Pension liabilities will be continue to be a burden for nonprofit hospitals rating service, Standard and Poor’s (S&P), reported Monday.
While there are other factors contributing to the financial problems of the sector, large pension funding demands are the biggest factor according to a report in Reuters. S&P credit analyst Liz Sweeney said in a statement that the promises of these retirement benefits could be a “drag” on nonprofit hospitals for several years despite improvements in the investments used to fund retirement services.
“Low discount rates have hampered the improvement in funding levels despite a rebound in asset values during the past two years,” said Sweeney.
Retirement benefits are just one of the many challenges nonprofit hospitals are facing. S&P noted that as pension gaps continue to grow in state and local governments, employers are putting more money into healthcare systems that have redesigned pensions, which could leave less funds for other projects.
“We believe that health systems will continue to implement plan changes to seek the next level of cost savings within the context of organization-wide expense reduction measures,” S&P reported.
Changes from the Affordable Care Act, increasing stress on Medicaid and Medicare, and increased healthcare demands in general, are also increasing the financial difficulties for nonprofit hospitals across the country.
You can read the full story in Reuters.
The founder and former CEO of a Naperville, Ill.-based nonprofit has allegedly fled the country amid allegations he stole nearly $200,000 from the organization for a film company he founded.
Robert Geniesse founded Our Children’s Homestead, a nonprofit foster-care and adoption agency, and was CEO until the board of directors fired him in March 2011, according to a report in The Daily Herald. He was fired under suspicion that he was embezzling from the organization, and a criminal investigation was soon launched.
Geniesse was formerly charged this month with funneling over $200,000 from the organization to his film company, Reverse Momentum Films. Four days before the charges were filed, however, he fled to Hamburg, Germany, according to the FBI. It was also alleged that his wife, who runs the film company along with her husband, went to Germany one month before the charges were issued. Howe is not charged with any wrongdoing in the case.
Along with using the funds for production of documentary films, Geniesse allegedly used the agency credit card for hotel rooms, rental cars, and other expenses during filming in Kenya and the Philippines. Reverse Momentum Films produced at least one picture in 2009, “I Am You,” a documentary about poverty in the Philippines.
Despite the alleged theft, Our Children’s Homestead remains in a good financial state. Kurt Freidenauer, who replaced Geniesse as CEO last year, told The Herald that the organization has been able to maintain its daily operations. He gave credit to the board for firing Geniesse before any more damage could be done.
Should he be located, the FBI will seek to expedite Geniesse back to Illinois, where, if convicted, he faces a $100,000 fine and up to 15 years in prison.
You can read the full story in The Daily Herald.
The sister publication of The NonProfit Times, Exempt Magazine, is the perfect publication for those in the sector whose forte is finance. The magazine is released quarterly, and the time has now arrived for the release of the latest edition.
The Fall 2012 issue of Exempt tackles a number of topics, from inflation to social media. Let’s take a look at some of the content you can expect to find within the pages:
- Hedging Against Inflation by Diversifying Investment Income: Some of the nation’s largest nonprofits are complex businesses,
generating income from donations but also via fundraising events,
program service revenue or membership fees, as well as investment
- Managing Risk In The New Normal: As you prepare to flip the page on your old-fashioned
paper wall calendar and toast the New Year, are you thinking about
risk? What adventures await your nonprofit in 2013? What risks will pay
dividends, and which will you be regretting at this time next year?
- Finance And Fundraising: Are you are asking this question about social media: “How do we know
this investment of staff time in social media will pay off?” If you are
getting answers from staff like this: “We have 10,000 fans on Facebook,”
hit the pause button and work on defining what success means. (Also check out this chart on social media metrics).
A new bill pending in the Illinois State Senate would require publicly-funded nonprofits to expose the pay their executives receive from private management companies.
The bill would accomplish this by closing a loophole that currently allows organizations to hide this data, according to a report in The Chicago Tribune. State Rep. Greg Harris (D-Chicago) filed the legislation after reading a series of reports in the Tribune that revealed that the nonprofit executive pay at 18 state-funded organizations rose at double the rate of the private sector in 2009 and 2010.
The report in question showed that nonprofits were able to hide their pay data by paying salaries through for-profit management companies they formed. The proposed legislation would amend Illinois’s procurement code to specify that organizations would also need to reveal what executives are paid even if those salaries came through a private company.
This is the latest step in a series of efforts by the state to bring greater transparency to publicly-funded groups. In July, the Illinois Department of Human Services, which funds many organizations in the state, started requiring all tax-exempt organizations that received $250,000 or more to release the pay data for all employees, including those paid through private companies. This requirement will extend to any nonprofit receiving $250,000 or more in DHS funding.
Harris’s bill will bring similar requirements to many organizations in Illinois, regardless of which agency is funding them. During Fiscal Year 2011, more than $9.8 billion was distributed to almost 6,000 nonprofits throughout the state.
You can read the full report in The Chicago Tribune.
There are few states that have as much diversity in the nonprofit sector as New York. From famous organizations such as Charity: Water in New York City, to the government-related nonprofits of the Capital region, there are plenty of opportunities in the Empire State.
That’s why, for the 2012 Nonprofit Salary and Benefits Reports, The NonProfit Times released a dedicated report for New York nonprofits.
The 2012 Nonprofit Organizations New York State Salary and Benefits Report is the ideal guide for managers who want to make sure they are offering compensation in line with competitors. It stands to reason that a large charity in Manhattan will offer vastly different salaries and benefits to workers than in smaller regions of the state, which is why the report offers a baseline on salary and benefits so you will be in line with your peers.
As any successful nonprofit manager knows, salary is just half of the picture when it comes to compensation, especially with top-of-the-line jobs. That’s why the New York Salary and Benefit Report lists the top executive perks given in the state. Additional vacation days and a car or car allowance were most common among New York’s nonprofits, with more than half offering these perks to their top executives. It should be no surprise, then, that these positions have some of the lowest turnover rates of those surveyed for the report.
Other information included in the NY Salary and Benefits Report include:
- Annual Salary Increases (executive and non-executive);
- Base Salary and Total Cash Compensation data with percentile rankings for each position;
- Total compensation costs as a percentage of operating expenses;
- Employee profile data: number of full/part time; exempt vs. nonexempt;
- Retirement Plans (maximum contributions, eligibility, plan offerings, participation rates);
- Executive Employment Agreements (organizations offering, terms and conditions);
- Part Time Employee Benefit Offerings;
- Overtime Practices – exempt vs. non-exempt staff;
- Flexible Spending Accounts (offerings, maximum contribution percentile rankings); and,
- General Benefit Offering (covers 34 unique benefit programs).
This report can be purchased, along with the four other Salary Reports, on The NonProfit Times‘ online store.
The NonProfit Times, the leading business publication for nonprofit management, has released the 2012 editions of its annual Nonprofit Salary and Benefits Reports. In partnership with Bluewater Nonprofit Solutions, these five reports will give managers the most up-to-date information on current trends in nonprofit salaries and benefits so they can properly fill out their IRS Form 990s.
This year brings the introduction of a new report to the standard four that were available in previous years: The 2012 Nonprofit Organizations New York State Salary and Benefits Report. All of NPT’s reports are based on responses from around the United States, but this is the publication’s first report to collect information based on a specific state. The New York Salary and Benefits Report contains information on mid-level salary information, complete benefits coverage, and key benchmarking information, including base salary and total cash compensation data with percentile rankings for each position.
The other reports released by NPT today are:
- 2012 Nonprofit Organizations Salary and Benefits Report: The information in this report will give you the salary range for nearly 252 positions in the nonprofit sector.
- 2012 Nonprofit Organizations Salary Report: This is useful for organizations that already have a handle on their benefits packages, but need information to create competitive salary structures.
- 2012 Nonprofit Organizations Benefits Report: Similar to the report above, this is the one to purchase if your nonprofit only needs help with creating competitive benefits packages for its employees.
- 2012 Nonprofit Organizations Top Executive Positions and Special Perks Report: Nonprofit executive compensation is so important to understand thoroughly. In order to attract the best people to be a part of a nonprofit organization, a very competitive environment, you need to make sure that you offer appealing compensation packages for hiring individuals who you wish to play an important role in your organization.
All five of the reports are available for purchase immediately on The NonProfit Times’ online store. Purchase one, or more, today so that your organization can attract the best and brightest employees, and stay on top of those Form 990s.
The words “fiscal year” always seem to make an appearance when reading reports about nonprofit finance or accounting. Contrary to popular belief, a fiscal year doesn’t just begin when the new year starts; it begins whenever the nonprofit wants it to.
As explained by Thomas Wolf in “Managing a Nonprofit Organization,” a nonprofit’s fiscal year can begin at any point during the year as long as its end date is specified in the documents in which it is mentioned. These dates are usually not chosen at random. Whether it’s to honor the organization’s anniversary or the birthday of a high level executive, fiscal years can have a lot of meaning. As such, great care should be taken in choosing a date.
What makes a good beginning and end to a fiscal year? Wolf laid out three considerations to keep in mind:
- It should roughly parallel the organization’s program year. That is, one
year’s program activities should not fall into two fiscal years.
- The fiscal year should end, whenever possible, just before a period of relative inactivity.
- The fiscal year-end may be chosen to coincide with a primary funder’s
fiscal year-end and resulting reporting requirements. For example, if a
major portion of an organization’s support is from the state government,
the nonprofit may select the same fiscal year-end as the state to
simplify reporting on state grants.
The director of Rockingham County’s Community Action Program (RCCAP) pleaded guilty yesterday to embezzling almost $1 million from a Sanford, ME nonprofit he headed.
According to a report in Foster’s Daily Democrat, 56-year old Thomas Nelson admitted to stealing $900,000 from York County Community Action Corporation (YCCAC) before he left for his new position at RCCAP in New Hampshire two years ago. Thompson had worked for YCCAC for 21 years.
The money was stolen from 2004-2010 and, according to court documents, was used by Thompson for gambling and to pay off mortgage and credit card bills. He is also accused of failing to report almost $400,000 in stolen income to the Internal Revenue Service (IRS), and with creating false income returns for a defunct nonprofit, the New England Community Action Agency, to cover up his theft.
“Through his actions, YCCAC’s former Executive Director betrayed the trust placed in him by the board, and compromised the organization’s ability to invest in and support initiatives that would have helped our clients,” YCCAC’s board of directors said in a statement. “Certainly, the organization deeply regrets and shares with the community a sense of anger that those funds were not available for enhancing services to clients.”
YCCAC receives its money from a mix of federal, state, and private funding. Nelson’s attorney, Jeff Silverstein, and a lawyer representing the organization both confirmed that none of the cash came from the federal government. Nelson instead embezzled from “unrestricted” cash funds controlled by the nonprofit. YCCAC confirmed that it is insured against the losses.
As part of the plea deal, Nelson agreed to pay $1.2 million restitution to YCCAC and $150,000 to the IRS. He also faces the following sentences for each charge he pleaded guilty to:
- Five years in prison and a fine of up to $250,000 on the conspiracy count;
- Up to 10 years in prison and a fine of up to $250,000 on the embezzlement count;
- Up to five years in prison and a fine of up to $100,000 on six counts of tax evasion; and,
- Up to three years and a fine of up to $100,000 on two counts of filing a false tax return.
The former chief financial officer (CFO) of a Metairie, La. nonprofit has pleaded guilty to charges that she embezzled almost $250,000 from the organization and another official there.
Federal prosecutors accuse Kelley Williams, 38, of forging the name of the nonprofit’s president on checks she made payable to herself and depositing them into her personal bank account, according to a report in The San Francisco Chronicle. She allegedly attempted to disguise the payments as legitimate expenses by using computer accounting software.
While the name of the nonprofit for which Williams worked is not disclosed, it was revealed in court records that it provides personal care attendants, transportation, education, and training to individuals with developmental disabilities.
Williams faces a maximum prison sentence of 10 years and a $250,000 fine following her guilty plea yesterday. Her sentencing is set for Nov. 7.
You can read the full report in The San Francisco Chronicle.
Moody’s Investors Services maintained its negative outlook on the nonprofit health sector, announcing Monday that more hospitals received downgrades than upgrades, citing the down economy and federal budget cuts.
The credit rating agency said that the ratio of downgrades to upgrades was 1.33 to 1, according to Reuters. The hospitals that received upgrades were primarily due to strong management, high revenue from state provider taxes, and mergers. Overall, however, Moody’s was not optimistic.
“The increased proportion of downgrades is driven by the continued slow economic recovery, increasing pressure on state budgets, and a large and growing federal deficit that may lead to reductions in Medicare and Medicaid which translate into weak volumes and revenue declines,” Moody’s said in a statement.
In a reversal from previous quarters, the dollar amount of downgraded debt for nonprofit providers exceeded the dollar amount of upgraded debt, $2.78 billion to $2.11 billion. Moody’s said this was an showed an increase of downgrades for large health systems.
Finally, the agency said that the United States Supreme Court’s decision last month to uphold the Affordable Care Act was a “neutral event” for nonprofit hospitals.
“Reductions and changes in Medicare and Medicaid reimbursements and funding will be negative in the long term due to expected cuts to these programs stipulated under the act,” Moody’s said.
You can read the full story on Reuters.