2013-12-05 / Opinion

Nonprofit Compensation Questioned

To the Editor:

I was one of six original board members of Bike Newport. Although the board was divided on the question of compensation for the executive director, a vote was taken last November with the issue not on the agenda and without a full board present. The board did not fully discuss the issue and did not bring in a third party to help us mitigate our differing views.

Another original board member and I had questions regarding the compensation package and were set to vote against it. However, we were denied the opportunity to vote. To me, it seems that the acting board chair took a look at the attendance at one meeting and decided to conduct a quick vote. Is that any way to do business, especially in a small community and with people who share the same commitment to cycling advocacy?

We all love the idea of bikes and bike riding, and who doesn’t value the integrity and transparency of nonprofit organizations? But has anyone requested public documents from Bike Newport Executive Director Bari George? Who has received (or even seen) Bike Newport’s 501(c)(3) application or IRS Form 990? Why would Bike Newport not post these documents on its website, which is a practice common to most (if not all) nonprofit organizations?

Perhaps it’s because Bike Newport does not understand Form 990, a yearly tax document required by the IRS from nonprofit organizations. Form 990 allows the IRS and the public to evaluate nonprofits and their operations. The form requires disclosure of potential conflicts of interest, compensation of board members and staff, and other details having to do with financial accountability and avoidance of fraud.

Why would Bike Newport avoid disclosing the procedure it used to determine the compensation of its executive director? Perhaps they do not know that Form 990 requires nonprofits to explain the process used to approve the compensation of the executive director/CEO and certain other key employees: it asks “did the process for determining compensation of the following persons include a review and approval by independent persons, comparability data, and contemporaneous substantiation of the deliberation and decision?” (Form 990, Section VI, Part B, line 15). Nonprofits filing Form 990 must describe that process on Schedule O.

There are questions regarding the hiring of the executive director. How was the job advertised? Would the hiring “procedure” pass ethical standards from an independent review? Has anyone seen the minutes from the single meeting that resulted in advertising the position, receiving applications, interviewing, and hiring? Many would perhaps say that’s a lot of work to accomplish in an hour-long meeting.

Lastly, why would the Bike Newport board of directors take a final vote on the salary and compensation package for the executive director without a full board present and without putting the vote on the meeting agenda?

Also, I want to offer a solution to Bike Newport: I will pay for an independent, mutually agreed upon third party to conduct a review of fiscal responsibility, integrity, and the hiring process. This is a requirement for Bike Newport if a 501(c)(3) classification is in their future and also will allow the public to see positive improvement in these areas.

Chuck Albrecht CDR, USN, Retired

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