Kentucky Forces Charity Founders to Fulfill Tsunami Pledge

With One Heart, Inc. founders Kelly Knight and Shelia Bayes agree to personally pay some overhead expenses after the organization claimed that 100% of contributions would directly benefit children. 

Using information from the organization's Form 990, Kentucky Attorney General Greg Stumbo reached a settlement with the founders of With One Heart, Inc. (EIN 32-0138289 Form 990).  Kelly Knight and Shelia Bayes started the organization in February, 2005 to raise money to build an orphanage in Sri Lanka in partnership with an organization called Sarvodaya USA (EIN 13-3358148 Form 990).  The promotional material for With One Heart claimed:

The overhead of this organization has been underwritten to insure that 100% of the contributions made to With One Heart, Inc., are utilized for the direct benefit of those children in need.

But the Form 990 showed that the organization raised $88,675 had spent $42,915 in expenses and had given $1,000 to another cause, contributing only $26,000 to Sarvodaya.  Apparently it still had $18,108 in its checking account.  With One Heart was able to verify with affidavits that five donors had put up $37,677 to cover overhead expenses.  In the voluntary compliance agreement, Ms. Knight agreed to pay $3,138 and Ms. Bayes $3,100 to make up the difference and the contribution to an unrelated organization and to send the $25,635 to Sarvodaya. 

Now, if you're thinking (as I did) that the Kentucky AG is remarkably attentive in his follow up of tsunami charities, there's more to this story.  Kelly Knight is the finance chair for the 2007 reelection campaign of Kentucky Gov. Ernie Fletcher and has served in a similar role for a number of Republican campaigns.  AG Greg Stumbo is a Democrat, and is now running for Lieutenant Governor on the Democratic ticket.   As Attorney General, Mr. Stumbo was instrumental in bringing indictments against Gov. Fletcher for hiring practices in violations of the Kentucky merit system (the governor settled and the case was dismissed after he admitted mistakes had been made). 

So all those other tsunami charities sitting on unspent funds can still breathe easy.  This case just shows that even organizations set up by prominent individuals like Ms. Knight & Ms. Bayes can be remiss on the follow up after the media attention goes away.  (Ms. Bayes is a prominent jeweler in Lexington, whose web site still notes her connection to With One Heart.)

Another peculiar aspect of this story is that With One Heart is nowhere to be found on Guidestar, even searching by EIN, which usually works when all other methods fail.  I could only find the Form 990 using the search on the Foundation Center's web site, and this was just the Form 990, leaving out Schedule A, which is required for all filers of Form 990.  Nor was I able to find With One Heart in the IRS Master File records for Kentucky.  Even stranger, it does not appear in the list of charity organization provided by the Kentucky attorney general's office.  Very odd.  It leads me to wonder whether the organization ever properly registered with the IRS. 

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