How Much Is Big Bird Actually Worth?

Steven Hayward posted an article at Power Line today about President Trump’s plan to cut funding for Public Broadcasting. The article illustrates the fact that in some cases, executives of nonprofit organizations make salaries that don’t sound as if they are appropriate for an organization that is nonprofit.

The article reminds us of two conflicting statements made by NPR about their budget:

On average, less than 1% of NPR’s annual operating budget comes in the form of grants from CPB [the taxpayer-funded Corporation for Public Broadcasting]  and federal agencies and departments.

…Federal funding is essential to public radio’s service to the American public. Its continuation is critical for both stations and program producers, including NPR. . . Elimination of federal funding would result in fewer programs, less journalism—especially local journalism—and eventually the loss of public radio stations, particularly in rural and economically distressed communities.

Both of those statements cannot be true. I have no idea which one is.

The article further reports:

According to tax filings — the most recent of which covers 2014 — then-president and CEO Melvin Ming was paid more than $586,000 in salary and benefits in the nine months before retiring, which included a $37,500 bonus and $18,700 in benefits. The year before that, Ming cleared $672,391 in salary, bonuses and benefits.

That’s five times the average pay for CEOs at nonprofits, according to Charity Navigator. (It’s twice as much as the CEO of the Corporation for Public Broadcasting gets paid.)

The average compensation for the other 10 top officials at Sesame Workshop in 2014 was a very handsome $382,135 — which is about six times the median household income in the U.S.

Big Bird is big business. The article states:

Last year, Sesame Workshop had $121.6 million in revenues. Of that, $49.6 million came in distribution fees and royalties and $36.6 million in licensing of toys, games, clothing, food and such. In 2014, only 4% of its revenue came from government grants.

I suspect there are other programs on Public Broadcasting that would do quite well if they chose to market items related to their television shows. I truly think it is time to give the free market the chance to work its magic in the area of Public Broadcasting.

Some Nonprofits Are Very Profitable

The Daily Caller posted an article today about the Rev. Kenneth Fairley, pastor of Mt. Carmel Baptist Church in Hattiesburg, Mississippi. The article reports that the Reverend allegedly profited after the federal Department of Housing and Urban Development gave $47,000 to the local government, which gave it, in turn, to a nonprofit called Pinebelt Community Services to renovate houses.

The article reports:

HUD has relationships with many such nonprofits that often function as expensive middlemen between government aid programs and those in need of help.

In Fairley’s case, Pinebelt had no capacity to do construction and told the city it had handed off the money yet again via a contract with a New Orleans company called Interurban Development. But Fairley had arranged with Interurban’s owner to make the hand-off an on-paper-only arrangement at an inflated price.

The article explains that the work that HUD paid for was done locally for less money than the grant, and Reverend Fairley kept the difference.

The article further explains:

HUD does little vetting of the middleman nonprofits to which it awards millions of tax dollars annually.

In Baltimore, for example, it has funneled millions through a nonprofit called Enterprise Community Partners to pass it on to neighborhoods. But instead, its CEO makes $577,000 and it has 48 officers who were paid $267,000 on overage.

Only half of its money actually made it to neighborhoods that needed it and no positive results have been demonstrated.

The idea of revitalizing our inner cities is good. However, when the money for these efforts comes from the federal government, there is no way that the projects can be watched carefully for fraud and misuse of funds. Unless local people are directly involved in improving their section of any given city, it is quite likely that the efforts to improve the area will not be successful. If you truly want to revitalize America’s inner cities, we need to change the culture there. The inner cities will not improve until the people living there develop pride in their surroundings. Non-profit groups can be very helpful in this effort, but obviously a vetting process is needed to find the appropriate group.

 

 

Opening The Door Wide For Identity Theft

Identity theft is a problem in the electronic age. Credit cards with chips can be stolen without anyone actually going near the actual card. The internet is a gold mine for identity thieves. Now the Internal Revenue Service (IRS) is going to make it really easy to have your identity stolen.

Freedomworks posted an article yesterday about a new rule the IRS is proposing on charitable donations.

The article reports:

A new rule is proposing that non-profit organizations collect the “tax identification numbers” of all their donors who give over $250. For you and me, that means our Social Security numbers.

It’s hard to imagine a more chilling regulation on charitable giving. Would you be willing to enter your Social Security number into an internet donation form, knowing that the government will get to see it? Would you be willing to write that number down and mail it through the U.S. Post Office alongside a check? I wouldn’t.

The article continues:

This is part of the IRS’a continued efforts to reduce the reach and effectiveness of non-profit organizations. Many of you will remember the proposed regulations from last year that would have narrowly defined “social welfare” to shut down conservative organizations critical of the IRS. Through a massive grassroots activism campaign, FreedomWorks, along with other organizations, was able to stop the regulation by driving a record number of comments – over 150,000 – to defeat the rule. This new regulation is a resurrection of the same idea – identify and deter voters to causes the government doesn’t approve of.

In addition to the compliance cost of organizations having to keep track of all these numbers, the potential for civil liberties violations is huge. The Constitution guarantees us the freedom of association, but that freedom is compromised when the we know the government is watching us, especially when the watching is being done by an organization capable of inflicting punishment in the form of fines, audits, asset forfeiture, and general harassment.

We saw that harassment when a business was boycotted because they gave money to support Proposition 8 in California. If this information is required, we can expect to see donors to conservative causes targeted. We have already seen thegovernment harass businessmen who contributed to conservative causes using audits and safety inspections.

The comment period on this new rule is open until December 16. Please comment and let the IRS know that they have no right to demand your Social Security number for charitable contributions.

The Internal Revenue Service Under President Obama Is Still Political

Fox Business posted an article today about a Government Accountability Office investigation of the Internal Revenue Service. A House Oversight subcommittee will take testimony from IRS commissioner John Koskinen today.

The article reports:

The GAO now says that IRS political “targeting is indeed possible in the audit process” for nonprofits, largely due to poor agency oversight and controls.

“Unfortunately, the IRS has not taken sufficient steps to prevent targeting Americans based on their personal beliefs,” the GAO says.

Specifically, The GAO found that “control deficiencies” do “increase the risk” that the IRS nonprofit unit “could select organizations for examinations in an unfair manner—for example, based on an organization’s religious, educational, political or other views.”

Judicial Watch, a watchdog group, says it has obtained Freedom of Information Act filings that show IRS workers were using donor lists from conservative nonprofit groups to target people for audit. It also says documents detail a October 2010 meeting between former IRS official Lois Lerner, Justice Department officials and the FBI to plan “for the possible criminal prosecution of targeted nonprofit organizations for alleged illegal political activity,” and that the IRS transferred confidential tax returns from 113,000 nonprofit social welfare groups to the FBI “as part of its prosecution effort.” The documents also show “the Obama DOJ wanted IRS employees who were going to testify to Congress to turn over documents to the DOJ before giving them to Congress.”

The IRS is a very obvious example of a government agency out of control. We need to revise our tax system so that the IRS is no longer necessary. The IRS is a descendant of  the office of Commissioner of Internal Revenue, established in The Revenue Act of 1862 as part of a temporary war-time tax plan. The Sixteenth Amendment to the Constitution (1913) allowed Congress to levy an income tax.

It is time to seriously consider a flat tax or a value-added tax.

 

I Am Definitely In The Wrong Business

The chart below is from a Daily Caller article posted this morning. It shows the salaries of the top executives of the ObamaCare state health exchanges:

2013SalariesofTopObamaCare

As you can see, these executives are paid very well for their efforts.

The article reports:

More than a million Americans have enrolled in the 23 non-profit Obamacare co-ops since they began in 2011. The co-ops were intended to be consumer-operated non-profits focused on delivering healthcare to the working poor and others needing health insurance.

Eighteen of the 23 co-ops paid their top executives prodigious salaries ranging from $263,000 to $587,000, according to 2013 IRS tax filings.

The high take-home pay for the “nonprofit” executives appears to violate both federal law and Obamacare rules prohibiting “excessive executive compensation.”

I strongly suggest that you follow the link above to read the entire article, but here are two examples of your tax dollars at work:

The top paid co-op executive was Thomas Policelli, CEO of Massachusetts’ Minuteman Health. He was awarded $587,000 in 2013, according to the co-op’s tax return. Minuteman was also among worst performing Obamacare co-ops, reporting only 1,700 enrollees at the end of 2014.

Minuteman’s cash-burn rate was 53 percent, with a net operating loss of $21 million last year, according to an analysis by Galen’s Turner and Thomas Miller, a senior health fellow at the American Enterprise Institute.

In nearby Connecticut, HealthyCT paid Kenneth Lalime $352,000. The co-op reported total enrollment of only 7,966 and suffered operating losses of $28 million. Standard & Poor’s estimated its cash-burn rate at 61 percent.

It is not news that the private sector runs things better than the government. You would think that after all the years that we have seen government waste and inefficiency, we would have learned that lesson by now. Healthcare needs to be part of the free market. There need to be things in place to help people who need assistance in obtaining health insurance because of their financial situation or because of a pre-existing condition, but generally speaking, healthcare needs to operate in a free market environment. It is obvious that ObamaCare has because a government money hole that will eventually provide poor quality healthcare to everyone who is enrolled in it. There is a reason that the Supreme Court, despite their obvious belief that ObamaCare should stand, is not enrolled in ObamaCare.

 

Defending Free Speech

The Washington Examiner is reporting today that Senate Finance Committee Chairman Orrin Hatch has asked Internal Revenue Service Commissioner John Koskinen not to change the Internal Revenue Service’s rules regarding political speech by nonprofit organizations.

The article quotes Senator Hatch:

“The IRS is just beginning to recover its reputation, and your agency is just beginning to regain trust from lawmakers,” Hatch wrote to Koskinen. “Do not throw all of that away in a quixotic and bizarre mission to regulate the political activity of Americans.”

Hatch said Congress will “have no choice” but to investigate the agency’s motivations if it issues the rules, claiming that it would be viewed as an act of political bias. He asked Koskinen to preserve all communications related to the rulemaking, in case the Obama White House or Treasury Department is playing a role in shaping it.

The IRS is not supposed to be a political organization. Unfortunately under President Obama it has become one. It would be nice to have an IRS Commissioner who would uphold the political neutrality of the IRS. Evidently John Koskinen is not that person.