Charity Governance

RECENT LEGISLATIVE PROPOSALS ARE A MISTAKE: AUDITS SERVE IMPORTANT FUNCTIONS FOR SMALL AND MID-SIZE NONPROFITS

DATELINE:  April 28, 2009, Chicago

We are big fans of the National Council of Nonprofits (NCP).  We particularly like their monthly newsletter, but we disagree with their apparent belief that raising the dollar threshold for nonprofit audits required by regulators is a good thing.  In its April Newsletter, NCP reports that Maryland Governor Martin O’Malley signed into law legislation...

THE PENNSYLVANIA ATTORNEY GENERAL TAKES ACTION: CITIZENS ALLIANCE FOR BETTER NEIGHBORHOODS

DATELINE: April 9, 2009, Chicago

Last month, a federal jury convicted former Pennsylvania State Senator Vincent J. Fumo on 137 felony counts, sending him packing for what is likely to be a lengthy prison stay.  A number of the charges against Fumo centered on his abuse of Citizens Alliance for Better Neighborhoods, a Philadelphia charity that received $17 million from Peco Energy, a large utility company. Fumo extracted the payment in exchange for favorable disposition of a regulatory matter. 

Now that the multi-year investigation and trial have concluded, Pennsylvania Attorney General Tom Corbett has stepped into the...

THE DEVIL IS IN THE DETAILS: ANGEL FOOD MINISTRIES

DATELINE:  March 10, 2009, Chicago

We had seen some earlier references to Angel Food Ministries and an FBI raid, but for some reason the story didn’t resonate with us.  Yesterday, we noticed that the Chronicle of Philanthropy’s Elsewhere Online column referenced a settlement of a lawsuit brought by two directors against the nonprofit.  We have not seen the pleadings, but the directors apparently alleged that the Wingo family was...

IT WAS FUN WHILE IT LASTED: UNIVERSITY INVESTMENT POLICIES ARE GOING TO CHANGE

DATELINE:  March 1, 2009, Chicago

 

The Pennsylvania Attorney General should open an immediate investigation into the investment practices of the University of Pittsburgh and Carnegie Mellon University.   The Pittsburgh Post Gazettereported last week that combined, the two institutions had invested a $114 million through Westridge Capital Management. Jonathan D. Silver, Pitt, CMU Money Managers Arrested in Fraud: FBI Says They Misappropriated $500 Million for Lavish Lifestyles.  The proprietors of that investment firm, Stephen Walsh and Peter Greenwood were charged in Manhattan federal court with securities fraud, wire fraud and conspiracy.  The two were sued in civil court by the SEC  and the Commodity Futures Trading Commission, on allegations that the two had misappropriated more than $535 million and fraudulently solicited $1.3 billion from investors since 1996.  The University of Pittsburgh and Carnegie Mellon have brought a civil suit against the Westridge, Walsh, and Greenwood.

 

So what was the alleged scheme?  Apparently it was another Ponzi scheme.  It seems the two just...

THE FRAUD ADVISORY PANEL SHINES A LIGHT ON FRAUD AGAINST CHARITIES IN ENGLAND AND WALES

DATELINE: February 25, 2009, Chicago

“He’d been a fellow trustee; he’d been a fellow young person; he’d been involved for over two years. And they [the trustees] were absolutely gutted… they were totally shocked, appalled, gutted by it. They couldn’t believe that they’d been let down. That was the main thing, the feeling of being let down.”  From the Fraud Advisory Panel February 2009 report.

             British terminology: choked up (He was gutted at the funeral, mate.)

The Fraud Advisory Panel is a UK registered charity which works to raise awareness of the human, social and economic damage caused by fraud and to help individuals and organizations develop effective strategies to prevent it.  They have just released a

SLUSH FUNDS: KEEP MONEY AWAY FROM CHARITIES CONTROLLED BY POLITICIANS AND THEIR CRONIES

DATELINE: February 12, 2009, Chicago

Yesterday we heard a local Chicago radio personality claim that other states and cities don’t have anywhere near the level of political corruption as Illinois and Chicago.  As Chicagoans who have watched how business is done in Chicago and Illinois during the last fifteen years, we understand his point.  You may have seen Gov Blago on the View or Letterman, but you have no idea how deep the corruption runs around here.  The Chicago Sun-Times is the paper of record when it comes to chronicling the investigations and arrests.  The Sun-Times regularly does full-page spreads mapping the connections between the parties.  Yet, Roe Conn, the afternoon drive-time talker, is wrong.  There is plenty of corruption to go around.  Detroit, Newark, Baltimore, New York, San Diego, Philadelphia, and other major Americans are not immune, as recent headlines have demonstrated.  Our attention was drawn to Philadelphia with the trial of Vincent Fumo now in full bloom. 

We’ve been following Fumo’s shenanigans for years.  We even have a Google alert set for him.  We seem to receive an alert every day.  You know the former Pennsylvania State Senator is in trouble.  Prosecutors have waited at least five years, but this week they got their opportunity to...

RESPONDING TO A FAITHFUL READER: FAMILY FOUNDATIONS AND MADOFF

DATELINE: January 5, 2009, Chicago

One of our faithful readers asked us to expand on our recent discussion of family foundations that have lost money in the Madoff scandal.  In our earlier post, we suggested that state charity regulators needed to take some action in response to what appears to us to be poor investment management practices on the part of some of those running these foundations.  The specific question was whether...

ACORN: “THIS IS ANOTHER FINE MESS YOU’VE GOTTEN US INTO, OLLIE”

DATELINE: November 16, 2008, Chicago

Last week, the Catholic Campaign for Human Development (CCHD), the national anti-poverty program of the U.S. Conference of Catholic Bishops, cut off its funding for ACORN, the controversial organization that was in the news during this just-completed election season because of allegations over voter registration fraud.  According to a November 13, 2008 press release CCHD cut off funding because of a major case of embezzlement which “raised serious concerns over ACORN’s financial accountability, transparency, governance, and organizational integrity.”  The press release then indicates that the allegations over voter registration fraud intensified CCHD’s concerns over ACORN's activities.  CCHD therefore extended its funding cut-off to any ACORN organizations.  We are not sure what the second cut-off adds to the first.  Maybe the first cut-off was similar to...

ALL STYLE, NO SUBSTANCE: THE SMITHSONIAN’S BOARD OFFERS LESSON IN WHAT NOT TO DO

DATELINE: April 15, 2008, Chicago

Much will be made of the today's article by Washington Post reporters James V. Grimaldi and Jacqueline Trescott regarding the February 2008 resignation of Pilar O'Leary, the head of the Smithsonian's Latino Center. Smithsonian Official Resigns After Ethics Violations. The story is tailor-made for critics of big-spending nonprofit executives. According to Grimaldi and Trescott, O'Leary was taking down about $200,000 in salary from the Smithsonian in 2005 and 2006.

Apparently wondering why O'Leary stepped down, the Post filed a FOIA request for the Smithsonian Inspector General's report covering his investigation of O'Leary. The Inspector General concluded that O'Leary "had...

HERE WE GO AGAIN: BUSINESS MANAGER CHARGED WITH STEALING $259,000 FROM CHURCH

DATELINE: March 27, 2008, Chicago

Hey, why worry about financial controls? They cost money, they add administrative burden, and you like spending time on mission rather than accounting. The reason can be found in Flossmor, Illinois, a suburb of Chicago. Yesterday, Eric Herman of the Chicago Sun-Times reported that Beverly Houston had been arrested and charged with stealing over...