Outrageous! Charity Chiselers (page 2 of 2)

Fat Cats

At some charities, an executive's earnings can burn up nearly half the total budget. "There are a lot of people out there making $200,000 to $300,000, and that's pretty much all [those charities] are doing -- existing to pay their own CEOs," says Trent Stamp, president of Charity Navigator. For example, in 2004 the Conference of Presidents of Major American Jewish Organizations Fund paid its secretary, Malcolm Hoenlein, $819,000, nearly half the charity's total expenses that year. Was he really worth more than the Red Cross president? And should taxpayers be subsidizing that salary because the organization is tax-exempt? I don't think so.

Too often, moneygrubbing crosses the line from unseemly to flat-out corrupt. Take the case of the Carl B. and Florence E. King Foundation, which receives tax-free status and makes grants to programs for children and the elderly, medical research and scholarships. In 2004 a jury ordered two of the charity's top officials to repay $7.5 million after they spent foundation money on everything from lavish vacations in Australia to health-club fees.

And, if officials actually do try to engage in oversight, it is not always welcome. In 2001 a United Way of the National Capital Area board member complained that the charity had paid for travel unrelated to the group's mission and had signed a lucrative contract with the group's former CEO. The board member was rebuffed and his term was not renewed. Later it turned out the CEO had defrauded the United Way out of almost $500,000, including personal trips to Las Vegas.

To be sure, some charity leaders are setting a noble example. William Baker, head of the New York-based Educational Broadcasting Corporation, has reportedly refused any raises above the $226,000 salary he first accepted a decade ago.

Yet how do we rein in those fat cats who would use our donations to pay for a deluxe wedding? A recent report to Congress suggests that nonprofits have at least three board members, that their tax reports be filed electronically and that large nonprofits have their financial statements reviewed by an outside auditor every year. "There's no reason not to extend many of the same requirements to nonprofits as we demand from corporations," says Jonathan Turley, a George Washington University law professor. He's right. Because we shouldn't open our wallets to line someone else's.

From Reader's Digest - September 2006

 

• • Politicians
• Michael Crowley
• • Scams
• • Your Tax Dollars
• Government

• Misuse of Hurricane Katrina Funds
• Why your charity dollars may be going to crooks instead of to the victims of Hurricane Katrina.
• 
• Research Grant Fraud
• We're paying for studies to heal sick kids and the elderly. We're getting swindled instead.
• 
• Government Employees' Undeserved Earnings
• How you are rewarding government employees millions of dollars they didn't earn.
• 
• Who Deserves $54,000 Per Hour
• Too many hotshot execs rake in a ton of cash -- whether or not they earned it.
•