Saturday, August 30, 2008

Boy Scout green sprouts outside Orange County

The group’s U.S. leaders take home more than the local chief’s six figure pay.

Written by: Teri Sforza, The Orange County Register
Corrected by: Alan, Unpaid Local Community Volunteer

Just when it seemed that Orange County’s Boy Scout executive was earning a pretty penny - $317,804 in total compensation for Les Baron - we see that his salary wilts in comparison with what the Big Cheeses at the Boy Scouts of America National Council in Texas earn.
  • FACT: Actual compensation NOT salary was: $260,608 and is the lowest among the other five (5) non-profit organizations of the same size within a twenty-five (25) mile radius of Santa Ana. (Source)
  • FACT: National Average Compensation is: $266,439 based on the size of the organization - which places Les Baron in line with competitive compensation (Source).
  • FACT: Compensation includes employer taxes, health insurance, and so forth.
  • FACT: Orange County Register includes even reimbursed expenses in their figure.
David J. Ross II, assistant chief scout executive; Kenneth L. Connelly, same title; Roy Williams, chief scout executive.
  • FACT: Yes, all three (3) were serving at the same time
  • FACT: Two (2) of them were in the process of retiring after a combined 80+ plus years of service.
  • FACT: They could of both left without training a replacement to carry on the Organization.
  • FACT: Mr. Williams actual “Management” salary was a mere $152K and LESS then even Les Baron.
Nonprofit watchdog Charity Navigator recently singled out the Boy Scouts National Council as having the nation’s highest-paid executive in the human services field. Which, of course, whetted The Watchdog’s appetite to exam the charity’s most recent tax returns.
  • FACT: Charity Navigator is NOT a Watchdog and is merely a Charity Evaluator.
  • FACT: It was not Charity Navigator that dug into the return it was Teri Sforza AND Tony Saavedra, OC Register.
  • FACT: OC Register NEVER sought the professional opinion of a non-profit CPA or other professional in their analysis.
More remarkable, perhaps, than a Scouting exec earning nearly $900,000 a year is the $648.6 million the Scouts have managed to accumulate in net assets. That includes $629 million invested in publicly traded securities.
  • FACT: These securities return $34.4M in dividends.
  • FACT: 32% of their support comes from these investments.
  • FACT: 1.8% of their revenue comes from public support.
  • FACT: ALL Public support was returned to local Communities through Grants.

Why does a nonprofit that collects money from little boys for camping trips and asks them to sell popcorn outside local supermarkets need more than half-a-billion dollars in the bank?
  • FACT: Camping Trip revenue does NOT support National Council.
  • FACT: Over 30% of the revenue from popcorn support the neighborhood kids.
  • FACT: Good Journalism seek out the answers through educated professionals NOT the general public before going to print.
  • FACT: Long Term Investment provides ongoing Program Support for more then a year.
And that $11.1 million spent on travel and conferences? And the $189,000 spent on lobbying legislative bodies?
  • FACT: $813,266 (0.54% of expenses) in Travel was spent for management.
  • FACT: $315,979 (0.21% of expenses) in Conferences was spent for management.
  • FACT: Non-Profits cannot spend more than 20% of their expenses on lobbying.
  • FACT: Boy Scouts spent 0.1% of expenses on lobbying. - Whoa?
Boy Scout spokesman Deron Smith did not answer questions directly, saying: “The BSA is one of the largest youth-serving organizations in America, with more than 4 million youth members and adult volunteers. When it comes to travel expenses, net assets or executive compensation, the BSA and our executive compensation, the BSA and our volunteer National Executive Board strives to be good stewards of its financial resources.”
  • FACT: 72 Board Members oversee their operations.
  • FACT: Nearly 100 years of successful operations.
He went on to about how the BSA builds the character and integrity of America’s youth.

To be fair, the National Council does give grants every year to needy Scouts. A total of $3,000 went to five Orange County Scouts ($600 each), according to the most recent tax returns.
  • FACT: To be fair $3,606,095 were given to Scouts in ONE YEAR.
  • FACT: More then every dollar received by National in public support was returned to the Community through Grants.
The Boy Scouts National Council earned a mediocre two of four possible stars from Charity Navigator. Revenue was down nearly 10 percent over four years, and spending was down nearly 4 percent. Still, it was ranked as one of America’s most trusted charities by “high net-worth consumers” in a survey released this week by the Luxury Institute in New York.
  • FACT: It takes $0.54 to raise $1.00 for the Scouts (decreases rating).
  • FACT: Program Capacity has lowered due to less public support (decreases rating).
  • FACT: Program Capacity was ONLY cut by less then a 1/3 of the revenue decline (decreases rating).
  • FACT: Boy Scouts is showing commitment in their financial resources during our recession (decreases rating).
  • FACT: Boy Scouts was ranked 5th Most Trusted Organization.


Here at home, the Boy Scouts of America Orange County Council saw revenues drop by nearly 24 percent between 2006 and 2007, according to its (their) most recent tax returns.
  • FACT: Revenue drop was only in one calendar year, 2006.
  • FACT: Revenue has increased 18.32% between 2004 - 2006
At the same time, expenses rose by nearly 11 percent. The cost of management rose more then 61 percent. The top manager’s compensation rose nearly 8 percent.
  • FACT: Depreciation rose 152.4%.
  • FACT: Occupancy Expense rose 75.6% as agencies rose meeting rental charges.
  • FACT: Payroll Expenses for non-directors rose 44.6%.
  • FACT: Payroll Compensation for non-directors, which includes Health Insurance, rose 44.2%.
  • FACT: Employment Tax Expense rose 36.1%.
The local Scouts’ net assets, however, were up more then 15 percent.
  • FACT: Pledges Receivable (Accounts Receivables) were up 98.8%.
  • FACT: Receivables are considered an asset holding.
  • FACT: In time of economic difficulties Pledges are not always collectible.
Nearly 70 percent of Orange County Scouts’ spending is on programs, the camping/character-building activities that form the core mission of the group (down from more than 77 percent in the two prior years). About 21.5 percent was spent on management (up from 14.7 percent in the two prior years). And 11.4 percent was spent on fundraising (up 9.5 percent in the two prior years).
  • FACT: Over 70 percent was spent on programs (70.4%).
  • FACT: Program Spending in 2004, $7.14M; 2005, $7.48M; 2006, $7.50M (up 4.8% from the two prior years).
  • FACT: Only 8% was spent on Fundraising.
  • FACT: Management Increase mostly relate to taxes, payroll expenses, occupancy, benefits for staff and a major hit on Depreciation (152.4%)!


Scouts spokeswoman Lara Fisher didn’t get into the large increase in management spending or the executive raise as revenues dropped
  • FACT: Management Increase mostly relates to taxes, payroll expenses, occupancy, benefits for staff and a major hit on Depreciation (152.4%)!
  • FACT: Lara Fisher would not know this information immediately until their CPA and accountants review the actual request, costing even more management expenses and time at the request of the OC Register.
Here is what she had to say: “We responded to a downturn in the economic market by lowering our budget 7 percent, to $8.4 million. ... The primary reason for the budget reduction was due to shortfalls in fundraising events involving donors in the construction and real estate industries. To cope with this downturn, we reduced our workforce and eliminated 11 staff positions. An additional two full-time positions will end at the close of 2008. These positions will remain open into 2009.”
  • FACT: Everyone hurts in a recessions and Boys Scouts are not exempt.
  • FACT: OC Boy Scouts elected NOT to reduce Program Spending.
  • FACT: OC Boy Scouts just like National are dedicated financially to the Program.
  • FACT: 2 out of 3 of Senior Scouting Executives had Compensation DECREASE.
  • FACT: Les Baron Compensation rose a mere 2.38%.
  • FACT: Cost of Living in Orange County rose 4.26%
  • FACT: An Outdoor Education, Outreach and Development Director were add to the 5 Highest Paid, equaling $239,311 in Compensation.
  • FACT: Overall Compensation actually DROPPED 0.83%.
  • OPINION: Outdoor, Outreach and Development all sound like Program Management not Operations?
  • OPINION: Appears to be a simple misclassification of roles.
An extra $300,000 of expenses was cut as well, she said.


Correcter's Opinion:
In summary, Boy Scouts along with numerous non-profits have seen and continue to see decreases in revenue when the economy was hit with a recession. The upside is what we can all help organizations that help our children, including the Girl Scouts.

Please support your local Scouting Programs. Thanks for listening to the real facts.

DISCLOSURE: I do not work for the Boy Scouts of America and obtain the information in my analysis solely from the same sources as the author of this article in the Orange County Register on August 30, 2008. Referenced here to correct the statements and add detail beyond the angle taken by Teri Sforza and The Orange County Register.

Thursday, August 28, 2008

OC Register misrepresent Boy Scouts

Ten (10) Blogs in the last five days regarding the Boy Scouts - What is the agenda?

You really have to question the agenda of the OC Register and Teri Sforza as she continues to add more limited articles regarding one organization in such a short period of time.

Further, with her most recent blog (article) she places an extremely bias point of view in her “Vote” by presenting the interest of non-profit security holdings in one of two manners: (a) Use them for good deeds, or (b) hoard them because you got them.

Instead of talking in person with a Certified Public Accountant (Community Based Journalism) who specializes in non-profit accounting she seeks the counsel of the general public while further driving their response by presenting only numbers without fully understanding the purpose of these assets.

The (almost) million-dollar Boy Scout. Thrifty, indeed!)
In her first article (blog) she criticizes the Messrs. Ross II, Connelly, Williams and Baron salary while including in these figures reimbursed expenses and further not making any attempt to determine the amount of these compensation figures that are just on paper (healthcare benefits, employer wage expenses and so forth) and the actual pay being received by these executives. Also she does no research or intentionally omits critical information, within the same documents that show the salary, on Mr. Connelly or Ross to find out that the fact that after 43 years of service to the Scouting Organization, Mr. Connelly was in the process of retiring along with Mr. Ross after 39 years. Now that might be the reason you have three executives with high salaries and in the end you are left with one.

Further Mr. Williams actual “Management” salary was a mere $152K of the $13M spent on management of their operations.

The most insulting aspect of her first article is the implication that executives in the Boy Scouts should work for FREE by including reference to the Scout Law on Helpfulness, which states in part, “He does things willingly for others without pay or reward”.

I think that is enough said on the first article as for one I think I do good deeds through my work and I make a fair living.

Big Bucks for Boy Scout contractors
In her next article, she once again uses compensation figures that include reimbursed expenses and other amounts never seen by the employee.

She also places the amounts earned by their legal counsel, accounting and investment contractors that defend the organization and help ensure their investments are secured, audited and provided the highest rate of return.

I do not think we need to question why these things are important to an organization and the financial stability to function. Yes, some us might think that attorneys and accountants get paid too much; however, without them nobody would defend and protect their assets and then we would need to concern ourselves with fraud and exposure to greater loss of holdings. $3M is a pretty fair deal to protect $629M from greedy or uneducated hands.

The half-billion-dollar Boy Scout stash
Then we move the story regarding the securities held by the Boy Scouts. She points out that $528M is unrestricted holdings in securities WITHOUT reference the revenue generated from these holdings ($30M+) that support ongoing operations of the organization for more then just one year.

She further implies that these monies should be spent by stating, “Scouts can spend the money however they like.”. I would guess that if Boy Scouts did spend their principal holdings they would have nothing to fall back on nor do they have any revenue earnings that help keep the Scouting Program alive as has been they have for nearly 100 years. They must be doing something right.

Also she fails to note that the Boy Scouts of America are self-insured and these same funds would be used to pay claims against the organization and further result in an ongoing decrease in revenue when such losses are incurred.

Another insulting attack from the article is in the midst of her numbers she references about how $3,000 in grant money went to five Orange County Scouts without even referencing the fact that a combined total of $3.6M was given to grantees. This again only gives the reader very restricted and biased information leading one to think that very little was given in grants.

Another fact missing is the fact that $135M was spent on programs and only $13M was spent on management while still having an excess that exceeded the security dividends resulting in the ability to place additional funds in more long term stable sources in the wake of decrease funding.

The “smear campaign” against the Boy Scouts
Then came my email to Ms. Sforza regarding my concern regarding the lack of full disclosure of the detail and suggested prior to her publishing my email that “True Journalism requires True Involvement in the Community”.

OC Scouts leader’s pay rose while revenue fell
After her limited review of the Boy Scouts of America in Irving, TX she moved her interest a little closer to home in pulling numbers on the Orange County Council.

Instead of researching the growth of revenue throughout the current Scout Executive’s tenure she pulls only two years and compared them by percentage, instead of showing overall revenue growth under the current leadership.

Further, she pulls a 61% increase in management costs without looking closely enough or providing the reader the information to determine the underline causes for such an increase. This item I stated needed a little review to see what happened. Ms. Sforza never gives the reader the details in her four follow up articles so far this week.

All of this should become clear when their return for the entire year 2007 is filed here within the next month or so (past filings were in August with the latest in November). However, Ms. Sforza implies in her writings (2006-7) that the 2006 filing available on GuideStar actually represents figures including 2007 and yet it was filed in November of 2007 for calendar year 2006. I guess my 2007 tax returned filed last month represents part of or all of my earnings for 2008. A better representation here would be stated, “…throughout 2006” to help ensure clarity. The use of 2007 can be misleading and some will reference that as being more current then it actually is on paper.

She ends this article by comparing Les Baron’s salary to the national average for non-profit executives to show his compensation, including again reimbursed expenses among other things is more then twice the figure. Now a better comparison would have been based on the size of the organization (available from the exact same reference page she found the National Average), which shows organizations a little smaller then our local Boy Scouts Council receive an average compensation of $266K based on $13.5M in expenses (Boy Scouts of Orange County two-year average is roughly $15M). Les Baron’s compensation was $260K, not including reimbursed expenses and so forth.

Again, true representation of the facts with correct comparisons is critical if your true intent is to inform the public and not smear the facts with irrelevant figures.

OC Boy Scouts, by the numbers
An actual post other then the use of 2007 has summary numbers that are directly from year and not a through time figure as implied. The problem is that the average reader is presented with summary data only and not given guidance on how to analysis the numbers. This leads the reader to assume certain factual details.

I somewhat liked this post as a good starting point in my own research. It shows a steady increase in assets and an overall growth in revenue from 2004 to the end of 2006. However, how much of this revenue is program related, public contributions, membership dues, security sales, gain/loss from assets and so forth.

Now we need to address the question on the $1M increase in management. Again the detail behind the numbers is not presented and leads to assumptions.

Here are some of the items that increased
$210,000 Salaries (new hires > non-directors)
$120,000 Depreciation
$ 60,000 Recognitions to Scouts & Community
$ 60,000 Supplies
$ 40,000 Professional Fees

Yes, some of those new hires likely were released in 2007 as the Council made corrections to respond to the economic slowdown.

OC Boy Scouts wrestle the economic downturn
This leads us to Ms. Fisher’s response about an $8.4M reduction. After hiring new staff and predicting only a short economic slowdown OC Council was faced with the fact that the economy was not going to recover as fast and had to make major choices.

Due note that these changes are not reflected anywhere in the current available financial numbers as these will not show until next year when they file their 2008 tax return. With such a major hit from the economy the only statement I do not agree with from Ms. Fisher is, “Cutbacks will not affect service to the county’s scouting community.”

Her comment is strictly out of love and dedication for her services to the Community. Any cutbacks limit the services, time and resources personal have available to the members the organization serves.

Now we can argue over 8% increase in overall compensation from 2 years ago (2006) or address the situation that is happening today. What happened last year will be interesting to review and if they can limit compensation increase to near 5% (remember medical, reimbursed expenses, along with deferred payments are combined together.

Ms. Sforza continues to grind the mere 8% without detail and from two years ago. Further, she fails to represent the true comparison of Mr. Baron’s salary and the average of other non-profits the same size.

She also throws 61% on the table without providing the reader with any detail on that percentage, including the fact that a major portion was new hires. You are only left with the question why she is spoon feeding the audience and misrepresenting the comparisons.

National Boy Scouts respond: ‘We do a good job’
Now this reply I love, “[Boy Scouts of America] (is) very disappointed in the angle that you took in your stories/blog postings.”

The angle has been to drive public opinion with the least amount of information, guidance and statements that give misleading facts to the Community.

Vote! Cap the cash nonprofits can amass?
The perfect example of her desire to place Boy Scouts in a negative light with very limited understanding of non-profit financial management and their cash flow is her own personal assessment that security holdings do only one thing, prevent organizations from doing “good works, [by] hoard(ing) it”.

I think now the readers can clearly see the guided campaign against an organization that serves the youth in our Community and we will see what hidden agenda lies next for the OC Witchhunt against the Boy Scouts.