Federal Tax Forms Show Why the Sekulow Family Business Should Be Investigated (UPDATED)

The UK Guardian reported yesterday that two state AG’s (NY and NC) will look into the finances of Trump lawyer Jay Sekulow and his fundraising charities. Examining the federal tax forms from Christian Advocates Serving Evangelism (2015 990), I can see why. Remember CASE is the nonprofit which serves as the fundraising organization for Sekulow’s American Center for Law and Justice, supposedly a religious liberty law firm.
According to the IRS, family relationship on the board of a nonprofit raise a red flag:

Irrespective of size, a governing board should include independent members and should not be dominated by employees or others who are not, by their very nature, independent individuals because of family or business relationships. The Internal Revenue Service reviews the board composition of charities to determine whether the board represents a broad public interest, and to identify the potential for insider transactions that could result in misuse of charitable assets.

It seems obvious that a nonprofit should not be organized like a closely held family company. Now look at the board of Sekulow’s CASE:
CASE 990 Board
Perhaps the name of the organization should be changed to Christian Advocates Serving Sekulows.
The only person on the board who is not named Sekulow is Colby May. However, he cannot be considered an independent board member because his income is dependent on grant money received from CASE/ACLJ.  May runs the ACLJ’s DC affiliate which is completely funded by CASE/ACLJ. A review of ACLJ-DC’s 990 form shows May as the Director.
ACLJ DC May
ACLJ-DC’s income was reported on the 2015 990 as $853,796.
ACLJ-DC 990 income
As can be seen on ACLJ’s 2015 990, a grant of the exact same amount was given to ACLJ-DC.
ACLJ to ACLJ DC
 
I suspect CASE might have to provide more information to the AGs about how executive compensation was decided since none of the board members can be considered independent. Again, the IRS guidelines specify independence in setting compensation.

The Internal Revenue Service encourages a charity to rely on the rebuttable presumption test of section 4958 of the Internal Revenue Code and Treasury Regulation section 53.4958-6 when determining compensation of its executives. Under this test, compensation payments are presumed to be reasonable if the compensation arrangement is approved in advance by an authorized body composed entirely of individuals who do not have a conflict of interest with respect to the arrangement, the authorized body obtained and relied upon appropriate data as to comparability prior to making its determination, and the authorized body adequately documented the basis for its determination concurrently with making the determination.

The CASE/ACLJ 990 form indicates the Sekulows and CASE/ACLJ engaged in four sizable mutual transactions as well as a major one involving a company half-owned by Jay Sekulow. See below:
CASE CLAG
Given the fact that none of the board members can be considered independent, how could this board prevent conflicts of interest as defined by the IRS?

B. Conflicts of interest. The directors of a charity owe it a duty of loyalty. The duty of loyalty requires a director to act in the interest of the charity rather than in the personal interest of the director or some other person or organization. In particular, the duty of loyalty requires a director to avoid conflicts of interest that are detrimental to the charity. Many charities have adopted a written conflict of interest policy to address potential conflicts of interest involving their directors, trustees, officers, and other employees. The Internal Revenue Service encourages a charity’s board of directors to adopt and regularly evaluate a written conflict of interest policy that requires directors and staff to act solely in the interests of the charity without regard for personal interests; includes written procedures for determining whether a relationship, financial interest, or business affiliation results in a conflict of interest; and prescribes a course of action in the event a conflict of interest is identified.

According to the 990, a third party expert reviewed the 5-million payment to Sekulow’s law firm and said it was all fine. I hope the AGs get to interview that third party. In the spirit of transparency, I call on Sekulow and company to disclose the identity of the expert and the basis on which the transaction is reasonable.
I hope the attention Sekulow is now getting will shine a light on the disgusting fund raising practices too many Christian charities use. Many such charities flaunt the very values and beliefs they claim to be upholding.

The Guardian Finds Skeletons in Trump Lawyer Jay Sekulow's Closet

I hope you go read this article by the Guardian on Jay Sekulow’s fund raising tactics.  I had been aware of the massive amounts of money he has raised through fear mongering but I didn’t know about the actual tactics. This is obscene.
Sekulow has a company that manipulates Christians into giving money they can’t afford to give. Reminds me of K-LOVE. Here is a script:
Sekulow CASE
I hope reporting like this helps dry up the money flow to these people. Most charities of this size simply don’t need your money.
 

Former Mercury One Donors Speak Out About Recent Changes

naz signIn response to my series of articles on the changes taking place at Mercury One, I have been contacted by Mercury One donors. Two such donors, now former donors, agreed to comment anonymously about the changes in focus and donation allocation policy.
Lack of Communication
One source of frustration for the former donors is the lack of communication from Mercury One. Without my posts, these donors would not have become aware that the changes had been made. The former donors said, “We did not receive any notification that restricted funds would be moved to a general fund.” Since the policy changes are buried on the websites, I can understand how donors would feel this way. If Mercury One is serious about going in this direction, they need to alert all donors and display the changes where they can be easily seen.
Reasons Questioned
Furthermore, the reason for the change did not ring true. “The focus of our giving is to support humanitarian initiatives and that is why we could align with and completely support The Nazarene Fund. The statement that Mercury One made concerning donations will be made to one fund because it allows them to give funds more quickly/easily just doesn’t make sense,” claimed the former donors. These individuals said Mercury One portrayed their response to past disasters as being rapid. The donors did not recall any mention of this limitation in the past.
History Museum
One of the reasons declared by the former donors for not giving relates to solicitations for a history museum by David Barton and Glenn Beck (see this post). They said, “We saw the history museum presentation by David and Glenn and will not be giving to this cause. We believe a donation to the museum fund does not effect change in the lives of hurting people but rather benefits Mercury One.”
Financial Statements
Now that donations are not being taken for the Nazarene Fund, the former donors would like a financial accounting. They said, “Another concern we have is that to date we have not received nor have we seen financial accounting on the Nazarene Fund.” In fact, there is very little reporting about funds received and spent on the websites. Donors might be more confident in Mercury One if fund balances were published on the website.
New Donation Allocation Policy
The former donors added, “Then we saw the posting of Mercury One’s new fund allocation policy, which causes us great concern. In our opinion that is not a decision to be made by them, that is a decision that donors should make. Since their organization has decided they will be in charge of placing our monies where they think best then we will not be giving to Mercury One. We are very concerned with the changes we have seen and can no longer support their initiatives.”
Overall, these donors expressed disappointment and confusion about the change of focus and the change in donation allocation.
I have reached out to Mercury One via their website, email and Twitter without response. Other donors who wish to share their experiences should feel free to contact me.

With Changing Focus, Mercury One No Longer Taking Restricted Fund Donations for Nazarene Fund

naz signSince late 2015, one of the flagship projects of Mercury One has been the Nazarene Fund. On the Nazarene Fund website, the purpose of the fund is described:

For several years, ISIS has invaded peaceful communities in the Middle East and painted the Nazarene symbol on the door of people they seek to convert, extort, or murder. While ISIS uses the Nazarene sign to symbolize death, we use the sign to symbolize life. Mercury One is a US based humanitarian aid and education non-profit organization that established and administers The Nazarene Fund. The Nazarene Fund aids in the restoration of Christians and other persecuted religious minorities and their communities who have been targeted by ISIS for their faith.

The Nazarene Fund was born out of Glenn Beck’s desire to help Christian refugees in ISIS held territories: Again, from the website:

In 2014, the Christian community in Syria and Iraq were facing the greatest calamity in its 2000 year history. The Islamic State (ISIS), exploded out Raqqa, Syria, the capital of its self-proclaimed Islamic State. In a lightning strike that surprised the world, ISIS forces captured Mosul, Iraq’s second largest city) and all of the nearby Nineveh plain – the traditional homeland of the region’s Christian Community. What followed was campaign of extortion, murder and displacement not only of the Christians but of other ethnoreligious minorities in the region. By 2015 a population of 3 million people was reduced to 300,000 – most of them displaced from their homes and fleeing to other countries.
In August of that year, Glenn Beck took the stage and the Restoring Unity rally in Birmingham, AL and declared the situation for what it was – genocide. Mercury One donors immediately responded and The Nazarene Fund was launched with a goal of rescuing 400 families.

Recently, however, the focus of this fund has changed. First, consistent with my recent reports, donations to the Nazarene Fund are now going to benefit Mercury One generally. Mercury One doesn’t want to accept donations just for the Nazarene Fund. This message was recently added to the Mercury One page set up to accept donations to the Nazarene Fund:
 
Naz fund donations 3 23 17Second, Mercury One appears to be getting out of the refugee rescue business. According to the Nazarene Fund website, the need is not the same as it was in 2015.
Naz Fund New Focus
I am skeptical that the situation in Syria and elsewhere has improved to the degree implied here.
In any case, donors should be aware that Mercury One doesn’t want to accept restricted donations, even for the Nazarene Fund, and going forward, won’t be focusing on rescuing religious minority families.

#GivingTuesday: Donor Illusions

Although dated, I have found this 2009 article on donor illusions to be helpful.  The article was published on the blog of the Give Well organization, a donor support group. Give Well publishes a recommended charity list each year. Here is 2016’s list.
The Give Well description of donor illusions focuses on international charities but illusions can be found in domestic charities as well (e.g., today’s post on coats for pledges at K-LOVE).

As a result, international charities tend to create “donor illusions” by implying that donations can be attributed more tangibly, reliably and specifically than they really are. Some charities are more purposefully misleading than others, and some have more prominent and clear disclosures than others, but we feel that all of the cases below end up misleading many donors.

The illusions illustrated in the post include loans to third world entrepreneurs, child sponsorship, and giving livestock to needy families.
Livestock Gifts
I have written about these in previous years as being a good example of a compelling illusion. Donors can easily sell the idea of giving an animal to a third world family to Sunday school classes or church groups. The marketing certainly creates that illusion. Check out World Vision’s 2016 catalog.
WorldVision 2016 goat
Here is what World Vision says about the gifts in the new Christmas catalog.
world vision fine print 2016
In other words, your donation will be used where “it is needed most.”
Church Illusions
Other illusions I have covered include Mars Hill Church’s promotion of Ethiopian pastors via Mars Hill Global. In fact, most of the money donated to Mars Hill Global went to expand the Mars Hill Church video locations in the United States.
Gospel for Asia for years told donors that 100% of donations went to “the field.” The illusion was created that poor church planters and Asian children were getting most of the donations. However, we have since learned that Gospel for Asia’s Texas leadership sent millions to Believers’ Church in India, also controlled by GFA founder K.P. Yohannan to build state of the art for profit schools and medical centers. While a small percentage of the money went to evangelism and helping the poor, much of it went to projects designed to make Believers’ church self-sustaining and a large portion went to India and then back to Texas to help build GFA’s state of the art headquarters.
Today, I wrote about K-LOVE’s claim that a $40/month donation to K-LOVE provides a warm winter coat to a needy child. The only reason that claim might technically be true is because K-LOVE and Operation Warm set up an artificial scheme to tie coat distributions to pledges. K-LOVE holds captive coats from Operation Warm and tells prospective donors we will give a coat if you pledge. What K-LOVE doesn’t tell donors is that the coat will be given to a child anyway, pledge or no pledge.
Do Donors Want Illusions?
Tim Ogden at the Philanthropy Action blog says they do:

David Roodman pointed me to a typical reaction post to the Kiva story. In summary, the authors lament the lack of direct connection to a specific person they can give to and wonder why they can’t just dispense with the intermediaries.
I think the post is quite revelatory about why so many charities create the illusion of direct connection. They do so because donors demand it.
The demand for direct connection is baffling to me since most donors absolutely refuse direct connection to the people in need that are closest to them. Consider: how often do you or your friends take advantage of the opportunity to give directly and establish a connection by giving $20 to the guy standing at the corner with the cardboard sign saying, “Will Work for Food”?
I’ll bet the answer is “never.“ And there’s a very good reason for that. You believe that to actually help that person you should give the money to a knowledgeable intermediary like a homeless shelter that will do the research to understand this person’s situation, and ensure the money you give is actually used in a responsible way.
So if you would only give to an intermediary in order to help someone on the street outside your home, why do you want to do away with intermediaries between you and a person on the other side of the world whose circumstances you don’t understand at all?
I just don’t get it.
In the end I guess the donor demand really is for an illusion. They don’t just want connection—what they want is the illusion of connection where they can feel directly connected but not actually have to be directly connected—with all the messiness that such connections would entail—to people in need.

This somewhat cynical explanation for the persistence of illusions doesn’t quite fit for me. As I have learned that charities are using subterfuge to raise money, my reaction has been anger. I want the nuance. I want to know what they are doing with the money.
Guilt Illusions
I am sad and angry that K-LOVE artificially creates guilt in their listeners. I know people who agonize over how much to give to K-LOVE “to keep them on the air.” When K-LOVE’s well-paid on-air personalities top off their appeals with the promise that the $40/month will trigger a coat for a needy kid, that tips the scale toward a pledge, even though the family income really can’t absorb that level of giving. It should keep K-LOVE executives up at night that their Christian brothers and sisters are denying their children and themselves basics so that they can get a quarter of a million per year (the CEO made nearly $600,000 in FY 2015).
On this #GivingTuesday, give to those you have investigated. Give locally. By all means, give a needy person a coat, but do it yourself, or through a local group who is locally accountable.
 

Gospel for Asia's CEO K.P. Yohannan to Headline Memphis Missions Conference

GFA LOGOApparently, the Metropolitan will return to the United States for a missions conference in February. K.P. Yohannan is scheduled to speak at the Downline Summit which takes place at Hope Church in Memphis, Feb. 5-6.
Yohannan’s organization hasn’t had the best year since April 2015. Gospel for Asia lost their membership with the Evangelical Council for Financial Accountability, was denied membership in the Independent Charities of America, was sanctioned to greatest extent possible by the U.S. Office of Personnel Management for violations of federal guidelines, was reported to the Canadian authorities for violation of GFA’s Canadian by-laws, and may be investigated by the U.K. Charity Commission, among other problems.
downlinesummit
 
 
 

Top Ten Posts in 2015

The ten top posts during 2015 are as follows with the most popular first:
1. Open Letter to Gateway Church Pastor Robert Morris from a Former Member of Mars Hill Church – This was posted on November 2, 2014 but remained popular throughout 2015. Driscoll recently joined Jimmy Evans as a director to form The Trinity Church in Phoenix.
2. Former Chief Financial Officer at Turning Point Claims David Jeremiah Used Questionable Methods to Secure a Spot on Best Seller Lists – This story about David Jeremiah’s questionable tactics from a former insider was a scoop but not one which stuck to Jeremiah like  a similar scandal did to Mark Driscoll.
3. Hillsong’s Brian Houston Interviewed Mark and Grace Driscoll After All (VIDEO) (AUDIO) – First, he said he would interview Driscoll, then he said he wouldn’t, then Brian Houston aired an interview with Mark and Grace Driscoll. It was great theatre but didn’t draw good reviews from former Mars Hill leavers.
4. A major study of child abuse and homosexuality revisited – This post from 2009 is one of the most popular articles in the history of the blog. In it, I demonstrate a key mistake in a journal article often used to link homosexuality and child abuse.
5. Southern Baptists Say Enough to Perry Noble and NewSpring Church – I am surprised that this post got so much attention.
6. Gospel for Asia Faces Allegations of Misconduct; GFA Board Investigation Found No Wrongdoing – The GFA story received the most attention from me this year.
7. Pastor of Willow Creek Presbyterian Says Church Reaction to Hiring Tullian Tchividjian is “Overwhelmingly Positive” – I briefly covered Tullian Tchividjian’s comeback as a development minister at a PCA church in FL.
8. A Few Thoughts on The Village Church Controversy – Village Church’s leadership apologized for their response to a young woman who sought a divorce from her husband who had admitted having child porn.
9. Hillsong Founder Brian Houston Issues Statement On Mark Driscoll at the Hillsong 2015 Conference – Mark Driscoll’s return to the spotlight garnered much reader attention.
10. Gospel for Asia’s K.P. Yohannan and the Ring Kissing Ritual – While the financial scandals were of interest to readers, this article ranked higher than the money problems.
To fully capture activity on the blog, one should consider the Gospel for Asia scandals (Patheos considered my coverage as a part of one of their top ten Evangelical stories of 2015).
It has been a good year and I thank my readers and those who support the blog with their comments and regular visits.

About Gospel for Asia, CBS 11 News Dallas Asks "When You Give, Do You Know Where Your Money Goes?"

CBS 11 News in Dallas followed up today on their earlier expose’ on Gospel for Asia. Watch

The iTeam picked out a couple of big items from the ECFA report (large cash reserves, smuggling cash into India), posted here on December 2 after being released by former GFA board member Gayle Erwin.
Earlier today, I reported that GFA could face sanctions from the Office of Personnel Management.
GFA doubled down on their contention that the $20 million from Believers’ Church/GFA-India was not a related party transaction. Instead, near the end of the clip, GFA’s statement to CBS News calls it a “donation.” It is beyond belief that GFA maintains this stance in the face of overwhelming evidence that K.P. Yohannan is in charge of Believers’ Church and all “field partners” in India.

What Happened to Gospel for Asia's Combined Federal Campaign Page?

As recently as a week ago, Gospel for Asia touted participation in the Combined Federal Campaign (Google cache).
Combined Federal Camp
 
Not any more. Now if you go to that same page, one sees a “Page Not Found” message and a frown. Once, GFA boasted about their participation in the CFC (Google cache), but mention of the program is now missing at that page.
I have been aware for several weeks that the Office of Personnel Management was reviewing GFA’s status as an approved charity. Recently, I learned that GFA may be sanctioned by the OPM due to failure to meet requirements for participation in the CFC. Today, I learned from an OPM Spokesperson that OPM contacted Christian Charities USA about GFA. Christian Charities USA assists charities by submitting and certifying the accuracy of application for acceptance into the CFC and is managed by the same group that manages Independent Charities of America. CCUSA submitted GFA’s original application for the CFC to OPM.
In early December, OPM notified CCUSA that its member charity GFA may be in violation of CFC regulations. According to the spokesperson,

CCUSA contacted GFA, and gave them ample opportunity to provide evidence they were not in violation of CFC rules. However, CCUSA did not get an acceptable response from GFA. CCUSA then decertified GFA.

The decertification by CCUSA may be the reason GFA has pulled the CFC page. The next possible step for GFA would be a sanction from OPM. I have been informed by the OPM spokesperson that GFA has been notified that OPM intends to sanction GFA if GFA is unable to prove that they comply with OPM standards.
By statute, sanctions may involve expulsion from the CFC program. The removal of the CFC page and any mention of participation in the CFC may indicate that GFA has been removed although the OPM spokesperson has not commented on that point.
Prior to the termination of membership in the ECFA, GFA had touted ECFA membership, ICA membership and participation in the CFC as indicators of financial integrity. Now there is nothing to independently verify that GFA is abiding by financial promises.

Update of Charity Review of Gospel for Asia Australia; Are GFAA and GFA Related?

Earlier this year, Ted Sherwood did a charity review of Gospel for Asia Australia. Recently, he updated it. As a part of the update, Sherwood evaluates a rather amazing claim made by an Australian association of Christian ministries called Mission Interlink. In essence, Mission Interlink claims that GFA Australia is independent of GFA in the U.S.
While technically accurate, it is clear from the evidence Sherwood supplies that GFA Australia wouldn’t exist if there was no GFA in the states or in India.
About Mission Interlink’s position, Sherwood wrote:

GFAA is a member of Missions Interlink, the closest we have in Australia to the ECFA:

Member use of the Missions Interlink logo implies high standards of governance and financial accountability, giving the Christian public assurance of their integrity[iii].

On 27 August 2015 I sent a link to my review to the National Director, Pam Thyer, suggesting that GFAA was in breach of one or more of their standards. On 3 December 2015, in response to my suggestion that donors should be alerted to GFAA’s misrepresentation when soliciting donations, Pam said that she had discussed the matters I raised in the review with GFAA and had concluded that ‘they do not contravene the MI Standards’.

Sherwood disagrees and provides evidence that GFA Australia is indeed in violation of some MI standards.

Furthermore, it is incredible that MI sees GFAA as separate from GFA. The only real reason GFAA exists is as a conduit to GFA in India. GFAA is sending money to GFA in India in ways that may or may not align with donor intent. Donors in Australia should be aware that their donations may be used to purchase or develop for profit businesses under the control of Believers’ Church.