Sunlight is the best disinfectant so let’s see if we can allow some to fall onto a topic rather dank and musty for most Baha’is. The National Spiritual Assembly of the Baha’is of Canada has submitted their tax returns to the government of Canada and since this information is in turn public, let’s take a look to see what we can learn about how the NSA is spending the funds donated to them.
Please don’t take my word for anything and double check the numbers for yourself. You can see the T3010 Charities Tax Return filled out by the NSA by visiting the CRA charities website. Unfortunately Baha’is like me have to rely on this information because the NSA does not share information with them via normal Baha’i channels.
As you’ll see below, even within this legally enforced format, their disclosure leaves much to be desired and rather than provide answers, it delivers new questions. Below you’ll find some of the things that jumped out at me. Perhaps you’ll notice other points and if so, I’d welcome your comments.
In the Revenue section of the “Statement of Operations” there is a clumsy error showing that simple arithmetic continues to challenge the Treasury department at the NSA of Canada.
|(Statement of Operations)|
|T3010 Line #||Total ($)|
|Total eligible amount of all gifts for which the charity issued tax receipts||4500||$6,688,533|
|Total amount received from other registered charities (excluding specified gifts and enduring property)||4510||$4,201,533|
|Total specified gifts from other registered charities||4520||$89,124|
|Total other gifts received for which a tax receipt was not issued by the charity||4530||$1,086,582|
|Total interest and investment income received or earned||4580||$83,700|
|Gross proceeds from disposition of assets||4590||$3,280,443|
|Net proceeds from disposition of assets (show a negative amount with brackets)||4600||-MISSING-|
|Other revenue not already included in the amounts above||4650||$13,374|
|Total revenue (add line 4500, 4510 to 4580, and 4600 to 4650)||4700||$12,284,818|
|Total Revenue (est. by assuming net approximates gross proceeds)||$14,267,583|
Line 4600 is simply missing (empty cell rather than the word MISSING that I wrote above). If we assume that the total number ($12,284,818) entered in the T3010 is correct, then that implies a net proceed of $1,175,706 from the gross proceed of $3,280,443 – less than half. Of course, you and I are not privy to the actual accounting ledgers but can only go by what we’re given from the NSA. But that implied amount for the net proceeds is highly improbable as it would require an unfathomably exorbitant expense related to the sale of the assets. Much more likely is a clerical or human error.
So either the person who filled out this form made a mistake by calculating the net amount incorrectly and then compounded that mistake by excluding it from the form (only allowing us to calculate the amount via inference by deducting it out of the sum) or they made the mistake of not adding the net proceed amount correctly to approximate the gross proceed (somewhere close to $3 million) and then forgot to add it to the net revenue. In either case, the key word here is mistake and somewhere, someone made either one or several.
The next interesting tidbit is that total donations (however we finally calculate it) were significantly lower than the previous year – in 2008 the NSA reported total revenue of $16,277,836. For the past 10 years or so, the NSA built up quite a war-chest as almost every single year had positive net inflows (I know, I know, during those same years they were continuously screaming about deficits and shortfalls – that’s another story). To make up for the shortfall in 2009, it seems that the NSA dipped into its coffers and sold about $3 million worth of investments. This represents about 13% of its total 2008 liquid assets.
Chile Baha’i Temple
So what did they do with the money raised by donations from Baha’is and from the sale of their long term investments? The NSA decided to step up big time (or they were directed to by the UHJ/ITC) and sent the vast majority of their donations (and then some!) to help build the temple in Chile. In total, $12,988,273 was sent outside of Canada:
|Total Activities outside Canada||$12,988,273|
|NSA Baha'is of the US||$59,150|
|NSA Baha'is of Chile||$12,538,058|
|Various NSA's, Pioneering & Teaching||$391,065|
This is much more than the average ($4 million) for expenditures sent outside of Canada for the past 12 years and close to the highest amount sent outside Canada in 2004 – $14 million. But those funds were sent to Haifa. The fact that the NSA sold off a significant amount of their investment assets implies that this was done to pay for the ongoing construction costs and that they did so as directed by Haifa. This isn’t surprising as usually the most well off countries pay much more than the average share of such projects.
There are several important issues here with compensation. First of all, this is the first time ever that the NSA has actually followed the CRA laws and disclosed the total amount that it is paying in salaries and like compensation. They have also gone back and re-submitted this for the 2008 and 2007 returns (but not the previous years). For example, in the T3010 filings for the fiscal year 2004 there is $43,746 under “Management & Administrative Expenses” even though in another location they cite the total number of compensated employees at 45!
In any case, now that we finally have the information, it is very interesting. In total, the NSA spent $2,431,889 on compensation for the fiscal year 2009. That is a significant amount relative to the total donations received. Using their own total amount for donations received, then the NSA of Canada spent 20% of their total revenue on compensation.
The sum comes up to a huge amount if we divide by the 20 or so people who work full time or part time in Baha’i administration in Canada. Why 20? To start, we have 9 people on the NSA itself and then about 10 others who work at the National offices and other ancillary administrative work. It is a rough estimate, I’ll concede, but it will do for a back of the napkin calculation. So $2,431,889 divided by 20 is $121,594 – that’s a lot of money! That’s more than $10,000 every single month for one year, for 20 people. Wow.
Fortunately, the CRA requires charities to provide some more information regarding their compensation expenditures. They do not have to detail their compensation expenditures but only have to disclose how many full-time employees are within certain ranges:
|Salary (Min)||Salary (Max)||Salary (Median)||# Persons||Total|
|Total Compensation Reported to CRA||$2,431,889|
In the salary range of $1 – $39,999 the NSA has 1 full time employee. In the salary range of $40,000 – $79,999 the NSA has 9 employees (quite possibly the NSA members). And finally, there are 3 part time employees who received a total of $50,000 compensation in aggregate.
Let’s assume the maximum for each salary range. So for we have $40,000 plus 9 full time employees at $80,000 each and finally, $50,000. That is a total of $810,000.
Hmmmm…. notice anything? The total compensation for the salaried workers is $810,000 – giving them the benefit of the doubt and assuming the maximum point in the range – but the total compensation is $2,431,889. So there is more than $1,600,000 unaccounted for.
If we assume the median, rather than the maximum for the salary range, the difference is even larger. A very large amount of money is spent via expense accounts (including travel, short term accommodation, etc.) as well as salaries relative to the total budget of the NSA. Unfortunately, the NSA is not only reticent to share information when it comes to the annual report submitted to delegates at the National Convention, it is also reluctant to accurately fill out the CRA charities report as you can see. Or perhaps they are just incompetent and the calculator was being used by someone that day.
Well, that’s about it. If I notice anything else of import, I’ll mention it. But for now, let me know what you think. If you’re a Baha’i in Canada, have you ever tried to contact the NSA requesting more detailed financial information? I’ve spoken to a few Baha’is who tell me that their experiences with the Treasury department are slightly less interesting and fruitful than talking to sheetrock.
Oh and if any fellow Baha’i from the US knows how or where to access the 990 form for the NSA of the US, let me know. Thank you.