The Washington Post reported last Thursday that current IRS Commissioner Mark W. Everson was chosen by the Red Cross Board of Governors to lead the $6 billion disaster relief agency. As IRS commissioner, Everson aggressively pushed for greater non profit compliance, accountability and disclosure by “cracking down on the dubious use of tax-exempt status by charities and nonprofit groups.”
Everson will soon start working to make sure the Red Cross complies with all IRS non profit laws. Complaints from victims of Hurricane Katrina, local chapters and whistle-blowers prompted Congress to pass amendments designed to streamline the only individual charity mandated by the federal government to help Americans in the midst of catastrophe.
Non profits are big news worldwide.
A week ago, The Independent (UK) reported that the Smithsonian Institute was rocked by “allegations of graft and extravagance” and that chief executive, Lawrence Small, left last month “following an audit which exposed lavish expenses including $12,000 (£6,100) for swimming pool upkeep, and more than $1million of mortgage allowances for a $3 million official residence which carried no mortgage.”
The New York Times ran a story on Tuesday, November 7, 2006, describing how the Decatur Shrine Club was unexpectedly seized and shut down by the Cahaba Shrine Temple of Alabama for contributing 51% instead of 100% of the charitable proceeds to the Shriners Hospitals for Children. “I guess Shrine law supersedes the city ordinance,” said club member Lucian McCulloch, who was quoted in both the Times article as well as in a story run by the Decatur Daily on Wednesday, November 8, 2006.
Last month, a March 1, 2007 New York Times article, “IRS Finds Tax Errors in Reports of Nonprofits,” detailed how 600 charities have had to file amended tax returns, how 40 individuals were asked to pay a total of $20 million in excise taxes on excessive benefit transactions and how Yale University did not fully report on its securities transactions as well as what portion of specific expenses were spent on it’s programs administration and fundraising.
Two weeks later, a New York Times front page story reported that money collected by the Shriners temples and clubs to benefit the Shriners Hospitals for Children was being misspent.
Or even worse.
Two decades ago, an Orlando Sentinel investigation found that most money raised by the circuses was withheld from the hospitals. The newspaper received a tip from Shriners who had been ordered to resell circus tickets, resulting in an estimated loss of $8,000 to $30,000. The Shriner whistleblowers had reported their concerns two years earlier to a pair of law enforcement officers who ultimately did nothing.
They were also Shriners.
The Sentinel staff also found that money raised for the hospitals was misspent on liquor, clothes, travel, parties and jewelry.
Before going on, let’s make one thing very clear.
This is not about the 425,000 fraternal Shriners, some of whom have volunteered for decades to help the sick and crippled children. These guys will roll out at zero dawn thirty on a Saturday morning to set up for a pancake breakfast. Or carefully apply heavy make up, pull on colorful costumes and not give a rip about what anyone thinks of a clown driving down the road, on his way to help heal the hospitalized children with laughter, the best medicine.
This is about Shriner chains of command that refuse to answer financial questions, though the charity is worth over $10 billion. This is about Shriner leaders who embrace secrecy instead of answering questions such as “Where does all the money go?” In the extreme cases of Shriner Vernon Hill and former IRS agent, Paul Dolnier, both Shriners groups sued them for defamation instead of answering their questions. In contrast, crimes and fraud are openly discussed and recorded in the Shrine Treasurers Association Meeting minutes. For example:
• $1.2 million missing from one bingo game’s proceeds.