Nonprofit Newswire | Adoption Agencies Slammed on Spending Habits . . . Including High Compensation

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April 26, 2010; Source: Atlanta Journal-Constitution | A hard-hitting investigation by the Atlanta Journal-Constitution might lead to calls that private adoption and foster case agencies in the state adopt new—and less personally lucrative—financial controls for the people running or overseeing these groups. Based on a review of federal tax filings and other publicly available documents, the newspaper reports finding “numerous examples where top executives” compensation accounted for one-fourth to one-third of agencies’ budgets. In many instances, administrative costs exceeded expenses on direct services for children.

Some of the questionable practices responsible for such outsize expenses include high pay for agency heads and office rent sometimes paid to employees or board members who owned the space or buildings.  In another instance, a management company belonging to the nonprofit’s president was paid $1.8 million in 2008.  Pablo Eisenberg, a senior fellow at Georgetown University’s Center for Public and Nonprofit Leadership, blamed the excessive expenses on a lack of industry standards and government rule. He said, “What you’re finding is certainly the trend in nonprofits. An increasing number of people are pushing for a kind of free market in nonprofits. There’s no accountability.  There are no guidelines by the IRS, even on self-dealing. It’s just appalling.”

Other examples of worrisome pay and administrative costs include the compensation in 2007 for the executive director of AAA Partners in Adoption Inc. of Alpharetta—$107,747 or 25 percent of its total expenses.  That same year, Open Door Adoption Agency Inc. of Thomasville paid its two top executives, a husband and wife, $201,000, out of a $1.2 million budget.  In another instance, of its $9.1 million budget, Bethany Christian Services spent $7.2 million, or almost four of every five dollars, on management expenses. The newspaper also found that another $1.2 million covered fund-raising costs — nearly twice the $694,000 that went to programs that directly served children.

Ironically, while some agencies seem to be living high, others are struggling to survive due to state budget cuts.  To make its point that none of this information should have come as a surprise, the newspaper listed all the sources for its story.  It notes:  “Most of those documents are available free online from organizations such as the Foundation Center (www.foundationcenter.org) or GuideStar (www.guidestar.org).”—Bruce Trachtenberg