Sunday, November 29, 2015

NOM's financial woes continue but they remain a danger

Brian S. Brown
In spite of having little money to work with
Mr. Brown remains a pernicious dick
National Organization for Marriage finally released their 2014 tax returns (form 990) for NOM and NOM Education Fund which are a 501(c)4 and 501(c)3 respectively. NOM now has co-chairs. Eastman and the Opus Dei eunuch Luis Tellez. It is possible that a large donation was conditioned on some more responsible oversight. Eastman had his hand in the till with nonsensical legal fees which was an enormous conflict of interest.

There was one large donation of $2.2 million which amounted to 43% of NOM's revenues. Without that it would have been lights out. The fact that NOM can still attract that kind of money in spite of staggering ineptitude means that they are still a threat to our wellbeing.

Just to update a prior post, NOM has now expended at least $61 million since 2007 with nothing to show for it. Brian Brown continues to demonstrate his aptitude for Reverse Midas Touch. In 2014 they only donated to one candidate. $10K went to Keith Matune who was challenging another GOPer in a primary for a seat in the Illinois House. Not only did Matune lose the primary but he tried to cover up a prior arrest for larceny. Nice fucking job Brian!

All of the large contractors have disappeared. Organizations are required to report their five largest contractors that received $100,000 or more. In 2013 (again, combined) the fab-five collected more than $1.3 million. the largest was Opus Fidelis which supposedly directed on-line strategy including social media for $480K. Seriously.

On a consolidating basis, NOM's financial condition improved in that revenues exceeded expenses by $226 thou in spite of a decline in revenues from 2013 by 20%. However the only real current asset they had as of 12/31/2014 was $81K in cash. Current liabilities were somewhere between $700K and $2 million (we cannot  know the real number) which means that they were operating with negative working capital.

When consolidated we appreciate just how synthetic some of these numbers are. The IRS tends to scrutinize large amounts of travel which are usually credit card reimbursements. In 2013 they reported $294K in travel and $56K for conventions. NOM-Ed showed $45K in travel and $280K in conventions. It doesn't look suspicious until you combine the two items and the two entities (something the IRS doesn't usually do). NOM has an even $350K combined; NOM-Ed $325K for a nice round  number total of $675. The 2014 number is $804K. It's quite a bit more money for a failing organization.

Brown is gaming the IRS on travel. Brown lives in the Philadelphia suburbs and the IRS considers NOM to be headquartered in Philadelphia where they apparently have a small office at a Catholic organization. That is important because it allows Brown to travel to what is now a branch office in DC at NOM's expense. Were DC the headquarters any money that NOM spent on Brown's travel to HQ would be taxable income to Brown. I need to pour over the rulings but this might be the subject of my next referral to the IRS.

Although I made a referral to the IRS last year, I did not notice the travel expenses. Nor did I notice the fact that NOM did not itemize it's occupancy expenses. NOM was using NOM-Ed as a conduit for large donations that were tax deductible. Then NOM just borrows that money. There is still some of that going on. While NOM reduced the inter-entity loan by $500,000 they are now using NOM-Ed for more expenses. Indeed, the travel and convention expenses for NOM-Ed were nearly $500K while NOM reported $300K.

NOM is responsible for 75% of the revenues but pays 66% of the expenses. It is an impossible allocation because NOM has all of the payroll. Pro-forma the difference is about $450K but it is not pro-forma since NOM has all of the payroll and pays for two offices. The only thing that should have accrued to NOM-Ed in 2014 was an idiotic “Marriage March.”
NOM-Ed had one donation of $100K, one for $50K and a few for $10K. It would not surprise me at all if some of those were routed to take advantage of a tax deduction (donations to NOM are not tax deductible).

Speaking of payroll, NOM appears to have reduced it by 29% or close to $600K. However, if you look closely, in 2013 the two entities reported 31 employees (none for ED) and 19 independent contractors. In 2014 they show 15 employees but swelled to 44 independent contractors. It looks suspect but we cannot know for certain.

Employees are the number of wage and tax forms that were submitted during the year. Independent contractors were 1099 (reported income) forms submitted during the year. We don't know how many employees NOM had at year's end (it was no more than 15) and we don't know how many days or hours those indies worked, what they were paid or what they did and how often they did it.

A possible scenario (which is speculative) is that they want to look frugal for donors and converted employees to contractors, paying them enough to transform their insurance to individual coverage under COBRA. For all we know, Mrs. Brown was a contractor.

NOM made no contribution to Brown's retirement plan in 2014 (but he is still at the same salary). Many of the numbers are flaky. For example, how is it that accounts receivable are different from 2013 by exactly $1 and exactly how does NOM have accounts receivable in the first place? Outstanding pledges have their own line on the report.

The big potential liability is probably credit card and expense reimbursements. Brown knows that Republicans have strangled the IRS and we are still in sequestration. The chances of an audit are very small.

Bottom line is that NOM is seriously wounded but remains very dangerous.

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