Keelan: Step up or step off

By Don Keelan

Most trustees of Vermont nonprofit organizations are fortunate that they don’t have to abide by the unofficial mantra of many museums and cultural organizations in New York City — “Give, get or get off.”

The above was outlined in the March 30 edition of The Economist, and furthermore, the publication also noted what was required financially from trustees at the Metropolitan Museum of Art. This NYC landmark and world-renowned institution requires a $10 million minimum contribution from each of its 75 board members. It’s not all that much when you consider the fact that the combined net worth of the board is in the neighborhood of $50 billion.

Don Keelan

There are some boards in Vermont — “money boards,” as they are sometimes referred to — that “assess” a minimum annual payment from their trustees. Most do not, and therefore expect participation, oversight and due diligence from their trustees.

I have written about this subject since 2003, hoping that my comments would be helpful. Maybe I was expecting too much. Lola Duffort, the education reporter for VTDigger, in her March 28 piece, confirmed that my advice is not being heeded.

In Duffort’s headline, “Compass School in Westminster has tax-exempt status yanked,” was a confirmation that I am still not getting my message delivered on good governance by Vermont nonprofit board members.

According to Duffort, the Compass School, a private, 70-or-so-student middle and high school with an operating budget of about a million dollars, is not by any means a sizable nonprofit. Nevertheless, for many years, the school has undertaken a significant mission — as do many similar Vermont nonprofit organizations. In the former’s case, the education of students requiring an alternative education.

Duffort’s story title might be a bit sensational (“tax exempt status yanked”) but nevertheless makes a serious point for any nonprofit: the loss of its IRS determination under Section 501c(3). This happens for a reason and, in this case, the failure on the part of the school to file three years of taxes, Form 990, brought on the loss of exemption. Bad enough.

But what I found discouraging were the comments by board members as noted in Lola Duffort’s piece. According to Duffort, board co-chair Roxane Blake was interviewed for the story and asked, “Why should the study be a story? Does Blake have any idea what it means for the school to lose tax exemption and the professional fees and tax penalties it will face — how donors’ contributions will be characterized by the IRS?”

Blake was not alone. Rick Cowan, the former co-chair, was quoted “(he) was under the impression that an accounting firm was doing the taxes — but couldn’t remember the name.” Mr. Cowan should know that you don’t lead by impressions; how about facts and verification?

Additionally upsetting was that Rick Gordon, the school’s founding director, had to be informed by a reporter of the loss of tax status. He went on to note that there was a trauma in the family of the volunteer who was in charge of  preparing the tax forms. This contradicts Cowan’s comment and, furthermore, why were there no filings for three years?

Duffort notes in her piece that someone at the board level mentioned “no one was directly responsible.” The board is responsible and each year is required to see a physical copy of the Form 990 before it is filed with the IRS.

Compass School is in for a difficult time with the IRS, and recently, before hearings with the Vermont Agency of Education. Let’s hope they will get through it. According to Duffort the three years of Form 990 have since been filed.

It has become so dispiriting to witness many Vermont nonprofits fail, and all too often the cause can be boards not carrying out their due diligence. In NYC, you are asked to get off a board if you don’t give your treasure or get others to. In Vermont, if you can’t give your attention, it is time to step off.

Don Keelan writes a bi-weekly column and lives in Arlington, Vermont.

Image courtesy of Courtesy of the Internal Revenue Service

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