Shriners: Bookkeeping for Clowns

New York Times finds lax controls in local Shrine clubs yielding little benefit overall for the Shriners Hospitals, which rely on a huge endowment and direct contributions. 

A few months back, I missed a story in the New York Times (Stephanie Strom) about accountability issues among Shriners.  The report raised three separate issues:

• The Shriners as a whole raise money for Shriners Hospital for Children (EIN 36-2193608 Form 990), a separate organization, but in the aggregate they contribute only 2% of the hospitals' operating expenses, since the hospitals have a $9 billion endowment and receive contributions and bequests directly.  (If the hospitals were a foundation, they would rank in the top five in assets.)
• Of the aggregate $32 million that the Shriners raised, only 43% goes to the hospitals.  The rest covers expenses of the local shrines, including their enterainment and travel to Shrine events.
• At the local club level, controls, especially cash controls, can be inadequate, and those who try to bring greater accountability find themselves under attack.

The national headquarters of the Imperial Council of the Ancient Arab Order of Nobles of the Mystic Shrine N.A. (EIN 36-2158164 Form 990), in Tampa, had income of nearly $7.5 million in 2004 (the most recent Form 990 available, for some reason) and expenses of a little under $5 million for a staff of just eleven.  Executive VP Charles G. Cumpstone, Jr. received compensation of $248,025.  The largest share of expenses are about $2 million for conferences and travel. 

There are 191 local shrines (if you are interested, the list of Shrine names can be found here).  It appears that each shrine has separate Form 990s for its clubs (as a group return) and for its headquarters building.  The IRS Master File lists over 2,100 entities using the AAONMS group return number.  The article reports that there isn't any kind of formal auditing of these units, either from the headquarters or the local shrines.  Theft due to poor cash controls is a continuing problem. 

The story focused on two Shrines in Alabama and Texas.

• The potentate of the Huntsville, Alabama's Cahaba (Cahaba Shrine Clubs EIN 51-0154800 Form 990 and Cahaba Shrine Center EIN 63-0588523 Form 990), Clairence Ballard, tried to institute cash controls at a local shrine club in Decatur, Georgia that was running a charity bingo operation.  Revenues increased dramatically after the club started depositing cash receipts (previously it had only deposited checks) and cash registers were installed in the snack bar.  But his successor as potentate dismantled the controls and things went back to the way they were.  Mr. Ballard was subsequently accused of falsely claiming that there was theft in the club, but was exonerated (and received attorney's fees) after his lawyer played a tape on which one of the members admitted to taking money. 
• In San Angelo, Texas, there was an attempt to clean up the Suez Shrine (Group EIN 51-0152806 Form 990, Suez Shrine Temple EIN 75-0787500 Form 990).  John Goline was rising in through the ranks of officers and joined forces with Richard Baumbach, a potentate who wanted to institute controls to ensure that charitable and fraternal funds were not comingled.  He instituted basic controls like dual signatures and a requirement that travel be approved in advance.  But his refusal to reimbuse $3,700 for an unauthorized band trip led to charges being brought against both Mr. Goline and Mr. Brumbach, who were investigated by the headquarters unit and dismissed.  When Mr. Goline ran for potentate (typically an uncontested election), a former potentate decided to run against him and busloads of members showed up to make sure Mr. Goline wouldn't win.

The article is helpful in illustrating the dynamic of small groups that hampers financial accountability.  A more activist headquarters would help, except that the headquarters leadership consists of people who have risen through the ranks of the local units.  But this is not an issue exclusively of the Shriners.  We have seen the problem of lax local controls with organizations as different from the Shriners as Alcoholics Anonymous.  And both the American Red Cross and the NAACP have suffered from headquarters boards that are paralyzed by being too beholden to local chapters.  It took a hurricane and an act of Congress to fix the American Red Cross board.  The fate of the Shriners will probably be more like that of the NAACP—a slow fade into the sunset.

Comments

[Paul Dolnier]

This blog highlights what is a MAJOR issue with many large frateranl related organizations, I worked directly with Stephanie Strom and the New York Times in the research of her article.

As a matter of fact, my organization Charity Watch is being SUED by the Shriners (fraternity) and Shriners (Hospital) for alleged defamation of character and libel due to the blogs I have written regarding the " alleged financial abuses " of the shriners fraternity and problems with their filed IRS Form 990.

[John]

I believe that sometimes people just get their facts from certain individuals instead of researching for facts their selves. I am a member of Suez and know the Past Potentate that ran against Mr. Goline and trust me we did not need John Goline to run our shrine. Also Mr. Goline failed to mention many details such as an alledged affair he was having with our secretary at the time. We have moved on since 2005 and have been successful in raising our moral and spirit at our shrine. We enjoy what we do raising money for the hospitals and it makes me sick to know that people write articles like this without getting their facts straight. Instead of always looking for bad news why not contact people who can give you insight on the good things we do!

[New Balance 574]

Happiness lies not in the mere possession of money ; it lies in the joy of achievement , in the thrill of creative effort.

[real jordan sneakers]

Nice website! I enjoy a few from the articles which have been written, and particularly the comments posted! I will definately be visiting again!

[online business system]

I bet you guys got some effective and productive points to ponder. I agree it just a matter of mind setting, look for those who are potential enough and can give you the best of what you need, don't settle for those bad things that are surrounding, look for good mouth that can give you essential facts.

[ghd lisseur]

I must express my admiration for the kind-heartedness providing assistance to persons that truly need assistance with in this region. Your extremely own commitment to getting the concept up and down appeared to become wonderfully effective and have generally encouraged these like me to attain their dreams.

[Sac Longchamp]

I must admit that this is one great insight. It surely gives a company the opportunity to get in on the ground floor and really take part in creating something special and tailored to their needs.

[Gianmarco Lorenzi]

I must admit that this is one great insight. It surely gives a company the opportunity to get in on the ground floor and really take part in creating something special and tailored to their needs.

[Hogan Sito Ufficiale]

Nice one, there is actually some good facts on this blog some of my friends may find this worthwhile, will send a link, thanks.

[MLB Hats]

Many thanks for the article. I will have a link back to this information from our fresh blog.
http://www.cheaphatcaps.com
http://mvpcaps.org
http://caps2011.com
http://hats-club.com

[Moncler Jackets Kids]

I find life an exciting business,The point is succinctness of expression.

[バーバリーマフラー]

死者·行方不明者約１００人に上った台風１２号による紀伊半島豪雨から２カ月が経過した。その間、死者·行方不明者や孤立集落が集中した奈良県十津川村や五條市大塔（おおとう）町は注目が集まり、復旧·復興に多くの支援も寄せられた。一方で、被害の深刻さや復旧の姿が伝わらず、風評被害に苦しみながら復興に向かっている被災地もある。
同県中部に位置する川上村は、県内で発生した約１８００カ所の土砂崩れの中でも、人家に隣接した崩落としては最大規模で、土砂崩壊量が概算で東京ドーム１杯分に相当する大規模な土砂災害に見舞われた。土砂崩れの発生は９月４日午後５時半ごろ。役場の電灯が突然消え、近くの国道１６９号を大量の土砂が埋め尽くした。

[402300572]

http://www.coachoutletstoreonlinenew.com