Officials at the Nature Conservancy say their
finances are an open book, a stance charity experts describe as essential to
promoting public trust. Still, simple answers can prove difficult to
get.
Questions about the compensation of Nature
Conservancy President Steven J. McCormick and his access to a discretionary fund
required prolonged discussions with Conservancy officials or brought conflicting
or incomplete responses.
In February 2001, the Conservancy persuaded
McCormick, a former longtime executive at the charity's California branch, to
leave his San Francisco law practice and move to Virginia to run one of the
nation's largest nonprofit organizations.
That fall, the Conservancy reported to
the Better Business Bureau's charity-tracking service that McCormick's
compensation was $275,000, plus usual health and retirement
benefits.
In November 2002 Conservancy communications
director David Williamson sent The Washington Post a chart
showing that some nonprofits paid their presidents more -- from the Boy Scouts
of America at $308,000 to the American Red Cross at $377,000. Williamson also
disclosed that McCormick had received a $75,000 down payment on a
house.
After repeated inquiries over months, McCormick
and other senior officials said that the Conservancy had underreported
McCormick's compensation. In addition to his base salary, they said, McCormick
also got a $75,000 signing bonus, a $75,000 yearly living allowance and a $1.55
million home loan from the Conservancy.
McCormick ultimately provided information showing
that his compensation and benefits for 2002 totaled about
$420,000.
He used the loan to buy a new $1.7 million house
in the Reserve, an upscale subdivision in McLean.
Williamson initially said the Conservancy made the adjustable-rate home loan at 7
percent, which he described as the prevailing rate at the time. McCormick later
said the rate was 6 percent. Real estate records showed it was 4.59
percent. McCormick apologized for
providing inaccurate information. "We were wrong," he said.
A Jan. 17 memo to hundreds of Conservancy trustees
informing them of the mortgage and The Post's inquiries described the rate as
"above market." Mortgage specialists, however, said 4.59 percent appeared below
market for such adjustable-rate loans last May. Keith Gumbinger, vice president
of loan-monitoring company HSH Associates, described the terms as a "pretty good
deal."
A Conservancy internal memo suggested that
McCormick would have had trouble securing outside financing because he already
had a mortgage in California and "did not have the ability at that time to carry
two loans." After confirming the Conservancy's loan, McCormick said he planned
to immediately repay it with bank financing to avoid "scrutiny of the propriety
of the loan." On Thursday, a Conservancy spokesman said McCormick had repaid the
home loan.
"I don't want to do anything that jeopardizes the
reputation of the Conservancy," McCormick said.
In an interview Thursday, Williamson said he will
be leaving his job on Friday, after 12 years at the Conservancy, to pursue
"other business opportunities."
Other Conservancy documents obtained by The Post
revealed a pool of cash known as "the President's Discretionary Fund." Those
funds, memos show, paid for ads in six major national markets featuring nature
scenes and Paul Newman's voice.
Questioned about the fund, Conservancy officials
were initially vague. They eventually supplied figures showing it had swelled
from $9.5 million in 1998 to $23 million last year.
Williamson told The Post the fund had been
abolished. McCormick said that the discretionary account, renamed the Quick
Strike Fund, held $3 million this fiscal year.
The documents identify the fund as the source of
millions spent on marketing. Some of the fund's cash came from the sale of land
considered ecologically insignificant, a memo shows.
The fund also paid for donor-tracking software,
government relations programs, an Indonesian ecotourism project and unspecified
"emergency needs" determined by McCormick, according to a written statement from the
Conservancy in response to
reporters' inquiries.
McCormick also used the fund last fall to dole out
$600,000 to losing participants in a United Nations environmental competition.
In August, at a South African conference, he announced the Conservancy would
give $30,000 to each of competition's 20 runners-up. McCormick told The Post his
announcement of the gifts was a spur-of-the-moment decision.
Public financial reports do not mention the
discretionary account, but Conservancy officials said the funds are included in
amounts reported in various categories. Conservancy finance director Craig T.
Neyman described the account as money "in the budget without a corresponding
use."
Told about the fund by a reporter, charity expert
Daniel Kurtz called it "bizarre." Kurtz, a former New York charity regulator and
author of guides for nonprofit managers, said such a large sum should be under
direct board of directors' control.
"That," he said of the fund, "is a hell of a way
to run a business."
Staff researcher Alice Crites contributed to
this report.
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