Sunday, November 26, 2017

The NOM nerd - From cook book to cooked books

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It should be perfectly obvious — That nerd is not me.
I purchased a sous-vide apparatus plus a blow torch (the sous-vide method does not sear). There exist a reasonable possibility that I will set my apron or myself on fire. But I digress. So I found myself reading a cookbook devoted to the sous-vide method. I had some difficulty concentrating because there were things bouncing around my brain about the 2016 National Organization for Marriage financial statements that simply don't make sense.

I note that the tax returns were prepared internally rather than by an accountant so anything is possible. NOM certainly had sufficient funds to pay an accountant. The choice not to is telling. These are not very smart people to begin with. One caveat is that I made no attempt to eliminate inter-entity transactions.

First know that, since 2007 NOM has spent a total of  $68,473,000. For that sum they achieved absolutely nothing. Brian S. Brown prospered but NOM's donors got schtupped.

Those of you who are familiar with NOM can skip the following paragraph:

NOM is actually comprised of two separate entities under common control. Both are tax exempt. National Organization for Marriage is organized as a 501(c)4 entity which means that although it is tax exempt, donations are not tax deductible. National Organization for Marriage Education Fund (NOM-Ed) is organized as a 501(c)3 which means that donations are tax deductible. NOM-Ed is prohibited from engaging in political activity.

Consider the following and also keep in mind that 2012 and 2016 were presidential election years:

What you are seeing is the huge slide that the combined organization has gone through since 2012. Moreover, in 2012 NOM was responsible for close to 70% of the total revenues. In 2016 the two entities were almost evenly split.

My theory is this: Along with the steep decline in revenues this split represents a transition from receiving most of its money from foundations to relying on individual donors. Foundations are already tax exempt. It is immaterial that their large donations to NOM were not tax deductible.

Let us peruse the expense side:

In 2012 NOM was responsible for most of the expenses. In fact it had greater expense than revenues by about $2 million. The assumption is that NOM-Ed used some tax deductible funds for political purposes which is against the law. And, yes, four years ago I alerted the IRS to this matter which I traced through the financials in greater detail than I am explaining here. What the IRS did with that information is unknown.

In 2012 the tax returns were prepared by a CPA. It likely shows actual expenditures by NOM. The NOMmers probably figured that they were very slick in covering up just the NOM-Ed side of the disbursements. As I said, these are not terribly smart people doubting the ability of other people to comprehend arithmetic.

Flash forward to 2016. NOM was actively campaigning, at first for Ted Cruz. They were likely involved in numerous other campaigns (I supposed that I could go through all the emails). Any money that they threw into those campaigns, including internal costs, must be through NOM, the 501(c)4. So this time, they did not bother to to even disburse the money through NOM.  

It is inconceivable that, in an election year, NOM-Ed was responsible for nearly half the revenues but nearly 70% of the expenses unless it was politicking. Remember, NOM-Ed is prohibited from engaging in politics, Again, there is a reason that an accountant was not paid to prepare the returns. They flipped the 2012 scheme. This time NOM-Ed broke even while NOM shows a surplus of more than $800 thousand.

Call me a cynic. The books are cooked according to my theory. They sure as hell don't make sense. This, by the way, is precisely how I got myself shot. Economic modeling clashed with reality. Things did not make sense. I turned out to be right. I wish that I had been wrong.

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