Charity Governance

THREE CUPS OF TEA AND A CLASS ACTION LAWSUIT: DRINK THE TEA, DISMISS THE LAWSUIT

DATELINE: May 11, 2011, Chicago

Two Montana residents, Michele Reinhart and Jean Price have filed a lawsuit against Greg Mortenson, the author of Three Cups of Tea, and the Central Asia Institute alleging fraud on the part of both defendants and requesting that the lawsuit be certified as a class action.  Our initial reaction to the filing was that the claimed injury is a bunch of nonsense, but as we read the complaint, we realized the complaint raises some important issues.  Those issues don't change our initial reaction.

The federal district court judge who is assigned this lawsuit should...

TENNESSEE ATTORNEY GENERAL SHOULD SEND A REAL MESSAGE TO DONORS: "RESTRICT AT YOUR OWN RISK"

DATELINE: May 10, 2011, Chicago

Jennifer Brooks of the Tennessee reports today that the Tennessee Attorney General has filed an appeal in the Fisk University case.  Tennessee Attorney General Files Appeal in Fisk Art Case.  You remember that case:  The one that has been going on for years, with the AG and Fisk University in a fight to...

MASSACHUSETTS FAMILY AND CORPORATE FOUNDATIONS SHOULD BE SPEAKING WITH THEIR LAWYERS IF THEY COMPENSATE DIRECTORS

DATELINE: May 2, 2011, Chicago

Massachusetts Attorney General Martha Coakley has declared class warfare on Massachusetts nonprofit directors.  She is the force behind proposed legislation that would, if enacted, provide her with the power to deny compensation to directors of Massachusetts public charities.  Based on her comments to the media, I have trouble imaging a situation where AG Coakley would approve compensation to directors should the Massachusetts legislature grant her the power she seeks. 

The critical question:  What is a...

UNDOUBTEDLY

DATELINE: May 1, 2011, Chicago

"Changing the tax treatment of charitable gifts in ways that make it more costly to give those gifts will undoubtedly cause many higher-income Americans to reconsider the amount of their gifts."

So writes Robert F. Sharpe Jr. in an April 29, 2011 opinion piece in the Chronicle of Philanthropy.  Changing the Charitable Deduction Could Discourage the Most-Generous Donors.  Mr. Sharpe is the president of the Sharpe Group, a fund-raising consulting company with offices in Memphis and Washington.

One thing that I have learned over the years is that I need to reconsider my thinking whenever the words "clearly," "undoubtedly," or "obviously" appear in the sentence I just wrote.  What is obvious or irrefutable rarely is.  Mr. Sharpe's article is a well-written piece of advocacy, but it suffers from the lack of a reference to a statistical or empirical studies supporting his assertions. 

I will be upfront about it:  As a tax lawyer with some 30 years mucking around in the tax code, I am in favor of...

DRAKE UNIVERSITY'S PRESIDENT MAY NEED TO GET HIS HEAD OUT OF THE BOOKS

DATELINE: August 25, 2011, Chicago

"Internal financial controls were circumvented by a veteran employee with knowledge of those controls"

So said Victoria Payseur, Drake University's vice president for business and finance, following revelations that a university employee allegedly embezzled $470,000 from the university over a five- or six-year period.  The employee, one Robert A. Harlan, worked for Drake University for over 20 years, according to the Des Moines Register.  'Betrayal' Felt at Drake After Report on Theft (April 21, 2011).  According to the police, the total theft may exceed $600,000.  According to the Register, Harlan apparently told police that he gave the money to...

THREE CUPS OF TEA: A BIG YAWN

DATELINE: April 22, 2011, Chicago

We saw Julie Bosman's and Stephanie Strom's April 17, 2011 article in the New York Times following up on the 60 Minutes report that parts of Greg Mortenson's book, Three Cups of Tea, might have been fabricated.  'Three Cups of Tea' Author Defends Book.  We haven't read the book, but apparently Mortenson tells the story of his adventures in Afghanistan.   Those adventures led Mortenson to co-found the Central Asia Institute, an organization that builds schools largely for girls in Afghanistan and Pakistan.  Mortenson is the organization's executive director.

Bosman and Strom paint a picture of a charity and a leader that have...

FLASH: OBAMA ADMITS HE WAS BORN IN KENYA

DATELINE, August 4, 1961, Honolulu

We simply don't understand what the fuss is all about.  Jerome Corsi didn't need to write his forthcoming book, Where's the Birth Certificate, to make the case that President Obama was born in Kenya.  Obama told us he was born in Kenya long ago. 

To hear it from the horse's mouth, buy Dreams from My Father as an audio book.  Fast forward the disk 61 minutes, 4 seconds.  When the audio is played backwards, Obama can be heard distinctly saying "I was born in Kenya."  Some say he is saying "cranberry sauce," but this is very unlikely because he recorded the book six months before Thanksgiving. If anything, Obama would have said, "Must have Peeps."

President Obama has long been a fan of backward masking.  In fact, in this year's State of the Union address, the video tape shows Obama turning ever so slightly in the direction of Representative Joe Wilson at 10 minutes and 23 seconds into the speech.  You might wonder why there is an impish grin on Obama's face.  Play the speech backward, and you will know why.  Obama says "You Lie."  Such clever speech writers.

It is no coincidence that Paul McCartney was one of the first artists to play the White House's East Room venue.  Of course it wasn't really Paul performing, but the man who replaced Paul when Paul "blew his mind out in a car."  We don't know Obama's cell phone number, but we are told that if you call it at exactly Wednesday Morning at 5 AM, you will hear Obama say, "Donald Trump, you're fired."

 

ATTORNEY GENERAL COAKLEY'S LATEST PROPOSAL COULD DRIVE FOUNDATIONS AND THEIR MONEY OUT OF MASSACHUSETTS

DATELINE:  April 18, 2011, Chicago

Massachusetts Attorney General Martha Coakley took her crusade against director compensation to the next level this past Thursday (April 14), when she released  a letter to officials at Harvard Pilgrim Health Care, Tufts Health Plan, Fallon Community Health Plan and Blue Cross Blue Shield of MA.  The Fallon and Blue Cross boards had already suspended compensatory payments to their board members, but Harvard and Tufts have not.  General Coakley was now issuing her final report regarding director compensation practices at these organizations.

As we have in the past, we will commend General Coakley and her office for making the results of her investigations public.  These releases often set down well-defined markers for members of the nonprofit sector, making it much easier for nonprofits to comply with laws that are often open-ended.  This report, however, is not up to the standards that General Coakley and her staff have set in the past.  We suspect that this is largely because it is results driven.  General Coakley is a politician.  Like all politicians, she can succumb to the madness of crowds.  As a good liberal, General Coakley prefers to blame high health care costs on what she is quick to characterize as greedy providers.  In many instances, we can chalk this sort of rhetoric up to harmless political hot air.  That may not be the case this time.  General Coakley delivers the punch line at the end of her letter:  Her office has proposed legislation...

NEW YORK POST REPORTER MISSES THE REAL STORY DUE TO THE APPARENT ALLURE OF LOBSTER, GOLF, AND EXEC COMP

DATELINE: April 12, 2011, Chicago

Heather Haddon of the New York Post certainly had a story to tell earlier this week.  Power of the Purse: Execs' Pay Shock (April 10, 2011).  She obviously knows about the power of the revised Form 990.  Haddon tells the story of an obscure New York nonprofit, The New York Independent Service Operator (NYSISO).  This organization manages high voltage lines and oversees the sale of electricity to utilities like Consolidated Edison.  According to NYSISO's 2009 Form 990, the executives and some of the directors look to be well compensated.  For somewhere between 12 and 14 hours of work each week, the directors receive reportable compensation ranging from...

A NAIVE PROPOSAL

DATELINE: April 5, 2011, Chicago

We are reading more and more proposals aimed at curtailing political speech, together with proposals that would make tax-exemption dependent on whether the organization is on the right side of the culture wars, wherever the right side might be.  But there is a basic problem with all of these proposals:  Whether an organization or a donor receives a desired tax treatment lies in the eyes of the beholder. 

Monday, David Callahan published an op-ed piece entitled Bringing Donors Out of the Shadows in the New York Times, espousing what he believes to be one antidote to money in politics: Require all nonprofit organizations engaging in any form of advocacy that touches the political realm to disclose donor names.  His proposal, regardless of whether...