Nonprofit Boards and Conflicts of Interest

Recently, on the Survivors of Chesapeake Facebook page, we’ve been discussing the importance of transparency in relation to finances at churches and nonprofits.

First, let me say that there is a big difference between what we might perceive as immoral behavior (say, a pastor accepting high-end gifts while at the same time encouraging lower-level church employees to make use of the food pantry to supplement their low salaries) and financial wrongdoing within an organization. 

There is no evidence I am aware of that there has been any financial wrongdoing at Chesapeake Church or within the many nonprofits with which Robert Hahn is involved. 

That being said …

There are some issues that I and others have noted.

Robert Hahn points to the financial statements/ 990 forms online as an example of financial “transparency.” And while audits are a good thing, it should be pointed out that they rarely uncover financial fraud. 

I have questions about the way Hahn’s nonprofits are set up. 

When forming a Maryland nonprofit organization, the state offers a checklist to follow, which includes how to go about setting up a board of directors:

Recruit a Board of Directors This should be a group of 5-7 unrelated individuals that will be responsible (legally) as fiduciaries for the organizations governance, finances, and legal compliance (The IRS will be looking to see that your board is comprised of “unrelated” individuals – related is considered either familial or through business partnerships)

Disclosing potential conflicts of interest and then addressing those conflicts is a required portion of the 990 tax form. The 990 is the “IRS' primary tool for gathering information about tax-exempt organizations, educating organizations about tax law requirements and promoting compliance.”

The 990 forms filled out by Chesapeake Church, End Hunger, Friends of ROA, among others specifically ask in the section entitled “Governing Body and Management” the following: Did any officer, director, trustee, or key employee have a family relationship or a business relationship with any other officer, director, trustee or key employee?

On both the 990 for End Hunger and Honduras Compassion Partners, that section is checked “no.”

“No” is an obviously false statement.

The president of End Hunger is the daughter of the secretary on the board of directors. 

Two of the board members on the Honduras Compassion Partners board of directors are married.

And though there is no 990 filed for Robert Hahn’s latest nonprofit, Friends of ROA, the organization has only three board members: Hahn himself, his daughter, and his son-in-law. (His other daughter serves as the organization’s resident agent.)

Friends of ROA is “not in good standing” because the board failed to turn in an annual report.

The fact that there is a blatantly false answer on two 990 tax forms is, in my opinion, enough of a reason to investigate further.

(You can find general information, filing history, and annual report/personal property information at egov.maryland.gov.)

Here are snapshots of the 990 for End Hunger: