November 15, 2008
Nonprofit Hospitals Seek Profits Overseas
Jacob Goldstein notes in the WSJ Health Blog that the University of Pittsburgh Medical Center is teaming up with GE to open cancer treatment centers in Europe and the Middle East. An AP story in the International Herald Tribune on the deal states that the partners are aiming to treat as many as 10 million new cancer cases a year. So is this a Bill and Melinda Gates Foundation-like push to help health care in third-world economies? Hardly. According to the Pittsburgh Business Times, it's all about the money: Chuck Bogosta, president of UPMC's division of International and Commercial Services, told the PBT that in the U.S., "cancer centers become profitable between three months to a year after opening. . . The centers in Ireland have taken longer to ramp up, becoming profitable in one to two years." But the current move will now enable UPMC "to be a little more proactive in going after the markets." In other words, its all about seeking out profits in new markets.
Goldstein notes that UPMC is not the only nonprofit hospital doing overseas deals. The Cleveland Clinic is expanding to Abu Dhabi, "which is not exactly a suburb of Cleveland." No kidding . . .
So, UPMC has a "Division of International and Commercial Services," eh? The Cleveland Clinic is expanding to Abu Dhabi. Now, tell me again why nonprofit hospitals ought not to be taxed like big (and international) businesses?
November 14, 2008
Russia's Justice Minister Lists 56 Religious Orgs for Liquidation But Orgs Still Waiting for Explanations
Russia's Justice Minister, Aleksandr Konovalov, has drawn up a list of 56 religious organisations for liquidation, mainly Protestant, Nestorian, Armenian Apostolic and Catholic as well as Buddhist and Muslim. The list appeared in mid-October on the Ministry’s website. The groups named are accused of submitting wrong accounts or financial reports for 2007-2008. The human rights organisation Forum 18 and the Slavic center for Law and Justice (SCLJ) have protested saying that the whole affair lacks transparency. The associations involved said that the Ministry did not contact them either verbally or in writing with regards to the matter before the list was published.
According to Vladimir Ryakhovsky, a member of the SCLJ, a Protestant organisation, the Justice Ministry’s action is also discriminatory vis-à-vis minority confessions. The fact that none of the 56 groups are linked to the Moscow Patriarchate is suspicious since 309 of 562 religious organisations belong to the former. In his view the Ministry simply tipped off the Orthodox Church led by patriarch Aleksij II with regards to possible errors and irregularities so that none of its associations would be put on the list
Fr Vsevolod Chaplin, vice-chairman of the Patriarchate's Department for External Church Relations, confirmed the allegation. He told Forum 18 that the Justice Ministry had made “certain comments” regarding the 2007-2008 account submissions from the Moscow Patriarchate's religious organisations. However, he was unable to say when these comments were made or whether they were made verbally or in writing, as many organisations in different regions were involved.
The 56 organisations are still waiting for an explanation, hoping that the Ministry will inform them about the violations or irregularities they are charged with. Forum 18 and the SCLJ noted however that it is hard for any of the 56 groups to obtain information; instead they are getting the run around treatment between the Ministry and the Religious Affairs Department and so are unable to find out what they must do.
The press is also hard pressed to find out what is going on. On 15 October the Interfax agency quoted a Justice Ministry spokesman saying the 56 faced liquidation because they had "failed to submit information and documents prescribed by law to the Justice Ministry over a prolonged period,” after that nothing.
Charities Bracing For Lean Times Ahead
The New York Times reports that although few fund-raising experts or nonprofit leaders are predicting an implosion in giving - a long fall from the more than $300 billion that was donated last year in the United States - they do acknowledge that their world has changed and are preparing for leaner times.
Some experts, like Robert F. Sharpe Jr., president of the Sharpe Group, a fund-raising firm in Memphis, point to historical data showing that swings in giving are not nearly as severe as broader economic ups and downs, and that during some of the worst times philanthropy remained strong. “Just about any way you look at it, the Depression was one of the best periods for charitable fund-raising,” Mr. Sharpe said.
Patrick M. Rooney, interim executive director of the Center on Philanthropy at Indiana University, said the most reliable indicator of individual giving was Standard & Poor’s 500 stock index, with a 100-point jump translating into an additional $1.5 billion of philanthropy from people who report donations on tax forms. “It works just the same way on the downside,” he said. Using that rule of thumb and the price of the index on Nov. 6, such individual giving would drop this year by about $8.7 billion from an estimated $187 billion, according to Mr. Rooney. That’s far less than financial markets have fallen. Mr. Rooney warned, however, that the timing of the market collapse could exacerbate the impact on giving. “If there’s a precipitous drop in January or February, no one pays much attention, but many households started thinking about their year-end charitable giving just as they got their third-quarter statements — and they could bet their fourth-quarter statements were going to be worse,” he said.
The effects of the downturn are already being seen among big and small donors, some experts say. Recent surveys in Indianapolis and Memphis by the Center on Philanthropy show that households with an annual income of less than $50,000 are likely to stop giving as a result of the downturn. Kimberly Wright-Violich, president of the Schwab Charitable Fund, said that contributions by individuals to their donor-advised funds “hit a brick wall in September.” She said such contributions fell by 43% from July through October. But she said she expected some stabilization to occur by the end of the year.
While individual giving is hard to forecast, giving by institutional foundations should remain level or rise over the next year. That’s because foundations typically achieve the legally mandated 5% annual payout rate using a 3- or 5-year rolling average. Thus, next year’s budget in many cases will reflect at least 2 years, 2006 and 2007, of solid growth in assets. That said, many foundations have experienced declines in their assets that at the very least will affect their giving in 2010 and have already resulted in decisions to postpone new programs.
But Lucy Bernholz, president of Blueprint Research and Design, a nonprofit consulting company in San Francisco, said it was difficult to gauge how individual donors, who collectively account for 88% of philanthropy in the United States, would behave in the current financial climate. “Bill Gates or the Google guys, single-handedly they could throw out an enormous gift or so and keep things afloat,” Ms. Bernholz said. “That’s a bit of an exaggeration, but we have so many new, big donors these days, and we don’t know how that will affect things.”
Many big donors have seen their wealth decline sharply. Maurice R. Greenberg, for example, the former chief executive of A.I.G. who has given $700 million to various institutions, has lost about $2.8 billion and seen the value of the assets in two foundations he controls decline by billions. “Obviously, that’s going to curtail significantly the giving that we have been doing in the past,” Mr. Greenberg said. “You can’t give what you have lost.” He said he and his family planned to live up to commitments they had made, although they might extend the time they had to complete gifts and he still planned to make charitable gifts. “We will either shorten the list or just cut back on the amounts given to each of the beneficiaries,” he said. Many smaller donors work through donor-advised funds, which are giving accounts established through brokerages like Vanguard and Fidelity. Once money is committed to those accounts, it must be used for philanthropy. So at Charles Schwab, for instance, the more than $1 billion that flowed into its charitable fund last year will at some point flow to charity, regardless of what happens in the markets and economy.
Detroit and other major American cities have come to rely as well on corporate philanthropy, which has been highly dependent on corporate performance in the past. The financial services industry is the second-largest source of corporate donations after pharmaceutical companies, which largely make their contributions in kind. Charles Moore, the executive director of the Committee Encouraging Corporate Philanthropy, said he expected financial services companies to continue their philanthropy, though perhaps at reduced levels in the near term.
Charities that receive individual and corporate gifts say that hard times are already beginning. Roxanne Spillett, chief executive of Boys and Girls Clubs of America, said that each of the local clubs she had talked to — there are 4,300 around the country — was reporting higher demand for services. Additionally, clubs are grappling with rising insurance premiums and higher energy costs, she said. “If you asked me a month ago, I might have said Newark is crashing, but clubs in another city, say, Chicago, are doing pretty well,” she said. “Now, uniformly, club leaders say they are bracing for a very tough end to ’08 and a tough ’09 and even beyond.” Ms. Spillett said the national organization was increasing the number of “asks” it makes to donors, increasing its stewardship calls to top givers and increasing face-to-face meetings with contributors. It is putting together a white paper to advise clubs on potential cuts and stepped up fund-raising. The national organization relies on corporate donations, and Ms. Spillett said she had seen some reluctance among those donors to make multiyear commitments, and some may be reducing their gifts.
Cambodia: Growth & New Found Riches Fuel Governmental Chutzpah in Cracking Down on NGOs
The Asia Times reports that with an overwhelming electoral mandate, robust economy and a potential bounty of oil and gas revenues, Cambodian Prime Minister Hun Sen feels in a strong enough position to move against the NGOs which have been a perennial thorn in the strongman's side since he took power more than two decades ago.
In late September he called for the revival of a controversial law which would require the country's more than 2,000 associations and NGOs to complete a complex registration process and submit to stringent financial reporting requirements. The draft law is expected to be passed by Hun Sen’s Cambodia People's Party (CPP)-dominated National Assembly in the coming months.
"Cambodia has been heaven for NGOs for too long," he said in a speech broadcast on national radio on September 26, adding that he had given up hope of reading any positive reports written by international or local NGOs. "The NGOs are out of control ... they insult the government just to ensure their financial survival."
By enacting the law, Hun Sen could recalibrate the government's terms of engagement with the Western-led aid community, on which his government has heavily relied for decades to finance its budget. The move comes as private-led foreign investment has fueled the country's economic rise, led in the main by China and South Korea. "Many of the services provided by NGOs today will one day either be privatized or the revenues of the government will grow to such an extent that the functions currently being done by NGOs will be taken over by the government," said Brett Sciaroni, chairman of Cambodia's International Business Association.
The NGO law's enactment would be a symbolic power shift between Hun Sen's CPP-led government, further emboldened by its landslide victory in this year's general election, and the Western-backed NGOs which have long chastised it over human-rights abuses and corruption allegations. International aid agencies have for decades held the purse strings on the aid which has sustained the national economy since it emerged from the horrors of the Khmer Rouge, the ultra-Maoist regime which systematically attempted to transform Cambodia into an agricultural utopia between 1975 and 1979, and a subsequent decade-plus of civil war. Some contend it was the Khmer Rouge's economic failures, including a devastating countrywide famine that killed many and stalked the regime's traumatized survivors, which set the stage for Cambodia's now decades-long dependence on foreign aid.
The comprehensive aid experiment took a stronghold after the signing of the 1991 Paris Peace Accords, which ended Cambodia's debilitating civil war. Since then myriad NGOs have come to Cambodia to work on everything from demining to microfinance, orphanages to agri-business, public health issues to snaring globe-trotting pedophiles. The demining NGOs in particular made great progress, clearing an estimated 25,000 hectares of mined territory between 1992-2003. Cambodia has also been hailed as a global success story in fighting HIV/AIDs transmission, led by NGO-organized education programs and health aid. Prevalence rates have fallen by nearly half, from 3% in 1997 to 1.6% in 2006.
But Hun Sen's government's relationship with NGOs and international aid agencies has often been fractious, epitomized by its tumultuous interactions with the environmental watchdog Global Witness over its consistent accusations of high-level government links to illegal logging, and with the UK-based rights lobby Amnesty International for its criticism of state-sponsored forced evictions across the country. The World Bank also suspended US$11.9 million in funds in 2006 for 7 sanitation projects when it found evidence of rampant extortion, bribe-taking, bid-rigging and procurement manipulation, leading Hun Sen to claim the multilateral lender was trying to tarnish his government's credibility. The bank only agreed to unfreeze the projects' funding in 2007 after the government promised to strengthen anti-corruption measures.
Despite Cambodia's recent economic boom, including a skyrocketing average 11% GDP growth over the past 3 years, a sizable portion of the nation's real income still derives directly from donor nations in amounts wrangled out each year at annual Consultative Group meetings. The meetings were for years characterized by vague promises from the Cambodian government in response to weak demands by donors for reform, including the long-delayed adoption of an anti-corruption law. But in the past 2 years these demands have become less relevant with the surge in aid from China, which typically has less good governance or transparency conditions attached.
The Western nations' share of the average US$600 million in annual aid arrives through international aid agencies and NGOs. The process has been widely cast as a corrupt, inefficient gravy train, giving some traction to Hun Sen's complaints. Many analysts and expatriates argue that NGOs and their workers suffer from an image crisis among the Cambodian public, partly due to their comparatively high salaries and lifestyles, which are far adrift from the 35% of the population which lives on less than $0.50 a day. Country directors for prominent international aid agencies typically receive a $250,000 annual package, which includes a spacious villa in the capital's upmarket "NGO-ville" area, a 4-wheel-drive vehicle - usually emblazoned with the logo of their donor agency or charity - and fees paid for the capital's better international schools. The aid watchdog Action Aid estimated in 2005 that the 700 or so international consultants working for NGOs in the country earned more than Cambodia's 160,000 civil servants put together.
Others contend that several NGOs are actually impeding the development of a self-sustaining private sector, mainly through the alleged abuse of their not-for-profit status to pursue business opportunities. That status helps them avoid taxes and other unofficial costs that private businesses pay, giving non-profit an unfair competitive advantage in the market, they say. Cambodians now understand the word NGO, especially in the local context, to be a for-profit enterprise, said Sophal Ear, the author of The Political Economy of Cambodia, Aid and Governance. "It's all a business and this is just another way to avoid taxes," he said. "When not covered by donors, capital costs for NGOs have largely been privatized, through an extensive network of 'donations' to the ruling party by Oknhas [politically connected tycoons] politicians, and civil servants."
The NGO law, known formally as the Law on Organizations, was first written over a decade ago and aims to address such complaints. It would require NGOs to submit for government approval documents detailing their structure, goals, funding resources, properties and even logos. It also entails fines and imprisonment for any NGO which fails to submit annual reports to the Ministry of Economy and Finance. Many fear the discretionary powers the law will give the government in monitoring and sanctioning NGOs. Hun Sen no doubt had his one good eye on the anticipated bounty of future oil and gas revenues when calling for the controversial law's revival. Chevron, the US energy giant, discovered oil off Cambodia southwestern coast in 2005 and analysts have predicted the find could generate anywhere between $200 million and $2 billion in annual revenues for the government when full-scale production begins in 2010. The government is still awaiting a key assessment from Chevron of the supposed find, and both sides have more recently played down expectations. Nonetheless, NGOS are already warning of a possible "resource curse" similar to places like Nigeria, where corrupt governments pilfered and wasted earnings derived from energy exports. A new NGO coalition has begun work to oversee the transparency of the management of future oil funds. Led by the NGO Forum, it has given little information on its structure, but has said it plans to ensure the potential financial benefits from the windfall are managed in a socially responsible manner, and that benefits filter down to the impoverished grassroots.
The World Bank, which also aims to monitor the government's oil revenue management, noted in May that international aid is often poorly managed in key sectors, with the problem of "fragmented" assistance especially acute in health and education. In the health sector, 22 donors are currently working with over 100 NGOs to deliver $110 million in Official Development Assistance (ODA) per year through 109 projects - yet use of the national system remains at just between 13% to 18%, said the bank. The vast majority of rural Cambodians are forced to use an expensive yet rudimentary private healthcare system which is more reminiscent of poorer African than neighboring Asian nations.
November 13, 2008
The Economist's Matthew Bishop: Demand for "Philanthrocapitalism" Now Greater than Ever
Matthew Bishop, New York bureau chief of The Economist and co-author of Philanthrocapitalism: How the Rich Can Save the World, argues that in recent years, rapid wealth creation, particularly on Wall Street, has resulted in a surge not just in giving, but in a new, businesslike approach to giving that he calls “philanthrocapitalism.” Now, people are asking whether the recent struggles of some of capitalism’s biggest winners, and the growing suspicion of some of capitalism’s core methods, including Wall Street’s use of leverage, mean that philanthrocapitalism is in trouble, too.
Mr. Bishop predicts that there is reason to think that the need for philanthrocapitalism will be greater than ever, and that leverage will be one of the main reasons. Philanthrocapitalists have developed a new vocabulary to describe their approach to charity, which borrows enthusiastically from the business lexicon. They call themselves “social investors” or “venture philanthropists,” and try to make donations that are “high performance” and “strategic.” Above all, they love to “leverage” their money.
Though leading philanthrocapitalists are giving away unprecedented amounts of money — Bill Gates and Warren Buffett are together handing out about $3.5 billion a year through the Bill & Melinda Gates Foundation — they are quick to recognize that even those sums are dwarfed by government and big business budgets. (The New York City schools budget is about $17 billion a year, by comparison.) To make a real difference, philanthropists have to find ways to use their money that have an outsize impact, typically by using donations to change how others spend their money. This kind of leverage — using a relatively small donation to enlist others in a cause — is very different from the Wall Street kind, which by multiplying the size of traders’ bets sometimes has blown extra air into financial bubbles. Expect philanthropic leverage to become more important in tough economic times as social demands increase and government budgets get tighter — the need to get the maximum bang for the increasingly sought-after philanthropic buck should become even more critical.
The Gates Foundation, for example, has tried to “leverage” the research and development budgets of the big pharmaceutical companies by giving incentives to encourage them to spend more of their research budgets on discovering, say, a vaccine for malaria (which kills millions) rather than a cure for baldness (which hurts only vanity). Another leveraging strategy has been to encourage research that combines a variety of inexpensive drugs to cure a different disease.
Also, there is the most tempting pool of money — government spending, much of which is already directed at solving social problems. Leveraging those budgets has become a core strategy for many of today’s leading philanthrocapitalists, including Mr. Gates and Michael Bloomberg, whose use of his own money to get elected mayor of New York, one could argue, is the clearest example yet of philanthrocapitalistic leverage.
Mr. Bishop argues that an obvious opportunity for leverage during the economic downturn will be for philanthrocapitalists to bring about mergers and acquisitions in the nonprofit sector, which currently has far too many organizations doing essentially the same thing. When raising money was easy, those nonprofits could resist demands to get together. Now philanthrocapitalists who want to finance bigger, more efficient organizations may find a new willingness to accept their terms. However, Bishop points out, the opportunity to leverage philanthropic dollars may be even greater abroad than at home. The initiatives by the Bush administration in overseas aid and development to help poor people threatened with diseases like AIDS and malaria have often worked in partnership with philanthropists.
Bishop claims that the potential to change a society, in the way that only a government can, holds out a high return that increasingly appeals to philanthrocapitalists. He argues that it will not escape the attention of today’s leading philanthrocapitalists that there may never be a better opportunity for them to leverage government spending in directions they want than at the start of a new administration explicitly committed to change.
November 12, 2008
NYT: Recipients of NYC Mayor Bloomberg's "Mayor Award" are Nonprofits He Privately Contributes To
The New York Times reports that every year, New York City honors a handful of artistic and neighborhood nonprofit organizations with a prestigious prize known as the Mayor’s Award, citing their contributions to the city’s cultural life. What usually goes unmentioned, however, is Mayor Michael R. Bloomberg’s contributions to many of the winning groups. Since 2004, the city has given 10 of the awards to organizations, or their employees, that have received significant private donations from Mr. Bloomberg, according to records and interviews.
In 2006 alone, the award was given to five groups that had received hundreds of thousands of dollars each from Mr. Bloomberg, a billionaire. On Monday night, Mr. Bloomberg presented one of the Mayor’s Awards to the Alliance of Resident Theaters/New York, which provides financial assistance and affordable space to hundreds of small theater companies. Since 2001, Mr. Bloomberg has personally given the group about $700,000, records show.
Aides to Mr. Bloomberg and several leaders in the city’s arts community downplayed the connection between the mayor’s charitable giving and the city awards, saying that any overlap was inevitable and largely accidental. But others said that the overlap highlights the blurring of Mr. Bloomberg’s philanthropy and his role as mayor, which became a flash point during the recent term limits debate. During that debate, Mr. Bloomberg and his aides asked the heads of several nonprofit groups that rely on his largess to testify in support of his plan to extend term limits at public hearings or to urge wavering members of the City Council to back his bid for a third term.
Even some who receive the mayor’s private money said it can be hard at times to distinguish his official actions from his private charitable giving. Mayor Bloomberg donates the money to the groups through large and technically anonymous donations to the Carnegie Corporation, but it is an open secret in New York City’s cultural circles that he is the source of the gifts, which typically range from $10,000 to $150,000 a year. Since 2002, Mr. Bloomberg has donated more than $100 million to at least 2,500 nonprofits, earning him widespread praise. Much of Mr. Bloomberg’s philanthropy is directed toward cultural causes.
The Mayor’s Awards for Arts and Culture, first given out in 1976, and only sporadically in the 1990s, have become an annual honor under Mr. Bloomberg. Every year, a 21-member advisory commission submits recommendations for six to eight awards. At least four members of that commission either run or sit on the board of a group that receives donations from Mr. Bloomberg. The final decision is made by members of the city’s Department of Cultural Affairs.
Federal Judge Rules That US Treasury Dept. Violated Al-Haramain Islamic Foundation's Fourth Amendment Rights
Judge Garr King for the US District Court for the District of Oregon ruled that the US Treasury Department's freezing of the assets of the Al-Haramain Islamic Foundation violated the organization's due process rights because it failed to give any basis for designating it a "Specially Designated Global Terrorist" (SDGT) organization. Judge King opined that the Treasury violated the charity's rights by not giving the foundation adequate notice and a chance to make an argument against the designation.
The seizure of the organization's assets was authorized by Executive Order 13224 which allows the Treasury's Office of Foreign Assets Control (OFAC) to block the assets of individuals or entities designated as SDGTs.
Judge Garr King indicated that in his view, the language "provide material support" to terrorism as a basis for designating an entity an SDGT (the criterion established under Executive Order 13224), is unconstitutionally vague. EO 13224 does not define "material support." He did not overturn the designation, however, as it has yet to be decided whether the due process violation was harmless error.
The case also involves the issue of whether the terrorist designation can be made by relying on classified documents. Judge King ruled that the Treasury Department did have the authority to keep the classified record secret under the International Emergency Economic Powers Act. "I conclude, however," he wrote,"that the government violated Al-Haramain Islamic Foundation-Oregon's due process right to adequate notice prior to designating it."
The Ashland, OR chapter of the now-defunct Saudia Arabian charity was led by Pete Seda, who was indicted in 2005 on money-laundering and tax fraud charges. Seda fled the country, but returned in November 2007 to face federal charges.
In a separate challenge to the terrorist designation, the charity and government lawyers have battled over a National Security Agency document that was accidentally given to Al-Haramain lawyers. The document has been under tight security ever since the lawyers reported it to the Justice Department and all copies were returned at the government's insistence. The U.S. Court of Appeals for the 9th Circuit returned that case to a trial judge for another hearing after rejecting part of the challenge.
November 11, 2008
Closing Arguments Made in Case to Determine Whether Holy Land Foundation was a Charity or a Terrorist Front
The Dallas Morning News reports that lawyers finished their closing arguments to jurors today to determine whether five defendants broke U.S. law by funneling more than $12 million to Hamas through the Holy Land Foundation, which was the largest Muslim charity in the United States before the government shut it down in 2001.
Prosecutor Barry Jonas told jurors that throughout the two-month trial, the defense has stressed the defendants’ relief work on behalf of Palestinians under Israeli occupation in order “to distract you” from evidence that the defendants gave Hamas money. He reminded jurors that since 1995, U.S. law has prohibited any support of Hamas, including humanitarian aid. The government contends that Holy Land sent money to specific Palestinian charity groups, called zakat committees, in Hamas’ social services wing. That wing provides aid to Palestinians, particularly relatives of suicide bombers.
Theresa Duncan, an attorney for former Holy Land CEO Shukri Abu Baker, began the defense summations by saying that Holy Land’s good works on behalf of Palestinians oppressed under Israeli occupation are not “mere distractions,” but are central to the case. She said that for Mr. Baker and Holy Land, “providing relief to people was not just a job, it was a religious obligation.”
Ms. Duncan said the defendants always wanted to follow the law. Holy Land submitted its books to annual audits, she said, and the charity kept detailed records for years — well beyond its obligations as a tax-free entity. After the U.S. declared Hamas a terrorist organization, Holy Land hired a former Dallas congressman to help the organization approach the U.S. government to get advice about which overseas groups were off limits to fund, but they were rebuffed, she said. The zakat committees Holy Land funded are still not designated as terrorism fronts, she reminded jurors.
Ms. Duncan told jurors that “no one disputes that Hamas is a terrorist organization.” She said that Mr. Baker never “advocated for the destruction of Israel. Shukri’s life and work is about helping people and not hurting them.”
Linda Moreno, attorney for former Holy Land co-founder Ghassan Elashi, told jurors her client put politics aside in order to help Palestinians under the brutal Israeli occupation. "For those who have been impoverished by politics and history and failed leadership, for all those generations of refugees that he helped feed and clothe and educate, Ghassan Elashi does not apologize for serving them," she told jurors. "He knew the work of the Holy Land Foundation attracted enemies." She acknowledged that wiretapped phone calls showed Mr. Elashi questioned the fairness of U.S. terrorism laws that he thought would stifle legitimate overseas aid to the needy Palestinians and other refugees. "But," she said, "he sought to obey.”
In the government rebuttal, prosecutor Jim Jacks reminded jurors of videos from the 1980s and early 1990s of Palestinian festivals where speakers and musicians openly praised Hamas and Holy Land raised money. "Can there be any doubt that these men were the leaders of Hamas in the United States, and that they were the fundraising mechanism?" he asked. "Look at all those videos. It seems like every song was about support of Hamas, about martyrdom, about jihad, about killing Jews."
Last year’s trial of the same men ended in a hung jury and mistrial. The retrial began two months with prosecutors eliminating much of their previous case but keeping their essential charge that Holy Land was created to raise money for Hamas.
Deliberations are expected to begin this afternoon or Wednesday. The case is being tried in the U.S. District Court, N.D. Texas, Dallas Division, with Judge Jorge A. Solis presiding.
Nonprofit Alleges City of Houston Violated Fair Housing Act
The Housing Corporation of Greater Houston, developers of a proposed complex called Magnolia Glen that would provide housing for the homeless and mentally ill, has filed a complaint with the U.S. Department of Housing and Urban Development alleging that the city of Houston violated the federal Fair Housing Act by not providing $4 million for the Magnolia Glen project. The proposed complex would provide 220 efficiency units at a former motel on the Gulf Freeway frontage road near the University of Houston.
The Housing Corporation, a nonprofit that primarily builds and operates housing for the homeless, does not accuse the city of intentional discrimination. Instead, it alleges that the City Council's failure to vote on the Housing Corporation's request for funding has had the effect of discriminating against blacks who, the complaint says, comprise more than half of the city's homeless and disabled homeless people who are mentally ill or have HIV.
The Housing Corporation cannot argue that the city has engaged in intentional discrimination because Mayor Bill White and his top housing officials have backed the project.
When the corporation wrote the city in mid-October stating that it was considering filing a complaint, Mayor White wrote back that federal laws require the city to take into account neighborhood opposition when awarding federal Community Development Block Grants. White wrote: "The city of Houston believes that neighborhood acceptance or opposition is one factor to be taken into account. It would be a substantial setback for HUD activities if elected officials could not consider community support or opposition ... and determine how to ration scarce funds across a wide range of needs within our community."
The 1968 Fair Housing Act prohibits discrimination in the sale, rental and financing of homes based on race, color, national origin, religion, sex or disability.
4 Scottish Schools Threatened with End to Charity Status
The Edinburgh Journal reports that four of Scotland’s top private schools have been threatened with the loss of their charitable status if they fail to increase their spending on bursaries.
The four schools, which include Huthesons’ Grammar in Glasgow, Merchiston Castle in Edinburgh, Lomond school in Helensburgh, and St Leonards in St Andrews, have failed to meet the “public benefit test” needed for a charity. The Office of the Scottish Charitable Regulator (OSCR) stated that they have a year in which to put forward plans to expand bursaries to meet the test’s standards.
Jane Ryder, the regulator’s chief executive, said that they had failed “mainly due to significant fees and the fact that there was not sufficient help in place so that those who cannot pay the fees can also benefit from what the charity does.”
The schools which have been criticized fear the financial impact of losing charitable status. The 50 Scottish independent schools registered as charities save approximately £4.5m a year in taxes because they do not have to pay business rates or VAT. The sector claims that losing charitable status could force up their fees by between 5 and 8%.
30 charities were examined and assessed by the OSCR on their adherence to the 2005 law stipulating that every charity must pass a public benefit test in order to justify its tax breaks.
November 10, 2008
NY Post Reviews 10 Celebrity Charities and Finds Eyebrow-Raising Business Practices
The New York Post reports that George Clooney, Bono, Wyclef Jean, Petra Nemcova and a half-dozen other celebrities have founded charities that have some eyebrow-raising business practices.
Jean's charity to help Haitians has allegedly failed to file tax returns for eight years. Bono's mega-foundation is reported to have chartered a plane to Africa and bought tickets for a U2 concert. Poker lover George Clooney allegedly took donations from a dubious online card-games company. And Giant Super Bowl hero Osi Umenyiora is reported to have dropped the ball when it comes to even registering his charity to benefit Africa and research into Alzheimer's disease.
"You need to have people managing the organization that are well versed in the letter of the law," said Bennett Weiner, CEO of the Better Business Bureau's Wise Giving Alliance. "Just because a celebrity is associated with a charity doesn't mean they are doing any of this."
Below are the 10 celebrity charities that raised red flags, according to a Post examination of federal tax forms and other records, and the alleged shorcomings:
1.) Yele Haiti (Wyclef Jean Foundation)
Wyclef Jean's charity aims to address educational, environmental and emergency-relief issues in his native Haiti, but has not filed a US tax form since 2000. An insider at the charity told The Post that where the money goes in Haiti is a mystery and the Charity President Hugh Locke said, "We are in arrears in our filing." He said that large donations go directly to projects in Haiti, where the organization is registered as a charity and the missing IRS documents would be filed by the end of the year. The forms are required to allow them to receive donations that can be tax deductible and to avoid paying taxes on their donations. The charity also has not completed the required New York state registration, according to Attorney General's Office records. Meanwhile, Jean owes the state of New Jersey $183,172 in personal income tax, a sum Jean's spokesman said last month the singer was in the process of paying.
2.) George Clooney's Not On Our Watch
George Clooney leads the Hollywood outcry against genocide in Darfur and his group also provides humanitarian aid and raises awareness of human-rights issues in Sudan and Burma. But Clooney's charity, which lists Don Cheadle and Matt Damon as founders, has a contractual relationship with an offshore company that conducts poker games on the Internet to raise funds for the charity. The company, Rational Services Limited, is incorporated on the Isle of Man, off the coast of England. Such companies operate in a legal gray area. In registration documents filed last year with the New York attorney general, Not On Our Watch requested its contract with the gaming company "not be subject to public inspection." Although the AG does not require such information, one expert on charities and IRS law said he had never seen a tax-exempt organization list an offshore gambling enterprise as a donor. The charity's executive director, Alex Wagner, would not reveal the nature of the relationship with Rational Services Limited, other than to say it donated $1 million to Not On Our Watch. "They were very generous to us and gave us a donation that has gone on to do a lot of good in Darfur," Wagner said.
3.) Osi Umenyiora's Make Plays for Africa, Strike 4 a Cure
The Giant star defensive end started a foundation called Make Plays for Africa and a sister group, Strike 4 a Cure, to raise money for research into AIDS and Alzheimer's disease two years ago. But their annual celebrity bowling tournaments were financial failures, and it came to light in news reports last summer that the groups did not have tax-exempt status, as they claimed. Umenyiora's brother, Jim, director of Make Plays for Africa, said he would cancel further events and shut down the Web site. Until recently, however, Umenyiora's personal Web site solicited "sponsorship packages" for Strike 4 a Cure, and the charity's Web site still solicits donations. The Make Plays for Africa site has been shut down. Umenyiora's manager did not return calls for comment.
4.) Tyra Banks' TZONE Foundation
The supermodel and talk-show host recently set up this Los Angeles-based organization to help disadvantaged teenage girls - starting with running "self-esteem camps," then shifting focus to funding other groups that empower young women. But in 2006, the group blew more cash on salaries and internal costs ($34,611) than it gave out in grants to community groups ($31,900). Meanwhile, it listed a questionable expense of $4,255 as "benefits paid to or for members" on its tax forms. The charity said that it was in a transition period in 2006 and that the $4,255 benefits expense was misidentified on the form and was actually money for employee benefits.
5.) Bono's DATA (Debt, AIDS, Trade, Africa) Foundation
The U2 frontman lends his megawatt star power to this advocacy group to help bring an end to AIDS and poverty in Africa. The Washington, DC-based group - now known as One - took in an eye-popping $31 million in 2006 but spent just $6 million on its work. Among its outrageous expenses were a $272,700 bill to charter a plane, a $117,838 tab for "transportation and security" and $8,740 for U2 tour tickets. Kathy McKiernan, a spokeswoman for Bono's organization, said the group chartered the 737 to fly journalists and others on a 10-day "learning and awareness-raising trip" to seven African countries in May 2006. DATA was reimbursed for the majority of the costs from the media, she said. "Our policy is to take security and a camera crew to shoot video for use in our advocacy work with us on all Africa trips we do," she added. She said the concert tickets were distributed to DATA's supporters and elected representatives in Washington. McKiernan said the lawmakers were asked to reimburse the charity if the ticket price was more than $50, to comply with congressional ethics rules. Most of the $31 million raised was in grant form and will be paid over several years, with just $8 million coming in 2006, McKiernan said. Bono has never disclosed how much he gives to his own charity, but McKiernan said the rock star covers all of his own travel-related expenses.
6.) Petra Nemcova's Happy Hearts Fund
After surviving the 2004 tsunami in Thailand by clinging to the top of a palm tree, the supermodel wanted to pay it forward by founding a charity to build schools in Latin America and Indonesia. Instead, it seems an outrageous portion of the donations have gone for lavish parties at Cipriani. According to the most recent tax filing, for 2006, the organization spent more than half of its funds on administration and fund raising, including its annual star-studded Heart of Gold ball, and gave nothing in aid. Glen Nordlinger, a director of Happy Hearts Fund, said the group raised $4.5 million in 2007 and spent $2.1 million on programs, including building schools - though the charity has not filed its 2007 paperwork yet. But even those figures raise red flags with charity watchdog groups, which use the almost universal standard that a well-run charity should spend 65 to 75% of its donations helping people. Still, in November, Happy Hearts will host a Masquerade in Venice dinner at Cipriani Wall Street and will honor "His Excellency" Wyclef Jean, according to the invitation.
7.) Larry King Cardiac Foundation
The CNN talk-show host and heart-attack survivor raises funds for heart operations for poor patients. But the charity spent $2.3 million on salaries, supplies, advertising, program expenses and gala dinners in LA and Washington, DC, in 2006, much more than the industry standard of 10% for fund-raising. Meanwhile, King employs his son, Larry King Jr., as the organization's CEO at a $200,000 salary - a hefty raise from the $66,667 he was paid when first appointed in 2004. Junior's current salary blows away the standard 3% of total expenses recommended as the ceiling for a CEO salary. Family members on charity boards are also a red flag. "I'm afraid that this just doesn't pass the smell test," said Sandra Miniutti, vice president of marketing for Charity Navigator, a leading charity watchdog group. King Jr., 46, said that the charity has only three employees and that he wears many hats. "I am not your typical CEO or president," he said. "I do everything, and I agreed to take this on because I really wanted to help my father." The group didn't respond to requests for financial information from the charity division of the Better Business Bureau, which asked for it after receiving calls from potential donors who wanted more details on the organization.
8.) Gary Payton Foundation
The retired Seattle SuperSonics point guard established this Seattle-based charity to give out scholarships to needy children. But the organization gave out only $12,937 - while it spent $101,620 on management and administration in 2006. It spent more than half of its donations on the salary of its executive director - $65,000 - that year. A spokesman for the charity would not comment.
9.) Dyan Cannon's Operation Outlook
The actress is the "international executive spokesperson" of this Everett, Wash.-based group that tries to find runaways and missing children. The charity spends 68% of its $2.4 million budget on its relentless telephone solicitations - but workers have been accused of posing as representatives of a better-known child-finding agency to raise funds. The accusations say phone solicitors misrepresented the group in telephone solicitations as the National Center for Missing and Exploited Children, a highly regarded charity. "One overanxious caller can make statements like that, and we just can't be responsible for everything," said a spokeswoman for Operation Outlook. The charity has also rebuffed repeated requests to provide its financial information to the Better Business Bureau.
10.) Magic Johnson Foundation
The retired basketball legend raises AIDS awareness and helps patients. But the group has spent large amounts on administrative costs ($712,825 in 2006) that are almost equal to the amount it gives to the cause ($714,029). The foundation's president, Towalame Austin, acknowledged the issue and said the group had looked to reorganize. She said new filings should reflect a turnaround in the amount going to the needy.
November 9, 2008
Australian Charities Lose Bequests After Families Challenge Wills
Australia's Courier-Mail reports that relatives are increasingly challenging wills in court, costing charities millions of dollars in bequests despite the wishes of the deceased. The Brisbane-based Australian Centre for Philanthropy and Nonprofit Studies examined 46 major cases and found that about 1 in 14 Australians leaves a bequest to charity, but their wish is likely to be over-ruled if relatives contest the will. The new report, titled Every Player Wins A Prize, revealed that charities lost the entire bequest in 6 instances and had it substantially reduced in another 35.
Australia is one of only four countries with "family provision laws", introduced to ensure "the proper maintenance and support of a will-maker's spouse and children".
The Centre's director, Professor Myles McGregor-Lowndes, said legal challenges to wills had become more common, and predicted that battles between families and charities would continue to grow as the wealthy generation of baby boomers died over the next few decades. He said that changes to family make-up, attitudes and expectations and a growth in personal wealth had contributed to increasing conflict over bequests. Family factors include: (1) Multiple marriages with partners and children vying for a share of the estate; (2) Rising numbers and legal recognition of de facto and same-sex relationships; (3) Growing numbers of elderly and dependent parents; and (4) Rising numbers of Generation Y living at home into their 20s or 30s who may be classed as "dependent."
The report said changing cultural values meant more people not included as beneficiaries expected a share of the estate as their right, and it was no longer considered inappropriate to challenge a will. Lawyers said an attitude of "entitlement" now pervaded the culture, rather than an inheritance being seen as an unexpected or windfall bonus. Further, increasing wealth had also made it worthwhile to mount a challenge.
Many cases don't even reach the courts, with charities pressured to hand over tens of thousands of dollars in "go-away money" to settle claims quickly, according to the report. It also advises charities to encourage gift-giving through tax-effective mechanisms, such as prescribed private funds, while donors are still alive.
Only 58% of adult Australians have made a will and 7% have bequested a charity.
NM Judge Dismisses 3 Defeated State Lawmakers' Suit Alleging 2 Nonprofits Violated NM's Campaign Finance Law
Recently, an Albuquerque judge dismissed a lawsuit filed by two state senators and 1 representative who were defeated in the June Democratic primary and then sued several nonprofits who had distributed campaign literature against them.
State Sen. Shannon Robinson, Sen. James Taylor, and Rep. Dan Silva allege their election opponents acted with nonprofit groups and others to evade New Mexico's campaign finance law. The nonprofits include New Mexico Youth Organized and the Center for Civic Policy, both of which have been at the forefront of an effort to adopt ethics reform in the state Legislature. The suit sought to overturn the results of the primary.
The lawsuit alleged money was transferred to secretly pay the nonprofit groups to finance mailers pointing out Robinson, Taylor, and Silva's campaign contributions as well as various votes on ethics bills and other issues.
Robinson, Taylor, and Silva plan to appeal the case to the New Mexico Supreme Court.