Nonprofit director's compensation raises questions

Developer BFC Partners' decision to team up with Local Development Corp. of Crown Heights may complicate the very problems it was meant to resolve

By: Joe Anuta

WHAT'S IN STORE? BFC's plans look good on paper, but locals question how they'll work out.

The executive director of a Brooklyn nonprofit dedicated to providing affordable housing, social services and youth programs has personally received a percentage of profits from past development deals, an arrangement in his contract that charity watchdogs call a red flag.

That is one of several unusual financial details Crain's found in the operating statements of the Local Development Corp. of Crown Heights. The nonprofit, considered a trusted resource in the African-American community in Crown Heights, was brought on by developer BFC Partners earlier this month to help overcome local opposition to a proposed mixed-income apartment and recreation complex on city-owned land.

The revelations alarmed experts in nonprofit administration, who said the payouts to Executive Director Caple Spence cast doubts about the organization's management.

"This is not normal," said Ken Berger, the former chief executive of Charity Navigator, the largest nonprofit evaluator in the country, after reviewing the organization's Form 990 financial disclosures from 2015.

The nonprofit's involvement in the city-led effort to redevelop the Bedford-Union Armory in Crown Heights raises questions about why it was selected by BFC Partners and how it will help manage a half-million-dollar fund that is part of the project.

Opening doors

For-profit developers often partner with charities to win over community members who are skeptical of a project's promise of social and economic benefits. When developments undergo public scrutiny, nonprofit partners can deflect criticism because making money is not their primary goal. They also often bring specialized skills and sometimes allow projects to qualify for subsidies that would not otherwise be available to for-profit enterprises.

In late 2015 a team including BFC and Brooklyn nonprofit CAMBA won a competitive bid to transform the city-owned armory with a proposal to build market-rate condos and rentals around it. The developments would help pay for new affordable housing, a low-fee sports and recreation facility, and community and office space. CAMBA, which specializes in housing, economic development and education programs, is set to run the day-to-day operations at the rec center and provide discounted or free activities to nearby residents.

But despite that partnership, community members continue to oppose BFC's $195 million plan. They said the entire project should be dedicated to affordable housing. In September New York Knicks star Carmelo Anthony pulled his support, and another early partner, Slate Property Group, dropped out amid controversy surrounding an unrelated nursing home sale on the Lower East Side.

In reaction to increasingly vocal opponents, BFC principal Donald Capoccia announced in early March that BFC was bringing in the Local Development Corp. of Crown Heights, which has deep roots in the community. The group planned to hold meetings, reassure residents that the development was in their best interest, seek out minority- and women-owned businesses to participate and explain why the market-rate units in the project are vital to its success. In addition, the nonprofit would manage a fund seeded with $500,000 from BFC—and potentially boosted by future revenue from the project—that is designed to build additional affordable housing elsewhere in the working-class but gentrifying neighborhood.

'Rare' arrangement

Spence's employment contract, as detailed in his 2015 state filing, was structured to give him a cut of the nonprofit's development deals, allowing him to take a 10% share of profits the charity earned and 20% of what the nonprofit received from developer fees—money the city or state pays developers for working on affordable-housing projects. It was unclear whether the development corporation and BFC would get developer fees for the Bedford-Union project and if the revenues would be divided between them. The charity is involved only with the condo portion of the project, according to the city. Regardless, Spence's compensation arrangement is rare in the nonprofit world, experts said.

Nonprofit executives' compensation is generally a fixed amount. That ensures they are not pursing deals for personal gain, according to Nonprofit Compensation, Benefits and Employment Law, a book by David Samuels and Howard Pianko. And unlike for-profit businesses, nonprofits are required to reinvest any leftover money in the organization. When compensation is based on profit percentages, pay can fluctuate year to year, meaning that in some years extra money might flow to executives, just like at a for-profit business. Berger said such fluctuations could draw the eye of state and federal regulators, who can seek to recover payments they deem improper.

The Local Development Corp. of Crown Heights' 2015 filings stipulate that this arrangement boosted Spence's total compensation to a maximum of $312,000 in a given year, which one lawyer Crain's spoke with said makes the arrangement more palatable. But Berger still found it troubling. "The fact that the questionable number has a cap on it doesn't make it any less questionable," Berger said.

And Spence has pulled in quite a bit more than that amount in the past.

Compensation package

In 2014 the nonprofit reported about $752,000 in revenue, mostly in fees from affordable-housing buildings it manages. Yet Spence took home around $1.15 million in total compensation that year, including base pay, bonuses and about $956,000 in retirement and other benefits. The payouts resulted in an operating loss at the charity of more than $1 million.

A lawyer for the group said 2014's compensation was an anomaly that likely stemmed from a split-dollar life insurance policy that was transferred to Spence in lieu of other retirement benefits. Split-dollar policies, which are paid in part or full by an employer,are sometimes used as incentives for high-ranking nonprofit employees. And premiums, which the charity will get back after the policy is paid out by the insurer, can be put down in one year instead of the cost being spread out over several. But the incentive is more often used by larger organizations, according to Gregg Hirsch, an attorney specializing in insurance products at Mound Cotton Wollan & Greengrass. The football coach at the University of Michigan, for example, has a split-dollar life insurance policy.

Even excluding 2014, however, Spence's average compensation was about $318,000 between 2007, the first year he's listed as executive director in the organization's publicly available filings, and 2015, the year when the salary cap is detailed. Executive pay can vary across organizations depending on the work and how prized the person's skills are, but experts noted that Spence's compensation seemed high relative to the size of the nonprofit. In 2015, for instance, the head of a Bronx affordable-housing nonprofit of similar scale made less than half of Spence's average compensation. Even executives at much larger affordable-housing firms, such as the Fifth Avenue Committee and the St. Nicks Alliance, made no more than three-quarters of Spence's compensation.

"I would say this salary falls into the range of screwiness," said Odell Mays, an adjunct lecturer at the Columbia University School of Professional Studies, who reviewed the organization's annual 990 filings for 2007 to 2015 for Crain's. "There is a lot of stuff in here that is ripe for being questioned."

If a charity or executive does exceptionally well, he said, high compensation can be justified. But the Crown Heights nonprofit might have a hard time proving it is far outperforming its peers. In 2007, Spence's first year as executive director, he completed the organization's first ground-up development, a 173-unit senior residence in east Flatbush. The project pushed the corporation past $100 million in total construction spending for the first time.

"This award-winning project moved [the organization] beyond its humble beginnings as a redeveloper of old walk-up tenement buildings to a full-fledged developer of modern mid-rise apartments for its community," the group wrote on its website.

Three years later Spence completed a 143-unit senior residence in Crown Heights. In total he has brought in millions in revenue for the nonprofit, his lawyer said, noting that the executive's compensation package was drafted with the help of an outside specialist. Spence has continued to run several education and senior centers.

But Spence has not completed a major project since 2010. And under his leadership, the charity ran an operating loss for seven of the nine years between the beginning of 2007 and the end of 2015.

Plans to open a charter school, which videos on the nonprofit's website show Spence discussing as far back as 2013, never came to fruition. The costs involved made the idea unworkable, the organization said.

Nevertheless, Spence continued to receive perks that are unusual for small nonprofits. A 2013 filing showed he took out a personal loan of $166,000 from the nonprofit at 5% interest. Although charities sometimes make personal loans to employees, they are typically amounts akin to a paycheck advance, Mays said. At the very least, the board would typically require a written agreement for a loan of that size, yet it was issued without one, according to the state filings. Spence's lawyer said the corporation has largely been paid back.

Potential missteps over executive compensation are often avoided in the tax- exempt world by having a board of directors with a wide range of professional experience who can push back on anything they deem improper. To get Charity Navigator's stamp of approval under Berger's leadership, boards had to consist of at least five people, he said. The Local Development Corp. of Crown Heights has just three. Two of them are also listed as executives of the First Baptist Church of Crown Heights, the religious organization founded by the late Rev. Clarence Norman Sr. The house of worship is the institution from which the charity gets its neighborhood clout.

Strong connections

Norman, who was a highly influential figure in the Crown Heights community, started the local development corporation in 1987 to further the mission of his church. After his death in 2015, a local street was named after him and his wife. The organization has retained its connections in the neighborhood and currently manages about 670 units of affordable housing. "We have been looking out for the community for more than 30 years," Spence told Crain's at the announcement of his group's participation in the project. "We have worked with several government agencies, state and city," he added, "and we have a close working relationship with the elected officials." He has since referred all questions to the organization's lawyer, who would speak only on background.

Clarence Norman Jr., son of the late pastor, was a powerful Democratic Party boss in Brooklyn until he was convicted on campaign finance charges and sentenced to several years in prison. Spence said in a recent news report that Norman Jr. acts as a consultant to the local development corporation. He even listed himself as a contact for the organization during a meeting the city hosted for nonprofits interested in a community land trust. But according to reports, he is not working on the armory project.

BFC Partners said it picked the nonprofit because it was seeking to join forces with an organization with "deep community roots."

"After more than a year of community engagement, there was consensus among Crown Heights stakeholders that [it] would be the most appropriate local, nonprofit partner for the Bedford-Union Armory project," BFC said in a statement. "The ... team's deep community roots and our comprehensive approach to this project will ensure that the armory is a success for all Crown Heights families."

Correction: Caple Spence said in a recent news report that Clarence Norman Jr. acts as a consultant to the Local Development Corp. of Crown Heights.The attribution was misstated in an earlier version of this article.

A version of this article appears in the March 13, 2017, print issue of Crain's New York Business as "A curious partnership".

http://www.crainsnewyork.com/

Charity Probe Questions: WSJ Article

WSJ.com reported that New York Gov. Andrew Cuomo's probe of executive pay at nonprofits is bumping up against some of the state's best-known charities with strong ties to the most powerful people in Albany, including the speaker of the Assembly and the governor himself.

Two weeks ago, a state task force named by Mr. Cuomo began asking nonprofits to submit detailed information to the Cuomo administration about their executive pay levels and compensation policies. The task force said it is collecting information on a rolling basis from all nonprofits that receive funding from the state.

But one nonprofit that had not received a request by Wednesday is HELP USA, a homeless housing group founded by Mr. Cuomo in the 1980s. The governor's sister, Maria Cuomo Cole, is the group's chairperson, and its board of directors includes Mr. Cuomo's campaign treasurer Richard Sirota and Jeffrey Sachs, one of his closest health-care advisers, according to HELP's website.

HELP operates homeless shelters and develops low-income housing around the nation and gets most of its $71 million budget from federal, state and city contracts and grants, according to its tax filings.

The nonprofit paid its chief executive, Laurence Belinsky, $546,000 in 2008—including a $157,000 bonus—and $508,000 in 2009, according to IRS filings. His salary is more than 40% higher than the median salary of chief executives of nonprofits based in the Northeast with operating budgets of more than $13 million, according to Charity Navigator, a prominent charity database.

Mr. Belinsky couldn't be reached for comment.

Another powerful group that hasn't received a letter is the Greater New York Hospital Association, which represents many Medicaid-dependent hospitals in the city region and pays its chief executive $2 million a year, according to tax filings.

After a reporter inquired about the status of data requests to HELP and the hospital association, a state official said on Thursday that the task force had mailed letters to the groups.

Meanwhile, one of the first groups to get the request was the Metropolitan Council on Jewish Poverty, a social service group run by William Rapfogel, the husband of the chief of staff to Democratic Assembly speaker, Sheldon Silver. Mr. Rapfogel received a $435,000 pay package in 2009, tax filings show.

A spokesman for the taskforce said all nonprofits that receive government money would eventually receive a request for information.

"There are thousands of not-for-profits that we are looking at, so we are sending the letters in waves on a rolling basis," said the spokesman.

Susan Lerner, the executive director of Common Cause, which advocates for transparent government, said the governor's investigation would be successful only if all charities are treated equally.

"You need an objective standard by which to judge what is or is not excessive compensation. Where are we headed with this?" Ms. Lerner said.

Jeff Stonecash, a Syracuse University political science professor, said Mr. Cuomo's probe was treading on politically sensitive ground. "There are some pitfalls here, but there's a lot of gain if he can get the right headlines," he said.

Josh Vlasto, a spokesman for Mr. Cuomo, said the investigation would be fair.

"Politics never got in the way of investigations before, and it won't now. If you think otherwise, just ask Pedro Espada," Mr. Vlasto said, referring to the former Democratic Bronx state senator whom Mr. Cuomo investigated while attorney general.

Mr. Cuomo's investigative foray into state-subsidized charities has been the object of much interest and anxiety around the nonprofit world. The governor has promised a wide-ranging review, an undertaking that could be handled by Attorney General Eric Schneiderman, whose office regulates charities.

The governor has been praised for drawing more attention to nonprofit executive pay as it has stretched deeper into six and seven figures. But, depending on how Mr. Cuomo navigates those loyalties and rivalries within the nonprofit world, the task force also carries political risk.

"I can't see that he isn't smart enough or ethical enough to see that it would be problematic to target only organizations with whom he has no connection," said Assemblywoman Deborah Glick, a Lower Manhattan Democrat who introduced a bill this year to limit compensation for hospital executives.

Mr. Cuomo assembled the task force in early August in the wake of a New York Times article that scrutinized the executive compensation of a Medicaid-financed nonprofit group that reportedly paid two of its top executives close to $1 million a year. He put two of his most trusted aides on the task force, Financial Services superintendent Benjamin Lawsky and State Inspector General Ellen Biben.

But the inquiry's goal hasn't been defined. The task force may hold hearings and issue a report, leading to potential regulatory changes and legislation.

Weak enforcement of rules on U.S. charities: experts

(Reuters) - Authorities in the United States, particularly in cash-strapped states, have not devoted enough resources to policing nonprofit groups like those involved in recent philanthropy controversies, experts say

U.S. tax authorities grant groups charitable status, which exempts them from taxes, and require most to file annual informational tax returns, but experts say the main source of regulation faced by nonprofit groups is at state level from the attorney-general.

"The problem is that very few states have put the resources they should into this part of the attorney general's activities and the quality of regulation ... varies," said Leslie Lenkowsky, a professor of public affairs and philanthropic studies at Indiana University.

Best-selling author Greg Mortenson was accused by television program "60 Minutes" this week of misusing money given by donors, who include President Barack Obama, to his charitable organization Central Asia Institute. The New York Times reported last month that singer Madonna had ousted the board of her Raising Malawi charity due to mismanagement.

Many U.S. states are facing financial hardships stemming from the U.S. recession of 2007-2009, which has limited their budgets for law enforcement and other services.

There are about 2 million nonprofits in the United States. Of that number, just 20,000 receive about 85 percent of the $300 billion in U.S. donations made annually, experts said.

Mortenson, whose charity received $100,000 of Obama's $1.4 million Nobel Peace Prize award, has denied any wrongdoing and Madonna has said that her group was not under investigation.

Montana Attorney General Steve Bullock, who is responsible for overseeing the Central Asia Institute, said he will investigate concerns raised that the charity spends more promoting the importance of constructing schools in Afghanistan and Pakistan that is spends to build them.

"We've kept our rules relatively loose for charities in the United States," Lenkowsky said. "The reason being that our philosophy is that we would like to see lots of private initiatives that aim to serve a public interest."

HIGHER FRAUD RATE

Tax authorities reject very few applications by groups wanting to become charities, but making it more difficult would raise concerns about what criteria would be used to determine a nonprofit and could hinder efforts by groups to do good.

There are several independent charity watchdogs such as Charity Navigator and the American Institute for Philanthropy, where donors can get advice about larger nonprofit groups.

But their views can differ. The institute wrote a critical report about Mortenson's Central Asia Institute, while the Navigator gave it a top four star rating and then added a donor advisory warning when concerns about the group were raised.

"The vast majority of donors are looking for information that is readily available; they don't have a lot of time to do research for their charitable giving," said Ken Berger, chief executive of Charity Navigator.

"We're trying to oversee what is basically a $2 trillion part of the American economy -- one out of every 10 jobs -- 10 percent of GDP, and we are a very small operation," he said. "Creating further regulation would not be viable unless we get serious about enforcing existing law more rigorously."

Research shows that theft in the nonprofit sector accounts for 13 percent of annual donations, or about twice the rate of fraud in the for-profit sector, said Mark Kramer, co-founder of nonprofit consulting firm FSG and author of "Do More Than Give: The 6 Practices of Donors Who Change the World."

"In the for-profit sector, the line between what is illegal and what is merely bad judgment is clearly defined: Madoff committed fraud and is in jail," Kramer said.

"When one takes on the moral weight of running a charity, however, the rules are less clear," he said. "Unlike the for-profit sector, the scandal doesn't depend on whether something is illegal -- merely whether it sounds bad."

Kramer said donors tend to focus on funding good causes rather than judging charities by their results -- an approach which creates greater opportunities for mismanagement.

Protest Oregon's Proposed New Fundraising Law

Read Dan Pallotta's latest post in the Harvard Business Review:

Oregon's Attorney General John Kroger has introduced a bill that would strip the tax-deductible status from donations made to charities that spend less than 30% of their annual budget on services over the course of a three-year period. The law is intended to weed out scams.

And that's a problem. The fact that a charity spends less than 30% of donations on services doesn't mean it's a scam, and the fact that it spends more than that doesn't mean it's not one. The proposed law could not be more dysfunctionally designed: It has a blind spot for real fraud and puts a spotlight on potential innocence.

Here are six reasons why anyone who cares about social progress should contact Mr. Kruger's office and ask him to withdraw this proposed legislation:

1.It uses a false theory of transparency. It assumes — and makes the public think — that disclosure of overhead is transparency. Nothing could be further from the truth. Many reported overhead ratios distort and obscure the truth. They cloak the underlying accounting that goes into calculating the overhead percentage. Reporting a high rate of overhead probably signals a kind of innocence: It means the charity isn't using accounting shenanigans. The law drives right past real fraud (in the form of fraudulent accounting) — misses it completely, every time. Charities using aggressive, unethical accounting practices to mask high overhead get a free pass — or worse, they're made to look good. This practice is widespread. The Nonprofit Overhead Cost Project at Indiana University reported that, of 126,956 tax forms they studied, half of the organizations reported a hard-to-believe 0% fundraising cost, and one-quarter of charities with revenues between $1 million and $5 million reported a 0% fundraising cost.

Read more here.

New York Board of Regents Form 16-Member Committee to Investigate Deaccessioning

www.mediabistro.com reported the following:

This past fall, you might remember, was a bit rocky for the museum industry in New York. First, the state’s plans to pass a bill making selling pieces or collections of art in order to pay for anything but more art, particularly by government-funded museums, would be illegal, failed to pass through the senate. This was likely due to pressure put against its passing by the big, New York City-based museums who publicly stated on a number of occasions their distaste for regulation and promised they could police themselves just fine. If you were in support of the failed bill, things got even worse when the New York Board of Regents allowed emergency regulations surrounding museum deaccessioning to expire. This concerned many, as it was a sign that the flood gates for art sales could potentially now be open. Though that didn’t seem to happen en mass, at least on the record, the Regents caught a good deal of heat for it. Now, some months later, they appear to be attempting to regroup and figure out the controversial issue-at-hand. Judith H. Dobrzynski of Real Clear Arts reports that the Regents have recently formed a 16 member advisory committee who will look into how the state should handle museum deaccessioning. The list of members include lots of directors of museums across the state, as well as a couple of more high-profile museum types, including Martin Sullivan of the National Portrait Gallery, who was recently/currently mired in a controversy of his own. So what will come of the committee? That’s anyone’s guess. But given how tumultuous 2010 was for the state, it’s sure to be interesting to watch pan out.

Bringing Comparison Shopping to the Doctor’s Office

The NY Times reported on the development of health care price comparison resources being developed.

As the article relates:

Even if a patient does want to comparison-shop, there is no easy way to obtain complete and useful information. It is a hole in the market that some companies see as an opportunity, especially because many Americans will soon have to pay more attention to what they are paying for, rather than count on insurance to cover everything.

But there has been no easy way for consumers to shop for the best deal on a colonoscopy or blood test. A start-up financed by prominent venture capitalists and the Cleveland Clinic, Castlight Health, aims to change that by building a search engine for health care prices. Patients using Castlight could search for doctors that offer a service nearby and find out how much they will charge, depending on their insurance coverage.

A few others are starting to publish health care prices, including Thomson Reuters, a Tennessee start-up called Change:healthcare, the New Hampshire government, which created a comparison shopping tool for residents, and health insurers. Aetna, for instance, has built tools to help patients estimate prices and may build more advanced tools, said Lonny Reisman, Aetna’s chief medical officer.

Price transparency could significantly change the way health care is bought in the United States. The notion “seems ridiculously simple and obvious, and in any other industry, you would say, ‘Duh, we already have that.’ But in health care, it’s revolutionary,” said Alan M. Garber, a professor of medicine and the director of the center for health policy at Stanford, as well as an investor in Castlight. Read more here.

Come Together? Right Now? A Discussion of Strategic Alliances and Partnerships

The blog, Done by People, by Joe Brown, Principal and Founder of Slope Resources, LLC, offered the following recap of the "A Conversation with NYS Comptroller Thomas P. Di Napoli and Panel Discussion on Strategic Alliances & Partnerships."

On Monday, I had the opportunity to attend a highly informative and engaging forum which brought together government and nonprofit representatives to discuss the topic of strategic alliances and partnerships among nonprofit organizations. While the discussion focused on New York State’s nonprofit sector, the challenges, considerations, and ideas discussed are applicable to organizations nationwide. In the absence of a video or audio recording of the session, I wanted to share this detailed recap and my impressions of the session.

The event was sponsored by the Community Foundation for the Greater Capital Region and the New York Council of Nonprofits (NYCON) and held at the headquarters of New York State United Teachers (very nice digs, by the way) in Latham, New York, a few miles northeast of Albany.


Karen Bilowith, President and CEO of the Community Foundation for the Greater Capital Region, presided over the session. The approximately 75 attendees included representatives of various nonprofits, including arts, cultural, health, and human services organizations, as well as a number of funders and consultants (including yours truly). Following Ms. Bilowith’s welcoming comments, New York Secretary of State Lorraine Cortés-Vázquez provided brief opening remarks. Ms. Cortés-Vázquez assured the attendees that “most in government” recognize the importance of the nonprofit sector and rules and regulations pertaining to the sector should not be so onerous as to provide disincentives for staff, board members, and volunteers to participate.

I’m from the government, and…
Ms. Cortés-Vázquez then introduced the session’s keynote speaker, New York State Comptroller Thomas P. DiNapoli. The Office of the State Comptroller has responsibility for the review, approval, and payment of the state’s contracts with nonprofit organizations. Mr. DiNapoli noted the importance of the nonprofit sector to the state and its economy, citing 2006 statistics that the state’s approximately 24,000 nonprofits reported revenue of $133 billion and employed nearly 1.2 million people, or 17% of the state’s workforce. He quantified the state’s contractual bonds with the sector as consisting of nearly 31,000 active contracts totaling $14.6 billion, as of June 2009. Read more here.

The balance of the session was devoted to presentations and discussion by a panel consisting of:
■Doug Sauer, who has served as Chief Executive Officer of New York Council of Nonprofits (NYCON) since 1980. NYCON’s membership represents approximately 1,600 charitable nonprofit organizations across New York State.
■Cristine Cioffi, who is a partner in the law firm of Cioffi • Slezak • Wildgrube P.C., but spoke primarily in her role as Chair of the Board of Trustees of Ellis Medicine, an organization which resulted from the recent merger of three nonprofit hospitals in Schenectady County.
■David W. Palmquist, who as Manager of the New York State Museum’s Chartering Program, oversees the chartering of museums, historical societies, and similar cultural organizations with educational purposes across the state.
The panelists responded to questions posed by Ms. Bilowith, as well as several questions from audience members.

Doug Sauer
While all three of the panelists presented interesting perspectives on the potential of various collaborative models for nonprofit organizations, I was particularly impressed by Mr. Sauer’s insight and candor on a number of fronts. Early in his presentation, he discussed the recent proliferation of nonprofits, describing the creation of thousands of new organizations each year, many of which are not active, and the resultant saturated environment. (I was reminded of a recent article in the Chronicle of Philanthropy, which noted that the number of nonprofit organizations nationwide has increased by 90% to 1.2 million since 1996). Read more here.

Inspector General: NYSTI director acted unlawfully

The Business Review (Albany) reported that the state inspector general today alleged that New York State Theatre Institute producing director Patricia Snyder unlawfully directed more than $1 million of the Troy-based authority’s funds to pay family members and support “questionable expenses” that included a $150,000 apartment in New York City.

The 127-page report issued by Inspector General Joseph Fisch alleges that, among other things, Snyder hired herself and family members to act, direct and produce 92 percent of all NYSTI productions; received adaptation rights and royalties from the theatre’s production of “Miracle on 34th Street;” and spent $150,000 on an apartment near Carnegie Hall that was used to lodge family and friends.

E. Stewart Jones, an attorney representing Snyder, called the 127-page report “highly distorted and really mean-spirited.”

Jones said the report takes situations out of context, and that Snyder’s family members were qualified for their positions and highly respected in their fields.

“They are all present on their merits,” Jones said.

He said that neither Snyder, NYSTI’s board nor its attorney were aware of a 2007 state law that prohibits nepotism in state-created authorities.

State legislation in 1974 created NYSTI as a nonprofit public authority to provide theater and education for New York youth. It is funded with public money.

As such, NYSTI is a state agency that must follow New York’s ethics laws. Those laws were established in the 1980s and strengthened in 2007. The 2007 law prohibits “elected officials, state officers or employees” from “hiring, promoting, disciplining or discharging a relative” for any paid position at state agencies or authorities. Snyder did much of the hiring at NYSTI.

Read more: Inspector General: NYSTI director acted unlawfully - The Business Review (Albany)

Making Sense of Federal Forms

Here is a helpful post from CharityNet USA on federal forms for nonprofits:

Running a nonprofit means you have to deal with all types of report forms. You will have forms coming from both your state’s government and the Federal government. Each government department will expect you to know what their forms are for. I’m going to go over some common federal forms you will encounter and what each is used for.
• Form 1023- filed to apply for 501(c) (3) status with the IRS
• Form 8718- payment coupon filed with Form 1023 to report the amount being paid
• Forms 990N, 990 EZ, and 990- annual filing forms submitted by 501(c) (3) organizations to report income, expenses, and activities
• Form 940- filed annually to report and pay employer’s federal unemployment tax
• Form 941- filed quarterly to report employment taxes (income tax, Medicare, Social Security, etc.) withheld from employees and the employer’s portion of employment of those taxes
• Form W-4- completed by employees so the correct tax amounts are withheld from their paychecks
• Form W-2- distributed to employees each year to report their income and taxes withheld
• Form W-3- filed annually to report income paid to employees and their employment taxes
• Form 1099MISC- distributed to individuals who are independent contractors to report their income
• Form 8829- reports the expenses for using portions of your home for business use
• Form 4562- filed to report depreciation and amortization on property and equipment
• Form 4797- filed to report the sale of business property during the year
• Form 4868- filed to receive an automatic extension of time to file tax documents but not to pay taxes
• Form 2848- filed to give an attorney, CPA, or EA power of attorney or to act as your representative
• Form 4506- filed to request a copy of your tax returns
• Form 8822- filed with the IRS to change the address on file with them

Throughout the course of running a business you will encounter many different types of forms, both federal and state.

IRS FORMS Here

Study: CEO Salaries At Nonprofits Up In 2008

NPR reported on a new study by The Chronicle of Philanthropy, released Monday, shows that the top pay at the nation's largest nonprofits rose again last year, with some eye-popping results. But the survey also found signs that these high-dollar salaries may be starting to turn around. Read more here.

The interesting issue here is that it included only large nonprofits. In fact, the Chronicle stated that there median salary level was over $400,000. How can NPR or any other news source draw conclusions on salary levels for nonprofits increasing, when the majority of organizations aren't even included (or given a voice)? It is news stories like this that are problematic and tarnish the sector, even though the figures apply to a minority of nonprofits. Have your own thoughts, share them here.

NY lawmakers use campaign money as personal piggybanks

The Journal News reported on politicians often unrestricted use of their campaign money, including highlighting donations to nonprofits. As the article related:

What does spending $861 on hot sauce or $18,750 on a 2009 Cadillac sedan have to do with serving in the state Legislature?

For Assemblywoman Donna Lupardo, D-Binghamton, her office explained that she dipped into her campaign account to purchase personalized bottles of Hot Shots "Road Kill" sauce to give as party favors to supporters last month.

And Sen. James Alesi, R-Perinton, whose district covers a large part of Monroe County, said he does a lot of driving in the course of his work. Thus he chose to use campaign money to pay for some of the cost of his new Cadillac.

"I put about 40,000 miles a year on my car traveling around the district," Alesi explained.

Lupardo holds an annual "Blues and Barbecue" fundraiser that draws several hundred people, so "she had wanted to do something to just give back to the supporters," aide Michael Kennerknecht said of the sauce from Hot Shots of Charlotte, N.C.

From leasing cars and paying for airline flights to sponsoring Little League teams and contributing to charities for cancer victims, New York's election laws give lawmakers plenty of leeway on how they can spend their war chests.

Former Senate Republican Leader Joseph Bruno, who resigned last year and is battling federal corruption charges, used $441,373 from his campaign coffers to pay legal bills between January and the end of June. Bruno once bought a pool cover, saying it was related to his political duties because he regularly entertained.

Good-government groups have been pushing for stronger laws on the use of campaign contributions. New York law prohibits using the money for things that are not related to a political campaign or holding a public office.

But it is "too vague to provide any meaningful restraint," according to a report earlier this year by watchdog organizations.

The groups are proposing to restrict spending to uses that promote a candidate's election, and to ban expenditures like country club dues, legal fees, utility payments and rent. New York has among the weakest campaign finance laws in the country, advocates said. Read more here.

Expanded NYS Government Accountability Website

Sunlight 2.0, expanded and revamped, is the government accountability Website by Attorney General Andrew Cuomo’s office. The new Website — sunlightny.org — is more comprehensive than its predecessor, including adding information about state authorities and campaign contributions.

Each search offers the following categories to explore:

• NYS Campaign Finance
• Lobbyist State Corporations
• Member Items
• Charities
• State Contracts