Local Nonprofit Made Up Board

An organization that evaluates charities across the United States said falsely listing the board members was unethical and not consistent with good governance of nonprofits

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    A South Bay nonprofit is serving youth falsely listed board members on documents with the IRS, which two nonprofit experts say may raise questions about the organization's integrity, as NBC 7's Wendy Fry investigates. (Published Wednesday, Jul 2, 2014)

    A South Bay nonprofit serving at-risk youth falsely listed board members on documents with the Internal Revenue Service, which two nonprofit experts say may raise questions about the organization’s integrity.

    Three of the people falsely listed as board members for the “Turning the Hearts Center” since 2010 said they had no knowledge they were documented on tax forms as being involved with the organization. Some weren’t aware they were listed until they were informed by NBC7.

    “I think a decision was made to ask people to be on the board and it never came to fruition,” said Sergio De La Mora, the organization’s co-founder and board chairman.

    The Chula Vista-based nonprofit provides parenting classes, food banks, graffiti removal and gang counseling.

    De La Mora says he didn’t know, until about mid-May, that several people were incorrectly listed as board members on the organization’s IRS Form 990’s - documents meant to provide transparency over how tax-exempt funds are managed.

    “I sent (those people) a letter of apology, explained to them that their names would be removed from any literature or forms, of course the 990’s, that they would be changed and rectified,” De La Mora said. “And since we’ve done so.”

    The names, including NBC7’s Diana Guevara and the ACLU’s Norma Chavez, are listed in IRS forms dating back to 2010.

    Guevara and Chavez both said they declined invitations to serve on the “Turning the Hearts Center” board.

    “I was shocked, surprised and disappointed,” Chavez said.

    Attorney Richard Arroyo, listed as a board member, said he agreed to serve on the board, about five years ago, but he never realized that decision became official because he was never asked to attend a board meeting or take a single vote.

    “Well, I don’t know if it makes me angry, it makes me question the administration and the integrity of the organization, because if they’re going to do something like this, who knows what they might be doing with the money, which is what I think is more of a concern,” Arroyo said.

    An organization that evaluates charities across the United States said falsely listing the board members was unethical and not consistent with good governance of nonprofits.

    “It’s deceptive and not at all transparent,” said Sandra Miniutti, the Vice-President and CFO of Charity Navigator.

    Board members traditionally provide oversight over how tax-exempt funds are spent; and how state and federal grants are administered. In 2013, ‘Turning the Hearts’ received about $561,000 in grants and contributions, according to their amended Form 990.

    A spokeswoman for the San Diego Workforce Partnership, which distributes federal grants to local nonprofits, said Turning the Hearts Center received $346,456 in federal Workforce Investment Act funds in 2013.

    A nonprofit expert at University of San Diego said the public should be concerned about issues like this because all taxpayers support nonprofit organizations in that the funds collected are tax-exempt.

    “If the public loses confidence in nonprofits, people will not volunteer their time or donate funds to a wide variety of causes,” said Pat Libby, Director of the Institute for Nonprofit Education and Research at University of San Diego.

    De La Mora told NBC7 Investigates that he was unaware of the improper paperwork because it was not his role to sign the forms, but rather the job of the Executive Director Doug Luffborough, who parted ways with the organization in about mid-May 2014.

    “You entrust people to run an organization and they do a wonderful job. It’s a growing organization – a lot of details. I’m not part of every detail,” De La Mora said.

    Luffborough, also a Chula Vista Elementary School District trustee, briefly returned a phone call request for an interview but said he could not answer any questions about the organization because he was no longer involved in it. He declined an on-camera interview about the discrepancy in the board member’s names and stated he needed to consult with an attorney before speaking further with NBC7.

    According to the previous and the corrected forms, Luffborough was paid $100,000 a year for his work as Executive Director for “Turning the Hearts.” Chula Vista Elementary School District spokesman Anthony Millican said Luffborough, as a CVESD trustee, was not required to disclose his “Turning the Hearts” salary because the nonprofit does not do business with the school district or meet any other triggers that would require disclosure.

    After NBC7 Investigates began asking questions about the board, De La Mora sent people previously listed on the 990’s amended copies of the IRS tax forms. He also provided NBC7 a copy of those amended forms.

    The only two people who were listed on both the original and the corrected IRS documents from 2010- 2012 are the cofounders De La Mora and Doug Luffborough. The amended forms also add two additional names to the charity’s list of board members for 2010-2013: Luffborough’s wife and De La Mora’s wife, for a total of four board members between 2010 – 2013, according to the amended forms.

    Charity Navigator's Sandra Miniutti said it is not a good governance practice to run a nonprofit organization with less than five independent board members, and especially not when those board members are related.

    “They would lose 15 points in our rating system right there for that and that is the most an organization can lose,” Miniutti said. In California, state law allows for nonprofits to run with only one board member.

    IRS Form 990’s ask an organization to identify whether or not board members, officers, directors and trustees have a family or business relationship with each other. On each of the corrected forms, the organization indicates “no,” that none of the directors or trustees are related, despite the fact that the board was apparently comprised of two married couples.

    NBC7 Investigates reached 3 of the 5 people listed on the original tax forms. A fourth person declined to comment, and messages left at a fifth person’s work place were not returned.

    De La Mora said he realizes the falsely listed board members was a serious oversight and that’s why he acted so quickly to correct the forms as soon as he learned of the discrepancy.

    He said his organization, which serves more than 17,000 people annually, is ready to move past this growing pain.

    “I feel really confident that the community can drive by Turning the Hearts Center and say, ‘There is an organization that is not perfect, but they are willing to be perfected,’” De La Mora said.

    Since NBC7 Investigates began examining the Turning the Hearts nonprofit, De La Mora says the organization has made many other changes, including instituting a conflict-of-interest policy, holding board meetings and keeping minutes of those board meetings, and having a board vote on the new executive director’s pay.

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