Nonprofit Newswire | November 17, 2009

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The Nonprofit QuarterlyNonprofits formed by three legislators go unaudited
Nov 12, 2009; Birmingham News | This is a type of story Nonprofit Quarterly has covered many times over the years (Here, or here, and here, here and here, the problems of politicians creating and sometimes personally running charities. Examples at the federal level have included foundations established by former Congressman Tom Delay and former Senator Rick Santorum and nonprofits closely linked with members such as Congressman Randy “Duke” Cunningham, now no longer a member of our nation’s top legislative body, Congressman Frank Balance, since convicted expressly for his nonprofit shenanigans, and Alan Mollohan, currently facing a molasses-like ethics investigation for his nonprofit connections. But it hasn’t only been federal. Several politicians, most notably, State Senator Vincent Fumo in Pennsylvania, ready to go to jail, and California Insurance Commissioner Chuck Quackenbush, now a cop in Florida, have also demonstrated ways of making mincemeat of the concept of nonprofit accountability. The Birmingham News reports that a couple of Alabama state legislators have devised their own particular way to screw muck around with nonprofits of their own creation. In 2006, Alabama gave a portion of the state’s “coal severance tax revenues” to a number of nonprofits. The law that the legislature passed included $100,000 apiece for the Marion County Community Development Association and the West Alabama De­velopment Association of Fayette County. The only problem was that these two nonprofits didn’t exist at the time—except in the minds of one Alabama state senator and two members of the Alabama House of Representatives. A couple of years later, the two organizations still lack IRS approval as 501(c)(3) nonprofit charities, but that doesn’t seem to have stopped their receipt of monies. Some $800,000 later, the two organizations are unaudited and no one can affirmatively say what they did with the public money they received. One of these three legislators offered this as an explanation of their expenditures:  “I think we’ve given some (money) to schools, to vol­unteer fire departments, for some road work, but you need to talk to the other two [legislators].” The state body charged with conducting the audits (the “Examiners of Public Accounts”) said that it was unaware of the two organizations, much less that they had received public funds. This is a pretty skeevy story, right up there with Duke Cunningham, Frank Torrance, and Vincent Fumo. The last thing nonprofits need is to have legislators who make the laws concerning nonprofit functions and oversight using nonprofits as personal and political play-toys.—Rick Cohen

The Nonprofit QuarterlyNonprofits in the real estate market
Nov 13, 2009; | It’s a lousy time to sell real estate—we saw two stories in the news this weekend about nonprofits selling real estate. The first is a story about a community-based organization in Paterson, New Jersey which has decided to “restructure” and unload its building because it can not pay its mortgage. While the reasons given involve a real downturn in 2008 funding, the article suggests that the agency may have been in decline for a while. It’s hard to rebound when you have huge fixed assets hanging around your neck. The second story is about what California nonprofits are experiencing as they attempt to fundraise through “Dream House” raffles. This one is a very interesting read and a mini-window on our times.—Ruth McCambridge

The Nonprofit QuarterlyCoop trailer park in Texas
Nov 16, 2009; Houston Chronicle | With the help of Community Resource Group, an Arkansas-based nonprofit, the 94 households in Pasadena Trails became the first group of mobile home residents in Texas to collectively purchase the land under their homes. Trailer parks, often on the fringes of metropolitan areas, are popular among real estate investors who can buy them cheaply and then sell them for a quick profit. Many times residents only get 60 days to get out. Housing advocates say conversion of mobile home parks to resident ownership is a promising approach that’s received insufficient attention in government and nonprofit programs. To pay for the land, residents’ security deposits are converted into a down payment fund, the rest is financed by foundations and lenders.—Aaron Lester



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