Calif. Anti-Gay Group Successful--At Lining Leaders’ Pockets, Says Blog

by Kilian Melloy

EDGE Staff Reporter

Wednesday September 10, 2008

An anti-gay Calif. group has raked in millions, purportedly to promote "[J]udeo-Christian principles in California's laws," but a freelance journalist's article claims that most of that revenue has gone into the pockets of the group's top people.

Blogger Justin McLachlan posted a Sept. 8 article at his site detailing how the California Family Council has received donations from the public amounting to nearly $3 million, but spent only a little more than half a million dollars on its mission, described by the group as work that "protects and fosters judeo-Christian [sic] principles in California's laws."

McLachlan reported that the CFC's tax returns show that the overwhelming majority of that money went to the group's two highest paid employees, including executive director and founder Ron Prentice.

Those two employees reaped over $1 million all together over a four-year period, the journalist reported, with the remaining employees of the CFC taking in another $900,000.

The article said that this means about 70 percent of the donations contributed to the CFC have gone toward paying its workers, whereas the Better Business Bureau's Wise Giving Alliance is cited as defining the standard for tax-exempt groups' expenditures at 65 percent on program services, rather than staff salaries.

Of the money taken in by the CFC over the four years of its existence, only 18 percent has gone to program services, according to McLachlan's article. In its first two years, the CFC spent nothing at all on program services, though it took in more than one and a half million dollars.

An examination of the group's expenditures that surveys the CFC's spending pattern after setting aside its payroll costs indicates an even worse record on program services spending: only 12 percent, the article said.

The article noted that Prentice, formerly a vice president with the anti-gay, Colorado Springs-based Focus on the Family, now earns considerably more than his former FOF superiors... even though FOF took in $144 million in 2007 alone.

The article quoted University of Southern California's Dr. William Crockston as saying of the group's financial picture, "The ratios are terribly wacky."

Crockston, who specializes in nonprofit organizations and business management, added that such high salaries are unusual for small, relatively new organizations like the CFC.

Another specialist in nonprofits, attorney Gene Takagi, referenced his own article, written for The Practical Lawyer, a publication from the American Bar Association.

In that article, Takagi wrote that any "organization that engages in an inurement transaction (such as paying an unreasonable compensation to an insider) may face revocation of its exempt status," reported McLachlan.

The Takagi article also said that nonprofits are required to demonstrate that they exist to benefit the public, rather than individuals.

The article noted that Prentice did not answer requests for comment or for financial statements. The article also cited the Wise Giving Alliance and the Evangelical Council for Financial Accountability, both of which suggest that the governing boards of tax-exempt groups should mainly rely on volunteers.

In the case of CFC, the governing board appears to consist of Prentice and the CFC's other highest-paid employee, a Mr. Henderson. The board appears to include no other members, which indicates, the article said, that Prentice and Henderson themselves determined the level of their salaries.

McLachlan's article noted that Prentice also serves as the president of California Renewal, the group behind the anti-family amendment entity, which supports Proposition 8, a ballot initiative scheduled to go before Calif. voters in Nov.

If approved, Proposition 8 would rescind marriage equality for gay and lesbian families in that state.

California Renewal, however, is not permitted at this time to operate, the article noted, because the group is delinquent in its taxes. Nevertheless, remains active.

The group's attorney, Andrew Pugno, said that California Renewal is tax exempt, the article recounted, and that it therefore does not owe taxes.

In the same email, the article said, Pugno wrote, "I hope you understand I am extremely busy and don't have much time to deal with this other than wait for the [proper tax authorities] to contact me to let me know if anything else is required to revive [the group]."

However, the article went on, it seemed that Pugno was thinking not about California Renewal, but rather a third organization run by Prentice, the California Family Alliance, which also was forbidden to operate following a failure to provide the state with documentation required for tax-free groups.

The article said that Pugno claimed all the information required of California Family Alliance has since been provided to the state.

The office of the secretary of state, however, informed McLachlan that if that were indeed the case, California Renewal would have been allowed to resume operations.

In any event, has continued to operate despite its parent organization's suspension by the state, evidently with no consequences as a result.

The article quoted the executive director of the Fair Political Practices Commission, Roman Porter, as saying, "There's nothing within the political reform act that would address that issue."

Law professor Daniel Lowenstein, who is with the University of California Los Angeles, was one of the authors of the political reform act, the article said.

Lowenstein, whom an addendum to the article identified as having contributed money to another pro-Proposition 8 group, was cited as saying that while in his opinion the state government could prevent a suspended organization from continuing to operate a committee promoting a ballot initiative, "It doesn't look good politically."

Added Lowenstein, "You've got a committee being sponsored by a business that's involved in what amounts to a pretty shady situation, not paying its taxes."

Kilian Melloy serves as EDGE Media Network's Associate Arts Editor and Staff Contributor. His professional memberships include the National Lesbian & Gay Journalists Association, the Boston Online Film Critics Association, The Gay and Lesbian Entertainment Critics Association, and the Boston Theater Critics Association's Elliot Norton Awards Committee.