NSAL Form-990 Tax Return: A Mystery Wrapped in an Enigma

Discussion in 'The Howard Stern Show' started by Captain, Feb 19, 2015.

  1. Captain

    Captain Alto, Blanco y Guapo Gold

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    Ok, I know this has been done before, but as someone who does this for a living, I thought I'd give my two cents. Below is the link to the IRS Form-990 for North Shore Animal League. This is the return that income tax exempt orgs have to file with the government. It is a matter of public record, and includes details about revenues, expenditures, etc:

    http://www.animalleague.org/assets/pdfs/2013-irs-form-990.pdf

    EDIT: OK, so I forgot the DS crew are not into reading anything longer than 10 words, so here is the short version: NSAL appears to be pretty well designed by accountants and lawyers to operate year-over-year at a loss (so, purposefully weak expense controls and inflated payments to buddies to run operations), but also allow the long-term assets to be sucked out (over an extended period of time) in the form of inflated executive compensation deals and tax gimmicks. In short, it redistributes resources from rich donors to the friends of rich donors.


    A few (long) thoughts:

    (1) Officer compensation: Salaries are not especially high for organizations of this type. However, what struck me was the absence of tax-qualified benefits for the rank-and-file employees. Moreover, if you look at Part IX, line 9, you see "other employee benefits" for $3,431,794. This is probably a non-tax qualified executive compensation package (e.g., a way of inflating compensation outside of the salary box). Then, if you look at Schedule D, Part X, they are carrying an accrued pension liability of $3 million and an annuity payable of $1 million. That is truly remarkable for an organization that is running in the red and does not appear to have a tax-qualified ERISA plan. This is probably an executive (non-qualified) retirement package that is just sitting there on the books, year over year, eating in to the projected future revenues. I would LOVE to know what that line item is.

    (2) Related party transactions: They appear to be financing a related-party: The Pet Savers Foundation. The amount is small ($80,000), but the question is why they are transferring money to a related-party that does business at the same address as NSAL. Who owns and controls PSF? What is it doing that NSAL does not do?

    (3) Revenues & Expenses: Revenues are from a "black box." Rather than the fund-raising galas producing money, it looks like various individual gifts comprise the lion's share of revenues ($27 million). Other places in the filing suggest that high net worth individuals are donating stock, real property and so forth to NSAL, which forms the bulk of their asset base. Schedule G, Part II: Their Celebrity Gala cost more to produce than it raised. Indeed, the organization as a whole is spending more than it is taking in as revenue. When I look at the expenses, I see many yellow flags: very high ad and promotion costs ($600K), very high legal fees ($500K); very high occupancy and travel costs for an org of this type ($400K and $300K). What really caught my attention was the "other expenses" totaling some $14 million. $7.5 million of this was in "program education materials." WHAT!!! If their revenue sources are almost wholly a small circle of high net worth philanthropists, these type of expenses do not make sense.

    (4) Third party expenses: They are paying an outside party (Infocision) about 33% of the gross receipts for telemarketing. I would love to see the contract for that arrangement and who owns and controls Infocision. I would also like to see the phone log and vouchers for the Infocision account. Moreover, their third-party legal and accounting fees are VERY HIGH for an organization of this size. The accounting fees in particular struck me as WAY off the mark, unless they are in the middle of a huge governmental investigation or active litigation. Again, I would like to cross-list the officer and employee index against the law firm and accounting firm index.

    (5) Assets: Despite running revenues against expenses, year-over-year, in a way that makes the organization "un-profitable," they have a surprisingly strong asset base. They have $4 million in cash, which is unheard of, and appear to have the bulk of their asset base in property and equipment. That itself is not unusual for an org of this type, but I would love to know how they acquired the real property, as they appear to own the premises upon which they operate.
     
    Last edited: Feb 19, 2015
  2. larryluncg

    larryluncg Empty VIP Gold

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  3. WillyBest

    WillyBest Achiever Gold

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    Hmmm...
     
  4. TallTyrion

    TallTyrion Triggered like a mofo VIP

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    that's actually better than I though it would look...heh
     
  5. zerokarma

    zerokarma Well-Known Member

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    North Shore Animal League has always been a sham organization, it's basically a front for rich snobs to shift around some money and give some cushy do nothing jobs to their friends and relatives all while pretending to be doing a good cause.

    I am sure if the IRS actually did a full audit on them there would be lots of skeletons to be found.
     
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  6. PelicanWig

    PelicanWig Beautiful Soup

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    I know nothing about this shit but are the answers to your questions and concerns also public info? Specifically the ones about the telemarketing firm? Thanks I'll hang up and listen.
     
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  7. Blur

    Blur Alumnus

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    Cliff Notes, por favor.
     
  8. Weed

    Weed Well-Known Member

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    InfoCission's Mission Statement from their webpage...

    Deliver our Clients the Highest Return on Investment
    At InfoCision, we are committed to the same mission, vision and philosophy established by our Founders Gary and Karen Taylor in 1982, that has enabled our company to provide unmatched results to our clients for more than three decades.

    Mission
    InfoCision’s mission is to provide direct marketing solutions that deliver our clients – businesses and organizations across industries – the highest possible return on investment (ROI). The principal services InfoCision offers include inbound and outbound call center solutions; direct mail and fulfillment; and interactive (Web) and data (intelligence and analytics) solutions.

    Vision
    At InfoCision, our vision is to be the highest-quality direct marketing solutions provider in the business. We achieve this by helping organizations build stronger relationships with customers and donors; ensuring our clients feel great about the Communicators making and taking their calls; and creating an environment where people enjoy coming to work. Our devotion to quality enables our company to remain financially viable and prosperous.

    Philosophy
    Our philosophy is to provide the highest quality services – which generate superior results for our clients – by investing more in quality than our competition. However, our investment must be cost-justified by producing the highest return on investment for our clients. While InfoCision may not always be the lowest-cost direct marketing solutions provider, we will provide a significantly higher ROI for our clients at a competitive price.

    *****************

    Hummmmm.. This leads me to believe that charities are somehow a good business for the people running them. But this can't be the case, can it?
     
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  9. Hamster

    Hamster Well-Known Member

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    Christ..... 40 pages....no wonder everyone hates lawyers, accountants, and the IRS.
     
  10. SouthernListen

    SouthernListen I don't follow the crowd. Sorry about that. VIP

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    1. Salaries have to be shown on their Form 990. Pensions and annuities may not. So they can hide exorbitant compensation for the ringleaders there.

    2. Related party transactions are big in charity. Some big Christian feed the poor charity got busted using their personally owned trucking companies to ship food around, at higher than market rates, of course, and with no bidding, of course. Another way to milk suckers who give them money for personal gain.

    3. a) The galas are thrown for the benefit of the charity's management, not to raise money. They want to hob nob and be in the society set with celebrities. This is a way to engineer that w/o having to foot the bills personally. In high society is has always been known to be ruiniously expensive to "entertain". This allows a charity manager with a six figure income to entertain like she's a Vanderbilt.

    3 b) Donations of non-cash assets are almost always over-valued and not marked to real market value. They enjoy a nice tax deduction that is probably not much less than the property's actual value after selling costs. This is like regular people donating broken down cars and overvaluing them, or someone donating his old socks and underwear at an inflated value (near $0 in reality).

    4. Another way to funnel money to those who control the charity. To avoid related party status you might only have to send business to a friend's company, who then cuts you a deal in your other business dealings, or even gives you a kickback. Plenty of ways to work this scam.

    5. Depreciation could account for running paper losses. I assume cash flow would be a different matter.

    NSAL is just one of many, if not most, Charities set up for the benefit of someone besides those they claim to be helping. Others have simply been hijacked by someone along the way. And as the celebrity gala thing indicates, the benefit they desire is not always only monetary. It can be celebrity exposure, ego gratification, fame, whatever. Clever rationalizations make it possible for them to defend themselves against such charges, of course.
     
  11. RonHeinzkaboot

    RonHeinzkaboot Adultophile VIP

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    Really excellent post!
     
  12. RonHeinzkaboot

    RonHeinzkaboot Adultophile VIP

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    (2) Related party transactions: They appear to be financing a related-party: The Pet Savers Foundation. The amount is small ($80,000), but the question is why they are transferring money to a related-party that does business at the same address as NSAL. Who owns and controls PSF? What is it doing that NSAL does not do?
    I wonder if The Pet Savers Foundation is Beth or someone who does her PR or helps her with her fostering. Sounds like a consultant payment but they don't want to actually name the consultant directly. Beth Fosters, she pet saves?

    Just that 33% of donations landed by telemarketers goes to phones sales guys instead of the charity's objectives should convince anyone to give locally or directly. Non-profits are such a scam.
    Most of the time they are just self promotion or employing family members.
     
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  13. Beffquus

    Beffquus Scripta sunt in stellis Gold

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    I actually don't mind this part. If that's how these folks shelter their income and protect their assets -and it's done legally - fine. Have your meetings, throw your galas and all that shit. What bothers me is when they shake $10 or $20 out of other folks for some stupid calendar or book just so someone like Whorse can get up on the PR cross and say "Look at meeeeee!!! I'm an angel and I save little helpless animoes!!! Fuckin' vanity charity.