NYS Charity Compensation Probe: WSJ

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.

Tell Governor Cuomo About Your Nonprofit!

Let's Tell Them About The Good Work Of Nonprofits
Submit Your Testimonial to NYCON & the Governor Today!

On August 3rd the Governor announced the formation of a task force charged with investigating executive compensation at nonprofit agencies (full announcement from Gov. Cuomo below).

NYCON is in agreement with the Governor that activities like those recently exposed in the NY Times that were the impetus to the formation of this task force, can have significant detrimental effects on the relationship between nonprofits and the public.

However, we also know that these types of activities are not solely a "nonprofit issue" and, furthermore, that there are many more positive stories than negative ones occurring in nonprofits.

We want to make sure the Governor realizes this too.

We are asking you to help us remind Governor Cuomo that nonprofits employ hard-working New Yorkers who provide much needed services in communities across our state.

Please send us your stories, comments and reactions to the Governor's announcement!

Let the administration know the services you provide are essential and are delivered in an ethical, honest and efficient manner that rivals any successful for-profit company. Let's remind them, and all taxpayers, that we're delivering services at costs far below our private sector counterparts, and take on contractual obligations from the State that they would never agree to, often times to our own detriment - because we exist for our mission, not profit.

Please submit your stories here.

NYCON is creating a web page dedicated to publishing your testimonials, and we encourage you to submit your stories which will be shared online and with the Governor's press office. You can also submit your comments directly to the press office at: press.office@exec.ny.gov.

Please feel free to contact our membership office if you have any questions or comments.

Thank you again for all you do and for your continued dedication to the nonprofit sector and your community.

Doug Sauer

CEO, New York Council of Nonprofits, Inc.

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

Nominate Your CPA Board Member for the 2011 Michael H. Urbach, CPA, Community Builders Award

2011 Michael H. Urbach, CPA, Community Builders Award Now Accepting Nominations
Sponsored by the New York Council of Nonprofits (NYCON) and the New York State Society of Certified Public Accountants (NYSSCPA)

Submission Accepted through August 22nd, 2011

In recognition of the important role, talents and leadership that a Certified Public Accountant (CPA) in New York State can provide as a board member for community-based charities, NYCON and NYSSCPA are pleased to announce the 8th Annual Michael H. Urbach, CPA, Community Builders Award.

The award is named in honor of the late Michael H. Urbach, CPA, former partner of Urbach, Kahn and Werlin, former NYS Commissioner of Tax and Finance and Chair of the State Employees federated Appeal, and board leader of a number of charities.

Award Criteria & Submission

Candidates must:

• Be a CPA in good standing and a member of the New York State Society of Certified Public Accountants;



• Have served as an Officer on at least 3 different charitable 501(c)(3) community-based nonprofits with service as President/Chair at least once;



• Have demonstrated exemplary board leadership resulting in significant and positive organizational impact including, but not limited to, financial turn-around, growth, and/or organizational re-structuring; and



• Preference will be given to nominees whose board leadership accomplishments have been with community-based charities.

Deadline - August 22, 2011
Nominations addressing the candidate's qualifications must be received by August 22nd. Nominators are strongly encouraged to address the candidate's qualifications related to the four (4) criteria's mentioned above and to include at least three (3) letters of support from the charities who have benefited from the candidate's volunteer leadership.

Send seven (7) packets of nomination materials to:
Urbach Community Builders Award Committee
New York Council of Nonprofits
272 Broadway
Albany NY 12204

or email the packet to Melissa Currado, Executive Assistant to the CEO at mcurrado@nycon.org.

Announcement & Presentation
The 2011 award will be formally presented at the Annual Member Meeting of NYCON slated for the afternoon of October 6th at Mohonk Mountain House, New Paltz, New York.

The Luncheon will take place during CAMP FINANCE, a two-day retreat that provides the very best in knowledge, skill and strategy sessions for your staff and volunteer leaders.

In honor of the late Harold Mandel, a certified public accountant who worked for Urbach, Kahn & Werlin in Albany, NY and retired in West Palm Beach, FL, the 2011 Urbach Honoree has the privilege to award one (1) nonprofit executive of their choice a Camp Finance scholarship in Hal's name. In 2009, Mr. Mandel's family accepted a posthumous Michael H. Urbach, CPA Community Builders Award in his tribute.


Past Urbach Award Honorees
2010
Edward S. Mucenski, CPA of Potsdam
2009
Lewis "Lew" Kramer, CPA of Chappaqua
2008
Mel Zachter, CPA of Staten Island
2007
Eugene H. Fleishman, CPA of Poughkeepsie
2006
Craig Sickler, CPA from Kingston
2005
Paul Battaglia, CPA from Batavia

For More Information
visit NYCON at http://www.nycon.org/ or contact Melissa Currado at (800) 515-5012 or mcurrado@nycon.org

NYS Unemployment Insurance Fee To Impact Nonprofit Employers

Read below about the recent news about a new fee per employee for employers related to NYS Unemployment Insurance borrowing. As a nonprofit, there is another alternative, which you can learn about from NYCON:

Find Out if the Unemployment Savings Program for NYCON Members through First Nonprofits Companies can Save You Money.

Why pay a tax if you don’t have to? Many NYCON Members have switched from paying the state unemployment tax rates to First Nonprofit Unemployment Savings Program saving up to 60% of their unemployment costs annually. Find out if you can too. Take NYCON's FREE upcoming Beneft Spotlight: Unemployment Savings Program on August 23rd from 10 am to 11am. REGISTER HERE

A Big Bill for Employers
The Albany Times Union reported that Gov. Andrew Cuomo on Tuesday rolled out a sweeping plan to help revitalize the state's economy, complete with an ad campaign and competitive grant program designed to spark innovation.

But businesses have a more immediate concern: The bill is coming due for New York's unemployment insurance.

Citing the need to borrow more than $3 billion from the federal government to prop up its chronically empty account, the state faces a whopping $95 million interest payment on loans for the fund due Sept. 30.

As a result, the state Department of Labor is assessing businesses up to $21.25 per employee to cover the cost. That payment is due Aug. 15.

Complaints about what businesses describe as a hidden tax were rolling in Tuesday after numerous employers received the notices and as Cuomo expounded on his plans for the economy.

"This is something that could -- depending on the number of employees -- be a pretty hefty cost in this economy," said Mike Durant, New York state director for the National Federation of Independent Businesses.

When asked about the surcharge during a news conference outlining his revitalization plans, Cuomo stressed that the bill for interest is ultimately coming from Washington, D.C.

"It's a federal decision whether or not they'll waive the interest payments. I hope that they do," he said, adding that his office was pushing the state's congressional delegation on the issue.

The hefty tab illustrates what can happen as the federal stimulus program, enacted shortly after the recession started in 2008, runs out.

The Department of Labor noted that the stimulus program provided no-interest loans to the states in 2009 and 2010, but not this year.

Read more: http://www.timesunion.com/local/article/A-big-bill-for-your-boss-1472786.php#ixzz1SetH4Zip

Schumer: Losing Tax-Exempt Status Could Be An Unfair Blow To New York’s Nonprofits

Schumer: Losing Tax-Exempt Status Could Be An Unfair Blow To New York’s Nonprofits

Report Provides County-By-County Breakdown Of The Over 6,000 New York Nonprofit Groups That Lost Tax Exempt Status – Groups Can Correct Error, But Have To Do It Soon Before Costs Go Up

Today, U.S. Senator Charles E. Schumer unveiled a new section of his website to aid New York nonprofit groups that may have mistakenly lost their tax exempt status. Schumer is strongly encouraging nonprofit groups to check a recently-released Internal Revenue Service (IRS) list, available on Schumer’s website, to ensure that they have not been mistakenly stripped of their tax-exempt status – a move that could cost these groups thousands of dollars. Schumer’s webpage was launched shortly after media reports indicated that several nonprofit groups, including the New Windsor Little League and Plattekill Public Library, were included on the list released June 8th, despite the fact that their paperwork was up to date and filed with the IRS. Several nonprofit groups were never contacted by the IRS, despite several attempts to send mailings and other communications to warn the groups of the looming deadline to avoid losing their designation as a 501(c)(3) group.

“Little leagues, public libraries, museums, meal programs, and other nonprofit organizations that are the very fabric of communities throughout Upstate New York are at risk of losing their tax-exempt status and paying thousands of dollars in penalties through no fault of their own,” said Schumer. “Whether because of a lost notice in the mail or paperwork errors, no nonprofit should needlessly lose their tax exempt status. Every nonprofit group in Upstate New York should take a moment to ensure that they won’t be forced to pay unnecessary taxes this year. I’ve launched this new page on my website to make it easy and painless for groups to make sure that they’re not on the list, and to take steps to correct the problem if they are. Remaining tax-exempt helps keep costs down while boosting fundraising for charity organizations.”

"The good work of community charities has a vital impact on the everyday lives of New Yorkers,” said Doug Sauer, Chief Executive Officer of the New York Council of Nonprofits. “Whether it is providing volunteer first responder assistance, providing food and housing to families in need, caring for our children, disabled and elderly, fostering economic development or creating and promoting arts and culture - charities are integral to our quality of life in ways that are often taken for granted. NYCON is eager to do what we can to assist those organizations whose tax status have been revoked so that they continue their important contributions."

On June 8th, the IRS released a list of 275,000 nonprofits nationwide who automatically lost their tax-exempt status because they failed to file annual reports for three years in a row. The list included over 19,000 New York organizations, including more than 6,000 across Upstate New York. While the IRS believes that many of these organizations are no longer operational, they acknowledge that some groups on the list might not have been aware of the requirement, and are taking steps to allow these nonprofits to reinstate their tax-exempt status. In making the announcement, IRS Commissioner Doug Shulman said that, “We realize there may be some legitimate organizations, especially very small ones that were unaware of their new filing requirement.”

The list includes a diverse range of nonprofit groups including sports leagues, public libraries, museums and other educational programs, conservation groups, religious organizations, business networking groups, and others. There are over 106,000 registered nonprofits in New York state, according to the New York Council of Nonprofits, employing over 1.2 million New Yorkers statewide. Included in this total are 3,000 food pantries that feed approximately 3 million people each year. Over 17,000 people work in New York museums, which help contribute over a billion dollars to the state’s economy each year, thanks to visits from 6.6 million families, senior citizens, and students. In 2010, the American Red Cross in New York responded to 3,920 local disasters, and has trained nearly 590,000 people in First Aid. The group has also trained over 168,000 people in emergency preparedness, collected over 400,000 units of blood, and helped over 66,000 military families through their Armed Forces Emergency Services and Community Outreach Programs, according to the New York Council of Nonprofits. New York charities play an important role in communities across the state, and should be allowed to continue to do their good work in a tax-exempt state that will help their bottom line, allowing the nonprofits to serve more Upstate New Yorkers.

Here is how the nonprofits who lost their tax-exempt status break down across the state:

• In the Capital Region, approximately 952 nonprofits lost their tax-exempt status.



• In Western New York, approximately 687 nonprofits lost their tax-exempt status.



• In the Rochester-Finger Lakes Region, approximately 867 nonprofits lost their tax-exempt status.



• In the Southern Tier, approximately 562 nonprofits lost their tax-exempt status.



• In Central New York, approximately 811 nonprofits lost their tax-exempt status.



• In the Hudson Valley, approximately 1,942 nonprofits lost their tax-exempt status.



• In the North Country, approximately 426 nonprofits lost their tax-exempt status.

Being included on the list means that these nonprofits are no longer eligible to receive tax-deductible contributions, and that any income the group receives may be taxed. This has the effect of raising taxes on the nonprofit, while also putting a serious damper on their fundraising. The Pension Protection Act, passed by Congress in 2007, requires tax-exempt organizations to file an information return or notice each year with the IRS. Smaller groups are required to file for the first time in 2007, and the law automatically revokes the tax-exempt status of groups that do not file for three consecutive years. As a result, the first nonprofits to be revoked under the new law saw their status removed based on 2010 returns, filed in April of this year.

Fortunately, as long as groups are aware that they have been improperly stripped of their tax-exempt status, they can take corrective action at minimal cost to the group. Any nonprofit that can demonstrate that it has met its filing requirement for one or more of the last three years can fax copies of their past tax returns to be reinstated at no cost to the group. Additionally, those groups with under $50,000 in income that have not filed tax returns over the past three years can file for reinstatement for a reduced fee of just $100. If the groups fail to file by December 31, 2011, that fee jumps to $400-850 for 2012. Due to the limited window to take advantage of cheaper and easier ways to reapply for tax-exempt status, Schumer is encouraging nonprofits across Upstate New York to check his website and the list of those that lost 501(c)(3) status to ensure that their paperwork is up to date. If a group finds that they have lost their tax exempt status, they can follow the instructions on Schumer’s website and take steps to see that it is reinstated.

The new section of Schumer’s website can be accessed by visiting http://schumer.senate.gov/Public/irs_6_22_11.htm

Nonprofits Can Win Free Gas

IT’S YOUR CHANCE TO MAKE A DIFFERENCE, AND THEN SOME.
For the 2011 Fueling Good Program, we’re focusing our support on four charitable categories: Education and Social Investment, Energy Assistance and Conservation, Environmental Protection and Restoration, and Health and Well-Being. Your organization must serve one of these interests and have 501(c)3 status to be eligible to participate. Please choose a category during registration. Thank you, and best of luck!

Get an overview of Fueling Good: http://www.youtube.com/watch?v=fvZDcdn9q5U

How it works:
· Starting June 1, nonprofits will be able to register at http://www.fuelinggood.com/ to participate in the summer program. From July 14 – August 11, local communities will begin voting at that site for charities of their choice. (The full rules/details will also be available on the site starting June 1).

· CITGO will be awarding gas to 12 nonprofits at the end of August, with more to follow in the fall.

Who is eligible?
· 501(c)3 nonprofit organizations in the 27 states where CITGO operates.