By Karen Smith Welch
Amarillo Globe-News
October 30, 2011
http://amarillo.com/news/local-news/2011-10-29/penn-fined-pavones-charity
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| Amarillo Globe-News Rev. Frank Pavone |
Pennsylvania twice fined the Rev. Frank Pavone's flagship anti-abortion charity for raising more than $1 million in donations without the state's authorization, according to state records.
The fines totaled $8,000 levied last year and in 2006 following Priests for Life's failure to renew its 2005 registration as a charity and submit required copies of federal tax returns with the Pennsylvania Department of State in subsequent years, according to documents from the department.
The financial transparency of Priests for Life and affiliated charities Rachel's Vineyard Ministries and Gospel of Life Ministries is at the heart of a dispute between Pavone and Amarillo Bishop Patrick J. Zurek. Last month, Zurek restricted Pavone to ministry in the Amarillo Diocese, where he is a priest under the bishop's authority.
Based in Staten Island, N.Y., Priests for Life raised $45.5 million from 2004 to 2008, according to its tax returns.
Priests for Life spokesman Jerry Horn attributed the registration problems to clerical error as the nonprofit juggled the varying registration requirements of multiple states, a task a charity expert said can be "a bit of a nightmare."
Zurek has said the restrictions on Pavone will be indefinite until questions about how the charities handle donations are answered. Pavone and Horn contend the nonprofit groups have been transparent, providing the bishop all the financial records he has requested.
Pavone joined the Amarillo Diocese in 2005 when now-retired Bishop John W. Yanta promised him the chance at full-time pro-life ministry that the priest had pursued in the Archdiocese of New York until his activities were limited there.
Pavone has appealed the bishop's decision to the Vatican and asked Zurek to allow mediation, Horn said.
The bishop and his priest now are at an impasse. Pavone's canon lawyer advised him against an Oct. 13 meeting with Zurek without a mediator.
"To date, we have had no response from the bishop to our numerous requests (for mediation)," Horn said Friday.
Zurek declined to comment on the stalemate or to answer other questions about his scrutiny of Pavone and the charities.
Poor track record
Auditors checking Priests for Life for a combined analysis of 2007 and 2008 and a separate examination in 2010 noted the charity's track record of delinquent state filings in their reports.
The myriad state compliance processes make for "a daunting and arduous task," Priests for Life's Horn said. "And, unfortunately, on occasion, an organization might miss a particular deadline or, through a clerical error have a filing fall through the cracks."
Priests for Life conducted fundraising campaigns in Pennsylvania without first registering with the state, prompting authorities there to order the nonprofit to stop in 2006 and fine the group $2,000, according to a consent agreement signed by a state prosecuting attorney and a representative of the charity.
Still, Priests for Life continued to seek donations in Pennsylvania without renewing its registration for four years starting in 2006 and ending in 2009, raising as much as $1.6 million, according to information the state subpoenaed in March 2010.
The nonprofit also failed to notify the state it had hired a marketing company to conduct fundraising campaigns there in 2006, 2007 and 2008, documents from Pennsylvania show.
"Another big no-no," said Ron Barrett, vice president for nonprofits of National Corporate Research, a business that assists charities in keeping registrations current. "In 23 states, if you're soliciting and you use a paid fundraiser, you have to send copies of the contracts and alert the states that you are using a paid fundraiser."
Pennsylvania hit Priests for Life with another fine, this one for $6,000, last year for noncompliance. The nonprofit's failure to disclose the marketing contract also resulted in a subsequent Pennsylvania investigation that led to penalties for the contractor last year, Pennsylvania State Department spokesman Ron Ruman said.
Priests for Life is not registered in Pennsylvania now either, but the state has no information that the organization is currently soliciting donations there, Ruman said.
Pennsylvania has a reputation of being a "very stringent enforcer of charitable statutes," Barrett said.
"It's a cumbersome process, and it is a bit of a nightmare because the statutes aren't uniform," he said.
Requirements vary
Rules vary from state to state as to which charities might be exempt from registration, for example, and financial reporting requirements may differ widely, Barrett said.
"It gets very, very confusing," Barrett said. "You have to have a management system in place that shows that you really are tracking it. In defense of that organization (Priests for Life), I understand, but if they've already had a problem once, it's a little unusual that they wouldn't have sought a solution internally or farmed out to an organization that does this professionally to make sure you don't run into these kinds of situations."
Fines are a cost of registration issues, Barrett said. But there are others.
"Think about the PR that this organization's going through and the black eye that it has in the press and the black eye that it has in the community," he said. "Sophisticated donors are paying attention to this stuff and they're not going to continue to donate to an organization that No. 1, can't keep their house in order and No. 2, can't comply with the law."
Pennsylvania posts its enforcement actions online, showing "hundreds of organizations that have run afoul of Pennsylvania's very complex and unforgiving registration and filing process," Horn said.
Organizations penalized at one time or another by the state run the gamut from the National Gay and Lesbian Task Force to the United Farm Workers to the Humane Society of Harrisburg, he said.
More than 11,000 charities are registered to raise funds in Pennsylvania, Ruman said. In 2010, the state issued 60 cease-and-desist orders to nonprofits and signed 56 consent agreements with charities in violation of state statutes, he said.
Seeking help
Registration documents Priests for Life filed last year in Virginia indicate the charity might have hired a firm to help it with state compliance. The charity asked the state to send any notifications to Labyrinth Inc., which handles state registrations for nonprofits, according to its website.
Priests for Life completed 2010 with a $1.4-million shortfall, according to an audit. But as of Sept. 30, the nonprofit has posted a small year-to-date surplus of almost $46,000, Horn said Friday.
"While we are currently in the black, our overall fundraising efforts are slightly behind last year," Horn said, attributing the lag in part to Zurek's Sept. 9 letter to Catholic bishops nationwide advising they might want to suggest that parishioners withhold donations from Priests for Life and its affiliates until the financial questions are cleared up.
Rachel's Vineyard Ministries, an organization that helps people affected by abortion, and Gospel of Life Ministries, a lay association supporting Priests for Life, are separate nonprofit groups with similar pro-life goals, Horn said. The organizations share some board members, including Pavone, and are listed on the home page of Priests for Life's website.
The IRS revoked Gospel of Life's tax-exempt status last year for failing to file required records with the agency.
Priests for Life raises money to combat legalized abortion. Entries in its tax returns and audits included a $170,000 "employee loan" on its books in 2007, 2008 and 2010. Horn said that figure represents loans to several employees but neither key management personnel nor board members.
"On occasion over the years, PFL has made loans to valuable and/or longtime employees who have been in emergency situations, suffered a financial hardship or submitted legitimate requests based on needs," Horn said.
Horn said an entry for an $85,000 check to an organization outside the United States in Priests for Life's 2008 tax return in reality represents multiple donations to "several European-based, Church- related nonprofit pro-life/pro-family organizations."
The IRS tax return form calls for money distributed outside the United States to be noted and for the recipients to be named and the area or region where the recipients are located to be identified.
Priests for Life's tax return notes the $85,000 as a check sent to "Europe." The slot where the name of the recipient is to be listed is blank.
Contact: karen.welch@amarillo.com
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