Friday, March 20, 2009

Italians Turn to Priests for Loans When Unemployment Benefits Aren't Enough

Bloomberg reports that Europe’s most indebted country, Italy, faces its worst recession since 1975, the church is stepping in to help cash-strapped Italians, who receive the lowest unemployment benefits in the 30-member Organization for Economic Cooperation and Development.  The smallest of Italy’s 325 dioceses have earmarked a minimum of 15,000 euros to support bank loans for parishioners. The archdiocese of Milan has created a fund now totaling 3.2 million euros to which people may contribute to over the Internet.  Church officials will meet in Rome March 23-26 at the Italian Bishops Conference to commit more cash, according to Andrea La Regina, head of social projects at Caritas, a Catholic charity based in Rome.  

Caritas serves as the intermediary between parishes and Banca Etica, or Bank with Ethics, a lender started 10 years ago in Padua by a group of nonprofit organizations.  To obtain credit, Catholics must first make their case to their parish priest, who presents the appeal to a three-member council of the local branch of Caritas. If the charity decides with Banca Etica that there are grounds for a loan, the church acts as a guarantor.  “We examine case by case to ensure that people aren’t too indebted,” said Claudio Gasponi, who screens loan requests at the bank. About a third of applicants receive the funds, he said.  The current interest rate is 3% a year. That compares with personal-loan rates of between 8.9% and 9.3% at Intesa Sanpaolo SpA, Italy’s second-biggest bank.

Italy’s jobless rate climbed in the fourth quarter to 6.9%, its highest in more than two years, the national statistics office said today. Demand for unemployment benefits soared 46% in the first two months of 2009 from a year earlier, the country’s welfare and pension agency INPS said this week in its annual report.  Italy’s unemployment benefits are a fraction of what neighboring France pays.  Former workers get a maximum of 40% of their wages, capped at 1,000 euros a month, for a maximum of six months, according to labor law.  In France, benefits last for almost two years and equal a minimum of 57% of the person’s last paycheck.

Prime Minister Silvio Berlusconi turned down a proposal by the opposition Democratic Party to extend unemployment payments to former temporary workers, who now account for 10% of Italy’s workforce as the country introduced more flexible labor contracts to encourage companies to hire.  On March 1, he told reporters in Brussels the cost would be “unsustainable.”

Italy is hemmed in by debt 1.1 times its GDP, which costs 81.5 billion euros a year in interest payments. The country also has a European Union obligation to keep its deficit within 3% of GDP.  Italy’s $1.8 trillion economy will contract 2.6% this year after shrinking 1% in 2008, the most in three decades, according to Bank of Italy’s deputy director general, Ignazio Visco.


March 20, 2009 in International | Permalink | Comments (0) | TrackBack (0)

Indian NGO Blames Sexual Exploitation of Girls at Rehabilitation Center On Lack of State Regulations To Monitor the NGOs Operating Them

The failure of India's Himachal Pradesh government to frame guidelines to monitor the working of NGOs and rehabilitation centres was one of the reasons for the shocking case of four teachers sexually exploiting six girls at a centre-cum-hostel here, claims a Shimla-based NGO, Society for Disability and Rehabilitation Studies (SDRS).  The SDRS claims that the National Policy For Persons with Disability Act requires the states to frame guidelines to regulate NGOs.

“The state (Himachal Pradesh) is yet to frame guidelines for the NGOs that are registered under the Persons with Disabilities Act, 1995, for taking care of special children,” SDRS chairman Ajai Srivastava said.  He said that to date only Goa has come up with guidelines under the act.  According to Srivastava, Prerna Rehabilitation Centre, where the sexual exploitation occurred, was working illegally for the past four years and the government was not aware of its activities.  “The centre had been working illegally since 2004 and it got a registration certificate from the state Department of Social Justice and Empowerment in November 2008 on the recommendation of a district welfare officer,” Srivastava said.  “At the time of registration, no proper inspection of the centre was done,” alleged Srivastava, who is also a member of the Rehabilitation Council of India of the Union Ministry of Social Justice and Empowerment.  “After the registration, no government official bothered to inspect its working.”  The centre also did not have proper classrooms for special children. The lone female teacher of the centre was on maternity leave for the past three months. There were no female helpers to take care of the needs of the students.  The centre has more than 25 special students and was getting a monthly grant of Rs.30,000 under the state-sponsored Sarva Shiksha Abhiyan (SSA) scheme. The grant was stopped after the episode was uncovered.  Srivastava said most of the teachers in such centres are not even registered as professionals with the Rehabilitation Council of India, a mandatory requirement under the Rehabilitation Council of India Act of 1992.  

Official sources said the government has no record of the total number of rehabilitation centres working in the state.  The Social Justice and Empowerment Director, Subashish Panda, said: “We are keeping vigil only on the working of state-funded NGOs that are running rehabilitation centres.”  Chief Minister Prem Kumar Dhumal said: “It’s a serious issue and I have directed authorities to maintain records of all the rehabilitation centres, both aided and non-aided, being run by the NGOs in the state. We have decided to frame specific rules in order to bring all of them under the ambit of law.”


March 20, 2009 in International | Permalink | Comments (0) | TrackBack (0)

Michigan Town Wants Nonprofit to Lose Its Liquor License For Not Paying Taxes and Water Bills

The Detroit Free Press reports that the Auburn Hills City Council is objecting to the Michigan Liquor Control Commission renewing a nonprofit's liquor license because the nonprofit, the Mexican Mutual Society, owes more than $35,000 in water and sewer bills and back taxes.

The council has asked the commission to audit and investigate the organization's licensing, however, an official with the commission says the investigation is unlikely to happen because state law prohibits the commission from denying a nonprofit club's license based on a municipality's objections.  Auburn Hills City Manager Peter Auger said the request was sent to the commission along with other liquor licensing recommendations on Tuesday.  According to Sharon Martin, deputy director of licensing for the commission, when the commission receives such requests, it sends letters to the municipalities informing them that the investigation won't proceed because the statute doesn't allow it.  Martin said the commission generally intervenes only if a club is not legitimately operating as a nonprofit or if it breaks state laws, including selling alcohol to nonmembers or to minors.

According to its web site, the Mexican Mutual Society was founded in 1943 by seven Mexican-American men and "takes pride in promoting the Hispanic culture."  An official at the club declined to comment.



March 20, 2009 in In the News | Permalink | Comments (0) | TrackBack (0)

New York Museums Feel the Economic Pinch

The New York Times reports that New York museums throughout the boroughs have felt the economic pinch and have had to make various adjustments including cutting back programs and laying off workers.  The article reports that while these are tough times for cultural institutions all around, they are particularly hard on those in New York City’s outer boroughs, which lack the foot traffic, tourism concentration, and cachet of Manhattan.  Regardless, the arts organizations are making the adjustments necessary to keep their doors open and trying to maintain business as usual.  As important anchors in their neighborhoods, cultural institutions hope they can count on the loyalty of locals, for whom a trip to the museum is fast becoming one of the few affordable activities. Because museums outside Manhattan tend not to be as dependent on tourists, their attendance shows less of a drop-off.

With corporate donations down, public funds cut and endowments depleted, the challenges facing the museums now are particularly formidable.  “The real question for everybody is how to deal with the funding picture,” said Kate D. Levin, the city’s Commissioner of Cultural Affairs, adding that museums were facing challenges “not because they’re not in Manhattan.”  Flushing Town Hall saw its city allocation, including City Council funds, reduced by 41%. Cuts from other city agencies forced the hall to eliminate after-school programs and elder services.

There are bright spots. Those organizations that already had building projects financed and under way, for example, have benefited from a decline in construction costs. The Queens Museum of Art had trouble generating contractor interest in its renovation project seven months ago, but the bid it reissued in December received a very different response. “They were knocking down our door,” said Tom Finkelpearl, the museum’s executive director. “Frankly, I don’t think we could have built the building if the economy didn’t go south.”  The Queens Museum had raised the $48 million for its renovation before the recession hit.  However, one of the main contributors had invested with Bernard L. Madoff, who is accused of running a Ponzi Scheme that hurt nonprofit institutions, as well as other investors. The Queens Museum is extending exhibitions in order to program fewer new ones, has eliminated 7 of its 40-member staff through layoffs and attrition and will decrease its annual operating budget by about $1 million.

If there is any important lesson to be learned from all this, arts groups say, it is in part the importance of building strong boards and diversifying financing sources. Flushing Town Hall, for example, gets 48% of its $1.2 million annual budget from the city. The Bronx Museum, which said its financing from city agencies was down about 60% between fiscal year 2008 and fiscal year 2010, has always relied on public funding from a variety of government sources.


March 20, 2009 in In the News | Permalink | Comments (0) | TrackBack (0)

Hearing Held To Investigate Whether Kansas Nonprofit Used Political Ties to Gov. Sebelius to Secure Funding

The Topeka Star reports that Kansas lawmakers want to know whether a Johnson County nonprofit used its political connections to Gov. Kathleen Sebelius to get a special funding increase last fall.  Lenexa-based Community Living Opportunities was awarded nearly $713,000 in extra Medicaid funds. The group serves developmentally disabled Kansans, primarily in Johnson and Douglas counties.  At the time, the agency’s board of directors included Kansas Democratic Party Chairman Larry Gates, a Sebelius confidant, and his former law partner, Dan Biles, whom Sebelius appointed to the state Supreme Court this year. Lew Perkins, the University of Kansas athletic director, also serves on the board. Biles has since stepped down from the board.  The allegations come as Sebelius, a Democrat, awaits U.S. Senate confirmation to lead the U.S. Department of Health and Human Services, which administers Medicaid.

A hearing was held on Wednesday, but neither Sebelius nor Gates attended.  Sebelius has said she had nothing to do with the funding decision, which was made by Don Jordan, her secretary of social and rehabilitation services. Gates also has denied speaking to Sebelius about the funding request.

At the hearing, other service providers maintained that the state told them no extra funding was available. They told lawmakers that Community Living Opportunities was allowed to skip the usual process of requesting extra funds, which involves going before a local agency that oversees such requests.  The extra funds Community Living received went to pay staffers who work directly with 43 of its 350 clients with disabilities deemed severe enough to warrant higher payments.  Jordan told lawmakers Wednesday that giving Community Living the extra funds was “an extremely challenging decision.” He said he concluded that the agency’s clients deserved the funding. “I believe I did the right thing,” he told lawmakers. 

Typically, groups such as Community Living go before a local entity — a Community Developmental Disability Organization — that has been designated by the state to oversee extra funding requests. In most cases, however, the “gatekeeper” is itself a competing service provider.  However, Community Living’s requests for extra funds had been denied in the past by the local gatekeeper, the county-run Johnson County Developmental Supports.  “It’s the reason we felt we had to go to SRS (Social and Rehabilitation Services),” said Community Living’s senior administrator, Stephanie Wilson. She said Community Living serves those with severe disabilities who require more costly services.  Yet at the same time Community Living petitioned the state, it was developing a 40-acre ranch in Douglas County for use as a therapeutic equestrian and activity center for its clients. The property cost $400,000, Community Living executives told lawmakers Wednesday. A home, stable, and swimming pool have been built.

No additional hearings are scheduled, but an investigation by legislative auditors has been requested.  Jordan also has asked for an external review to validate his decision, which should be completed in May.


March 20, 2009 in State – Executive | Permalink | Comments (0) | TrackBack (0)

Thursday, March 19, 2009

D.C. Appellate Court: Professors at Religious Colleges Can't Unionize

Union organizing of professors at private colleges has largely been squelched since 1980, when the U.S. Supreme Court ruled in NLRB v. Yeshiva University that faculty members at private institutions should be considered managerial employees ineligible for collective bargaining. A rare breakthrough for such union drives came in 2005, when the National Labor Relations Board ruled that faculty members at Carroll University had the right to unionize. But on Friday, in a ruling that focused primarily on whether Carroll was entitled to be exempt from unionization because of its religious ties, the U.S. Court of Appeals for the District of Columbia Circuit quashing the union drive.

Carroll argued the NLRB erred in finding the university's professors were not barred by Yeshiva from organizing. But once the Appeals Court determined that Carroll was exempt as a religious institution, it declined to consider the Yeshiva issues. In the Carroll decision, the Appeals Court applied what it called a "bright line" test of whether the university is entitled to a religious exemption from collective bargaining. This three-pronged test is whether an institution describes itself as providing a religious education, is nonprofit, and is affiliated with a religious group. The court found that Carroll, as a Presbyterian liberal arts institution in Wisconsin, "easily" met that test.

The NLRB had applied a more stringent standard, which it said Carroll did not meet. In its analysis, the board noted that the Presbyterian Church has no administrative control over the college, nor do they own it; that the Presbyterian Church does not appoint trustees, the president or the faculty; that students are not required to have any religious beliefs or to attend church services; and that while students are required to take one religion course, the criteria for fulfilling that requirement are so broad that qualifying courses include "Literature in Black America" and "Playing Crazy: Cultural Constructions of Madness."

The distinction between these two tests of a college's religious nature matters to many institutions. While there are many colleges where the religious roots of an institution are so omnipresent that these institutions would pass the NLRB test, there are many others like Carroll that were founded by religious groups and still identify in some ways with the groups, but where church ties are much less visible. The Appeals Court said that the NLRB test was a dangerous one because it could involve federal officials investigating religious practices and philosophies in ways that Congress and the Constitution found antithetical to religious freedom.

The faculty union at Carroll was organized by the United Auto Workers, but the UAW declined to comment on the decision. Carroll issued a statement praising the decision and pledging to continue to work with professors. The university has consistently opposed the unionization effort.

Much of the legal discussion about Carroll's faculty has focused on the institution's religious status. But the case has also involved important skirmishing over the Yeshiva decision. (The NLRB has control only over unions at private institutions; state laws govern unionization at public institutions, which is why Yeshiva does not limit faculty unions at state institutions.)

Advocates for unionization have maintained for years that Yeshiva was incorrectly decided. But some have argued that, even if Yeshiva was correct, the degree of faculty autonomy and institutional control has so eroded at many institutions that there should be no presumption that private college faculties have managerial authority. The NLRB rulings on Carroll appeared consistent with that view; for example, a 2007 ruling rejected Carroll's claims that the faculty were managers. The board noted that, even in academic matters, the administration "exercises substantial independent control." The board added: "After discussing the faculty’s authority over hiring, tenure and promotion, budget matters, staffing levels, terms of employment, and structural changes, the acting regional director determined that the respondent’s faculty do not exercise managerial authority over non-academic matters. In this regard, he found it significant that the administration had recently changed the structure of the college from one to two schools despite faculty opposition, and had restructured the administration system without any input from the faculty."

Carroll objected to this analysis of whether its faculty members were managers. And it received backing in a brief filed in the case by the American Council on Education, the National Association of Independent Colleges and Universities and the Wisconsin Association of Independent Colleges and Universities. The brief argued that the NLRB was improperly applying the Yeshiva decision. The traditions of shared governance, the brief said, mean that the faculty role is not diminished just because decisions are also made by administrations and boards. Further, the brief argued that the most important faculty role involves academic matters, and that the NLRB placed too much emphasis on the faculty role in non-academic matters.

Union leaders who are focused on higher education said that the NLRB had correctly decided the case. Many are hopeful that with the appointees President Obama will place on the board and in federal courts, Yeshiva will be questioned increasingly in the years ahead.


March 19, 2009 in Federal – Judicial | Permalink | Comments (0) | TrackBack (0)

Large Firms Starting Trend of Offering Laid Off or Deferred Associates Stipends to Work in Public Interest

CNN reports that while the legal industry is taking an unprecedented beating from the sputtering economy, many megafirms across the country are viewing the slump as an ideal time to help out the cash-strapped public interest. Rather than just handing out severance packages with pink slips, some firms are giving laid off associates an option: work for a public interest group and the firm will pay a fraction of the associate's original law-firm salary for a year.

Once insulated, law firms are shedding young and mid-career associates at extraordinary rates. This is especially true at large corporate firms that overestimated their growth and extended too many offers to associates last fall. At least 2,149 attorneys have been laid off in 2009, bringing the total to 3,045 since January of last year, according to, an industry web site tracking the slump. Hundreds more associates set to start jobs this fall are bracing themselves for rescinded offers and deferred start dates. Some students are finding their summers wide open as some law firms have canceled internship programs.

The silver lining in this downturn is that it presents a “once-in-a-lifetime opportunity" to transform the legal profession according to Esther Lardent, President of the Pro Bono Institute in Washington D.C., who began discussions this month with at least 15 corporate firms nationwide about placing unemployed attorneys in public interest firms. The project will get under way in a few months.

Other firms have already encouraged attorneys to go into the public sector. Just last week, one of the largest firms in the country -- Morgan, Lewis & Bockius LLP, based in Philadelphia, Pennsylvania -- announced it will pay deferred associates graduating in 2009 a $5,000 monthly stipend for one year if they secure a job in the public interest field. Firms are also scrambling to find work for mid-level attorneys in the public sector. Simpson Thatcher & Bartlett LLP, a major New York-based law firm, recently introduced a yearlong public service fellowship program that will pay current attorneys $60,000 a year to work in areas such as social service, community development or academia.

Encouraging laid-off and deferred attorneys to go into public service is filling a desperate need at public interest firms which have long been under-funded and overwhelmed with cases. Tightened state budgets and a decline in donations have further stretched their resources, forcing them to make staff cuts at a time when demand for their services is greater than ever before.


March 19, 2009 in In the News | Permalink | Comments (0) | TrackBack (0)

ND Nonprofit Used Federal Disaster Planning Money for Unallowable Items

The Grand Forks Herald reports that nearly a quarter of the federal disaster planning money spent by the North Dakota nonprofit, the North Dakota EMS Association, was used for “unallowable or questionable” items, including alcohol, a state official said.  The North Dakota EMS association, which represents about 1,800 ambulance and emergency workers, also spent money it should not have on lobbying, cell phones, meals, and some salaries and bonuses, an internal association audit and other records obtained by The Associated Press show.

Tim Wiedrich, chief of the North Dakota Health Department’s emergency preparedness and response section, said Wednesday that the “unallowable or questionable” items made up nearly $200,000 of the roughly $810,000 the Bismarck-based group received between 2004 and last year to help produce a plan to fight bioterrorism and other mass disasters.  

Mark Weber, the association’s president, said the group will repay the money, but he defended its motives.  “I think we felt we spent money for the right reasons and that we were spending that money appropriately,” Weber said. “We have nothing to hide. Every dime we spent was to promote EMS.”  But, Weber admitted that some grant money was used for dinner and drinks.  How the group will pay the money back is unclear.  It receives less than $200,000 annually from its other funding sources, including membership, testing, and conferences.   The grant allowed for the bulk of the executive director’s salary to be paid from the federal funds, but Wiedrich said documentation is lacking to support the salary charged to the grant. Records show $217,192 from the grant was given to the group’s executive director, which included salary, health insurance, and a bonus. Wiedrich said an investigation is ongoing, and the grant has expired.  Billings of about $38,500 from the group have been denied, and state officials are working with the federal agency and the EMS Association to figure out exactly how much will have to be repaid, he said.

Bismarck police have asked to review the case, Wiedrich said. He did not know if criminal charges would be filed. Richard Riha, the Burleigh County state’s attorney, said police are still investigating.


March 19, 2009 in In the News | Permalink | Comments (0) | TrackBack (0)

IRS Commissioner Indicates Private Foundation Excise Taxes Under Consideration for Nonprofit Boards That Approved Madoff Investments

Last December, we opined that boards of private foundations should probably be getting advice regarding the private foundation excise taxes in the wake of the Bernie Madoff ponzi scheme rip-off. We noted the "dirty little secret" amongst private foundation boards -- that for the most part private foundation boards don't know the meaning of due diligence.  Two days ago, Douglas Schulman, Commissioner of Internal Revenue, told the Senate Finance Committee that the Service is looking into the applicability of at least one of those excise taxes.  Commissioner Schulman's prepared statement before the hearing is available here.  During the question and answer session, though, according to the Chronicle of Philanthropy, Commissioner Schulman opined on  the applicability of IRC 4944:

The Internal Revenue Service has not decided if it will take steps to tax board members of private foundations who placed all or some of their organizations’ assets with Bernard L. Madoff, the investor who ran a $65-billion pyramid scheme, according to Douglas Shulman, the Commissioner of Internal Revenue.  “But I will tell you it is a tool that is available to us that we certainly will consider,” Mr. Shulman today told a Senate Finance Committee hearing looking into the Madoff scandal.

Another witness, William Josephson, former head of the New York State Charities Bureau, told the finance committee that Congress needs to pass tough new laws regarding the fiduciary duties not only of private foundation boards but public charities as well.  His very comprehensive and useful written statement regarding nonprofits and the Madoff fiasco is available here.  In the meantime, here is what Mr. Josephson had to say about the standards for imposing the tax on jeopardizing investments and enforcing fiduciary duties of board members:

A few more words need to be said about jeopardy investments.  First, no one knows what Code section 4944 truly means, and the all-too succinct regulations thereunder, which have not been revised since they were promulgated in 1972, are not helpful. Second, contrary to the Panel’s analysis infra, and despite vast public education efforts, apparently the prudent investor state laws rules are ineffective to insure diversification, due diligence and reduction of risk by charities. How could charities have made such material Madoff investments, up to 100 percent of their portfolios in some cases, over long periods of time, without doing any meaningful oversight? Third, from my own experience the state laws are too difficult to enforce. Calculation of investment losses for state law damages purposes is not simple nor easy, even if one could prove, by a preponderance of the evidence, imprudence. Such proof is particularly difficult because of state law business judgment rules and other defenses based on the state law exculpating provisions of the Uniform Management of Institutional Funds Act, now, alas, to be further extended by the misleadingly named Uniform Prudent Management of Institutional Funds Act (emphasis added).  The excise tax percentages in section 4944, recently doubled at this Committee’s initiative by the Pension Protection Act of 2006, are objective and have teeth. But like the Code section 4958 maximum discussed above, the maximum foundation manager limitations of $10,000 and $20,000, in light of the Madoff scandal, now seem far, far too low. If the substantive standard of section 4944 were rewritten, as it should be, to provide a comprehensive prudent investor standard for all exempt organizations, and liability were extended to all disqualified persons, not just to the charity’s managers, future Madoffs scandals should be deterred.

I disagree that "no one knows what Code section 4944 truly means;" it may be hard to articulate in the overly specific terms that lawyers too often desire (as a substitute for careful analysis and intellectual moxy in my opinion), but we know bad management when we see it.  IRC 4944 simply means "don't make investments with publicly subsidized money without doing basic homework, period."  You can lose money all you want if at least you can say you checked out the investment first. Simple!  It is the job of lawyers and judges to determine meaning from generally expressed standards, such as are obviously contained in IRC 4944.  We should not always call for the Service to do our jobs by writing regulations  that answer every conceivable question.  So here, I think, is another call for more verbiage either in the code and regs, to which practitioners will then complain that there is too much detail and complexity in the code.  Mr. Josephson complains, for example, that the 4944 regs are too succinct but in the same breath complains that state laws (presumably expressed in greater detail) are too difficult to enforce.  IRC 4944, in my opinion articulates a useful standard and  it is up to the judiciary, at the behest of the Service and tax professionals hired to figure things out, to provide precedential, case by case guidance that will eventually obviate the need for so much verbiage in the regulations.  This is a pet peeve of mine, that the judiciary has abdicated its role to fill in the blanks in tax statutes and regulations that are standard based, thus leading to the enactment of a whole bunch of detailed rules that, ironically, facilitate the very evil we try to avoid.


March 19, 2009 | Permalink | Comments (1) | TrackBack (0)

Point - Counterpoint: Is Angel Food Ministries CEO Pay Excessive?

The Atlanta Journal Constitution published an instructive point-counterpoint op-ed piece yesterday regarding whether the CEO pay at Angel Food Ministries is excessive.  The counter-point is actually argued by the CEO whose pay is under scrutiny.  It seems an effective argument but I wonder whether the CEO would have been better served had his lawyer made the arguments (he or she no doubt must have reviewed it before allowing publication).  Readers may recall that we have recently posted on the troubles at Angel Food Ministries.    The counter-point raises the question whether "success" in the charitable sector ought to justify salary increases and bonuses the way such rewards are doled out in the for profit world.  Here is a snippett from the point-counterpoint:


Angel Food Ministries is an example. It joins the ever-growing list of nonprofits that feel their mission gives them reason not to subscribe to generally acceptable charitable guidelines. Their mission is not unique, but their practices are. Fat salaries, loans approved but not by an independent board and conflicts of interest — all fail to pass the trust test the public is demanding of charities.

AFM may be fulfilling its mission by delivering food, but it is not delivering on credibility. In 2006, a $2.5 million salary in executive and family compensation does not sit well with supporters, even if the agency is helping the needy. Put in perspective, the median CEO salary at the nation’s largest nonprofit organizations in 2008 was $326,500, according to The Chronicle of Philanthropy. Many of these executives lead organizations with assets many times that of Angel Food Ministries, with some as high as $4 billion. Federal tax laws prohibit heads of tax-exempt nonprofit organizations from earning “unreasonable compensation.”

A submission to the IRS indicates about $1 million in additional loans to the same ministry family members. Although not illegal, unless prohibited by state law, it is imprudent unless it furthers the mission of the agency. The IRS frequently has expressed concerns about insiders determining their own compensation and loans without approval by a governing body that has no vested interest. The ministry board did not seemingly function like a proper board by providing checks and balances and protections against abuse of power. Studies are showing that the public is getting fed up with philanthropic misdeeds. Some have revealed that as low as 14 percent of those surveyed believe that the charitable sector spends its money wisely. Headlines are screaming of billions of donor dollars stolen or wasted and thousands of agencies not fulfilling their charitable mandate. One would think that would instill a practice of transparency and accountability. It hasn’t.


Nonprofit organizations battling hunger are among the worst hit. Food pantries are drying, donations are dropping and the food conglomerates have figured out that they can sell their overstock and soon-to-expire goods to developing countries for cents on the dollar rather than give it away to the needy.

One alternative lies in the ability to reinvent the way nonprofits generate capital to serve those in need. In the case of Angel Food Ministries, that ability was born in 1994; and at $140 million in revenue last year, serving over six million boxes, it continues to feed hundreds of thousands without the need for cash or food donations. It is a simple plan and simple in operation, yet complex to establish. It has a volunteer base of nearly 45,000, which it treats as valuable donated capital, and 100 percent of that donation is used toward program services. Few organizations can claim that.

At the helm of this ministry is a fairly compensated CEO. My idea to help people grew with 17-hour workdays over 15 years, five of which were wholly unpaid. An independent compensation study in April 2008 determined that my salary and compensation “falls within a reasonable range of competitive practices for like positions among like organizations providing like services and is therefore reasonable.”

Angel Food buys fresh, quality foods at discounted prices through volume purchasing and upfront payments. Then, through its volunteers who come together twice a month in over 5,000 communities or host sites across 39 states, it distributes food boxes to thankful families, and even sends cash donations to the tune of $5.2 million last year and over $19 million since inception back into each and every local community via these host sites. The axiom that guides it is, “A Food Ministry with a Servant’s Heart,” for it feeds a family of four for $30 a week while building communities and families of people. It is a “hand up, not a hand out,” and it leaves what emergency food is still out there for those who truly need it.

The CEO is essentially arguing that the more people his organization helps, the more justifiable his increasing salary becomes.  See Treas. Reg. 53.4958-4(b)(1)(ii) ("The value of services is the amount that would be paid for like services by like enterprises (whether taxable or tax exempt) under like circumstances.") I think there is regulatory support for that position but I wonder whether the implicit adoption of for-profit competitive standards is appropriate as a policy matter in the exempt world.


March 19, 2009 in In the News | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 18, 2009

India: Network of Activists and Orgs Aim to End Election of Criminal Politicians by Publicly Exposing their Crimes and Misdeeds

The Global Post reports that a network of activists and organizations known as the "National Election Watch" in India have dedicated themselves to making sure criminals do not end up in charge of the government.  India's middle class — which is still too small to be a decisive voice at the polls — is famous for political apathy.  Campaigns do not come down to issues, but instead often rely on mobilizing party workers to pass out free booze to voters in the slums. In some states, criminal gangs intimidate poor farmers into voting for their leader, while in others party cadres allegedly harass and threaten non-sympathizers, sometimes confiscating their voter registration cards. Money and muscle have become so important that every major party relies on candidates charged in criminal cases to deliver the vote. Nearly a quarter of the legislators in India's recently dissolved parliament had criminal cases pending against them — and not just for white-collar crimes, but also murder and other violent offenses. 

However, educated Indians are beginning to strike back. It started in 1999 when Trilochan Sastry, then a professor at the Indian Institute of Management in Ahmedabad, approached some of his colleagues with an idea for a guerrilla hit on the nation's unresponsive political parties.  Sastry suggested filing a lawsuit demanding that candidates divulge their financial assets and criminal records when the parties file their nominations.  In 1999, Sastry and colleagues, now calling themselves the Association for Democratic Reforms (ADR), filed this suit in the Delhi High Court.  In 2000 the court ruled in favor of the ADR and mandated the Election Commission gather information on candidates’ criminal backgrounds, assets, and liabilities, assess their suitability for holding public office, and widely publicize the findings.  In 2001 the Indian Government appealed against the judgment in the Supreme Court and several political parties intervened in the case.  In 2002 the Supreme Court affirmed and the Election Commission asked the Government to amend the Conduct of Election Rules to implement the judgment.  But the Government refused and instead introduced a new bill to overturn the judgment, which the President signed.  In 2003 the Supreme Court declared the amended act to be illegal, null, and void, and restored its earlier judgment.  The rules came into effect in 2003 and even after they were required to disclose their criminal records, all the major parties fielded a host of candidates with pending criminal cases in 2004, with the result that 128 out of 543 members of the last legislature faced ongoing criminal cases while they were in office.  At least two were serving life sentences for murder.

Because requiring politicians to divulge the most dubious facts about themselves didn't stop them from running for office — or winning — ADR set up the National Election Watch to make sure that the press and the voters know exactly how many robberies, kidnappings, and murders their honorable member of parliament is alleged to have committed.  The group has mobilized 1,200 organizations and thousands of volunteers to track the activities of dozens of political parties in the run-up to elections. Researchers comb through past affidavits to see whether the candidate has declared criminal cases in the past, and whether there has been any major change in his or her financial assets.  They lobby the press, hold public rallies, and plan to send weekly text messages with details of politicians' criminal records to voters.  So far, results have been mixed.

In the last state election that ADR tracked, the number of candidates with alleged criminal pasts dropped to about 12% from 25 %, but the number of alleged criminals who actually won seats remained flat.  The Congress Party-led United Progressive Alliance government named Shibu Soren coal minister, even though he was on trial for multiple murders (he was later convicted, then acquitted on appeal). And neither of the two party heavyweights has managed to purge alleged (or even convicted) criminals from their ranks. But the man who started it all remains optimistic: “The parties have publicly announced that they're not going to put up candidates with criminal records,” Sastry says. “They have not kept that promise, no doubt. But at least they have started reacting.” 


March 18, 2009 in International | Permalink | Comments (0) | TrackBack (0)

Nonprofit Created to Raise Funds for O.J. Simpson's Appeal

The Associated Press reports that Barrett Prody, the brother of O.J. Simpson's former girlfriend Christine Prody, has created a nonprofit corporation and an Internet Web site, the Society Against Legal Injustice Inc., to raise money for Simpson's appeal of his Nevada conviction and prison sentence on kidnapping and armed robbery charges.

Simpson lawyers Yale Galanter in Miami and Gabriel Grasso in Las Vegas said they are not connected to Prody's effort and do not think the fund is needed. "It seems that Barrett has the best of intentions," Galanter said. "But whatever he's doing is on a separate track with what we're doing." The lawyers said they expected to file an appeal in the next six weeks with the Nevada Supreme Court of Simpson's Oct. 3 conviction for the armed robbery and kidnapping of two sports memorabilia dealers in a Las Vegas casino hotel room. Galanter, who said he never met or spoke with Prody, said Simpson's trial fees and costs were fully paid and his appellate fees and costs were "basically paid." He declined to provide dollar amounts, citing attorney-client confidentiality.

Prody's Web site blames the hotel room confrontation on Thomas Riccio, the memorabilia dealer who arranged the meeting, and criticizes prosecutors and Judge Jackie Glass for their handling of the case. Prody estimates he spent about $6,000 filing incorporation papers in North Dakota and applying to the Internal Revenue Service for tax-exempt status as a 501(c)(3) nonprofit. He said he did not intend to take a salary from donations, at least at the start, and intended to use any money not needed for Simpson's case to fund other causes he deemed unjust.


March 18, 2009 in In the News | Permalink | Comments (1) | TrackBack (0)

In India, Child Hunger Persists While Economic Growth Soars

The New York Times reports that even after a decade of galloping economic growth, child malnutrition rates are worse in India than in many sub-Saharan African countries. Despite robust growth and good government intentions, 42.5% of India's children are underweight. In contrast, China sharply reduced child malnutrition and now just 7% of its children under 5 are underweight, a critical gauge of malnutrition. Malnutrition makes children more prone to illness, and stunts physical and intellectual growth for a lifetime.

Economists and public health experts say stubborn malnutrition rates point to a central failing in India's democracy of the poor. Amartya Sen, the Nobel prize-winning economist, lamented that hunger was not enough of a political priority here. India’s public expenditure on health remains low, and in some places, financing for child nutrition programs remains unspent.

Yet several democracies have all but eradicated hunger. And ignoring the needs of the poor altogether does spell political peril in India, helping to topple parties in the last elections. Others point to the efficiency of an authoritarian state like China. India’s sluggish and sometimes corrupt bureaucracy has only haltingly put in place relatively simple solutions — iodizing salt, for instance, or making sure all children are immunized against preventable diseases — to say nothing of its progress on the harder tasks, like changing what and how parents feed their children.

While India runs the largest child feeding program in the world, experts agree it is inadequately designed, and has made barely a dent in the ranks of sick children in the past 10 years. The $1.3 billion Integrated Child Development Services program, India’s primary effort to combat malnutrition, finances a network of soup kitchens in urban slums and villages. But most experts agree that providing adequate nutrition to pregnant women and children under 2 years old is crucial — and the Indian program has not honed in on them adequately. Nor has it succeeded in sufficiently changing child feeding and hygiene practices. Many women here remain in ill health and are ill fed; they are prone to giving birth to low-weight babies and tend not to be aware of how best to feed them.

In a memorandum prepared in February, the Ministry of Women and Child Development acknowledged that while the program had yielded some gains in the past 30 years, “its impact on physical growth and development has been rather slow.” The report recommended fortifying food with micronutrients and educating parents on how to better feed their babies.

A World Food Program report last month noted that India remains home to more than a fourth of the world’s hungry, 230 million people in all. The International Food Policy Research Institute, based in Washington,D.C. recently ranked India below two dozen sub-Saharan countries on its Global Hunger Index. Childhood anemia, a barometer of poor nutrition in a lactating mother’s breast milk, is three times higher in India than in China, according to a 2007 research paper from the institute.

The latest Global Hunger Index described hunger in Madhya Pradesh, a destitute state in central India, as “extremely alarming,” ranking the state somewhere between Chad and Ethiopia. It also found that “serious” rates of hunger persisted across Indian states that had posted enviable rates of economic growth in recent years, including Maharashtra and Gujarat. In the capital, New Delhi, which has the highest per-capita income in the country, 42.2% of children under 5 are stunted, or too short for their age, and 26% are underweight. A few blocks from the Indian Parliament, tiny, ill-fed children turn somersaults for spare change at traffic signals.


March 18, 2009 in International | Permalink | Comments (0) | TrackBack (0)

New IRS Rules for Investors Defrauded by Madoff are of Little Comfort to Non-Profits

The Boston Globe reports on new IRS rules issued yesterday that aim to ease the pain for some victims of Bernard Madoff's swindle and other Ponzi schemes.  The rules allow victims to claim refunds on federal income taxes they paid on what turned out to be phantom investment gains.  Madoff has pleaded guilty to operating the largest Ponzi scheme in history, with a value estimated by prosecutors of up to $65 billion.  

The IRS rules do not promise full recovery of money lost to Madoff, but they should provide significant tax relief by allowing victims to treat much of the money they lost as "theft losses," rather than ordinary investment losses, for which deductions are capped at $3,000 per year.  The rules only apply to cases where specific frauds are alleged by authorities. According to the IRS, for the year in which a fraud is discovered, taxpayers can deduct 95% of their net investment minus any funds they recovered either from the perpetrator or insurance organizations such as the Securities Investor Protection Corp. Investors who put money into a fraud through a third party can deduct 75% of their net investment.  Importantly, the rules also allow investors to "carry back" the deductions on returns up to five years in the past, or to carry them forward 20 years, which should provide additional tax savings even for investors who parked money with Madoff for a decade or longer.

Doug Shulman, commissioner of the IRS, said in Senate testimony yesterday the new rules follow reports that thousands of investors were duped in dozens of fraudulent schemes. The Madoff case in particular "raises numerous tax and pension implications for the victims," he said.  However, not all victims will be helped by the changes, including nonprofit charities that are not subject to income taxes and do not benefit from tax breaks.  That includes some of Madoff's best-known Massachusetts investors, including the Robert I. Lappin Charitable Foundation in Salem, which has shut down and reorganized after sharp losses, and the Carl and Ruth Shapiro Family Foundation in Boston, which lost almost half its assets, or about $145 million.


March 18, 2009 in In the News | Permalink | Comments (0) | TrackBack (0)

Tuesday, March 17, 2009

Ripped Off Michigan Nonprofits Unlikely to Get Full Restitution and Embezzlers Rarely go to Jail

MLive reports over the past few years, people entrusted to guard the finances at several Ann Arbor area nonprofits have instead siphoned off the funds for themselves, often splurging on extravagant trips, jewelry or gambling the funds away. It's happened everywhere from hockey associations to fraternal lodges to community centers and cemetery associations. Adding to the sting, law enforcement officials concede that embezzlers who get caught rarely go to jail - and sometimes aren't even forced to pay back as much as they stole.

Just how often charities and businesses are ripped off is nearly impossible to calculate. The ones who get caught, authorities say, are usually those who get so bold they take most or all of a group's money. On the outside, the embezzlers appeared to be trustworthy, police and organization officials say.

In his 29 years at the prosecutor's office, Washtenaw County Prosecutor Brian Mackie said he's seen only two cases where an embezzler was incarcerated at sentencing - and both of those people had prior felony records. Defense attorneys and judges point to sentencing guidelines that give more weight to violent crimes under a point system that determines who goes to prison. Circuit Court Judge Donald Shelton said sentencing guidelines are set by the state Legislature and include such factors as the defendant's prior record and the nature of the offense. In most cases, officials say, an embezzler is convicted of a felony and ordered to serve probation while paying restitution. And even if they violate their probation, embezzlers are usually given several chances to meet conditions before they end up behind bars, records show.

In 2000, former Ann Arbor District Library finance director Donald G. Dely was ordered to pay $119,387 in restitution. Court records show he repeatedly failed to repay the money, and was given several chances. He still owes $57,527, but Dely is now in prison after violating probation in 2006 for possession/sale of counterfeit insurance certificates and failure to pay restitution, state records show.

Mackie said he'd like to see some embezzlers sentenced to prison in cases where the amount stolen is significant. He said his office rarely strikes sentencing agreements with defendants, but the majority agree to plead guilty because their attorneys know the chances of being incarcerated are slim. Officials say getting the stolen money repaid is often a burdensome, lengthy process. And restitution doesn't even begin to cover all the damages from the theft, which can include such things as unpaid bills and legal obligations that went ignored, officials said. Investigators can seldom prove exactly how much was stolen, Mackie said. Although embezzlers can be fined on top of restitution, court officials say it rarely happens.


March 17, 2009 in In the News | Permalink | Comments (0) | TrackBack (0)

UNESCO Calls For Better Management to Prevent Worldwide Water Shortage

USA Today reports the United Nations called for better management to alleviate water shortages as the worldwide demand for water is rising and access to safe drinking water and sanitation remains inadequate in much of the developing world.

Population growth and mobility, as well as increased energy production, especially of biofuels such as ethanol, are contributing to the high demand for water, UNESCO said on the first day of a global water forum in Istanbul, Turkey. "With increasing shortages, good governance is more than ever essential for water management. Combating poverty also depends on our ability to invest in this resource," said Koichiro Matsuura, director-general of the U.N. agency.

Thousands of activists, entrepreneurs, mayors, parliamentarians, and business executives have gathered for the weeklong World Water Forum, which is held every three years to promote ideas about conserving, managing, and supplying water. Climate change and the impact of the global economic meltdown are key issues on the agenda this year.

Earlier Monday, police used truncheons and tear gas to disperse a small group of Turkish demonstrators who rallied outside the conference center to protest what they said was the forum's promotion of water as a commodity. The protesters said big water companies benefit from privatization, and that the poor are entitled to clean water as a "human right." About 20 protesters who tried to enter the complex in Istanbul were detained, according to an Associated Press photographer at the scene.

The forum, whose members include the World Bank and the International Committee of the Red Cross, deny they represent special interests.

UNESCO said half a billion people in Africa lack access to adequate sanitation, and that 5,000 children die daily from diarrhea, a disease that can be prevented with clean water. The agency said the number of people living on less than $1.25 a day is roughly the same as the number without access to safe drinking water. Water demand is increasing partly because of the rising production of ethanol and other biofuels in countries such as Brazil and the United States. Large amounts of water and fertilizers are needed to grow the crops needed to make biofuels, placing additional stress on the environment, according to UNESCO. Further, although many countries have legislation that protects and manages water resources, such legislation has"yet to have any noticeable effect" because water policy needs to include decision-makers in other fields such as agriculture, energy, trade and finance.


March 17, 2009 in International | Permalink | Comments (0) | TrackBack (0)

Texas Representative Proposes Law to Exempt Private, Nonprofits from Coordinating Texas Education Board Rules

In response to the Texas Higher Education Coordinating Board denying the Institute for Creation Research's proposal to offer an online master's degree in science education, Rep. Leo Berman, R-Tyler, has proposed legislation to exempt private, nonprofit educational institutions that do not accept state funding and state-administered federal funding from the board rules.

Members of the coordinating board, who are gubernatorial appointees, voted 8-0 in April to reject the proposal by the Dallas-based institute. Higher Education Commissioner Raymund Paredes said at the time that the institute's program, based on a literal interpretation of biblical creation, falls outside the realm of science and therefore could not be designated "science" or "science education." De Juana Lozada, a spokeswoman for the coordinating board, said Friday that the agency could not comment because the Institute for Creation Research has appealed the board's decision and the proposed legislation could have ramifications for the case.

Lawrence Ford, a spokesman for the institute, said in an e-mail that Berman's measure "is not limited to a particular viewpoint, either creationist or evolutionist, theist or atheist, Jewish or Muslim or Christian or Buddhist or Hindu, rich or poor, or any other viewpoint."

Steven Schafersman, president of Texas Citizens for Science, said the measure promotes a right-wing religious agenda. "It would make Texas a magnet for unscrupulous private 'educational' companies that will want to offer students the opportunity to pay for bogus advanced degrees," Schafersman wrote on his group's Web site. "If H.B. 2800 became law, it would be a gold mine to every fly-by-night, degree-granting outfit in the country."


March 17, 2009 in State – Legislative | Permalink | Comments (0) | TrackBack (0)

Nonprofits Give to NY State Campaigns, Despite Law

The New York Times reports that a review of campaign-finance and federal tax records shows that at least 81 New York tax-exempt charities have given contributions to legislative candidates since 2005, with some organizations giving more than once to multiple candidates. While the amounts were not eye-popping, the contributions often flowed to lawmakers who helped the charities secure state money.

The State Board of Elections said it did not have the jurisdiction to screen contributions by nonprofit groups, calling it a matter for the IRS. The IRS would not comment on the activities of specific charities. Attorney General Andrew M. Cuomo’s office oversees charities on the state level, and a spokesman said the office can take action when there is evidence of systemic abuse of charitable money. Federal law prohibits nonprofits classified as 501 (c) 3 organizations from making political donations or participating in campaigns. Those that do risk losing their tax-exempt status.

Asked about the contributions last week, legislators and charity officials offered several responses, including apologies, suggestions of clerical errors, and defiance. Some of the contributions were given as the cost of admission to political fund-raisers, which some donors said they did not realize counted as campaign contributions. Some politicians insisted it was legal to accept the money even if the charities were barred from giving it. Since 2005, 55 legislative candidates — a vast majority of them incumbents — received at least one contribution from charities. Legislators insist there is no connection between their acceptance of these donations and any actions they might take to support the charities’ interests. The charities say they are supporting legislators who do good work, without regard to any assistance they may have provided.

Blair Horner, legislative director for New York Public Interest Research Group, said the Board of Elections should be required to monitor such contributions and that state law should be changed to make it explicitly illegal for politicians to accept them. Currently, the responsibility of avoiding such donations appears to fall solely on the nonprofit organizations.

“All I can say is, ‘Mea culpa, mea culpa, mea culpa,’ “ said Fred W. McPhilliamy, president of Helen Keller Services for the Blind, which donated $2,000 in February 2008 to State Senator Carl L. Marcellino, a Long Island Republican who helped win $55,000 in state aid for the group last year. “We goofed.” He said that representatives of his group bought tickets to a campaign fund-raiser for Senator Marcellino in Albany at the urging of a lobbyist but “never thought of it as a political contribution.” Senator Marcellino, who the records showed also accepted money from other nonprofit groups, said, “It was a dumb mistake on our part, and they shouldn’t have done it either.”

There have been periodic efforts to overhaul Albany’s campaign finance system, which is considered among the nation’s weakest, including a push by Gov. Eliot Spitzer in 2007. But little momentum has been generated, despite the pleas of government watchdog groups, and the issue of charities giving to lawmakers’ campaign accounts has not received broad attention. At least one national campaign finance watchdog said the situation in New York appeared unique. “I’m not aware of any situation where 501 (c) 3 groups have made contributions because it so obviously does not comply with campaign finance laws,” said Fred Wertheimer, founder of Democracy 21, a government watchdog group.


March 17, 2009 in State – Legislative | Permalink | Comments (0) | TrackBack (0)

Monday, March 16, 2009

Swiss Pediatrician's Foundation Helps Cambodia's Chikdren While Alienating International Public Health Experts

The Financial Times recently profiled Swiss pediatrician, Beat Richner, who has built five hospitals through his Kantha Bopha Foundation to provide free care to 85% of Cambodia's children.  Richner plays two cello concerts a week to help raise the $25 million needed to run the foundation that supports the hospitals.  Richner operates under a donor-reliant model, which aims for excellence over affordability, and his stance on Cambodia’s medical priorities have put him on a collision course with WHO and the NGO community.  One development consultant who works for the WHO in Cambodia explains: “My main concern is the sustainability of his operation. Richner is nothing if not an excellent fundraiser – he’s got a lot of charisma – but what happens when he dies? Who will raise the money then?”

Richner’s critics accuse him of failing to provide value for money by not making enough use of cheaper, generic drugs and by relying on the most expensive medical supplies.  Some NGOs also worrry that his focus on child medicine could divert resources and attention from other severe health challenges, such as the high rate of maternal mortality and HIV AIDs.  People within Cambodia’s NGO community are reluctant to speak publicly against Richner, for fear of escalating the clash. They also want to avoid generating adverse publicity at a time when Cambodia’s Prime Minister, Hun Sen, is pushing ahead with a new NGO law that some feel is designed to restrict their ability to operate in the country. 

According to the article, the received wisdom among international public health experts is that development aid is best spent on education and the provision of basic rural clinics. But Richner argues that all people have the same fundamental right to good healthcare. He characterizes the other approach as “poor medicine for poor people.” “When I got my first CT machine in Cambodia 10 years ago, there was an outcry from the WHO and UNICEF  They said it was stupid to spend so much money on this machine. But you need a CT scan to diagnose and treat TB.”

Richner's open antagonism to the mainstream NGO community is unhelpful, his critics argue. “He’s merely building up a host of enemies so the fact that no one wants to work with him becomes a self-fulfilling prophecy,” says the WHO consultant. “But there’s always a tension between innovators doing good things on a small scale and the more sluggish public health systems.”  Richner’s insistence that the Kantha Bopha Foundation remain independent of the public health system and his refusal to bow to the prevailing corruption in Cambodia has even led to his receiving death threats.  In 1995, the Health Ministry tried to close the first Kantha Bopha hospital because health officials and their international advisers believed it was undermining attempts to build a national health system. Only the personal intervention of the king saved it. In 2002, Richner threatened to close the foundation himself unless the health minister stopped criticizing his work.  The king eventually brought about another truce.  Relations with the Health Ministry have improved since then but the small amount of funding Richner receives from the Cambodian government is still paid directly to his foundation, bypassing the ministry.

Notably, no one disagrees that many of the children in intensive care at Richner’s hospitals would die without the treatment they receive there.  One in three Cambodians lives on less than $1 a day and medical expenses remain one of the biggest causes of poverty.

Since 1991, the Kantha Bopha foundation has raised and spent more than $370 million, with the vast majority of its funding coming from private donors, many of whom live in Switzerland. All five of Richner's hospitals constantly operate at capacity, with around 300 admissions of seriously ill children every day.  Meanwhile, Richner’s drive to cut the rate of transmission between HIV-infected mothers and their newborn children has met with huge success: the normal mother-to-child HIV transmission rate in Cambodia is 40%, but at Jayavarman VII Hospital they have reduced it to less than 5% by performing caesarean sections, treating the mother and child with anti-retroviral drugs and insisting that they stop breast-feeding.

Richner employs 2,100 people but spends just 5% of his annual budget on administration (his 180 doctors take a central role in running the hospitals; they earn about $1,000 a month compared with the $40 they would get from a state hospital). Richner imports all his drugs and medical supplies directly from Thailand to avoid the counterfeit pharmaceutical products flooding Cambodia. The head nurses personally distribute the medicines every day to ensure no thefts.

However, Richner only has five months’ funding left in the kitty and, unlike many charitable foundations, he has no endowments other than a commitment from the Swiss and Cambodian governments to each cover 8% of his annual budget. He spends everything he gets on new buildings, machinery, and drugs, as well as day-to-day expenses. In the past three years he has spent $34 million on new construction projects.  “The hospitals are working well and everything can continue without me, but the ongoing nightmare is the money," says Richner "I can only start to think of my [succession] plan when I get the money – this $200 million I need to save Kantha Bopha for 20 years. Then I will be a free man.”

It is this attitude that disturbs Richner’s critics at the WHO and other international health organizations in Cambodia. They have seen countless maverick humanitarians fall by the wayside when the funding for their donor-heavy projects ran out.

While the future of Kantha Bopha Foundation in Cambodia is far from secure, Richner still hopes to take his model to other damaged nations, such as the Democratic Republic of Congo and Burma. He is launching a new academy to train young pediatricians from Asia and Africa in his methods, so they can recreate what he has achieved in their own countries.


March 16, 2009 | Permalink | Comments (0) | TrackBack (0)

Sunday, March 15, 2009

New Colorado Law Allows Nonprofits to Save as Much as 40% When Buying Supplies

The Denver Business Journal reports that Colorado Governor Bill Ritter signed a bill into law on Friday afternoon allowing nonprofits to save as much as 40% on their supplies — enough to possibly keep some afloat that otherwise might drown.  House Bill 1088 will allow nonprofits that receive federal, state or local government funding to buy goods at the same price negotiated by the State Purchasing Office. Because the state buys so many supplies, it receives bulk-purchasing prices that small businesses are not likely to get.

The measure sponsored by Rep. David Balmer, R-Centennial, came through the Joint Select Committee on Job Creation and Economic Growth, where backers contended that lowering the cost of goods will allow non-profits to keep or add workers.  Though some Republicans contended that the measure will hurt for-profit suppliers that also are trying to keep their heads above water during this recession, HB 1088 received heavy bipartisan support in the General Assembly.

“The nonprofits in this state have operated across so many different sectors and are so important and so vital to Colorado,” Governor Ritter said. “You’re making personal sacrifices for something you believe in, and again I say to you: ‘Thank you.’”  Ritter, who formerly served on several non-profit boards, noted too that the boost for the groups should help especially at a time when they are bringing in less money but are finding their services more in need.

More than 19,000 nonprofits operate in Colorado;  many of them receive some sort of government money.


March 15, 2009 in State – Legislative | Permalink | Comments (0) | TrackBack (0)