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/

Lawsuits: GroWest's leaders responsible for improprieties

Imagine a dysfunctional nonprofit agency, filled with corruption and negligence at every level.

That’s the picture of GroWest Inc. painted in five state Supreme Court lawsuits obtained Wednesday by the O-D.

Some of the most egregious allegations are made against John Denelsbeck, the agency’s former executive director. One complaint filed by GroWest claimed Denelsbeck orchestrated bid rigging and masked the nonprofit’s financial problems from the board of directors.

“Denelsbeck used inside program information, such as project cost estimates to manipulate the bidding process to ensure that preferred contractors got particular jobs,” the complaint states.

Those contractors then called for bogus emergency repairs and other project changes to raise costs, according to the complaint. In some cases, the contractors used construction materials obtained through GroWest funds for personal use, according to the court documents.

The four separate legal actions filed by GroWest against its former officials and contractors claim various monetary damages ranging from $439,003 to more than $7.4 million. A fifth complaint filed by the city against GroWest and its former leaders also claims damages of more than $7.4 million.

Attorney Mark Wolber, who is representing Denelsbeck, said the former executive director did nothing wrong. Wolber took issue with how the allegations were compiled and questioned why Denelsbeck never was interviewed during a city investigation into the nonprofit.

“I find it a bit difficult to understand how anyone attempting to investigate can get a fair picture of the situation without explanation from both sides,” Wolber said.

Read more of the OD's article here.

Hage charges city of Utica $177,118 for Gro West investigation

The OD reported that details of Hage & Hage LLC.’s substantially discounted but still pricey legal bill for the GroWest investigation were finally made public Friday.

The final tally: $177,118.

The news did nothing, however, to calm the uncertainty surrounding the situation since April. City Comptroller Michael Cerminaro, whose office was held partly to blame by the law firm for failing to recognize the issues at GroWest, Inc., said again his office will not cut the check.

The reason, he said, is that investigations by the FBI and U.S. Department of Housing and Urban Development made the Hage & Hage probe unnecessary.

“Here the proper investigation is still going on, and we have this political investigation to bloody up (Mayor David Roefaro’s) quote-unquote political enemies,” Cerminaro said. “But yet, I’m supposed to pay this guy?”

Cerminaro said he will defend that decision in court, if need be.

Hage & Hage, run by J.K. Hage III, was hired by both the GroWest board of directors and the city in April, though the city alone will foot the bill.

The firm’s eventual report, delivered in August to the Common Council, found widespread misuse of federal money administered to the nonprofit housing rehabilitation agency from 2000 to 2009. It found blame with the agency itself, and with various city departments, and indicated possible criminal activity by former contractors.

City Corporation Counsel Linda Sullivan Fatata, whose office technically represents both the mayor and comptroller, said she would take Cerminaro to court if she must to force him to pay the bill. She pointed out the hiring of Hage & Hage was approved by the city Board of Estimate and Apportionment.

And she said if the situation ends up in court, Cerminaro would need his own legal counsel, meaning the expense of more taxpayer dollars. Ironically, Cerminaro would likely need E&A approval to hire his own lawyer, she said.

“I hate to see it come to that,” she said.

Both Fatata and Roefaro have said the Hage & Hage investigation would pay for itself. The city has sued GroWest, which has a $1 million insurance policy, and it has also taken over civil lawsuits initiated by GroWest against former agency employees and contractors.

“If we recover any of that money, it will more than pay for the bill,” Fatata said.

Roefaro responds

Roefaro said the Hage investigation has a purpose distinct from those by the FBI and HUD. Specifically, he has said, it protects the federal money currently coming to the city, provides an outline for the city to correct past mistakes and puts the city in HUD’s good favor by showing willingness for self-examination. The lawsuits enabled by the Hage investigation extended statutes of limitations that were about to run out, he said.

“If I didn’t do this, it would have cost the taxpayer millions of dollars,” Roefaro said.

Roefaro has bristled all along at the accusations of politics playing a role in the process, more recently saying he is taking his cues from HUD, which has stationed an auditor in the city’s Urban and Economic Development office.

Hage was first hired by the GroWest board, and the mayor said he had no role in the Hage investigation while it was going on. He said Cerminaro should “look at the hundreds of thousands his office has overpaid” instead of the bill, referring to payroll errors over the past year-and-a-half.

“We cannot reward incompetency, and I cannot push this under the rug,” he said. “Mr. Cerminaro will have to accept what is going on and that FBI and HUD are involved or he should resign.”

The bill submitted by Hage, who was hired at a rate of $150 per hour, actually indicated the work by his firm totaled $368,078. It was reduced, according to the bill, by several sizable “courtesy credits” from the firm.

Hage has said his normal hourly rate is more than $400, but that the actual hourly rate for the investigation came to $123.

Council members critical

The executive summary released is critical of both Cerminaro and former Mayor Timothy Julian, who was defeated by Roefaro in 2007. Cerminaro and Julian, both Republicans, have been mentioned as possible political candidates against the mayor in the 2011 election.

On Friday, Council President and Democrat William Morehouse said he was “boggled” by the situation and still objected to the investigation.

“I’m not saying it was, but it was potentially politically motivated,” said Morehouse, adding that he considered himself a friend of Hage and the mayor. “If it smells like and tastes like and looks like, it comes to a point that you really get concerned.”

Common Councilman Rocco Giruzzi, R-3, cited his lack of legal expertise and said he did not have an opinion on the Hage report, but did say he felt “nobody’s worth that amount of money.”

“I just hope at the end of the day there’s justice and the people that are guilty are held accountable,” he said.

Council Majority Leader Lorraine Arcuri, D-at large, questioned whether money recouped in lawsuits will make up for the city taxpayer-funded Hage investigation, or go back to the federal government.

“Not only is this a waste of money, but the use of a private local attorney for this may lead some to question the credibility of the report,” she said. “Worse yet, some may see it as a cover-up. “

What’s next?

Cerminaro said his office will begin formally auditing the bill Monday, and he plans on formally notifying the Corporation Counsel’s Office that he will not pay it during the week.

Fatata said her office will begin working on proceeding with the claims it has already filed against GroWest and the ones it has undertaken against the agency’s former employees and contractors.

She said her office will not initiate new actions any time soon, and that any additional suits will likely commence after the FBI has finished its work.

That means the city will likely not file civil suits against any of its employees. But that doesn’t mean they are completely in the clear, Fatata said.

“Anything with past officials would tend to be more criminal than civil,” she said, declining to elaborate.

Utica council won’t seek state help with GroWest

The OD reported that a resolution asking various state agencies to launch their own investigations into GroWest Inc. was voted down by the city’s Common Council on Wednesday after it was proposed by two council members.

GroWest already was the subject of a investigation by city-hired attorney J.K. Hage III and still is being probed by the FBI and the U.S. Department of Housing and Urban Development.

The executive summary from Hage’s investigation, an undertaking he has said will cost the city more than $100,000, indicated possible criminal improprieties by former contractors and employees of the West Utica-based nonprofit agency and a failure by the city to set up and execute an adequate way to administer federal dollars.

Council members James Zecca, D-2, and Frank Vescera, D-1, said Wednesday that they sought state involvement after reviewing the contents of Hage’s full report, which remains under lock-and-key in the City Clerk’s office.

The report is available only to council members and a select few other officials because of its implications for city employees and pending litigation. But Zecca and Vescera said its conclusions motivated them to seek as much help as possible.

“I’ve got to be honest with you,” Zecca said. “I don’t trust anybody at this point in time. I don’t trust a soul.”
He and Vescera suggested that the state Attorney General’s Public Integrity Bureau or the state Comptroller’s Office could become involved. But their resolution was voted down 6-3, with Rocco Giruzzi, R-3, the only other council member in favor of it.

Mayor David Roefaro and Corporation Counsel Linda Sullivan Fatata echoed the sentiments of opposing council members when they said the city’s only involvement with GroWest was through federal money, and that HUD and the FBI should be allowed to proceed without the state getting involved. A HUD auditor is currently stationed in the city’s Urban and Economic Development department.

Several council members said state agencies are certainly aware of the situation anyway, given the intense publicity it has received in the media.

GroWest and the city’s Urban and Economic Development office will be subjects of discussion at a 6:30 p.m. council Economic Development Committee meeting Thursday at City Hall.

The OD Offers View: Board’s duty to keep eye on finances

The Utica OD offered a very relevant viewpoint for any board member, whether municipal or nonprofit, should take into account:

It is truly chilling to learn that an amount equal to one-third of the Fairfield town budget could be misappropriated over time without anyone noticing.

A similar situation occurred just a short while ago when it was discovered that the town of New Hartford’s reserve had been depleted by $2.8 million – again, without anyone noticing.

We expect police to patrol our streets and deter crime. We expect public health officials to identify early outbreaks of disease. We expect teachers to educate our children.

Most certainly, those people elected and/or appointed to serve in key leadership roles must monitor a government’s or organization’s finances.

The story has been repeated across the Mohawk Valley and elsewhere, and not just in municipal governments like Fairfield and New Hartford, but also at nonprofit agencies, where private and public funds have been misappropriated or mishandled.

These incidents raise the very real specter that financial oversight is sorely lacking in the public and nonprofit sectors, and that malfeasance and waste are far more common than we’d like to believe.

Take Fairfield. In a town of just 1,607 people, a whopping $378,000 disappeared between 2005 and 2009. The current town supervisor now estimates additional costs of $800,000 or more, factoring in fines for missed reports and expense to borrow money to make up for the missing funds. The former town supervisor’s wife, Randi Matthews, has been charged with embezzlement and her case is in the courts, but the state Comptroller’s Office audit makes it quite clear that the Town Board members did not do their job. No one studied financial reports closely enough, and no one reconciled the financial statements with bank records, which would have been an immediate tipoff to problems.

The lessons here, for anyone serving on a board, are simple:

• Become familiar with financial statements. Talk to the treasurer, or the auditor, and educate yourself on financial statements, and what to look for.

• Ask questions when reviewing monthly financials. This is a critical responsibility of every board member. Look closely at the numbers, ask yourself if they make sense, and if anything looks amiss, refuse to approve the financial reports without a clear accounting.

• Insist on an annual independent audit. A good auditor is going to smoke out questionable financial practices, usually by finding irregularities when reconciling financial statements with checks or vouchers.

Review the audit report carefully.

• Rely on appropriate experts for advice. These would be the state Comptroller’s Office in the case of governments and the state Attorney General’s Office in the case of nonprofit agencies and charities.

• Blow the whistle at even the smallest signs of trouble. Remember, your responsibility is to the government, the agency, the taxpayers or the stakeholders, not to the individual people running the government or agency. Silence allows incompetence or malfeasance to flourish.

None of this is complicated, if the proper procedures are followed regularly. Remember, the person who’s absconding with the funds is almost always a trusted member of a government’s or agency’s inner circle. To ensure that funds are managed properly, board members should recall the apt words of President Reagan: Trust, but verify.

Copyright 2010 The Observer-Dispatch. Some rights reserved

Nonprofit Salaries Are Issue for States and Federal Officials

The NY Times reported that State and federal officials are starting to take their knives to the pay of leaders of nonprofit groups they do business with to help share the pain of tighter budgets.

A provision in New Jersey’s recently passed budget, for example, includes a limit on what nonprofit groups can pay their chief executives if they are providing social services under state contracts. The cap, based on a formula that also applies to for-profits providing such services on behalf of the state, is part of a broader effort by Gov. Chris Christie to rein in salaries on state workers.

In New Hampshire, Attorney General Michael A. Delaney is investigating compensation among nonprofit hospital executives. And Vermont legislators are trying various ways of curbing salaries paid by nonprofit groups that have contracts with the state.

On Capitol Hill, four senators this spring refused to approve a $425 million package of federal grants for the Boys & Girls Clubs of America after staff members looked at the organization’s tax forms as part of a routine vetting process and were surprised to learn that the organization paid its chief executive almost $1 million in 2008 — $510,774 in salary and bonus and $477,817 in retirement and other benefits.

“A nearly $1 million salary and benefit package for a nonprofit executive is not only questionable on its face but also raises questions about how the organization manages its finances in other areas,” said Senator Tom Coburn, Republican of Oklahoma.

Another senator, Charles E. Grassley, Republican of Iowa, has told Treasury Secretary Timothy F. Geithner that he is concerned that the Internal Revenue Service is not tough enough in policing pay in the nonprofit sector and that regulations governing compensation are too weak.

“I’ve asked him to review these regulations to see how they can be made effective,” Mr. Grassley said. “What’s there now doesn’t seem to be working.”

Mr. Grassley, who has used his seat on the Finance Committee to scrutinize a wide variety of nonprofit practices, noted that pay had been a “major issue” in his reviews over the last several years of universities, charitable hospitals and the Smithsonian Institution.

Compensation has long been a point of controversy among donors to nonprofits. By far the biggest category of complaints posted on the Web site of Charity Navigator, which offers research and analysis of nonprofit groups, involves complaints about pay. Read more here, especially for the other perspective offered by some nonprofit EDs.

Exclusive: GroWest claims millions in damages

The Utica OD reported that GroWest Inc. is initiating four separate legal actions against former agency officials and contractors, claiming that improper actions including possible fraud and negligence cost it millions of dollars in damages, court records obtained Thursday by the O-D show.

The actions bring weeks of intense speculation about an investigation of the nonprofit housing rehabilitation agency into sharper focus.

Among the defendants listed in the state Supreme Court papers: The agency's former executive director, John Denelsbeck, and its former finance director, Mary Hutton, both of whom resigned within the past two years.

In all, four separate summonses signed by Utica attorney J.K. Hage III and filed in the Oneida County Clerk's Office list various monetary damages ranging from $439,003 to $7.4 million. Hage's law firm has been enlisted by both GroWest and city government to investigate claims of “contractual improprieties” involving the use of federal and state funds by the agency over the past decade.

In an e-mail exchange, Hage said his firm expects to complete a report for GroWest and the city this month. The court actions are an attempt to preserve the legal options for the parties, if they wish to pursue them afterward, he said.

He declined further comment on the legal action, saying to do so would be to reveal elements of his strategy that he wishes to keep confidential.

The FBI has commenced a separate investigation into the matter, issuing subpoenas to the city and GroWest for records back to 2000. The U.S. Department of Housing and Urban Development, which has traditionally been a sizable source of funding for GroWest initiatives, is also conferring with the various parties. Read more here.

Official: Nonprofit agency GroWest subject of Utica's mystery probe

The OD reported that the subject of City Hall's mystery investigation that the Roefaro administration won't discuss is a nonprofit program that uses federal grant money administered by the city to rehabilitate homes, a city official said Monday.

GroWest has worked with the city under a number of different programs, including lead abatement, the sale of historic homes in the Rutger Park neighborhood, the Oneida Square façade improvement project and federal housing programs, which exist to create affordable housing for low-income households, according to records and O-D archives.

The agency was founded in 1996 with a focus on revitalizing the West Utica neighborhood around the Munson-Williams Proctor Arts Institute. In the 2009-10 fiscal year, the City of Utica paid $517,783 in Community Development Block Grant money to GroWest, which used the money mostly to assist with housing renovations, according to city Comptroller Michael Cerminaro.

Now, a City Hall official with knowledge of the investigation and who requested anonymity told the O-D Monday the city's probe is focusing on GroWest's activities. The official would not comment on the details of the investigation. Read more here.

Top 15 Non-profit Board Governance Mistakes

The Charity Lawyer blog has a great post about governance mistakes, which has been mentioned by the Chronicle of Philanthropy, the Nonprofit Quarterly, and numerous others. The list was also expanded by San Francisco tax-exempt organizations lawyer and publisher of the Nonprofit Law Blog, Gene Takagi.

Here is excerpt. We would encourage you to view the entire list and details here.

1. Failing to Understand Fiduciary Duties.
When you volunteer to serve as a director or officer of a non-profit, you accept the responsibility to act with the duties of good faith, due care and loyalty. You also accept the potential liability for failing to fulfill those duties. Increased scrutiny from the I.R.S., Congress, state attorneys general, the Department of Justice, donors and the media require vigilance at every step. It is no longer sufficient to rubber stamp committee or staff recommendations or to simply “abstain” from dicey decisions. Today, board service comes with real responsibilities and real consequences for those that fail to live up to them.

Read about the next two points and more.
2. Failing to Provide Effective Oversight.
3. Deference to the Executive Committee, Board Chair or the Organization’s Founder.

Standards for Common Sense: A Practical Guide to Basic Accountability Standards for New York Nonprofits

New York Council of Nonprofits published this updated edition with the support of Council Services Plus and the Dyson Foundation. This booklet, available to download for free here, is a practical guide for the average nonprofit seeking a reasonable understanding of what accountability standards are, who is promoting them, what related state laws say, and how to think about the choices presented. NYCON has selected eight of the most basic issues involving governance structure and practice, i.e. board size, board compensation, conflict of interest policies, board member independence, term limits, frequency of meetings, audit requirements and the creation of audit committees. The booklet outlines each issue, compares and discusses the standards set by laws or regulations and five different standards setting bodies - the Better Business Bureau Wise Giving Alliance, the Standards for Excellence Institute, the Panel on the Nonprofit Sector, the Evangelical Council for Financial Accountability and the Minnesota Council of Nonprofits.

In this 2nd Edition, NYCON has also added a section on Standards of Financial Accountability. This section explores guidelines for percentage of expenditures on program and fundraising activities along with the level of net assets relative to annual spending. Download your copy now.

Expanded NYS Government Accountability Website

The OD reported on Sunlight 2.0, the revamped, expanded government accountability Web site by Attorney General Andrew Cuomo’s office.

“We feel that all of you will have a real connection to Project Sunlight,” Marmelstein said.
The new Web site — sunlightny.org — is more comprehensive than its predecessor, including adding information about state authorities and campaign contributions.

For instance, Oneida County has 350 levels of local government, according to an interactive map on the Web site. The map also offers a breakdown of those levels. Each search offers the following categories to explore:

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

Oneida County Executive Anthony Picente attended the session and praised the Web site’s effort at increased government transparency.