May 22, 2010
Nonprofit Execs Arrested for Theft
The Philadelphia Inquirer reports that the attorney general has charged Harriet Garrett and Yvette Gimenez with theft in connection with the Philadelphia welfare-to-work program called Creative Urban Educational Systems. Both worked for the organization, and Garrett employed her husband and two of her daughters (Gimenez is the daughter of Garrett) at the organization. The nonprofit received state and federal funds for its work. Allegations against the Garrett include buying personal property (a motor vehicle), paying personal income taxes owed by her husband, overbilling for services, and double-billing for books. Student complaints resulted in an investigation by the Pennsylvania Office of Inspector General and the report that office issued ultimately led to a grand jury investigation and the charges. Allegations involve $220,000 of misappropriated funds.
More on Executive Pay
On May 16 we blogged about a NJ initiative to cap nonprofit executive pay paid from state sources. Today the Philadelphia Inquirer reports that William Marion, the CEO of Horizon Blue Cross Blue Shield of New Jersey received nearly $9 million in 2009. This pay and bonuses package reflects a 59% increase over the prior year.
Horizon says that the pay package included $3.9 million that had been deferred from previous years and also said that Marino has declined raises and bonuses since 2005. I can't figure out the math, but the nonprofit said that the compensation is set to be in line with "top officials at other firms." The article doesn't say whether nonprofits are used as comparators.
Sen. Lautenberg of New Jersey may introduce federal legislation that would curb compensation for nonprofit Blue Cross Blue Shields across the country.
Meanwhile, premiums continue to go up.
May 21, 2010
Howard Hughes Medical Institute Awards $79 Million to Boost Science Education
The Howard Hughes Medical Institute (HHMI) yesterday announced grants totaling $79 million to help universities strengthen undergraduate and precollege science education nationwide.
The grants will enable faculty at research universities to pursue some of their most creative ideas and develop new ways to teach and inspire students about science and research. Fifty research universities in thirty states and the District of Columbia will be awarded a total of $70 million through the institute's Precollege and Undergraduate Science Education Program. The schools will use the grants, which range from $800,000 to $2 million over four years, to develop creative, research-based courses and curricula; give more students experience working in the lab; and improve science teaching from elementary school through college. Grantees include Florida International University, Northwestern University, and the University of North Texas.
In addition, thirteen HMMI Professors will receive a total of $9 million over four years to help solve important problems facing science education, including how best to bring research into the classroom, teach large introductory science courses, and encourage students from diverse backgrounds to become scientists. The funding will enable individual scientists to develop innovative ideas for the classroom using the same creativity and adaptability as they do in the research laboratory.
According to HHMI president, Robert Tjian, "HHMI is committed to funding education programs that excite students' interest in science. We hope that these programs will shape the way students look at the world — whether those students ultimately choose to pursue a career in science or not."
May 20, 2010
IRS Reaches Out to Small Nonprofits
Notwithstanding Monday's deadline that potentially stripped over 300,000 nonprofit organizations of their tax-exempt status, Internal Revenue Service (IRS) Commissioner Doug Shulman said the agency will do what it can for small charities to keep their exemptions.
In a statement released on Tuesday, Commissioner Shulman said the IRS will be “providing additional guidance in the near future on how it will help these organizations maintain their important tax-exempt status -- even if they missed the May 17 deadline.” According to the statement, the IRS will offer “relief to these small organizations and provide them with the opportunity to keep their critical tax-exempt status intact.”
The current problem stems from the provisions of the little-known Pension Protection Act of 2006. The statute required nonprofits to start filing at least a Form 990-N (“e-Postcard”), even if their annual receipts were less than $25,000. Tax-exempt status would be revoked if annual paperwork was not filed for three consecutive years. This being the third year since the statute took effect, several small nonprofits -- which had never heard of the statute -- now face automatic revocation of their tax-exempt status.
Organizations with more than $25,000 in annual receipts must file Form 990 or Form 990-EZ annually. Private foundations file Form 990-PF. The tax forms are generally due four and a half months after the end of an organization’s fiscal year.
The Urban Institute’s National Center for Charitable Statistics (NCCS) estimates that of the 1,592,810 nonprofit organizations in the United States, more than 21 percent -- or 340,834 -- had not yet filed the required tax returns.
Texas Education Controversy Heats Up
Today's Texas newspapers are reporting on this week's events in Austin, Texas, regarding proposed changes to the state's social studies curriculum. The Dallas Morning News contains an article about yesterday's all-day public hearing. The article states in part:
During an all-day public hearing, former U.S. Secretary of Education Rod Paige and several Democratic state House members urged the board to put off their final vote, scheduled for Friday, and consider additional changes.
But House Republicans, represented by the president of the Texas Conservative Coalition, said the standards are fine and should be adopted this week.
"We believe the final product is a step in the right direction and will give Texas students a fuller understanding of American history," said Rep. Wayne Christian, R-Center, head of the coalition of 67 House members. "We categorically reject efforts" to delay action, he added.
Several board members indicated a delay is very unlikely as the social conservative bloc – seven Republicans – is firmly against it. There are three other Republicans on the 15-member board and five Democrats. During the hearing, most of the Democrats spoke in favor of a delay.
"There isn't enough support on the board to delay action," board member Don McLeroy, R-College Station, said during a break in the public hearing
Paige, a former Houston schools superintendent who served as education secretary under President George W. Bush, was the second of more than 200 people who signed up to testify on the proposed standards for U.S. history, government and other social studies courses.
Those standards will be reflected in textbooks, classroom instruction and achievement tests used in Texas schools over the next decade. In addition, textbooks used in Texas are typically marketed in other states.
Paige complained that the GOP-dominated board has allowed ideology to drive the curriculum requirements for U.S. history, which will have an adverse effect on students. Until that is corrected, he added, board members should delay action on the proposal.
The Houston Chronicle sheds some light on the critics' complaints:
NAACP President Ben Jealous asked the board to revisit slavery and civil rights lessons, arguing that proposed changes have watered down history. Former Education Secretary and former Houston Independent School District Superintendent Rod Paige also voiced concerns about the teaching of slavery and civil rights.
The Austin American-Statesman provides further details on the proposed amendments. According to the Statesman,
Among other things, the amendments would suggest that the nation's founders might not have intended a separation of church and state as the courts have interpreted it, and that the United Nations poses a threat to individual liberties.
Casting the proposed changes as the handiwork of outgoing State Board of Education member Don McLeroy, the Statesman continues:
One amendment requires eighth-grade students to compare the Constitution's Establishment and Free Exercise clauses with the long-held principle of separation of church and state. In another, McLeroy proposes casting early 20th century muckrakers and reform leaders such as Susan B. Anthony and W.E.B. DuBois in a negative light by contrasting their tone with the optimism of immigrants as told in a 1998 book written by religious painter Thomas Kinkade.
McLeroy would have high school history classes drop the study of a landmark 1949 federal court ruling that declared schools could not legally segregate Mexican American students, even though the practice remained popular in Texas for decades. He wants to replace that with discussion of the U.S. Supreme Court's ruling that governments may seize property for private development projects and another case in which white firefighters claimed they were passed over for promotion in favor of less qualified colleagues who were black.
Other proposals would tone down criticisms of the Red Scare and Sen. Joe McCarthy's anti-communist hearings of the 1950s and portray programs such as the United Nations General Assembly, financing for global humanitarian relief and global environmental initiatives as threats to individual freedom.
As an African-American and former high school social studies teacher, I am shocked and dismayed that my State Board of Education appears ready to implement these changes to the social studies curriculum. I echo the sentiments of Secretary Paige -- ideology should not drive curriculum requirements.
May 19, 2010
Play Space Owner Defends Self Against Claims of Having Religious Agenda
Tuesday's Washington Post carried an interesting story:
Gina Seebachan owns the Be With Me Playseum, an indoor play space in Bethesda, Maryland. The Playseum has recently become mired in controversy. According to the Post,
In anonymous postings on local Web sites, parents [have] accused Seebachan of handing out antiabortion literature at the Playseum, accepting support from right-wing Christian groups and playing Christian rock music at the play space. Most damning, one anonymous poster who said she was Jewish claimed that Seebachan told her that unless she accepted Jesus as her personal savior, the client and her children would go to hell.
Seebachan, her friends and neighbors take a different view. They speak of "an unsubstantiated whisper campaign that had gone viral, with Web postings accusing Seebachan, an evangelical Christian, and the Playseum of being less about creating a play space for children and more about saving their souls."
According to Seebachan, the current uproar stems from her references to God and her use of the word "life" on the Playseum Website. She dismisses the accusations against her and the Playseum as "vicious" lies. Still, at least one elementary school recently canceled a field trip to the Playseum because of the alleged religious nature of the play space.
May 18, 2010
Lilly Endowment Foundation Assets Decline
The Indianapolis, Indiana-based private foundation,Lilly Endowment, Inc., announced on Monday that its assets declined 7 percent in 2009 to $5.3 billion. The endowment blames the economy for the decline. According to the endowment's 2009 annual report:
2009 proved to be another challenging year due to what many call the most significant economic downturn since the Great Depression. Not only did the value of Lilly Endowment's assets decline, the impact of the recent economic crisis continued to be felt by virtually all the endowment's grantees and the individuals and families they serve.
In 2009, Lilly Endowment donated $276.1 million toward its three priorities: education, religion and community development. Most of the money went to Indiana organizations. The endowment also approved $282.3 million in future grants during 2009.
Notwithstanding the asset decline of 2009, Lilly Endowment remains among the nation's 10 largest grant-making foundations, according the Chronicle of Philanthropy's annual ranking. The foundation was worth more than $8.3 billion in 2005.
Panera Bread Donations? - Pay What You Want Restaurant Opens
My colleague Dan Kelly brought to my attention an MSNBC report that a nonprofit foundation associated with the Panera Bread Co. has opened a store in the upscale St. Louis suburb of Clayton with a novel business model - pay whatever you want. The restaurant's motto: "Take what you need, leave your fair share." Cashiers will tell customers what the normal price would be if asked, but remind them they do not have to pay. They direct customers to put anything they want to give into a donation jar. The stated plan is to see whether the restaurant, named St. Louis Bread Co. Cares, can be at least self-sustaining and, if it is, to open additional locations. The for-profit company will not be covering any of the costs of the new store. Any excess funds will go to community organizations, according to a St. Louis Post-Dispatch story on the same topic.
The story does not mention the foundation's name, but a Guidestar search reveals both a Panera Bread Foundation, Inc. and a Panera Bread Company, both listed as section 501(c)(3) public charities. The latter organization is coded as being involved with children and youth services and appears inactive, with no Forms 990 available. The first organization at first glance looks like a typical corporate foundation, with the 2008 Form 990 reporting about a million dollars in contributions to over 200 exempt organizations, except that it is a public charity based on over 50 percent public support reported. It is not clear if either entity is the one referred to in the article, although the President of the Panera Bread Foundation, Inc. (and until recently CEO of the for-profit company) is named as the person in change of the unnamed foundation mentioned in the media stories.
May 16, 2010
What Do New Jersey & Canada Have in Common? - Proposed Nonprofit Pay Caps
Both New Jersey and Canada are seriously considering capping executive compensation at nonprofits. Starting with New Jersey, according to The Star-Ledger Governor Chris Christie plans to require nonprofit social service agency that receive state funds to cap their compensation at no more than $141,000 annually as of July 1st. Lower caps would apply to nonprofits with budgets of less than $20 million. The big caveat is that the limit would apply to the extent the salary is paid by state funds; these nonprofits would still be free to pay higher compensation, but would have to use funds obtained from other sources to do so. Other limits would apply to state-funded travel, education, severance, and vehicle expenses for employees of these nopnrofits. The state estimates it will save approximately $5 million annually. Only nonprofits that contract with the Department of Human Services and the Department of Children and Families will be affected, at least initially. An article in The Press of Atlantic City notes that whether any hospitals will be covered apparently remains unclear. The catalyst for the new limits was a 2009 report by the Office of Legislative Services that found executive salaries paid for with state funds provided by these two departments of up to $250,000 (pages 18-19 of the report).
In Canada, a less certain by broader reaching cap is under consideration. According to reports from two Canadian law firms that have extensive charity practices - Miller Thomson LLP and Carters Professional Corporation - Bill C-470 would give the Canada Revenue AGency discretion to revoke an organization's charitable status if it pays a single executive or other employee over $250,000 annually. If passed, the bill would be effective for 2011 forward. While introduced as a Private Members' Bill, which I understand generally means passage is unlikely, this bill has already garnered support from the Liberal Party, the Bloc Québécois, and the New Democratic Party, leaving only the Conservative Party of Canada as not yet supporting the bill among the parties that have representatives in the House of Commons. The Conservative Party is, however, the minority government, with its head, Stephen Harper, currently serving as Prime Minister.