Authorities Go After 36 Charities

September 3, 2013       Patrick Sullivan      

Louisiana State Treasurer John Kennedy has demanded that 36 organizations either outline what they’ve done with state appropriations or return the money. If these organizations do not comply with reporting requirements by September 4 (original deadline was August 31), Kennedy will refer them to the newly-created Office of Debt Recovery.

“These 36 organizations were chosen because the terms of the Cooperative Endeavor Agreement have expired and they did not comply with the reporting terms of the agreement,” said Jason Redmond, deputy treasurer and communications director. The list was subsequently revised down to 34, eliminating two duplicate entries on the original list.

According to Redmond, Cooperative Endeavor Agreements mandate quarterly progress and cost reports that detail progress made on projects funded with state money, as well as copies of receipts, invoices and contracts related to the project and copies of checks used to pay for the receipts, invoices and contracts.

State appropriations to the organizations in question range from $2,000 to $550,000. The total amount across all the organizations in question comes to about $4.45 million. The NonProfit Times attempted to contact several of the targeted organizations, which either could not be reached or declined to comment.

“Over the last several years, our Audit and Compliance Division has repeatedly sent certified letters, sent emails and even made personal call attempts to these particular entities demanding the required progress reports and the supporting documentation required under the law with little or no response,” said Kennedy in July. “While most NGOs have worked in good faith with our office and have been in compliance, these 36 organizations have become the most flagrant violators of these important requirements.”

Redmond said that 22 of the original 36 organizations are active, 11 are inactive and the state is currently unable to determine the status of three. Five of the organizations are now in compliance, and 14 are working with the Treasurer to come into compliance. The remaining 15 are not in compliance, according to Redmond.

“Treasurer Kennedy has publicly voiced displeasure in the past with certain nonprofit organizations (particularly line-item state budget fund recipients) that he considers unaccountable or otherwise a poor fit for public funding,” said Matt Mullenix, vice president of the Baton Rouge-based Louisiana Association of Nonprofit Organizations (LANO).

“We do not feel this public calling-out by the Treasurer is meant necessarily to implicate nonprofits generally nor that it indicates any systematic move by the State to seek more funding from nonprofit sources,” Mullenix continued. “However, efforts of that kind are occasionally considered, especially at the municipal level, and have been floated as statewide initiatives in Louisiana in the past few years, so that issue is always on the horizon.”

Mullenix said that none of the 34 organizations are LANO members. “In this case, I think the Treasurer is simply taking an opportunity to highlight a personal peccadillo; the funds involved are relatively small, especially compared to revenues that potentially could be recovered with corporate tax expenditure reform,” said Mullenix. Mullenix called Kennedy, who is reportedly considering a run for governor in 2015, a “friend to the nonprofit sector.”

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