The National Committee for Responsive Philanthropy (NCRP) has asked the federal and state authorities to investigate the Otto Bremer Foundation after its three trustees installed themselves as co-CEOs.
The foundation’s three trustees — S. Brian Lipschultz, Daniel Reardon and Charlotte Johnson — announced their intention to become co-CEOs after the departure of former Executive Director Randi Roth last summer.
“Ms. Roth’s position — executive director of philanthropy — was eliminated in June when the trustees determined that they could best carry out their duties and responsibilities by simplifying the reporting structure of the staff,” said Jon Austin, a communications consultant serving as a spokesman for the St. Paul, Minn.-based foundation.
Roth’s departure comes after 10 years of steadily ballooning trustee pay. Dorfman said the three trustees earned $42,500 in 2004. According to the foundation’s 2013 Form 990, their combined salaries exceeded $1.2 million. “This level of compensation is outrageously high of trustees of a grantmaking foundation,” said Dorfman, adding that many don’t compensate their trustees at all, and for those that do the median is $24,000.
Trustees retained outside consultants to benchmark the salaries after undertaking “a conscious and deliberate effort to adjust their compensation to bring it in line with the demands on their time and with the practices of other organizations of similar size and complexity,” according to Austin. “As a result, their compensation reflects the scope and complexity of their responsibilities” and “the full-time nature of their work,” he said.
Dorfman said he was prompted to investigate the foundation when someone in Minnesota called to ask him his thoughts on a shared leadership structure. “At that point, I was not aware that they’d fired Randi Roth,” he said. “I offered that person my thoughts on shared leadership, which I don’t have a problem with. But it didn’t smell right and I started digging.” He noted most nonprofits with a shared leadership have an independent board to provide checks and balances.
Dorfman is afraid the foundation’s new governance system, the compensation of its trustees and the departure of the executive director will undermine its work. “The Otto Bremer Foundation has a fantastic track record in investing in poor and middle class folks to lift people out of poverty and empower the poor,” he said. “There’s a decades-long tradition of exemplary grantmaking. I’m fearful this latest move puts that in jeopardy.”
The foundation’s structure — a trust, as opposed to a nonprofit corporation — precludes it from having a board, according to Austin. “Had Mr. Dorfman taken the time to understand our structure as a trust and to understand what that status entails under law and in accordance with the document that established the trust, he might, in turn, better understand that the trust’s oversight is provided – conscientiously, objectively, independently and effectively – by the courts, the Minnesota attorney general and the Internal Revenue Service (IRS),” Austin said.
The Otto Bremer Foundation has nearly $900 million in assets, according to its 990, about $796 million of which is in corporate stock. The foundation owns 92 percent of Bremer Bank, Dorfman said, “and the trustees are also separately compensated for their roles with the financial institution.”
The Washington, D.C.-based NCRP sent letters to the IRS and to Minnesota Attorney General Lori Swanson asking for an investigation into the foundation and issued a press release earlier this week. Dorfman is not expecting a response. “You don’t learn about an investigation unless and until they take action,” he said. “My hope is that the attorney general and the IRS will convince the trustees to rectify their approach, or replace the trustees.”