Nonprofit Board Crisis

Girl Boy Scouts #NonprofitBoards

Yesterday I saw a troop of girl Boy Scouts.  And it was just a few days ago that Boy Scouts of America changed its name to Scouting America.  The new name/brand is supposed to reflect a "new" approach to being welcome to all genders and I'm not precisely sure what else although the following Forbes article offers some helpful insight to my puzzlement.  But at the same time I am equally puzzled by why girls or anyone not a "boy" would want to join the Scouts given their nefarious history or just that "boys" have been their target audience all along.  Plus there is a plethora of options for girls to be and become all they seek without joining a group whose mission has been to serve boys.  But according to the following article, that some 6000 girls have earned the Eagle Scout rank (that's the final resting place).  And to top it off wearing my Marketing Professor hat, I firmly believe, and there is plenty of evidence, that no one organization can fully satisfy the needs of EVERYONE.  But the Boy Scouts are declaring they will give this goal a shot.

Of course I don't wish them well.  The organization is a massive disappointment and because of its history and certainly lack of admitting guilt and responsibility for at minimum hiding what it knew existed as a rampant occurrence of child abuse.  No, I am not forgiving of an institution that does not seek forgivness.

EDITORS' PICK

3 Lessons From The Boy Scouts' Name Change

Sonia Thompson

Contributor

 

0

May 10, 2024,12:27pm EDT

Boy Scouts of America recently announced it was changing it’s name to Scouting America. The rebranding move was announced as a small change that helps the brand better align to its values.

Five years ago, the organization changed its policies to allow girls to take part. Since the evolution of that policy, more than 176,000 girls have joined it’s programs, including 6,000 who’ve earned the Eagle Scout rank.

Back in 2017, Scouting America also made a change to welcome in transgender children into its programs.

The mission of Scouting America is to “prepare young people to make ethical and moral choices over their lifetimes by instilling in them the values of the Scout Oath and Law.”

For reference, the Scout Law states that a Scout is “trustworthy, loyal, helpful, friendly, courteous, kind, obedient, cheerful, thrifty, brave, clean, and reverent.” The Scout Oath builds on these principles and expresses, “On my honor, I will do my best to do my duty to God and my country and to obey the Scout Law; to help other people at all times; to keep myself physically strong, mentally awake, and morally straight.”

PROMOTED

In the press release about the rebrand, Scouting America noted that the name change reflects “the organization’s ongoing commitment to welcome every youth and family in America to experience the benefits of Scouting.”

Roger A. Krone, president and chief executive officer of the organization echoed these sentiments in the release with these comments, “This will be a simple but very important evolution as we seek to ensure that everyone feels welcome in Scouting.”

 

Here are three lessons from the Scouting America name change that you should embrace as you work to build a brand that is inclusive of the people you’ve chosen to serve, regardless of their identity.

All Decisions Should Be Values-Led

Response to the Scouting America name change has been mixed. While there are some that are praising the brand, others feel like the organization is failing boys who no longer have a space to themselves.

But with any sort of big decisions like this, it is always helpful to look to an organization’s mission, vision and values to better understand the why behind the decisions.

The name change for Scouting America is very much in keeping with the organizations values. Nowhere in the mission, Oath, or Scouts Law does it say or imply anything about gender. So it makes sense that the brand’s name would be gender neutral, so as not to immediately send a signal for someone considering becoming a member that “this isn’t for you” if they weren’t born a boy.

As you’re thinking about making big changes in your organization, especially on your journey to building an inclusive brand, it is always good practice to connect your actions to your mission, vision and values.

That way, you can stand firm in knowing that you made the right choice, even in the face of naysayers.

Dr. Seuss Enterprises did this a few years back. The brand decided to stop publication of six classic books after a review acknowledged that those books portrayed people from minority communities in ways that are “hurtful and wrong.”

While many people weren’t happy about it, Dr. Seuss Enterprises declared the decision was made to stay true to the brand mission of “supporting all children and families with messages of hope, inspiration, inclusion and friendship.”

Name Changes Are Only Starting Points To Belonging.

While having a gender neutral name will eliminate barriers to people who aren’t boys from joining Scouting America, that won’t be the only factor on whether or not a scout or their family feels like they belong.

Scouting America needs to consider the entire experience they deliver to ensure they think through and nurture an environment where everyone feels seen, supported, and like they belong.

As a brand, even if your intention is to be inclusive and to ensure everyone you serve feels like they belong with you, what matters is how people actually feel.

That means you have to be intentional about ensuring the customer experiences and environment you deliver are primed to work with people from all the identities you’ve chosen to serve.

It isn’t enough to say “everyone is welcome.” You have to prove it.

Retailer Old Navy started leaning more heavily into body inclusivity a few years back. In doing so, the brand made several changes in the overall experience it delivered to ensure everyone felt like they belonged during their shopping experience, including consumers who needed larger sizes.

The brand eliminated the “plus-size” section in stores and on the website, to ensure people didn’t feel othered. The brand also did away with charging more for clothes that were a larger size, and added in mannequins in a broad variety of sizes to ensure there was representation on that front as well.

Where You Start Isn’t Where You Have To Stay

One last lesson to embrace from Scouting America is that of evolution. Just because your policies, practices, and marketing may not have been as inclusive as you like in years’ past, it doesn’t mean that you can’t make meaningful progress moving forward.

We are all learning and growing. And although it would be fantastic to have started out operating as an inclusive brand, consumers do value and support brands who evolve to be inclusive as they learn about the experiences and plight of others who are from underrepresented and underserved communities.

Walmart hasn’t always been a brand that catered the experiences of people who have sensory processing disorder. But over time as they listened to feedback from their customers and team members, the brand decided to implement sensory friendly hours every day in all their stores in the U.S. and Puerto Rico.

Evolution and growth are a natural for brands that want to stay relevant. So don’t hold too hard on “the way we’ve always done things” as a reason why you can’t start embracing a new and more inclusive way of “doing things” moving forward.

Follow me on Twitter or LinkedIn. Check out my website. 

Sonia Thompson

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I'm an inclusive marketing coach and consultant that helps companies grow by including consumers most brands ignore. I also host the Inclusion & Marketing podcast.

Inspired Nonprofit Leadership Podcast #NonprofitBoards

I don't know how much podcasts are in my future but here's the latest from Inspired Nonprofit Leadership.  My thanks to these folks!  

In this episode nonprofit board expert Mike Burns dives deep into the purpose, challenges, and innovative practices concerning nonprofit boards! Our discussion critiques conventional wisdom around board responsibilities, such as budget approval and the potential benefits of rethinking board members' roles for greater organizational impact.

Changing the Name Doesn't Change Who You Were Or Are #NonprofitBoards

The B.S.ers of America has decided that the best way to make citizens aka taxpayers forget about the organization's misdeeds (nearly 100 years and 82,000 lawsuits from people sexually assaulted by scout leaders and knowingly hiding the records about sexual predators aka institutionalized child molestation (from NPR)) is to simply change its name and open its doors to those who have been traditionally NOT its clientele.  

I am afraid I don't understand why girls or LGBTQ folks would want to join an organization with such a historically abusive record but that's for them to decide especially when there are plenty of welcoming organizations that precede this invitation (aka the Girl Scouts).  And, while the B.S.e'rs had to sell lots of property to build a $2.4 billion fund to settle claims from sex abuse victims, the board or those before them have yet to apologize for the institutional bad behavior.  Nor has the organization spoken to how it will prevent sexual molestation and if this occurs, reporting on it.  Frankly, I thought the ideal solution would have been to start over and THEN be welcoming.

And how do the current Scout leaders and members fell about the new brand (Scouting America)?  Too soon to tell but funny enough, one US Congressman has gone to Twitter to state that "Wokeness destroys everything it touches."  You think he's hiding something?

 

All the Ex-President's Men Have A Nonprofit Home for Self-Dealing

All of the (ex) president's men have a home.  Conflicts of interest and other board fails appear to be a key theme for this blog this week and the latest story underscores these themes.  Sadly this may be a harbinger for the future of nonprofits if political plans by some triumph.  Not a rooter am I.

Anyway, want to understand conflicts and violations of these?  Read the following.

 

Pro-Trump Nonprofit Paid Millions to Companies Tied to Its Own Leaders

The Conservative Partnership Institute’s three highest-paid contractors had connections to the group’s leaders or their relatives, raising concerns about self-dealing.

 

A job fair sponsored by the Conservative Partnership Institute on Capitol Hill in June 2018. The group was founded the year before and aims to help conservatives wield power.Credit...Al Drago for The New York Times

By David A. Fahrenthold

Reporting from Washington

May 6, 2024

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The Conservative Partnership Institute, a nonprofit whose funding skyrocketed after it became a nerve center for President Donald J. Trump’s allies in Washington, has paid at least $3.2 million since the start of 2021 to corporations led by its own leaders or their relatives, records show.

In its most recent tax filings, the nonprofit’s three highest-paid contractors were all connected to insiders.

One was led by the institute’s president, Edward Corrigan, and another by its chief operating officer. At a third contractor, the board members included the group’s senior legal fellow Cleta Mitchell, a lawyer who supported Mr. Trump’s efforts to overturn the 2020 election.

Last year, the Conservative Partnership Institute hired a fourth company connected to an insider: a fund-raising firm run by Mr. Corrigan’s brother, Patrick Corrigan. Public filings show the company received a contract three weeks before the firm was legally formed.

READ THE I.R.S. FILINGS

The documents show a sharp increase in the Conservative Partnership Institute’s funding. Its three highest-paid vendors were connected to insiders at the nonprofit, other documents show.

The Conservative Partnership Institute applied to the Internal Revenue Service as a tax-exempt nonprofit, and the agency approved. That means donations to the group are tax deductible, like gifts to a food bank or the American Red Cross. It also means that, by law, its money must serve the public good rather than private interests.

The nonprofit has pushed those limits by entwining itself with only one faction of American politics. It pays high salaries to some of Mr. Trump’s former officials, hosts retreats for Republican lawmakers at a rural compound and funds efforts to vet people and ideas for a second Trump term.

Legal experts say these insider transactions also raise concerns about self-dealing. While hiring insiders is permitted when certain safeguards are in place, the payments moved money out of daylight and into opaque entities that the nonprofit’s leaders helped control.

“There’s no checks and balances,” said Michael West, a lawyer at the New York Council of Nonprofits. Because there is no real third party to determine whether the insider-led companies were charging the nonprofit a fair price, Mr. West said, “the potential for overpayment here is epic.”

 

 

Of the insiders who had dual roles at the nonprofit and its vendors, only one responded to questions from The New York Times. Wesley Denton, the institute’s chief operating officer and a former Trump administration official, said he also had been paid by Compass Professional, one of the vendors.

Mr. Denton’s annual compensation, with benefits, from the institute was $391,735. He declined to say how much he received from Compass Professional. He was on the board of both the vendor and the institute.

 

“We’re proud to have helped launch new, independent, nonprofit service providers that provide high-quality professional services,” Mr. Denton said in a written statement.

The institute’s donors include several Republican political campaigns, as well as conservative businesspeople. One major donor, the retired Texas aviation entrepreneur Robert Bruce, said the nonprofit’s leaders had not told him about their use of vendors with insider connections.

“I’ve never had a conversation like that,” Mr. Bruce said in a phone interview.

He estimated he had given “several hundred thousand” dollars to the institute. Mr. Bruce said he had no concerns that the nonprofit’s leaders were misusing money. “I’ve known them a long time,” he said. “They’re good people.”

The Times traced the relationships between the group’s leaders and their vendors by examining charity and corporate filings with the federal government, five states and the District of Columbia.

Our politics reporters. Times journalists are not allowed to endorse or campaign for candidates or political causes. That includes participating in rallies and donating money to a candidate or cause.

Learn more about our process

The records do not show what share of the $3.2 million went to the institute’s top leaders and their family members — only that the money flowed to companies where they served as an owner or a director. In at least one case, a company failed to flag that connection as required in a state filing.

 

The Conservative Partnership Institute was founded in 2017 by former Senator Jim DeMint, Republican of South Carolina, after he was ousted as the president of the Heritage Foundation, a conservative nonprofit. The group’s aim was to help conservatives wield power, shepherding them “through the Washington swamps without being infected with Potomac Fever,” Mr. DeMint said in 2017.

The institute’s fund-raising actually improved when conservatives lost power.

In 2021, with Democrats in charge in Washington, the institute hired former Trump staff members, including Mark Meadows, the former White House chief of staff. It began courting donors as the voice of Mr. Trump’s allies and ambitions.

Fund-raising jumped to $45 million in 2021 from $7 million in 2020. The nonprofit, newly flush, bought a 2,200-acre retreat on the Eastern Shore of Maryland and a series of commercial buildings near the U.S. Capitol, with plans for a restaurant, a school and TV studios. The group also began convening workshops and seminars for conservative lawmakers and staff members as well as seeding new conservative nonprofits.

As the money flowed, the institute’s leaders began to found a series of companies in Delaware.

The first was Compass Professional. Its first annual report listed a slate of directors, including Edward Corrigan and Mr. Denton.

Next was Compass Legal Services. Its initial filing listed directors, including Ms. Mitchell and Charlotte Davis, one of the institute’s board members.

By the end of 2021, the group had paid its companies a combined $639,259, according to an audit that it filed with state-level charity regulators.

Federal law allows nonprofits like this one to hire insiders as long as they properly disclose the payments and ensure the insiders do not overcharge. Legal experts still advise against it because of the temptation for insiders to abuse their power over charity funds.

“You have an obligation to behave in the interest of that organization,” said Linda Sugin, a professor of nonprofit law at Fordham University. “The problem is, when you’re on both sides of the transaction, then we’re skeptical that you’re going to put the organization’s interests before your own.”

Ms. Sugin said the institute could have reduced its risk by soliciting bids from competing firms to gauge whether the insiders were charging market rates. The institute could have asked its leaders to recuse themselves from the decision to hire their own companies, she said.

Mr. Corrigan and other leaders did not respond to questions about whether their group took those steps.nonprofit is found to have given improper benefits to insiders, the insiders could face financial penalties from state or federal regulators. In extreme cases, the I.R.S. could revoke the group’s tax exemption.

In 2022, a third Delaware company was formed: Compass Property Management. Its corporate filings show Mr. Denton as president.

During that year, the nonprofit paid the three insider-connected companies a combined $2.6 million, according to the audit that it filed with states. The institute said those payments were “for the use of facilities, personnel, human resources and other professional services.”

How much of that flowed to the insiders on those vendors’ boards of directors?

Mr. Denton offered only a partial answer.

He said the vendors did not pay their board members solely because they were board members.

However, as in his case, Mr. Denton said the companies could pay their board members for other reasons, for “doing employment work for these organizations, outside of their board duties.” The president of Compass Legal issued a statement saying his company did not pay “outside directors” but did not specify which directors were counted as “outside.”

 

Compass Professional and Compass Legal have worked for other clients, including Mr. Trump’s 2024 presidential campaign and Gun Owners of America, according to federal campaign and charity filings. The companies’ leaders did not respond to queries about how much of their business came from the Conservative Partnership Institute.

The most recent data on what the institute paid the three original insider-connected companies is from 2022. Since then, corporate filings show, the companies’ board members have shifted, but Conservative Partnership Institute leaders or their family members remained on the boards of each.

Last year, the institute also hired a company that was partly owned by Patrick Corrigan, Compass Direct LLC, to a fund-raising contract, paying $180,000 over the next year.

In a filing in North Carolina, the institute said that contract began on July 1, 2023. But Patrick Corrigan’s company was not founded until July 24, three weeks after it won the contract.

In its own filings with North Carolina, Patrick Corrigan’s company was asked if he was related “as parent, spouse, child or sibling to ANY officer, director, trustee or employee” as his client, which was his brother’s nonprofit.

In filings for 2023 and 2024, the company answered “no.” Patrick Corrigan signed the forms.

After The Times pointed this out, Patrick Corrigan responded with a one-line email: “The NC filing has been updated,” he wrote. He did not respond to other questions.

Robert Draper and Julie Tate contributed reporting.

David A. Fahrenthold is an investigative reporter writing about nonprofit organizations. He has been a reporter for two decades. More about David A. Fahrenthold

A version of this article appears in print on May 7, 2024, Section A, Page 15 of the New York edition with the headline: Trump-Allied Nonprofit Paid Millions to Firms With Ties to Insiders. Order Reprints | Today’s Paper | Subscribe

Conflicts of Interest #NonprofitBoards

If you sometimes are wondering if you or your board members have one or more conflicts of interest, take a look at the following where conflicts of interest are aplenty.  Please remember that boards and each member are legally responsible for addressing conflicts of interest as part of their fiduciary duty of loyalty.

Potential conflicts of interest widespread at Mass. special ed schools

In the affluent town of Sudbury, a special education school funded in large part by taxpayers has been fraught with conflicts of interest and financial mismanagement.

At Broccoli Hall, the head of the private school employs her husband and son, netting the three highest salaries in 2021. Over the years, the family also bought personal items on the school’s credit card, took out advances and inappropriately supervised each other.

Board members overseeing the special ed school had financial entanglements, too, with several securing work contracts with the nonprofit.

Broccoli Hall, which enrolled about two dozen students ages 11-19 last year, isn’t an outlier in Massachusetts. Among the schools the state approves to teach students with special needs, there are widespread potential conflicts of interest, from family hires to deals with board members.

Public dollars, private special education

Of the 76 organizations, a WBUR investigation found nearly three-quarters awarded contracts and jobs to relatives of school leaders or board members from 2019 to 2023. In some cases, the leaders or board members landed their own deals.

The review found dozens of spouses, children and other relatives involved in financial contracts like teaching jobs, IT gigs or insurance deals.

WBUR is a nonprofit news organization. Our coverage relies on your financial support. If you value articles like the one you're reading right now, give today.

“It seems like an awfully big coincidence that the best person for each of these jobs just happened to be a family member of another person involved with the schools — it just seems statistically highly unlikely,” said Laurie Styron, who heads the nonprofit watchdog CharityWatch and reviewed WBUR’s analysis.

The vast majority of the schools operate as private nonprofits and are required to disclose potential conflicts to government regulators.

Conflicts of interests aren't illegal. But experts say nonprofit board members and leaders should avoid business relationships with the organizations they oversee. Even appearances of conflicts can damage credibility.

"It seems like an awfully big coincidence that the best person for each of these jobs just happened to be a family member of another person involved with the schools ... ."

LAURIE STYRON

“People need to be able to trust that their tax dollars and other resources are being used by the nonprofit in the best possible way,” said Styron. “And it makes it tougher to do that when people see a lot of nepotism.”

There was also little transparency for how hiring or spending decisions were made behind closed doors by school leaders or the volunteer boards that oversee the organizations.

David Renz, director of the Midwest Center for Nonprofit Leadership, said the number of potential conflicts WBUR discovered was “striking.”

“Even perceived conflicts of interest that are not a problem are — in fact — a problem from a credibility, trust and constituent relationships perspective,” said Renz.

WBUR reached out to dozens of school executives and board members, but few responded to requests for information. The analysis of taxpayer-funded special education schools is based on 10,000 pages of IRS tax forms, accounting audits, real estate records, lawsuits and other public documents covering a four-year period

The findings also pointed to a lack of state oversight of the schools’ spending. The state’s Department of Elementary and Secondary Education (DESE) said it rarely scrutinizes the schools’ finances. This allows problems to fester at places like Broccoli Hall.

Massachusetts, like other states and the federal government, generally prohibits nepotism in the public sector, including school districts, and requires competitive bidding for big contracts.

Nonprofit schools aren’t bound by those restrictions but must follow federal and state laws that require deals be reasonable and meet fair market standards when they involve leaders or board members.

Unlike most private schools — such as college preparatory academies — special ed schools’ curriculums are overseen and approved by DESE every three years. They teach students with behavioral issues and learning disabilities, such as autism and dyslexia.

Under federal law, children whose needs can’t be met at their public schools can attend the special ed schools — with local school districts footing the bill. Tuition ranges from $60,000 to $500,000, depending on the program. Some are day schools with small class sizes; others are full-time residential programs. Many parents say they’re vital, with some families battling local districts to pay for their children's spots.

The price tag for taxpayers is steep — and rising. Last year, Massachusetts spent $804 million on tuition payments and transportation costs. More than 7,000 students attend the schools each year.

Special education schools cropped up out of necessity decades ago. Until the 1970s, public schools had few resources to help students with special needs. Some parents started private schools from scratch, out of their homes or rented buildings.

Many of the schools eventually became part of the state’s network of special education programs. And in some of them, the concentration of power still lies with family members who founded the organizations.

Financial mismanagement and family hires

Jane Jakuc has held the reins at Broccoli Hall since its founding more than 25 years ago. Before that, Jakuc led another special education school in Sudbury called Willow Hill. She employed her husband, Dan O’Hara, as a teacher and janitor.

In June of 1997, after expressing concerns about finances at the school and the couple’s combined salary, the Willow Hill’s governing board voted against renewing her contract, effectively ousting her. (Jakuc disagreed with the board, according to court documents.)

But by then, Jakuc had already petitioned the state to open a new special ed school. With the state’s approval, Jakuc opened Broccoli Hall’s doors to students the next year, serving as both head of school and board president. Again she hired her husband.

By 2008, she had hired their son too. Jake Egan, who isn’t a licensed teacher, directs an annual school theater performance.

Hints of financial problems at Broccoli Hall started emerging in 2011. As required by the state each year, the school hired an accounting firm, Smith, Sullivan & Brown, to review its finances.

In its audit, the firm discovered the school had undocumented spending and poor financial controls. The accountant stated the school relied too much on a credit card for purchases, charging nearly $130,000 that year.

“Many of the receipts for the credit card purchases were unavailable for inspection,” the report stated.

The firm submitted a plan to the state, and Jakuc and the school’s governing board pledged to correct course“immediately.”

While some of the financial problems were resolved, others cropped up or never fully went away.

The accounting firm repeatedly found “numerous personal transactions” were charged to the school’s credit card up until 2017, sometimes with missing receipts. It didn’t name who was responsible, but stated such charges should stop.

Year after year, an accounting firm hired by the school found problems with Broccoli Hall's finances, including its use of the school credit card. (Jesse Costa/WBUR)

Other records, however, did reveal the family was behind some of the spending. Broccoli Hall’s 2014 federal tax filing showed Jakuc charged $2,485 in personal expenses to the school’s credit card. The following year, Jakuc’s son charged $664 to the card. Both transactions were approved by the board as loans. The mother and son later paid the school back.

Jake Egan is in charge of the winter musical. Students must participate to graduate and classes shut down for all of January for the production.A 2019 review of the school by DESE found it met state requirements for academics, safety and health.

Egan made $102,000 in 2021, the third-highest paid staffer at Broccoli Hall. His father, Dan O’Hara, earned $121,000 and his mother, as head of school, earned $144,000. All declined to comment for the story, as did the school’s board members.

A former science teacher at Broccoli Hall alleges she was fired in 2021 after confronting Jakuc’s son about decisions including “over the top pricey” purchases for the school musical.

“I got called in front of Jane [Jakuc]. It was scary because who wants to be yelled at and fired,” Pamela Clapp said.

“It took a while for it to dawn on me … how much of a family business it really was,” added Clapp, who now teaches at a school in Newton.

That year, the accounting firm’s audit of Broccoli Hall found Jakuc had inappropriately approved timesheets submitted by a family member, and that “minimal detail was provided on the work performed” by the unnamed relative.

"It took a while for it to dawn on me … how much of a family business it really was."

PAMELA CLAPP

Nepotism can make it difficult for organizations to discipline employees who are also relatives of one another, said Cynthia Rowland, a San Francisco tax attorney who specializes in nonprofit law.

“It's absolutely a best practice to have family members not reporting to family members,” said Rowland.

Jakuc pledged to stop signing off on her husband and son’s timesheets, the report states.

But the most recent audit of the school — filed in February — showed Jakuc continued the practice: “We found a lack of appropriate supervisory authorization” for two years.

The school also failed to have written agreements for some of its outside contractors, the audit found.

It’s unclear if Broccoli Hall’s 11 board members worried about the spending problems or appearance of nepotism. Each year, members reviewed the audit and approved a plan to fix the issues, including Jakuc as board president.

WBUR reached out to board secretary Mark Bombara, but he declined to comment or provide meeting minutes.

The role — and conflicts —of governing boards

While public schools rely on elected committees to approve budgets and evaluate school leaders, private special ed schools like Broccoli Hall are overseen by governing boards.

The boards are made up of volunteer members appointed by the school who hire and set pay for top executives and approve school budgets. Members are advised to avoid doing business with nonprofits they oversee.

The Massachusetts Office of the Attorney General, which helps regulate public charities in the state, urged nonprofit boards in 2022 to be “very cautious” about these transactions, in part because they “may look questionable to the public.”

But WBUR’s investigation found financial conflicts were common between the schools and their boards. More than half of the 76 organizations disclosed at least one transaction from 2019 to 2023 involving a board member or their relative.

The analysis revealed contracts for lawyers, insurance agents and financial managers. One board member owned a company that provided medical prescriptions to a school. Another was on the board of a business that supplied food to the school. Several others were paid consulting fees.

In the case of Broccoli Hall, records show the school on four occasions hired board members or relatives for jobs. In 2022, Broccoli Hall paid two unnamed board members a combined $30,000 and the relative of a board member about $15,000 for consulting work, according to state records.

Laurie Styron of CharityWatch said these types of transactions can indicate that governing boards may not be providing adequate oversight.

“If the organization had completely independently functioning boards of directors, would those boards have determined in all of these cases that family members of other board members or executives were the absolute best people for the job?” she asked.

Styron said board members should collect bids from multiple vendors and any interested or affected parties shouldn’t vote. Organizations should take board minutes that reflect its decisions are in the nonprofit's best interest.

The nonprofit schools state they have conflict-of-interest policies as required by the IRS.  Broccoli Hall, for example, has a policy requiring school leaders and board members to “leave the room” if there’s discussion or vote on a potential conflict.

But it’s unclear how the schools’ governing boards make their decisions. Board minutes and meetings, for example, aren’t public.

In another example, Broccoli Hall employed Mark Dutkewych, the husband of then-board member Lisa Freedman, starting in the 2014 fiscal year. He and his wife left Broccoli Hall in 2019. They declined to comment.

Tax-exempt organizations like Broccoli Hall should also disclose potential conflicts of interest like these to the IRS and the public, Styron and other experts said. If transactions aren’t divulged, a nonprofit could face IRS penalties including fines.

For two of the years that Dutkeywch worked for the school, it didn’t tell the IRS. In 2022, the school also didn’t reveal to the IRS that Jakuc' two relatives - her husband and son - worked there.

Defenders of the private schools say there are safeguards in place.

Elizabeth Becker, executive director of the Massachusetts Association of Approved Private Schools, said in a statement the schools hold themselves “to the highest levels of professional standards” when reporting to their governing boards and state regulatory officials.

“Our member schools have layers of checks and balances including annual audits to uphold the expectations of excellence,” said Becker, whose group lobbies on behalf of special education schools.

But WBUR’s investigation found these fiscal audits aren’t routinely inspected by the state.

Fragmented state oversight

Decades ago, the state auditor’s office investigated private special ed schools and ordered some of them to return millions of dollars in misspent funds. But in recent years, the office hasn’t audited the schools and is not mandated to do so.

The only organization that minimally reviews some of the schools’ finances is a little known agency called Operational Services Division or OSD.

It’s the state’s procurement agency, which requires state contractors — including the schools — hire an accounting firm and produce an audited financial report every year.

But the details of those financial audits weren’t being reviewed by OSD, according to a highly critical 2018 report from the state auditor’s office. This might have cost Massachusetts tens of millions in inappropriate spending, the office stated.

The audits are designed to alert the state of financial problems and require corrective action plans. For 13 years in a row, Broccoli Hall and Jakuc were put on notice to take “immediate” steps to fix its lapses.

But it's unclear if state officials paid any attention.

In a statement, OSD said the Department of Elementary and Secondary Education is supposed to examine — and enforce — such plans. But DESE spokesperson Jacqueline Reis said the responsibility lies with OSD if there’s inappropriate spending.

“Routinely inspecting the … audits has not been a focus of our work in the past,” Reis said.

When asked if the department has penalized schools for mismanaging public funds, she didn’t answer.

In response to WBUR’s questions, Reis said DESE would change its policy to develop “a more structured process for timely review and follow-up for financial corrective action plans” – though the timeline is unclear.

In October, the U.S. Department of Education launched a probe of DESE’s supervision of special education, including the private schools. Complaints by parents and educators spurred the inquiry.

Among those calling for reforms is education advocate Ben Tobin, who helps parents navigate the private special ed system. He said the public currently has no way to know how taxpayer money is being spent at these schools.

“If they're taking the same funds as a public school, they should be held to the same standards," said Tobin, who supports legislation for more state control over these schools.

A key state lawmaker said the prevalence of conflicts discovered by WBUR in the schools warrants further scrutiny.

“I do think the vast majority of the schools are doing an excellent job — but we need to do everything to make sure that's the case,” said state Sen. Jason Lewis, who co-chairs the Legislature’s education committee.

For several years, bills that would require private special education schools to report financial information, including conflicts of interest, to DESE and the auditor’s office have stalled.

Tobin hopes similar legislation now in committee faces better odds, especially in light of the federal government’s scrutiny of the schools.

He added, “If you're taking the money to work with kids with disabilities, it shouldn't be a lot to ask to have some transparency.”

---

With reporting from WBUR's Christine Willmsen.

 

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Mission Values Can Evolve #NonprofitBoards

Congratulations to the United Methodist Church which today overturned it's 40-year ban on gay clergy as well as penalties for holding same-sex marriages! (CNN).

While the struggle by Church members toward this ending has been long and costly (somewhere between 30 and 40% of UMC churches have gone off to start a new denomination), the long-term results may actually include growing the number of individual members.

Institutions founded on specific principles most frequently based on biblical understandings but also founder/leaders who had a vision that attracted others to join often go through traumatic periods to modify these principles in sync with changing environments and evolving or devolving consciousnesses.  

IAs we are viewing in our political world, governance "by the people" is challenging to hold onto when new and different people with new and different values are held-up as "better" and with more promising results for everyone.  In in faith practices, few of the beliefs are tractable toward holding onto those who for so long have been led to believe that change can be positive.  But as is also clear throughout the US in particular, faith practices are losing hold of their followers have followers found that while beliefs may indeed be noble and informing, they and the practices that reinforce these are just enough to sustain commitment.  

Individuals can survive radical (or perceived radical) change but they don't have to like it and will likely not see the benefit immediately.  This is true for faith practices but may be less true for political practices.

Leadership and Consumers #NonprofitBoards

Watching/reading the news reports about the protests going on (or being stopped from going on) around USA university campuses has me wondering what in the h*** are the university presidents and more important, trustees thinking?  Do they not understand who precisely are their customers and consumers.  Yes, there is a difference by the way.  Customers pay the bill. Consumers use the offering.  Sometimes these are the same people, sometimes not as is often the case for university students, at least undergraduates.

Sure, violence on campus is not acceptable in general but the need for protest IS and must be acceptable.  Learning about, understanding and not being satisfied with the status quo is part of what a university is for.  Either way, a university's leadership, exec and trustees, have a responsibility to safeguard students but also to listen to students - the very reason there is a university.  What Columbia trustees and the president have demonstrated is their lack of or maybe incapability to accept that they are neither customer or consumer but it is the obligation of the offeror to at minimum, listen to and understand the needs of the customer and consumer.  This is a gross failure at minimum on the part of the president and overall on the part of the trustees.  

And, as an after-thought, weren't many of those who are currently the trustees witness to if not participating in the protests during Vietnam?  Do they not remember how important it was to take this action?  For shame.