February 21, 2009
Charity Governance Fight Brewing in Oklahoma
This story in the Oklahoman details a fight brewing over the governance of Feed the Children, an Oklahoma City-based charity known for the emotional fundraising appeals of its founder, Larry Jones. According to the story, in December the charity replaced five long-time board members, who have now filed a lawsuit asking for a ruling that their dismissal violated the charity's bylaws.
Maybe they shouldn't be so upset: the story also reports that the American Institute of Philanthropy, a nonprofit watchdog group, has routinely given the charity an "F" grade, in part because Feed the Children spends only 18% of its cash budget on program services, as opposed to 60% on fundraising appeals and has repeatedly refused to disclose more detail on its activities.
AHA Defends Nonprofit Hospitals from IRS Report
For example, 80 percent of the hospitals surveyed did not report Medicaid underpayments. And, hospitals weren't even asked for the amount they spend to keep costly and critical community services, such as trauma, long-term and neonatal care available to their communities.
Yeah, right. Of course the AHA did not highlight the ridiculous practice of hospitals reporting the amount of uncompensated care and other community benefits by the difference between standard charges and costs (a practice I complained about a few days ago); nor did they mention that some hospitals not only reported Medicaid shortfalls but also Medicare shortfalls (the latter is not counted as community benefit in the new IRS Schedule H to Form 990, nor is it counted by the Catholic Health Association's community benefit guidelines); nor did they notice that the vast majority of community benefit (about 78%) was produced by one-fifth of the surveyed hospitals (see this blog post at the Wall Street Journal for more). What the AHA needs to do is get their collective heads out of the dark, constricted passage they are in and face the facts: some nonprofit hospitals deserve tax exemption (and by the way, those are not necessarily the ones reporting the most community benefit); others operate no differently from any for-profit business and ought to be paying taxes just like everyone else.
I'll have more thoughts on the IRS Hospital Report later this weekend, so stay tuned.
February 20, 2009
Join the AALS Nonprofit and Philanthropy Law Section
For those of you who are full-time law professors at AALS member or fee-paid law schools, you should have received an email this week asking you to update your information for the next edition of the AALS Directory of Law Teachers. Near the end of your registration process, you will be asked to select the sections that you would like to join. If you visit this list, I urge you to join the newly established AALS Section on Nonprofit and Philanthropy Law. This is very important because a larger section means more support for this subject area as a discrete discipline in law. To update your AALS Directory of Law Teachers information and register for the Nonprofit and Philanthropy Law Section, go to http://www.aals.org/dlt/. If you need your username and password for the registration process, contact the AALS at 202-296-8851. For information on the new AALS Nonprofit and Philanthropy Law website, go here.
The February 20, 2009, issue of the New York Times has a interesting article about charities filing for bankruptcy. The article highlights specific charities as anecdotal evidence of increases in charity bankruptcy filings, but offers no statistical evidence of an increase. Here is an excerpt from the article:
Charities rarely go bankrupt, although there have been scattered examples involving nonprofit hospitals and Catholic dioceses facing lawsuits stemming from the priest sexual abuse scandals. Traditionally, insolvent organizations have simply closed their doors and filed a plan of dissolution with the charity regulator in their state.
But in the last six months, nonprofit groups that include cultural institutions and social service agencies have filed to reorganize or liquidate themselves under the bankruptcy code.
While no one has compiled data on how many charities have turned to the courts for protection, experts in the field say it has become more common as nonprofits have been pressured by donors to operate more like businesses.
For the entire story, see "Charities Now Seek Bankruptcy Protection" in the February 20, 2009, issue of the New York Times.
February 19, 2009
Government Cutbacks Hurt Faith-Based Charities
Here is another story on the effect of the economic downturn on the nonprofit sector. This time, we take a look at faith-based charities.
Today's Washington Post is reporting that faith based charities are facing unprecedented cutbacks from one of their biggest funders: the government. These cutbacks will naturally affect the charities' ability to maintain the wide array of private social services they currently provide to the nation's sick, elderly and poor.
The current economic downturn has led local and state government agencies across the nation to reduce contracts and grants or delay payments to the groups. This, in turn, has forced many groups to eliminate programs and lay off staff. For example, reports the Post, in the Washington, D.C., area, faith-based charities such as Catholic Charities of the Archdiocese of Washington and the Salvation Army are freezing job vacancies, postponing initiatives, and rallying their members to dig deeper into their pockets.
Government leaders, meanwhile, are urging the charities to increase their fundraising. Yet, the current economic situation is causing deep cuts in private giving.
The road ahead surely looks bleak for faith-based charities.
Gates Foundation to Give Aid to African Farmers
Enough about the stumbling economy; here's a story to cheer your heart:
From Seattle comes the news that the Bill & Melinda Gates Foundation yesterday announced that it is investing US$48 million and private corporations are chipping in another US$42 million to help small-scale farmers in Africa work themselves out of poverty and hunger by improving the way they grow cocoa and cashews.
Dr. Rajiv Shah, the foundation's director of agricultural development, cited the importance of the effort because the majority of people who live in extreme poverty depend on agriculture for both food and income.
"We hope to move more than 1.5 million people out of poverty in a relatively short time frame," Dr. Shah said.
According to The Canadian Press who broke the story, the companies giving cash and in-kind contributions to help with the cocoa and cashew project include The Hershey Co., Kraft Foods Inc., Mars Inc., Archer Daniels Midland Co., Cargill Inc., Armajaro, Olam International Ltd., and Starbucks Corp.
Cocoa is West Africa's largest agricultural export and accounts for 70 per cent of the world's supply. The Canadian Press report states that:
The Gates Foundation has committed $23 million to the World Cocoa Foundation to administer the cocoa project. It will hire local scientists, agriculture outreach workers and educators to help the farmers.
"We have learned that African farmers will listen to other Africans," Shah said. "Even corporate sponsors with Western names hire local people to work on the ground."
The cocoa project hopes to increase farmers' income by improving their knowledge and productivity, cocoa quality, crop diversification and supply chain efficiency.
Improving their growing and processing technology, including getting access to fertilizer and knowing how to use it, could significantly impact cocoa farm production in West Africa, Shah said.
Most African farmers have little or no contact with people who can help them grow more efficiently, like agriculture extension workers in the United States.
"We're talking about millions of farm households," Shah said. "Their level of contact with experts is very minimal. Those types of systems we take for granted in the United States and (in) the developing world don't exist."
The foundation also will assist the farmers in forming cooperatives to help them get a better price for their product.
The new grants are aimed at helping about 200,000 cocoa farmers in Cameroon, Ivory Coast, Ghana, Liberia and Nigeria in West Africa over the next five years, Shah said. The foundation hopes to help those farmers double their income by 2013.
A grant of $25 million to the German development organization Deutsche Gesellschaft fur Technische Zusammenarbeit will support the cashew project, which aims to help 150,000 small-scale cashew farmers in Benin, Burkina Faso, Ivory Coast, Ghana and Mozambique increase their incomes by 50 per cent by 2012.
Africa produces about a third of the world's cashews, but most of the nuts are shipped to Vietnam or India for processing, said Richard Rogers, a foundation program manager in the area of global development.
Texas Legal Aid System Seeks $40 Million from Stimulus Package
I do not like being the bearer of bad news, but stories about the state of the economy and its effect on nonprofit organizations abound. Here is another one for today...
Yesterday's Houston Chronicle reported that falling interest rates could cause the collapse of Texas' legal aid system if the Legislature does not take action soon.
Leaders of the Texas Access to Justice Foundation, which directs state and federal funds to legal aid for low-income Texans, said they plan to ask lawmakers for a $40 million "bridge loan" from the federal stimulus package. The foundation, funded in part by Interest on Lawyers' Trust Accounts, or IOLTA, projects that drops in interest rates will decrease 2009 IOLTA funding to $1.5 million from $28 million in 2007.
"That is a real crisis. That is not fabricated. That is not manufactured. That's reality," said James B. Sales, chairman of the foundation's policy making arm, the Texas Access to Justice Commission.
The foundation also expects legislation to be filed in Texas over the coming weeks that would direct other funds to it for longterm support of legal aid services.
Texans who earn less than $11,075 annually are eligible to receive legal aid funds through the foundation. According to Sales, more than 5.2 million people qualify. He said the legal aid groups and pro bono lawyers in Texas have been able to serve roughly 23 percent of those in need.
Sales said using stimulus money would prevent layoffs without asking the Legislature to commit state dollars in future sessions. He said he believes the foundation will be able to support itself again in 2011.
All of us in Texas who do pro bono work within the legal aid system hope the foundation will indeed receive funding.
With Economy in Shambles, Nonprofit Hospitals Face Downgrades in Credit Ratings
The current state of the economy is continuing to affect nonprofit organizations. This time, nonprofit hospitals are taking a hit. American Medical News reported yesterday that the flagging economy and volatile stock market are being reflected in those hospitals' credit ratings. Accordingly, those facilities will have to pay either a higher interest rate on their debt or a higher rate for future borrowing -- or both.
According to the AMN report, Moody's Investors Service has reported that the number of downgrades it issued in 2008 for nonprofit hospitals exceeded upgrades by the largest margin in five years.
The report continues:
Moody's upgrades affected $13.1 billion in debt, while the downgrades affected $9.2 billion. The fact that more total debt in dollars was upgraded than downgraded, despite the gap between downgrades and upgrades, shows the hospitals most affected, analysts said. Those would be facilities already facing financial trouble before the recession, and those that have a high percentage of uninsured and indigent patients.
But the health of the whole nonprofit sector is getting worse, according to ratings agencies. Fitch Ratings switched its outlook for the nonprofit hospital and health care system sector from stable to negative in late December 2008. Fitch expects downgrades to exceed upgrades for the next 18 to 24 months.
Both ratings firms pointed to the weakened economy, which they said has produced an increase in uncompensated care, fewer elective procedures and investment losses by the hospitals.
Moody's issued 53 downgrades in 2008 compared with 27 upgrades, widening the margin from 1.3 to 1 in 2007 to 2 to 1 in 2008, said Deepa Patel, an associate analyst for the ratings firm. That was the widest margin since 2003. Patel said an unprecedented 27 of those 53 downgrades came in the fourth quarter, compared with four upgrades.
Fitch analyst Jeff Schaub said downgraded hospitals tend to have extreme deterioration, unavoidable capital spending commitments or other drains on liquidity such as overly aggressive investment allocations and precarious debt structures.
Hospitals in poorer neighborhoods, with a larger number of uninsured and indigent patients, tend to be on the downgrade list, but Richard Gundling, vice president of the Healthcare Financial Management Assn., said that scope has become much larger now. "In this environment, there are not a whole lot of bright spots. Everyone is feeling the pinch," he said.
The economy and market turmoil already have caused some hospitals to lay off employees or cut salaries, according to an October 2008 American Hospital Assn. survey. The survey found that 53% of the 736 hospitals responding were considering staff cutbacks. Clerical and administrative staff were most affected, but some hospitals laid off employed physicians as they closed money-losing departments and others asked physicians to take a pay cut equal to that taken by top executives. Meanwhile, many systems have scrapped plans for new projects, citing the cost of borrowing or a lack of access to credit.
Overall, this situation does not look good!
The "Shovel-Ready" Nonprofit Projects
The Institute for Policy Studies at the Johns Hopkins University Center for Civil Society Studies has recently issued "Communique No. 12" entitled "Shovel-Ready but Stalled: Nonprofit Infrastructure Projects Ready for Economic Recovery Support. The report describes the results of a survey of nearly 2000 nonprofit organizations with projects ready to roll once fundingn is received. The remarkable thing about the report is the implicit notion that nonprofits ought to be in as much a posture to compete for government spending as are other market participants. Seems a bit unseemly to say that, but nonprofits do not exist in a separate world. To survive, they will need to deploy their own army of PR professionals, much like (but on a smaller scale) the big three automakers, banks, and Wall Street investment firms.
Independent Sector's Policy Proposals to Strengthen the Nonprofit Community's Ability to Serve Our Society
The Independent Sector recently issued a policy platform entitled Policy Proposals to Strengthen the Nonprofit Community's Ability to Serve our Society.
Independent Sector (IS) offers six broad policy proposals including:
- Ensure adequate resources and fair and responsible fiscal policies to support vital programs that sustain, protect, and strengthen communities
- Preserve and expand policies that help Americans give back to their communities
- Ensure that nonprofits have the capacity and capital to serve the needs of their communities
- Protect the rights of Americans to speak out through nonprofit organizations
- Ensure that Americans are able to continue vital charitable work throughout the world without unduly jeopardizing their safety or their civil rights
- Support funding and policies that provide for transparency and accountability to ensure integrity and public trust in charitable institutions
Colombo on The Fighting Gators and Tax Exemption
The Athletic Department at the University of Florida, home of the National Champion fightin' Gators must make enough money to fund the economic stimulus bill and yet it -- and other college and university atheletic departments, of course -- are inexplicably exempt from taxation. Our Contributing Editor, John Colombo, has recently posted The NCAA, Tax Exemption and College Athletics. The article explains (or maybe not) why big time college athletics are exempt from taxation. Here is the abstract:
The purpose of this article is two-fold. First, it will explain the concepts of federal tax-exemption law as they apply to the NCAA and to the universities operating Division I-A football and basketball programs. As the article indicates, current law makes it virtually impossible for the IRS to withdraw exemption either from the NCAA or universities operating major athletic programs. It is somewhat more plausible that the IRS could tax revenues from Division I college athletics under the UBIT, although even that course of action would have to scale considerable legal hurdles. Moreover, even if the IRS applied the UBIT to big-time athletic revenues, this course of action likely would end up largely a "paper tiger" because the evidence suggests that virtually none of these programs would have taxable net income in the tax accounting sense after applying appropriate cost accounting. Of course, the law can be changed; Congress could certainly attach particular conditions to tax exemption for the NCAA or universities conducting Division I-A basketball and football programs if it desired. The second part of this article, therefore, examines the tax policy issues raised by college athletics, particularly whether these programs fit within a theoretical paradigm that demands they be exempt from taxation, or whether instead big-time college athletics should be considered a sui generis exception to general tax policy. The reason this is important is that if major college football and basketball do not fit in any standard theoretical paradigm for exemption, then we should forthrightly recognize that continuing tax-favored treatment for these activities is an "exception" to general tax policy - much like a local community abating property taxes to induce a business to locate there. Such a conclusion, in turn, means that Congress could consider attaching special conditions to continuing tax exemption for the NCAA and universities engaged in big-time athletics without worrying about any damage to established tax policy or principles - in other words, this is the "hook" reformers can use to press their case. While the exact scope of these special conditions should be debated by experts in college athletics, I note in the final section of the article that there are precedents in tax law for (1) attaching conditions on the use of proceeds from an exempt activity (e.g., a requirement that big-time athletic revenues be used to subsidize other charitable outputs, such as increased athletic opportunities in non-revenue sports or for women); (2) expenditure limits such as caps on coaching salaries, and (3) expanded disclosure via a schedule to Form 990, similar to the new Schedule H for hospitals, that would require both the NCAA and universities with athletic programs to provide more information regarding their programs and the academic progress of student-athletes.
I think I'll hold off reading it until March Madness.
February 18, 2009
Healthcare Fundraisers Happy with Stimulus Bill
In a report released today, the NonProfit Times states that healthcare fundraisers are grateful for the final version of the federal government's stimulus package (Health Fundraisers Get Big Stimulus Win, The NonProfit Times, February 18, 2009). The NPT report states in part:
Healthcare fundraisers will be grateful for changes in the federal government’s stimulus package. The House version of the bill initially threatened grateful patient programs by denying access to names and addresses but was eliminated from the final version approved by Congress.
The final version of the bill (H.R. 1), signed into law by President Barack Obama, will strengthen opt-out requirements for written communications to patients and their families, according to the Association for Healthcare Philanthropy (AHP).
Under the Health Insurance Portability and Accountability Act (HIPAA) nonprofit hospitals and their foundations are allowed to seek donations from individuals who have been patients in their hospitals. Section 4406(b) of the stimulus act would have effectively denied the development offices at nonprofit hospitals and healthcare providers access to names and addresses of patients in their own institutions, according to the Falls Church, Va.-based coalition. AHP’s position indicated there was no record of basis to justify the change and pushed for it to be eliminated from the House version of the bill.
In a fact sheet distributed to lawmakers, AHP President and Chief Executive Officer William C. McGinly warned that if the [House's] language had passed, fewer philanthropic dollars would go to nonprofit hospitals, straining operating budgets and limiting financial resources.
“For philanthropy to continue to fulfill its role in the American health care system, this is not the time to drastically change standards for fundraising,” AHP said in a position statement. The organization, with has more than 4,900 members, estimates that 61 percent of the $8.35 billion in donations to nonprofit hospitals and healthcare systems in 2007 came from individuals.
The Conference Committee included the language in a new section titled “Opportunity to Opt Out of Fundraising.” In a separate section of the legislation, the committee also included language that increases penalties for HIPAA violators.
Transparency on Wall Steet? Use the Nonprofit Model
An interesting op-ed in yesterday's New York Times argues that if newly appointed Treasury Secretary Timothy Geithner wants to increase financial transparency on Wall Street, he should look to the Nonprofit Sector for a model:
TIMOTHY GEITHNER, the Treasury secretary, has pledged that the second bank bailout will be characterized by far greater transparency than the first on the part of the financial institutions. If he is sincere in his goal, then there is a simple accounting procedure that should be a part of the plan: the beneficiaries of taxpayer financing should have to keep track of their money in the same way nonprofits must.
Nonprofit accounting is designed to ensure that the recipients of grants from the federal government and other benefactors are held accountable for the funds they receive. Regrettably, the big banks that have been granted billions from the Troubled Asset Relief Program are less transparent in their financial reporting than the local soup kitchen that gets federal support.
Nonprofits use what is known as “fund accounting.” Fund accounting requires that a separate set of books be maintained for all grants that are designated for a specific activity. The aim is to ensure that the resources are spent for their intended purpose.
. . .
Charity is accountable. TARP recipients should be, too.
Definitely worth reading.
In Defense of High Salaries for Charity CEOs
A job is a job, right? Just because people work for nonprofits, doesn't mean they don't want to get the highest salaries they can get. Professors, doctors, CEO's are naturally self-serving first, charitable second. That's just how we are wired, I guess. Anyway, I ran across a rare but sensibly written defense to high salaries in charitable organizations and thought I would pass it along. Its entitled "Debunking Charity Salary Myths. Here is a snippett:
High salaries should not signal a red light to not give just as low salaries should not signal a green light to give. Charity salary levels ought to be based on the skill, experience and education necessary to forward the work of the organization. Charities compete with businesses and the government for employees and must therefore offer reasonable wages in order to attract, hire and retain competent people. Many charity employees are willing to sacrifice the higher pay in the private sector for the psychological rewards of working for a good cause. But underpaying employees could sabotage a charity’s programs if the only people willing to accept such low wages are unqualified to do the job. Underpaying lower level employees may be more damaging to an organization than paying top level executives too much. Charities that pay so little that they can’t retain their staff waste a lot of money by repeatedly recruiting and training new crops of employees, and losing valuable institutional knowledge in the process.
I am the first admit that I often fan the fires of indignation when I hear about insiders and disqualified persons making seven figure salaries while doing good. But I suspect those cases are the outliers and, as such, ought not stereotype the sector. Still, seven figure salaries -- even for CEO's of REd Cross and other mega-charities just don't seem right. There are, no doubt, extremely skilled corporate managers who would gladly work for far less and charities ought to work harder to find them. How's that for "waffling"?
Patterns and Structures of NGO Self-Regulation in Africa
The January 2009 issue of the International Journal of Civil Society Law has three useful and thought provoking articles regarding nonprofit organizations beyond our own cloistured worlds and minds. Here is a brief discussion of the first article. The other two articles are "The Agency Problem in Non-Profit Corporations, by Giovanni Tamburrini, and a book review of "Charity Law and Social Policy" by Debra Morris. Karla Simon has done a terrific job with the IJCSL.
1. Patterns and Structures of NGO Self-Regulation in Africa, by Mary Kay Gugerty. Here is the intro:
The growth in scale and scope of nongovernmental organizations (NGOs) around the world has been accompanied by growing governance and regulatory challenges for governments, NGOs and donors. Challenges to nonprofit and nongovernmental organization (NGO)governance and accountability are particularly acute in sub-Saharan Africa (hereafter Africa), a region often characterized by illiberal democratic governance, weak mechanisms of regulatory oversight, and nascent civil societies. The combination of political liberalization and increased donor funding of nonprofits throughout the 1990s also sparked a dramatic increase in the number of NGOs operating in most countries in Africa. As an example in Kenya, the estimated number of NGOs registered with the government grew from less than 500 in 1990 (Ndegwa, 1990) to nearly 3200 in 2004 (NGO Council, 2004). As a result of these forces, governments in Africa found themselves increasingly dependent on NGOs for the provision of key public services, but with few regulatory or coordination mechanisms at their disposal to influence or oversee the activities of these organizations (Barr, Fafchamps and Owens, 2005). Donors also found it increasingly difficult to assess the capabilities and potential of the many newly emerging organizations. The need for standard-setting and oversight was underscored throughout this period by the periodic eruption of high profile nonprofit scandals that began to challenge the reputation and credibility of legitimate organizations (Kwesiga and Namisi, 2006; Gibbelman and Gelman 2004; Naidoo, 2004). These scandals emphasized to donors, governments and NGOs themselves the need for stronger standard-setting and credentialing mechanisms for the sector.
February 17, 2009
New Postal Rates Expected to Hurt Nonprofit Mailers
Yesterday's NonProfit Times reported that charities that use premiums to fundraise will soon -- once again -- be struck a powerful blow by the United States Postal Service. With postal rates scheduled to increase effective May 11, the NPT is maintaining that nonprofit parcels and Nonflat Machinables (NFM) will bear the brunt of the rate increases, with percentage increases ranging from almost 10 percent to 50 percent.
The report states in part:
The United States Postal Service (USPS) Board of Governors released new postage increases that are set to take effect May 11. The new rates will be reviewed by the Postal Regulatory Commission (PRC) to ensure they are within the provisions of the Postal Act of 2006, namely checking that they are within the price cap for each class of mail.
The cap, based on the most recent 12-month average of the Consumer Price Index-Urban (CPI-U), was about 3.8 percent. Each class of mail can see price increases as high as an average of 3.8 percent, but can vary within each class. If the PRC were to find that the new prices were not set correctly, the Postal Services would adjust them.
The hardest hit postal classes will be Standard parcels and Nonflat Machinables (NFM), according to Tony Conway, executive director of the Alliance for Nonprofit Mailers (ANM), a Washington, D.C.-based coalition. He expects average percentage increases in those two categories to reach the upper teens, calling it a sign that the cost of the Postal Service processing and handling such mail remains high.
The NPT report also noted that some nonprofits were faced with massive double-digit postage increases when the NFM category was introduced two years ago. The resulting increase in costs prompted some organizations to modify the size and shape of their mailings drastically.
What will they do this time around?
Syrian Charity to Receive Money Transfer from U.S. Donors
The Historic Victory Plate being marketed by the American Historic Society contains, among other things, a picture of President Obama with the words "Change Has Come" written over the bottom part. If a report coming out of Damascus is true, change has indeed come in U.S. relations with Syria. Under former president George W. Bush, the U.S. imposed a variety of sanctions on Syria to punish a government the U.S. accused of allowing foreign fighters to cross into Iraq and of supporting militant groups in Lebanon and the Palestinian territories. One measure banned U.S. exports to Syria except for food and medicine.
However, Sunday's Washington Post reported Syria's ambassador to Washington, Imad Mustafa, as saying that the U.S. Treasury Department "has authorized the transfer of $500,000 to a Syrian charity." The Post reports Ambassador Mustafa as saying that the money -- being donated to the Children with Cancer Support Association -- was raised by Syrians living in the United States.
This could be a sign that the U.S. is easing some of its sanctions against Syria -- or at the very least, Syrian charitable organizations would be exempt from some of the U.S. sanctions.
Association For Healthcare Philanthropy Opposes Fundraising Limitations in Stimulus
The Association for Healthcare Philanthropy recently took opposition to language in the stimulus bill that, according to the group, "would have denied hospital access to grateful patient names and addresses." The association notes that the language was removed or at least weakened:
The Conference Committee, in a new section titled, Opportunity to Opt Out of Fundraising, included language that will strengthen the opt out requirements regarding written communications to grateful patients and their families. This language is consistent with the existing HIPAA requirements. In a separate section of the legislation, the Committee also included language that increases the penalties for HIPAA violators. AHP is reviewing the final legislation with legal counsel and will provide further insight when the review is completed.
The Association' position statement can be found here.
More on Angel Food Ministries' Campaign Contributions
The Atlanta Journal Constitution has also picked up on Angel Food Ministries questionable campiagn contributions. The AJC reports, though, that the 501(c)(3) is also under scrutiny for making nearly $500,000 in unsecured loans to insiders and disqualified persons.
Angel Food Ministries, the Georgia nonprofit started to help struggling families with food costs, made more than $453,000 in unsecured loans in 2007 to formerly high-paid family members running the organization. It brought the total of their loans to more than $1.1 million over a two-year period. Internal Revenue Service documents show that father Joe Wingo; his wife, Linda; and sons Wesley and Andrew together earned $402,097 in 2007, down from $2.1 million in 2006. However, the organization gave the family growing amounts in unsecured loans. The Wingos owed Angel Food Ministries nearly $663,000 beginning in 2007, and that increased to $1.1 million by the end of the year.
As I mentioned in my most previous post, that's a whole lotta groceries that went, instead of to the poor country folk of rural Georgia, to the founder's pockets. The most distressing new revelation is that more than 200 metro Atlanta churches participate in the Angel Food Ministries. One ought to expect that donations will dry up soon. Here's a good teaching point using the media attention as context: "what should a tax exempt organization do by way of crisis control when faced with revelations like this?"
Nonprofit Caught With its Hand in the Campaign Cookie Jar
The Online Athens Banner-Herald contains an interesting scoop posted yesterday. Seems a nonprofit organization known around mostly conservative Athens, Georgia (home of the hated Georgia Bulldogs, I might add) has been secretly donating tax exempt funds to "conservative candidates." The exempt organization is innocently named Angel Food Ministries, Inc. Its stated purpose is to donate and sell groceries below cost to needy families in rural Georgia. Unfortunately, it is also accused of donating $50,000 to "conservative candidates" during recent elections. Here is what its website says:
In 1994, Pastors Joe and Linda Wingo found their hearts going out to the families of many of the local families in Monroe, GA, affected by the recent industrial plant closings. On their back porch, the first Angel Food distribution fed 34 families. Over the next years, other churches wanted to be get involved, and Angel Food began feeding hundreds of families across the southeast. Now, Angel Food feeds over 500,000 families a month in 35 states. Praise the Lord for his faithfulness!
I am all for praising the Lord and working in his vineyards, but do you realize how many boxes of bread, cans of peas, and packages of Ramen noodles that amount could have purchased to feed the poor people Angel Food Ministries features on its website? Of course, innocent until proven guilty. But once found guilty, throw the dadgum book at 'em.