Canvasback Missions Flips Gift Boats from Uncle Sam

Congress granted the Micronesia mission group a couple of Coast Guard cutters in 1999, but they quickly sold them.  We dive deep into the organization's tax filings and the authorizing legislation for more buried treasures. 

The New York Times (Diana B. Henriques & Andrew W. Lehren) brought to light the apparently unauthorized sale of two decommissioned 133-foot Coast Guard cutters by Canvasback Mission (EIN 93-0831904 Form 990). 

Canvasback is a project of Jamie and Jacque Spence, who have provided medical services in the Pacific islands since 1981.  The had wanted the vessels to transport medical supplies to the island, replacing a 71-foot catamaran that they had used since the mid-1980s to supply medicines to a dispensary system. 

It isn't clear why, but Canvasback decided that the cutters would not be appropriate for continuing the system and made the same decision about another 180-foot cutter donated by a private ship owner in Texas. 

The Times article makes it appear that the mission acted contrary to Congressional intent in selling off the vessels.  However, to be fair, the legislation, which was in the 1998 Coast Guard appropriation, put the burden on the Commandant of the Coast Guard to obtain the recipient's agreement to the following conditions:

• that the vessel would be used for providing medical services to the Pacific Island nations
• that they wouldn't be used for commercial services
• that they would be available for use of the US government if needed in times of war or national emergency
• they would hold the government harmless for any claims from exposure to hazardous materials, including asbestos and PCBs
• the recipient has funds available that will be committed to operate and maintain each vessel conveyed in good  working condition, in the form of cash, liquid assets, or a  written loan commitment, and in the amount of at least $400,000 per vessel.

We don't have the Form 990s back to 1998, but as of 2001 the organization came nowhere near meeting the funding requirement set by Congress.  In that case, the Coast Guard should never have gone through with the deal in the first place.  And if the other conditions weren't clearly communicated and put into the transfer agreement, it seems to me that problem also lies with the Coast Guard.  This isn't an abuse of earmarking, this is a US agency not carrying out the instructions given by Congress. 

In the organization's charmingly handwritten IRS Form 990s, the sale of the White Holly for $330,000 shows up in the 2002 return (page 15).   It looks as though contributions were down that year, and the cash went to cover that year's deficit operation, with some going for purchase of medical equipment.  (The Foundation Center Form 990 records only go back to 2001, so the sale of the other Coast Guard cutter isn't available.) 

The 2004 return (page 13) shows the sale of the privately donated vessel for $380,250.  In this year, a loan from the founders in the amount of $261,544 is shown being discharged.  This loan apparently was related to the construction of the original catamaran. 

Missing from the Form 990 is the schedule of depreciation that would make it possible to establish what vessels and vehicles the mission owns.  Every year shows the sale of some vehicles and small boats, but it isn't clear whether these were used in the mission or were in-kind donations. 

By 2005, the mission is showing income of just about a million dollars.  The founding couple receive  modest compensation of $84,612, but that probably goes a long way on impoverished Pacific islands.

As the article mentions, the mission has shifted its focus to clinics on the larger islands and has received two $1 million dollar grants from the Department of Defense for diabetes research, again from a Congressional earmark.  What the article does not mention is that the grants are given in cooperation with the School of Public Health at Loma Linda University (EIN 95-1816009 Form 990), which seems like a reasonable way to provide a degree of oversight and accountability to the program.    

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