Nearly $4 billion. That's what the Mahoning Valley's network of 1,180 nonprofits was worth in 2009, the latest year that the Internal Revenue Service reported assets. The nonprofits supply funds for a myriad charitable causes that range from operating hospitals and public libraries to awarding modest scholarships to high school graduates at specific schools.
But some foundations often pay themselves as much as the charities they donate to, a review of the nonprofits showed. The review also found:
Those who operate some of the Valley's most generous foundations say money should be flowing more freely and that charities lack transparency;
Article Photos
Special to the Tribune Chronicle
Pat Haun decorates her daughter’s grave in November 2011, the 29th anniversary of her death in a traffic accident about 300 feet away in Brookfield.
Many foundations get neglected by out-of-town banks that took over local institutions where the foundations were previously housed;
And many of the foundations were created as a result of peculiar or sometimes heart-wrenching events.
The Tribune Chronicle spent nearly a year investigating more than 900 Mahoning Valley charities. About half reported tax returns with Guidestar, an online database that publishes nonprofit information, and 150 nonprofits clearly listed money spent specifically for charitable purposes.
A closer look at those 150 nonprofits revealed that five spent more on salaries for officers, directors, trustees and key employees than they did on charitable giving; 43 spent more on expenses than charitable giving; 16 spent at least a third (and 6 of those spent more than half) as much on salaries for officers, directors, trustees and key employees as they did on the causes they support in exchange for tax-exempt status.
Yet 30 percent of Ohio's economically distressed school systems are located in Trumbull County; Liberty is in fiscal emergency while Brookfield and Niles are in fiscal watch.
Last year Campbell and Girard were among the top-five local governments in the state recovering from fiscal emergency.
And government and independent researchers continually rank Youngstown and Warren among the most impoverished urban centers in the nation.
Fiscal need is great in the Mahoning Valley, and government cutbacks exacerbate the need for local charities and foundations to fill that gap.
At the Christy House homeless shelter in Warren, the roof leaks and the walls are in dire need of a fresh coat of paint, said Thomas Conley, president and chief executive officer.
The shelter, run by the Urban League, seeks funding from charitable contributions, the United Way and government grants, but Conley said, ''The government just doesn't have that pot of money like they used to.''
"We're finding that we have to rely on local philanthropy more than ever,'' Conley said.
The IRS requires many nonprofits to donate at least 5 percent of their worth to remain tax exempt, but operating costs often supplement ''charitable contributions,'' allowing nonprofits to reach that 5 percent threshold and remain tax exempt. In 2009, the net value of the 150 nonprofits examined totaled nearly $1 billion, of which $31.7 million, or 3 percent of their total worth, was spent on charitable contributions.
James Sisek is the president of Farmers Trust Company, a local bank that deals in trusts and fiduciary activities but not in loans or deposits like a typical bank. He said operating costs do not factor into the amount his company distributes.
He added that while it ''wouldn't be fair'' to take potshots at other foundations, a donation of 5 percent isn't always 5 percent.
''When a foundation is earning 2 percent in income and dividends and distributing only 5 percent, you can see right there that half the money is going right out the window in overhead and expenses,'' Sisek said.
Sisek and other nonprofit executives like Patty Brozik, president of the Community Foundation of the Mahoning Valley, say money should be flowing more freely, especially when the community is in such need. They say high operating costs, management fees and a poor economic climate have stymied giving.
The Warren City Schools Foundation, for example, spent $35,700 on charitable giving in 2009 when it accumulated $45,144 in expenses, including $25,000 for then-executive director Karen Brown. Her name does not appear on the foundation's tax filing. She worked through July 2011, soliciting donations from Warren City alumni.
John Pogue, who formerly served as president of the Warren City Schools Foundation for more than a decade, prepared and filed the organization's taxes. For many of those years, the Foundation did not file with the IRS. It instead filed a 990-N, also known as an e-Postcard.
''There were a number of years that we did not file 990s because we did not have sufficient income,'' Pogue said.
Prior to 2011, if a nonprofit brought in less than $25,000 annually, that organization was required to file only an e-Postcard, which doesn't list who it paid, who it donated to or the organization's financial information other than gross income. It lists the organization's revenue and proof of its existence.
Since 2011, the IRS has increased the revenue limit for filing e-Postcards to $50,000. While these smaller organizations can now forego more costly tax filings, they are disclosing less information and operating without close scrutiny from the federal government or the public.
Another example is the Nils and Janet Johnson Foundation in Canfield, which is worth about $380,000. The private foundation donates to other charities like the Rescue Mission of the Mahoning Valley or Buckeye Elks, which uses its donations for scholarships.
In 2008 and 2010, the Nils and Janet Johnson Foundation averaged about $20,000 per year in charitable giving. But in 2009, the giving dipped to $10,925. That year, Nils Johnson received $15,000 in compensation as treasurer, according to the foundation's tax filing.
''He has, frankly, done an excellent job in handling these funds in a difficult stock market,'' Eric Johnson said of his brother. ''He decided, in 2009, to take a distribution from the foundation as compensation for his efforts over the preceding 12 years. If you do the math, it amounts to about 5 percent of the amount distributed to the charities during the foundation's existence.''
The brothers manage their parents' foundation, which was established by the success of their father, an appellate court judge and local attorney.
Eric Johnson has heard of foundations and nonprofits with big staffs and hefty salaries. He said he's also heard of nonprofits pocketing money that was donated by philanthropists and intended for the needy.
But the Johnson family's foundation is funded with family money.
''We don't solicit funds,'' Eric Johnson said. If he or his brother took from the foundation, he said it would be like ''taking money from one pocket and putting it in the other.''
While the Johnson brothers personally manage their parents' foundation, others are managed by banks, trust companies or community foundations.
Foundations can be private or public. Farmers Trust Company manages both.
For example, the David E. Edward Charitable Fund donated 3.5 percent of its assets for charitable causes. Because this trust is public, the founder can make the charitable giving a percentage of the trust's income and not total assets, Sisek explained.
On the other hand, the Christman Anne Kilcawley Foundation is private and supports another nonprofit entity, Youngstown State University. The foundation met the 5 percent requirement for private foundations and paid Farmers Trust Company $159,124 to manage the fund in 2010. That fee represents less than a half of a percent of the foundation's assets.
Most community foundations charge a management fee of less than 1 percent of the total assets.
Brozik and other foundation leaders also argue for more transparency.
''There's not a lot of accountability. There's not a lot of monitoring,'' Brozik said.
Following the 2001 Enron scandal, federal legislation known as the Sarbanes-Oxley Act pushed for investor protection and fair accounting practices at publicly traded companies. The reform trickled down to charitable foundations and charities. More transparent tax filing forms are being implemented. National standards for community foundations were established.
All these measures were implemented to ensure that donors' money is used appropriately. But that didn't stop the former Forum Health from using the TMH and Northside foundations' assets as collateral against loans even though donors specified other reasons for their giving. The foundations' assets then became negotiable items in Forum's subsequent bankruptcy sale.
Brozik and other community leaders who seek grant funding and work with area banks on a daily basis remain reluctant to comment on some practices. Practices like banks serving as trustees, essentially negotiating their own compensation; practices like paying salaries and operating costs that exceed charitable giving; practices that adversely affect the amount of money that returns to the community.
In 2009, the Community Foundation of the Mahoning Valley donated more than 11 percent of its assets to charitable causes. Of the foundation's 10 directors, Brozik was the only one who received a salary, which totaled $44,500.
Larry Haynes, executive director of the Community Foundation of Western Pennsylvania & Eastern Ohio, said the banking and investment fees can be a necessary evil. While Haynes' organization, like any community foundation, mitigates those banking fees and operating costs for its 350 member foundations, smaller trusts and foundations must face those expenditures alone.
''If you think about the cost of an audit, the cost of (filing) a 990 (IRS form), the cost of investment management services, the cost of minimums, you can see it's kind of expensive,'' Haynes said. In some cases, instead of the 350 foundations paying to each file a form, the community foundations pays for and files one form for all.