of its income from individual donors through workplace giving programs. If this is the case, then what about private foundations, which receive minimal, if any, contributions from individuals?

So how do we select the criteria that ought to determine appropriate levels of executive compensation? Is it realistic to expect foundations to account for local and regional variability in the costs of living when determining how much money to allocate for compensation? Is it fair for a nonprofit executive of an organization funded largely by individual as opposed to institutional grantmakers to disclose how much of the public’s contribution will go toward compensation versus the actual business of the nonprofit? The answers to all the above questions will certainly vary by organization, mission, strategy and personal values. If nothing else, the UWCC case highlights the need to discuss these difficult issues to ensure philanthropy serves the public good and not private interests.

[1] The salary figure was taken from the Chronicle of Philanthropy's 2007 survey.
[2] NCRP recognizes the importance of providing nonprofits with adequate general operating dollars to be truly effective in achieving their organizational missions. It has been urging foundations to increase funding general operations and provide more funding for administrative overhead costs in programmatic grants.

Niki Jagpal is research director at the National Committee for Responsive Philanthropy (NCRP).

posted on: Wednesday, June 25, 2008

by Gary Snyder

Kudos to The Robert Wood Johnson Foundation joining the Center for Creative Leadership by launched a national program to train the next generation of nonprofit leaders. Its focus is to boost the skills and capabilities of early-to mid-level professionals working in health and health-related organizations in nine U.S. communities.

Health care is one of the largest segments in the nonprofit world. Based on Nonprofit Imperative, my monthly e-newsletter, it is certainly one sector that needs attention. As a former hospital administrator, I can attest that there are substantial weaknesses in the staffing skills, but more importantly, its governance. Healthcare institutions are very complex organizations. Reimbursement and other financial matters are very unique and require a skill set on the part of staff and board that is atypical to any other nonprofit.

Because of the heavy involvement of government in regulating the institutions, another set of unique skills is needed. Depending upon the size of the institution and the staffing complement, financial and regulatory issues could easily consume an inordinate amount staff.

Unknown to most of the general public, healthcare has a small margin in which to work. With recent changes, the revenues over expenses are increasingly narrowing. This presents problems relating to acquiring capital and maintaining cutting edge technology. It’s a tough challenge!

This new program is, hopefully, a thoughtful response to a critical need within the overall charitable world. A lack of leadership in the nonprofit sector has resulted in a growing number of abuses and poor practices.

A study reported in the New York Times showed that an estimated cost of fraud was $40 billion or 13 percent of the $300 billion donated. Other studies have similar results.

With these egregious offenders getting growing press coverage, the public’s confidence in our charitable organizations is diminishing. Harris Interactive Polls, for 2005 and 2006, have indicated that barely one-tenth of those surveyed believe that charities do a very good job spending money wisely.

There is a growing perception that all nonprofits lack accountability. Without trust, the backbone of our charitable organizations cannot be preserved, therefore compromising contributions.

In most instances, healthcare organizations have minimal standards to which they must adhere. If other nonprofits do not subscribe to a set of principles and practices that are generally acceptable to the public, the Internal Revenue Service, Congress, and state attorneys’ general will force adherence to a new regulatory code.

While I applaud the RWJ Foundation/Center for Creative Leaderships plans, the linchpin for success is going to be the content of the program and the degree to which it will change current practice.

I wish them well.

Gary Snyder is the author of Nonprofits: On the Brink (iUniverse, February, 2006) and articles in numerous publications. He is also a board member of NCRP. His email: gary.r.snyder@gmail.com; website: www.garyrsnyder.com; phone: 248.324.3700.

posted on: Tuesday, June 17, 2008

by Gary Snyder


In a rare pleading, the American Red Cross has asked the U.S. Congress for $7 million to fulfill its obligations to main staff to coordinate state and federal disaster resources. While I am not sure of the merits of such a request, I find it chilling that the nonprofit sector is getting tight…. maybe too tight, with the government as its banker.

This request is made in the face of a similar request from the Smithsonian Institution for a $34 million bailout. Both have similar issues.

Both are well known for having poor governance. This has lead to on-going scandals, turnover in leadership and a total lack of transparency. The Red Cross has had 10 CEOs in just 12 years…several of which have left with significant golden parachutes. At the Smithsonian, nearly half dozen secretaries or deputy secretaries (CEOs of museums) have terminated employment in just the last year.

Both groups are noted for poor fiscal management with the American Red Cross admitting recently to a $200 million deficit. They are laying off (35%) staff and reevaluating office space. The Smithsonian, according to the Inspector General, failed to report expenditures and underreported millions of dollars income to favorable employees. For example, the director spent $1.15 million of donor and government money on housekeeping services. Despite paying excessive benefits and salaries, they are still in need of $2.5 billion to fix its facilities.

Both have been under the scrutiny of congress with many investigations. Because of the close relationship with the federal government (the Smithsonian gets 70% of it budget from the federal government and the Red Cross was stripped of its national first responder status and is a congressionally chartered organization), I wonder if the Congress has the wherewithal to punish these two stalwart organizations by not acquiescing to their funding requests.

Seventy percent of the charitable world is made up of small, struggling organizations. Is it good practice to indulge the two formidable organizations when they have evidenced decades of misdeeds and when the others are unable to tap similar resources to meet their important missions?

Gary Snyder is the author of Nonprofits: On the Brink (iUniverse, February, 2006) and articles in numerous publications. He is also a member of NCRP's board of directors. His email: gary.r.snyder@gmail.com; website: www.garyrsnyder.com; phone: 248.324.3700.

posted on: Friday, June 13, 2008

by Yna Moore

Links between Jack Abramoff and the White House makes the news once again.

According to an Associated Press story by Peter Yost , a new report compiled by the House Oversight and Government Reform Committee, chaird by Rep. Henry A. Waxman (D-Calif.), noted that:

"The White House conducted an inadequate and incomplete internal review of its
involvement with convicted influence peddler Jack Abramoff and his lobbying
team. ... that President Bush had personal contact with Abramoff, that White
House officials solicited Abramoff's recommendations on policy matters and that
Abramoff's lobbying team offered White House officials expensive tickets and
meals, at least some of which were accepted."

Abramoff is serving time after pleading guilty to several felony counts in two separate federal court cases related to corruption of public officials and defrauding Native America tribes.

In many instances, Abramoff inappropriately used his Capital Athletic Foundation to channel bribe money into the hands of politicians like Rep. Bob Ney. Other politicians who allegedly had inappropriate ties with Abramoff include former Texas congressman Tom DeLay (here and here)and Rep. John Doolittle (R-Calif.)

The Abramoff scandal is a classic example of foundations being abused for personal and political gain. Since then, there have been efforts at better government oversight of charities by the Senate Finance Committee, the House Oversight and Government Reform Committee, and the IRS but more needs to be done. For a fully accountable charitable sector, we'll need to provide the IRS and our state attorneys general with adequate budgets and staffing to carry out their functions of overseeing charitable organizations. We will also need to close regulatory loopholes, and encourage substantive self-regulation by foundations and nonprofit institutions such as setting up and implementing conflict of interest and disclosure policies to prevent insider dealing. Click here for more on accountability in the philanthropic sector.

Kristina ("Yna") Moore is communications director at the National Committee for Responsive Philanthropy.

posted on: Thursday, March 27, 2008

Need for Religious Conversion
By Gary Snyder

We have seen it with nonprofits. We’ve seen it with foundations. And now we see it with religious organizations and no religion can plead innocent.

A little over a year ago, a survey by researchers at Villanova University had found that 85 percent of Roman Catholic dioceses that responded had discovered embezzlement of church money in the last five years, with 11 percent reporting that more than $500,000 had been stolen. A truly startling statistic!

A few religious leadership organizations have called on their followers to adhere to “best practices”. Needless to say their pleas have been left on dead ears, with untold numbers of religious related organizations getting into trouble.

Churches, church auxiliaries and other religious affiliated institutions enjoy special protections. Just as other nonprofits, religious organizations are exempt from paying taxes, but are still obligated to abide by tax laws regarding accurate accounting, executive compensation, insider dealings, but unlike virtually all other charities, are not required to file IRS Form 990. This Form is a snapshot of the organizations finances and the single most illuminating document available for the publics’ scrutiny.

The amount of abuse is staggering and growing. In the latest count—from 1998-2001—religion related misdeeds totaled $2 billion, up from $450 million for the previous 5 years. A lot of hands caught in the proverbial cookie jar.

In Cleveland a former dioceses employee is accused of stealing $17.5 million over an eight-year period. Across Lake Erie another fraud was brewing at a Catholic Church (MI) where a secretary was stealing over $1 million over a decade and until recently all eyes were on the Priest.

At Crossroads Christian Church a congregant stole $50 million from pastors and church-goes alike. At Daystar Assembly of God Church (AL), church leaders swindled the church membership resulting in the loss of the church.
Possibly the largest scam perpetrated on a congregation was the Baptist Foundation (AZ) where about 11,000 trusting parishioners and others, principally seniors, were defrauded of more than $550 million.

But in too many instances, the religious leadership is, in fact, treating themselves to the offerings. At St Vincent’s Ferrer Church, the priest had “off of the books” personal investments of over $3 million. Forensic accountants estimate that, in reality; over $8.6 million was pilfered. At St. Joseph Catholic Academy (NJ) the pastor stole $600,000 from raffle money.

The stories continue…with all seeking to repair almost irreparable reputations in what is a seemingly crisis-ridden religious sector.

Just as the Internal Revenue Service has “advised” other tax-exempt organizations such as foundations and other nonprofits, it has put religious associations on notice that such abuses will not be tolerated. Within the last year, the IRS sent out a strongly worded letter reminding religious organizations---of all denominations---that they should be mindful of its strict guidelines. Some have abused their tax-exempt privilege and are currently under investigation.

There apparently aren’t any internal controls in place. There needs to be more transparency. A beginning step in facing this massive problem may be politically not palatable. Open up the books. Control the coffers. List the salary and benefits for key employees. List the top employees and their compensation. Note any relationship between board members, employees and contracts awarded.

Just a first step, but lawmakers must have the political will and let the sunshine in.




Gary R. Snyder is the author of Nonprofits: On the Brink. He is a frequent lecturer and author of articles in numerous publications and blogs. His email is http://gary.r.snyder@gmail.com; website: www.garyrsnyder.com, phone: 248.324.3700.

posted on: Tuesday, March 04, 2008

By Gary Snyder

Public confidence is essential to America's 1.5 million charitable organizations and the 14 million–plus staff and volunteers. With the sector boasting over $3 trillion in assets, hundreds of articles and newsletters about the diminution of trust in the charitable sector have been written. This interest, in large measure, is the result of poor management of funds. These problems are not sporadic; these are systemic issues that are pervasive in all areas of philanthropy.

I worry about the confidence that clearly affects the public's willingness to donate time and money, shape the political and regulatory environment that governs charitable organizations, and the influence on morale within the charitable workforce.

Brookings Institution studies find only 11% of the public thinking that charities do a very good job of spending their money wisely. A very recent study from Ellison Research showed that 62% of the public believes that charities spend an inordinate amount of money on overhead costs (fundraising and administration).

Nonprofit Imperative, the monthly e-newsletter, finds that billions of dollars is absconded from charities, principally by those with whom we put our trust. The pilferers include top management, board members and financial staff.

So what needs to be done before the regulators---Congress and the Internal Revenue Service---tell the philanthropic sector how to run its agencies? Here are a couple of organizational tips to avoid a heart-wrenching discovery of fraud.

Executives should have some financial knowledge- nonprofit executives are surprisingly devoid of understanding of charitable finances. Frequently, they treat the books like their personal checking account. Most training financial seminars are lacking. They should give the executive the financial skills in which to conduct the financial end of the nonprofit. Based on studies of fraud, one central focus is the failure to demarcate between the financial staff and executive leadership.

Board members should have some financial knowledge-board members become glossy-eyed when the financials are discussed at meetings. Financial statements intimidate them. They prefer to talk about programming or good and welfare instead of budgets. Board members should be offered some tutorial so that they understand financials. In most instances it won’t raise their interest but will give them some idea as to what to concentrate on while reviewing the financials. For obvious reasons (one of which is control), many executives are not interested in having a board that is financial literate. As a board member, you should demand a tutorial.

Accountants should have significant knowledge about nonprofit accounting-most accountants subscribe to the theory that a business is a business. Charitable organizations are not for-profits and there are significant differences. A most obvious distinction is the degree that they have to adhere to Sarbanes-Oxley. Seek an accountant that has nonprofit experience and understands the many nuances that is integral to the charitable sector. We have experienced in our study of fraud that there should be an arms-length relationship between the charities decision-makers and the accountant.

Increase the number of independent (outside) members on the board

Establish an audit committee-an organization that has an audit committee should review if it operates within generally accepted guidelines.

Whistleblower protection-makes sure that there is a prohibition against taking punitive actions against employees who disclose information---illegal practices or violations of adopted policies---to the audit committee or any one else.

Records retention-a policy to maintain records for posterity purposes is important.

As part of updating your policies and practices, consider the following operational changes:

Four eyes-multiple views-staff should divide tasks so as to prevent illegal activity. Dividing the tasks is arguably the best defense against embezzlement.

Bank statement review-the executive should be the first to open and review bank statements, thus preempting manipulation of the documents by financial staff. In smaller organizations, reconciliation should be separated between 2 different employees or a board member.

Employee background checks-needless to say an employee background check is important for any new member of the staff. It is extremely important for those that are working in the financial area. Even though most employee thefts go unreported (because repayment and dismissal are typical), you can check to see if any prospective worker has had any problems with law. In your investigations, trust your instincts and explore and explore until you are comfortable.

Internal controls-few nonprofits have strong internal controls. Most charities have good intentions in developing them but getting around to developing them is another matter. As organizations grow, the internal controls need changing. Make sure the controls are operating at a level that will deter and detect fraud. Establish a code of conduct that will create a clear understanding of what is expected of all employees.

Watch employee’s life style-observing radical changes in employee consumption or travel may be a good tip-off to start monitoring the books.

Have a positive culture-demanding that employees stick to the internal controls and make sure that they (staff and rules) are frequently checked, will create a culture of adherence.

Purchase fidelity insurance-although having insurance will not deter embezzlement, it will cover, at least some of the losses. On the other hand, since the organization is often left whole, it may cover up any public knowledge of the misdeeds and enable the malfeasant to continue to his/her fraudulent behavior in another setting.

An overwhelming number of perpetrators of frauds do not get caught. There are hundreds and hundreds of embezzlements, thefts and larcenies at charities. As a result, there is a diminution of confidence in the charitable sector. Consequently, there is sufficient impetus to institute the abovementioned short and long-term barriers to malfeasance.

Smartness instead of indifference is the way to go. It isn’t that hard.




Gary R. Snyder is the author of Nonprofits: On the Brink. He is a frequent lecturer and author of articles in numerous publications and blogs. His email is gary.r.snyder@gmail.com; website: www.garyrsnyder.com, phone: 248.324.3700.

posted on: Monday, January 14, 2008

By Gary Snyder


Late last year we decided to take stock of all the corruption by accused public officials. They used nonprofits to benefit themselves.

A quick note on methodology. Since a complete catalog of politicos who've been accused of some form of corruption or abuse of power could be endless, we were selective for inclusion in this list. Most of the 25 (6 are from Alabama) listed below were the subjects of criminal probes, but we also included officials who were credibly accused of acts that, maybe not necessarily criminal. These have been culled from public documents including news releases from the FBI, U.S.Attorney’s offices, as well as hundreds of newspapers and other periodicals from across the country.

Enjoy!


1. The Kilpatrick family (as in Mayor of Detroit and Congresswoman and County Commissioner) has another investigation of their charitable practices. Federal authorities are examining the Mayor’s charitable fund as part of a case involving a major financial backer and Kilpatrick’s father. The Mayor’s mother (Congresswoman) and father (county commissioner) have had inquiries about their charitable endeavors.

2. U.S. Representative Alan Mollohan has recused himself from working on the budget of the Justice Department amid allegations that he directed federal money to nonprofits that indirectly contributed to his campaign. At least $202 million of federal dollars have gone to five nonprofits in Mollohan’s district, most of which were under his control.

3. Allegations of using money from a nonprofit for personal and political purposes, has surfaced in a letter from federal prosecutors to Pennsylvania State Senator Vincent J. Fumo. Some $17 million is in question.

4. Millions of defense appropriation contracts have been doled out to board members of a nonprofit. Lobbyists with ties to the same charity have received hundreds of thousands of dollars in consulting fees from the contractors. Congressman John Murtha and a former aide have also been beneficiaries. Murtha’s campaigns have received hundreds of thousands of dollars from the directors. Congressman Murtha is a high-ranking member of the defense appropriations subcommittee

5. Senator steers funds to nonprofit to misuse/Mayor indicted in Congressman Ted Steven’s affair-$450,000

6. U.S. Speaker Pelosi, others failed to report their positions in family charities

7. Alaska State Senator is accused of using nonprofit proceeds for personal gain is now indicted as a Mayor misapplies LOVE Social Services-(Alaska)-$1.2 million and a Pine Bluff Alderman pleads guilty to misuse of funds (AK) -$528,000

8. Some of the same California corporate interests that dominate the Capitol through high-priced lobbyists and campaign donations also bankroll nonprofit organizations that in turn spend tens of thousands of dollars a year entertaining state lawmakers and administration officials far from home -- gifts that otherwise would exceed state limits. California law prohibits public officials from accepting gifts valued at more than $390 from any source. But when it comes to travel expenses "reasonably related" to a legislative or governmental purpose, nonprofit groups are allowed to spend unlimited amounts

9. Alabama higher education has had a sad couple of years. Let’s take a look:

-Former Governor Don Siegelman, went on trial for a bribery scheme that involved funneling $550,000 through the Alabama Fire College. He was convicted by a jury on unrelated multiple charges, including bribery, mail fraud and obstruction of justice. Federal investigation of the college begins.

-The family and friend of the college system chancellor, Roy W. Johnson, receive over $300,000 in wages and contract payments. Investigation begins. Board of Education fires Johnson. Federal prosecutor accuse Johnson of taking $300,000 and prosecutors want to seize his $1.3 million home.

-Federal prosecutors charge State Re. Bryan Melton Jr. with funneling $85,000 in legislative grants to a college to pay his gambling debts. Melton pleads guilty and implicates Shelton State Community College president in a scheme.

-Shelton State Community College president Rick Rogers is fired when reports that a private foundation with ties to the school spent more than $560,000 to build him a home. The foundation is under federal investigation.

-Bishop State Community College names interim chancellor. School is put on probation, citing governance, administration, educational programs and financial aid system. After 7 months on the job, he resigns because of $438,000 in questionable costs, including $293,000 in financial-aid fraud.

-Alabama Fire College former deputy director pleads guilty to using state money to buy two Harley-Davidsons and a gazebo-Jacuzzi for his home.

-The county district attorney charges seven people connected with Bishop State, including the women’s basketball coach, with stealing $56,000 in financial-aid and sports-program money from the college.

10. FBI affidavits tie an Oklahoma former state Senator and his estranged business partner to kickback payments to a third party, who admitted to accepting a $250,000 kickback. The latter admitted to helping secure $2.27 million in state funds to a nonprofit. Investigators say that money was funneled into pet projects of the Senator.

11. Five Rivers Community Development Corp. (currently under investigation) might have violated a federal law when it signed a contract promising to pay consultant Charles Clyburn a percentage of public money given to the nonprofit agency. He is the brother of U.S. Rep. James Clyburn, D-S.C., might have violated The Byrd Amendment, a law that prohibits using federal budget appropriations - also known as earmarks - to pay for lobbying efforts. The contract states that Charles Clyburn was expected to secure $1 million worth of earmarks for Five Rivers during an 18-month period by working with federal officials.

12. Earmark Allan (Mollohan) Congressman from West Virginia earmarked $250 million that was directed to five nonprofits that he created. Friends staff the organizations. Board members of the charities contributed at least $397,122 to Rep. Mollohan’s campaign and political action committees. Since the abovementioned earmarks, the Congressman’s assets grew from less than $500,000 to at least $6.3 million. Despite the aforementioned, Mollohan recently requested a $1 million earmark to expand a wilderness area abutting his property, thereby increasing its value.

13. House Majority Leader Steny Hoyer has joined in steps to clean up pork barrel spending…apparently everybody else’s. The congressman has tucked $96 million worth of pet projects into next year's federal budget, including $450,000 for a campaign donor's foundation. Hoyer inserted into a 2008 education-spending bill for InTune Foundation Group, who’s Web site describes it as a music-education nonprofit group.
In 2005, InTune got a previous earmark for nearly $500,000 to develop lesson plans on funk music and Nobel Peace laureates. Asked recently how effective that program had been, Education Department officials said they didn't know. InTune hadn't turned in a report on what it did, officials said. "It is significantly past due," department spokeswoman.

14. Gov. Arnold Schwarzenegger, of California, set up a little-known nonprofit group that has paid for many of his international trips. Their donations paid for his and aides' journeys to Israel, China, Japan, Canada and Europe on trips, described by the governor's office as trade missions, costing hundreds of thousands of dollars. The governor and the nonprofit group have declined to name donors or describe their ties to the state government. Schwarzenegger solicited the $435,000 in gifts for the protocol foundation at a Nov. 7 fundraiser in San Francisco. Only after ongoing inquiries did the Governor revealed for the first time the names of donors to the secretive nonprofit group.

15. A Wake County grand jury indicted state Rep. Thomas E. Wright on charges of swindling banks, corporations and campaign contributors out of more than $350,000. As president of the Community's Health Foundation he got the organization to write a bogus letter a letter promising $150,000 in state money toward the building's renovation. Wright also fraudulently secured a $10,000 line of credit from a credit union for the foundation in 2001. He withdrew the money for his own use and without the knowledge of the foundation's board. He also faces charges of soliciting $8,900 in contributions in 2003 and 2004 from corporations for the foundation to help with the purchase of the building and with educational and minority health-care programs in New Hanover County. Wright used the money himself and falsely told the donors that the foundation was a charity and that the donations were tax-deductible, the indictments say.

16. A state senator helped secure funding from the state's two-year college system for a nonprofit program in Birmingham (AL) and then received about $4,000 a month from the program for nearly three years. The program received more than $310,00 from February 2004 through September 2006 to operate a computer-based tutoring program. The leader of the agency used more than $250,000, or three-fourths of the programs state funding, to pay his son, himself and a friend, according to the program's tax records and interviews with the three.

17. Pleasantville (NJ) Board of Education president James A. Pressley pleaded guilty to attempted extortion, admitting that he accepted bribes in return for his official assistance in steering public contracts to an insurance brokerage company and a roofing business. Pressley agreed to forfeit $40,800, which represents the total amount of corrupt payments he received.

18. Presidential candidate and former (AK) Governor Mike Huckabee formed a nonprofit organization that raised money for him to travel the country promoting conservative politics to fellow ministers and attacking Hillary Rodham Clinton's health care plan. In its three-year life span, the organization, Action America, collected $119,916 from a dozen or so donors. ... As information about the secretive group began to leak out in 1997, Democrats in Arkansas pressed for the identity of its donors, which Mr. Huckabee has refused to disclose. In addition, he failed to report his Action America income on his 1994 financial disclosure form, resulting in a 'letter of caution' from the Arkansas Ethics Commission in 1997. ... In all, at least 16 ethics complaints, including the one involving Action America, were filed against Mr. Huckabee, with violations found in five of them and a $1,000 fine assessed.

19. The National Defense Center has been a recipient of a ranking member of the Congressional defense community at the Congressman from the Jamestown (PA) community to the tune of at least $671 million in earmarks and R&D funds from the Defense Department. Congressman John Murtha has also befriended the nonprofit, Concurrent Technologies, which has received nearly $250 million with the vast coming from earmarks. Concurrent’s relationship with the Pentagon has come under federal scrutiny. Only one-third of the technologies it developed were put into use. Despite criticisms the funding keeps flowing.


Gary Snyder is the author of Nonprofits On the Brink (iUniverse, February, 2006) and articles in numerous publications. His email: gary.r.snyder@gmail.com; website: www.garyrsnyder.com; phone: 248.324.3700


© Gary R. Snyder, All Rights Reserved, 2008