A lawyer with close ties to Monroe County forms a nonprofit local development corporation to handle a $99 million county contract. He names himself and two friends as the board of directors. The friends are not told of their roles and never participate in a proceeding of the board. One of them is aghast to learn seven years later that he was ever a director.
The scenario illustrates the convoluted origins of Upstate Telecommunications Corp. and raises questions about the validity of the corporation and its 16-year contract to manage the county's vast information technology network, according to nearly a dozen experts in nonprofit law, including lawyers who regulated nonprofit corporations for New York state.
Specifically, how did Upstate Telecommunications become functional without input from its founding directors? And did the directors who approved contracting with the county have the authority to act?
Answers remain elusive because the corporation claims it cannot locate records that could shed light on the matter, and its incorporating attorney, Michael Townsend, has declined to answer questions about the founding.
The notion that a local development corporation with a multimillion-dollar county contract would be formed unbeknownst to most of its founding directors baffled experts briefed on the scenario.
All of them cast the situation as an example of poor corporate governance, but most agreed that questions of the corporation's validity would not alone unravel its contract — a scenario with potentially dire consequences for the county.
"The consequences of a corporation not being a valid corporation are sort of unclear," said Amy Lavine, a senior staff attorney at Albany Law School's Government Law Center, where she writes extensively about nonprofit public benefit corporations. "A court might treat it like a corporation if it's been acting like one. In the real world, how do you undo a $99 million contract that's halfway done?"
State Attorney General Eric Schneiderman has subpoenaed Upstate Telecommunications for documentation about its founding and finances as part of an investigation into Monroe County local development corporations with state Comptroller Thomas DiNapoli.
Read more here.
Sunday, November 27, 2011
Tuesday, November 15, 2011
NY comptroller says late checks hurt nonprofits
NY comptroller says late checks hurt nonprofits
Nov. 15, 2011, 3:01 a.m. EST
AP
ALBANY, N.Y. (AP) — New York Comptroller Thomas DiNapoli says late contract approvals and payments by the state are hurting nonprofit providers and jeopardizing services.
DiNapoli says state agencies last year were on average six months late in approving nine out of 10 contracts valued at $50,000 or more, often after services were provided.
An analysis of the first half of 2011 shows nearly 90 percent of contracts approved by the comptroller were submitted late by state agencies.
DiNapoli says nonprofits operate on thin margins and provide basic services ranging from health care clinics to work programs, with 22,000 active grant contracts totaling $16.8 billion.
The nonprofit sector employed 1.25 million people statewide last year.
You can access the article by Clicking Here.
Nov. 15, 2011, 3:01 a.m. EST
AP
ALBANY, N.Y. (AP) — New York Comptroller Thomas DiNapoli says late contract approvals and payments by the state are hurting nonprofit providers and jeopardizing services.
DiNapoli says state agencies last year were on average six months late in approving nine out of 10 contracts valued at $50,000 or more, often after services were provided.
An analysis of the first half of 2011 shows nearly 90 percent of contracts approved by the comptroller were submitted late by state agencies.
DiNapoli says nonprofits operate on thin margins and provide basic services ranging from health care clinics to work programs, with 22,000 active grant contracts totaling $16.8 billion.
The nonprofit sector employed 1.25 million people statewide last year.
You can access the article by Clicking Here.
Friday, November 4, 2011
Community Profits on Strength of Nonprofit Sector
Community profits on strength of nonprofit sector
Business First by Tracey Drury, Buffalo Business First Reporter
Date: Wednesday, November 2, 2011, 3:13pm EDT.
Tracey DruryBuffalo Business First Reporter - Business FirstEmail
Today’s the day I finally exhale, as the final pieces of our Million Dollar Nonprofits research report go out the door to the printer.
But by day’s end, I’ll be holding my breath once again - waiting for the report to land in the hands of the region’s nonprofit community. The report, to many, represents sort of a report card on how those execs are doing in their daily jobs of running a $2 billion sector.
The report is a compilation of several months of research into the region’s largest nonprofit organizations, each with revenue of at least $1 million. The 282 agencies on the list this year have a major economic impact in the eight-county region, employing nearly 53,000 people and providing services to hundreds of thousands.
And they do it all without profits in mind.
Our list includes a wide variety of organiations, including human service agencies providing programs for poor, individuals with disabilities and seniors, as well as cultural and arts groups, health-related organizations and others that work on business or economic development issues. Narrowing the field on what types of organizations to include has been a work in progress over the past 10 years, as we’ve included, then taken out again such groups as hospitals and health systems and health insurers - despite their status as nonprofit corporations.
Our list is part of the All About Nonprofits special publication, which also includes a list of the top corporate philanthropists in the region; foundations ranked by total grants paid; and a list of nonprofit fundraising events for 2012.
One of the most closely watched pieces of this report every year is the salary listings. Though we don’t get as many complaints any more about why we list them, I almost always hear from people thanking us for helping shed some light on compensation. As we said before, these agencies operate without profits in mind, but that doesn’t mean the executives working there are doing it for free.
Business First by Tracey Drury, Buffalo Business First Reporter
Date: Wednesday, November 2, 2011, 3:13pm EDT.
Tracey DruryBuffalo Business First Reporter - Business FirstEmail
Today’s the day I finally exhale, as the final pieces of our Million Dollar Nonprofits research report go out the door to the printer.
But by day’s end, I’ll be holding my breath once again - waiting for the report to land in the hands of the region’s nonprofit community. The report, to many, represents sort of a report card on how those execs are doing in their daily jobs of running a $2 billion sector.
The report is a compilation of several months of research into the region’s largest nonprofit organizations, each with revenue of at least $1 million. The 282 agencies on the list this year have a major economic impact in the eight-county region, employing nearly 53,000 people and providing services to hundreds of thousands.
And they do it all without profits in mind.
Our list includes a wide variety of organiations, including human service agencies providing programs for poor, individuals with disabilities and seniors, as well as cultural and arts groups, health-related organizations and others that work on business or economic development issues. Narrowing the field on what types of organizations to include has been a work in progress over the past 10 years, as we’ve included, then taken out again such groups as hospitals and health systems and health insurers - despite their status as nonprofit corporations.
Our list is part of the All About Nonprofits special publication, which also includes a list of the top corporate philanthropists in the region; foundations ranked by total grants paid; and a list of nonprofit fundraising events for 2012.
One of the most closely watched pieces of this report every year is the salary listings. Though we don’t get as many complaints any more about why we list them, I almost always hear from people thanking us for helping shed some light on compensation. As we said before, these agencies operate without profits in mind, but that doesn’t mean the executives working there are doing it for free.
Sunday, September 11, 2011
Gov's Nonprofit Compensation Probe
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.
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.
Wednesday, August 10, 2011
Mayor Brown vetoes bill that would aid arts groups
BuffaloNews.com reported about a new wrinkle surfaced in City Hall's plan to provide grants to dozens of arts and cultural groups after Mayor Byron W. Brown vetoed a Common Council bill.
Brown's office stressed that the mayor remains committed to providing one-time grants to arts organizations, but he objects to the way the Council has structured the aid.
As one of their final actions before leaving for summer break, lawmakers late last month unanimously approved a plan to channel $200,000 to city-based arts groups.
Under an informal deal that was hatched between the Council and the Brown administration, lawmakers would provide $100,000 from their budget lines, while the executive branch would provide another $100,000.
Mayoral spokesman Michael J. DeGeorge said today that the administration remains committed to providing the money. But he said Brown objects the Council specifying how the entire $200,000 sum will be spent.
Lawmakers insist that the money should be channeled to 27 city-based arts groups that saw their Erie County funding eliminated. The Council wants to use the Funds for the Arts, a consortium of local foundations that has distributed aid to cultural groups, as a pass-through entity for the city aid.
While the mayor has "no problem" with any of the groups on the Council's list, DeGeorge said, Brown believes that he should have the right to establish his own process for distributing the $100,000 that his office is providing. All arts groups that are currently on the Council's list would be welcome to apply, as would other Buffalo-based cultural groups, DeGeorge said.
Read more here.
Brown's office stressed that the mayor remains committed to providing one-time grants to arts organizations, but he objects to the way the Council has structured the aid.
As one of their final actions before leaving for summer break, lawmakers late last month unanimously approved a plan to channel $200,000 to city-based arts groups.
Under an informal deal that was hatched between the Council and the Brown administration, lawmakers would provide $100,000 from their budget lines, while the executive branch would provide another $100,000.
Mayoral spokesman Michael J. DeGeorge said today that the administration remains committed to providing the money. But he said Brown objects the Council specifying how the entire $200,000 sum will be spent.
Lawmakers insist that the money should be channeled to 27 city-based arts groups that saw their Erie County funding eliminated. The Council wants to use the Funds for the Arts, a consortium of local foundations that has distributed aid to cultural groups, as a pass-through entity for the city aid.
While the mayor has "no problem" with any of the groups on the Council's list, DeGeorge said, Brown believes that he should have the right to establish his own process for distributing the $100,000 that his office is providing. All arts groups that are currently on the Council's list would be welcome to apply, as would other Buffalo-based cultural groups, DeGeorge said.
Read more here.
Wednesday, August 3, 2011
Governor Orders Review of Executive Compensation at Nonprofits
From the Governor's Website
Albany, NY (August 3, 2011) Governor Andrew M. Cuomo today announced that he has created a new task force to investigate the executive and administrator compensation levels at not-for-profits that receive taxpayer support from the state. The task force will be led by the New York State Inspector General Ellen Biben, Secretary of State Cesar A. Perales, the Medicaid Inspector General Jim Cox, and the Superintendent of the Department of Financial Services Benjamin Lawsky.
"Not-for-profits that provide services to the poor and the needy have a special obligation to the taxpayers that support them. Executives at these not-for-profits should be using the taxpayer dollars they receive to help New Yorkers, not to line their own pockets. This task force will do a top-to-bottom review, not only to audit current compensation levels, but also to make recommendations for future rules to ensure taxpayer dollars are used to serve and support the people of this state, not pay for excessive salaries and compensation," Governor Cuomo said.
Governor Cuomo continued, "There is a whole range of compensation levels and extremes that have existed for too long and must be reviewed. The use of taxpayer dollars must be scrutinized at every level."
The Governor's task force will determine the protocol and scope of the investigation in order to target the audit to focus on ensuring that state taxpayer dollars meant to help and protect New Yorkers, particularly the poor and indigent, are going to that purpose and are not being diverted to compensation. It will also provide recommendations for State agency policies and procedures that will ensure that taxpayer dollars are not being diverted to excessive compensation.
Commissioners from the Department of Health, the Office of Mental Health, and OPWDD will also serve on the task force.
The Governor's action follows reports of startlingly excessive salaries and compensation packages for executives at not-for-profits that depended on state Medicaid funding through the Office of People With Developmental Disabilities (OPWDD) and other State agencies.
The State's Medicaid Inspector General has the authority necessary to exclude providers from participation in the Medicaid program if it is found that they have engaged in fraudulent or abusive practices.
There are currently no state rules governing executive and administrative compensation for not-for-profits that receive state support.
According to the Department of the Budget's January 2010 preliminary analysis of not-for-profit employees contracting with the mental hygiene agencies (Office of People With Developmental Disabilities, Office of Mental Health, and Office of Alcohol and Substance Abuse Services), there were approximately 1,926 employees with annual salaries greater than or equal to $100,000. The total value of their salaries was $324.6 million, with an average salary of $168,555.
NYCON Statement on Governor's
Review of Executive Compensation:
"NYCON supports IRS and state enforcement efforts to root out those relatively few and often large institutional nonprofits, especially in health care and higher education, where charitable resources are used for the private and personal gain of executives. Such abuses are a stain on the sector and the Governor is right, public trust is integral to the mission and work of our state's charities. The Internal Revenue Service already provides compensation guidelines as set forth in the federal tax code and we believe those guidelines should be upheld.
It needs to be emphasized, however, that these cases are very much the exception.
The vast majority of community-based nonprofit employees are doing hard and challenging work at compensation levels that are far below public employees and often the for-profit sector. It should also be noted that the phrase "taxpayer supported nonprofits" is misleading as the state government contracts to buy services from nonprofits, just as it contracts with the for-profit sector; except the nonprofit is often expected to unfairly perform at below the actual cost of doing business. Perhaps it is also time to order an extensive review of the executive compensation levels of "taxpayer supported for-profit businesses."
NYCON asks the Governor to take this opportunity to go beyond the immediate executive compensation issue and take a comprehensive look at how the state's overall regulatory and business relationship with the nonprofit sector can be improved in the interest of all concerned."
Doug Sauer, CEO, New York Council of Nonprofits, Inc.
http://www.nycon.org/
1-800-515-5012, ext 103
dsauer@nycon.org
Albany, NY (August 3, 2011) Governor Andrew M. Cuomo today announced that he has created a new task force to investigate the executive and administrator compensation levels at not-for-profits that receive taxpayer support from the state. The task force will be led by the New York State Inspector General Ellen Biben, Secretary of State Cesar A. Perales, the Medicaid Inspector General Jim Cox, and the Superintendent of the Department of Financial Services Benjamin Lawsky.
"Not-for-profits that provide services to the poor and the needy have a special obligation to the taxpayers that support them. Executives at these not-for-profits should be using the taxpayer dollars they receive to help New Yorkers, not to line their own pockets. This task force will do a top-to-bottom review, not only to audit current compensation levels, but also to make recommendations for future rules to ensure taxpayer dollars are used to serve and support the people of this state, not pay for excessive salaries and compensation," Governor Cuomo said.
Governor Cuomo continued, "There is a whole range of compensation levels and extremes that have existed for too long and must be reviewed. The use of taxpayer dollars must be scrutinized at every level."
The Governor's task force will determine the protocol and scope of the investigation in order to target the audit to focus on ensuring that state taxpayer dollars meant to help and protect New Yorkers, particularly the poor and indigent, are going to that purpose and are not being diverted to compensation. It will also provide recommendations for State agency policies and procedures that will ensure that taxpayer dollars are not being diverted to excessive compensation.
Commissioners from the Department of Health, the Office of Mental Health, and OPWDD will also serve on the task force.
The Governor's action follows reports of startlingly excessive salaries and compensation packages for executives at not-for-profits that depended on state Medicaid funding through the Office of People With Developmental Disabilities (OPWDD) and other State agencies.
The State's Medicaid Inspector General has the authority necessary to exclude providers from participation in the Medicaid program if it is found that they have engaged in fraudulent or abusive practices.
There are currently no state rules governing executive and administrative compensation for not-for-profits that receive state support.
According to the Department of the Budget's January 2010 preliminary analysis of not-for-profit employees contracting with the mental hygiene agencies (Office of People With Developmental Disabilities, Office of Mental Health, and Office of Alcohol and Substance Abuse Services), there were approximately 1,926 employees with annual salaries greater than or equal to $100,000. The total value of their salaries was $324.6 million, with an average salary of $168,555.
NYCON Statement on Governor's
Review of Executive Compensation:
"NYCON supports IRS and state enforcement efforts to root out those relatively few and often large institutional nonprofits, especially in health care and higher education, where charitable resources are used for the private and personal gain of executives. Such abuses are a stain on the sector and the Governor is right, public trust is integral to the mission and work of our state's charities. The Internal Revenue Service already provides compensation guidelines as set forth in the federal tax code and we believe those guidelines should be upheld.
It needs to be emphasized, however, that these cases are very much the exception.
The vast majority of community-based nonprofit employees are doing hard and challenging work at compensation levels that are far below public employees and often the for-profit sector. It should also be noted that the phrase "taxpayer supported nonprofits" is misleading as the state government contracts to buy services from nonprofits, just as it contracts with the for-profit sector; except the nonprofit is often expected to unfairly perform at below the actual cost of doing business. Perhaps it is also time to order an extensive review of the executive compensation levels of "taxpayer supported for-profit businesses."
NYCON asks the Governor to take this opportunity to go beyond the immediate executive compensation issue and take a comprehensive look at how the state's overall regulatory and business relationship with the nonprofit sector can be improved in the interest of all concerned."
Doug Sauer, CEO, New York Council of Nonprofits, Inc.
http://www.nycon.org/
1-800-515-5012, ext 103
dsauer@nycon.org
Subscribe to:
Posts (Atom)
