Foundations Paying Millions of Dollars to Their Own Well-To-Do Trustees Instead of Charities

releases.usnewswire.com ^

[chance33_98]

Foundations Paying Millions of Dollars to Their Own Well-To-Do Trustees Instead of Charities, Study Shows

8/29/03 3:42:00 PM

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To: National Desk

Contact: Pablo Eisenberg of the Center for Public and Nonprofit Leadership at the Georgetown Public Policy Institute, 202-362-0256, e-mail: pseisenberg@erols.com

WASHINGTON, Aug. 29 /U.S. Newswire/ -- A new study analyzing the tax returns of 238 foundations has revealed that in a single year, they spent nearly $45 million on "trustee fees" -- the vast bulk of which go to their own predominately wealthy boards of directors rather than to the charitable causes they were set up to fund.

The study, "Foundation Trustee Fees: Uses and Abuses," was released today by researchers at the Center for Public and Nonprofit Leadership at the Georgetown Public Policy Institute. The study is available in pdf format and can be requested directly from the Center by contacting study co-author Pablo Eisenberg by e-mail at pseisenberg@erols.com or by phone at 202-362-0256 or by contacting Rick Cohen at the National Committee for Responsive Philanthropy at 202-387-9177 or e-mail: rick@ncrp.org.

Among the findings:

-- A substantial majority of the foundations surveyed paid fees to their board trustees, including 64 percent of the large foundations and 79 percent of the smaller foundations. The amount of the trustee fees varied greatly and did not appear to depend on the size of the foundation.

-- The 238 foundations surveyed paid a total of $44,891,982 in trustee fees in 1998. Of this amount, $31,054,256 was distributed to individual board members -- $24,749,451 at the large foundations and $6,304,805 at the smaller foundations. The remainder, $13,837,726, went to bank trustees at 25 foundations.

-- Fourteen of the large foundations paid their trustees more than $100,000 each. The largest amounts went to two trustees of the Kimbell Art Foundation ($750,000 and $747,000) and to Walter Annenberg of the Annenberg Foundation ($500,000). Three large foundations paid between $90,000 and $100,000 to each of their board members, 27 paid $50,000 or more, and 56 paid $25,000 or more.

-- Five of the smaller foundations paid their trustees more than $100,000 each in fees. The highest fee, $232,619, was paid by the Ira and Doris Kukin Foundation. Four smaller institutions paid between $90,000 and $100,000 each to their board members, 16 paid $50,000 or more, and 31, or 50 percent, paid $25,000 or more.

-- Based on the 990-PF's and our follow-up phone calls, we found that, with a number of notable exceptions, trustees in general spent little time on foundation business.

-- The Internal Revenue Service and the state attorneys general, which have the responsibility for overseeing foundation activities, have not had the resources or, at times, the will to effectively crack down on abuses.

In light of the findings, the researchers included the following among their recommendations for policy reform:

-- Limit private foundation trustee fees to no more than $8,000 per trustee annually. Such a level was found modest enough to curb excesses, but sufficient to allow for the kinds of small, reasonable payments that can help promote diversity among foundation boards.

-- Prohibit foundations from counting trustee fees as part of their annual minimum required charitable spending (also known as "payout").

-- If the IRS and state attorneys general are to oversee and police the nonprofit sector effectively, their resources will have to be greatly expanded. All or a substantial portion of the excise-tax paid by private foundations should be allocated for this purpose.

The study on foundation trustee fees was researched and authored by Christine Ahn, Pablo Eisenberg and Channapha Khamvongsa.

[Blood of Tyrants]

How can I get on one of these boards?

[Kenny Bunk]

Yeah Baby!
What this article fails to point out is that these 501c3 scams are set up to do is pass wealth from one generation to another and keep it out of the tax-man's hands. So what? Big boys draw big pay.

A far more interesting line of inquiry might be to iinvestigate the projects funded by the big foundations.

[Blood of Tyrants]

Then if we can eliminate the death tax, the majority of these foundations will quickly disappear.

[txzman]

Nah this is just good 'ol capitalism.

The fact that a small group of buddies vote themselves all that money has nothing to do with it.

[Mark was here]

If you donate money to these "charities", and don't like how they are spending the money, don't donate to the "charity"!

Anyone who blindly gives their money away, expecting the taxpayers to assume responsibility for how it is spent,(by having the government "monitor" the "charity"), is lacking common sense, to be charitable about it.

[dogbyte12]

This is why campaign finance is a joke and needs to be scrapped. Charities are a great way to launder money politically.

You are president of a law firm. You get 50 of your fellow scumbag employees to pony up $1,000 each to Billy Jeff. Ya then give everybody a $1,000 bonus. Then Billy Jeff talks to his friend who runs "a charity", gets ya put on the board, where ya attend 2 meetings a year, and ya pocket $50,000.

People who play honestly with campaign finance rules get screwed, everybody else works the system. It's not just charities though, it is the corporate board scam. Arkansas First Lady Hillary Rodham sitting on a seat on wal-mart's board that was specially created for her is a good example. The position on the board was eliminated as soon as she resigned to help Bill run for President. Boards both corporate and charity often turn into bribery brothels.