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UPDATE: A NONPROFIT FOR VETERANS IS
FAULTED
ON SPENDING -- The National Veterans Business
Development Corporation spends only 15 percent
of government grant money on veterans.
For more about Veterans Corp, use the VA Watchdog
search engine... click here...
http://www.yourvabenefits.org/sessearch.p
hp?q=veterans+corp&op=ph
Story here...
http://www.nytimes.com/2008/12/
30/business/smallbusiness/30sbiz.html?_r=1&adxn
nl=1&ref=business&adxnnlx=1230597057
-b/C38QGd9AFRxSiCTKJn8A
Story below:
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-------------------------
A Nonprofit for Veterans Is
Faulted on Spending
By ELIZABETH OLSON
WASHINGTON — A nonprofit organization that Congress set up to help
veterans start and expand small businesses was criticized in a recent
Senate report for spending federal dollars on expensive dinners, luxury
hotels, first-class travel and high salaries.
Since 2001, the organization, the National Veterans Business Development
Corporation, has received $17 million from the federal government to
operate walk-in small-business centers for veterans, according to the
report, which was released this month.
 Of
that amount, only 15 percent a year on average was spent running the
centers, the report said. The percentage fell to 9 percent in the 2008
fiscal year, threatening centers in Massachusetts, Michigan and Missouri,
the report said.
In addition to the centers, the Veterans Corporation has given grants to
the Jewish Vocational Service Centers in Boston and Chicago and programs
for service-disabled veterans in San Diego and Syracuse to offer similar
assistance.
The report took the group to task for its other spending. Besides the
hotel stays, meals and salaries, money was spent on programs that were not
part of the group’s original mandate, the report said, including a youth
essay contest and the promotion of a film on a disabled veteran.
The Veterans Corporation’s board chairman, Jeffrey W. Gault, said by
telephone that the organization’s expenses “were very reasonable,” but
declined to comment further.
Two senators who investigated the organization — John F. Kerry, Democrat
of Massachusetts, and Olympia J. Snowe, Republican of Maine — called for
the money to be given instead to the Small Business Administration, which
has an Office of Veterans Business Development. Mr. Kerry is chairman of
the Senate Committee on Small Business and Entrepreneurship, and Ms. Snowe
is the ranking minority member.
In a letter to the two senators dated Dec. 22, Mr. Gault said the Veterans
Corporation spent nearly $1.7 million on program expenses in the 2007
fiscal year, the latest full-year figures available, which is about 74.4
percent of its total budget.
A group that sets out standards for charitable accountability, the BBB
Wise Giving Alliance, has recommended that at least 65 percent of a
charity’s total expenses be spent on program activities.
 The
Senate committee did not comment on Mr. Gault’s assertion, but in its
report, investigators criticized the reliability of the Veterans
Corporation’s accounting because no separate external audit had been done
since 2006. Audits are required for nonprofits giving away more than
$500,000 a year in federal money, but the Veterans Corporation maintains
that it is not required to have an audit.
David K. Rehbein, the American Legion’s national commander, said the
report showed the Veterans Corporation “has failed miserably in meeting
its obligation to the entire veterans’ community and should be held
accountable.”
The Veterans of Foreign Wars called for a halt to the group’s federal
financing.
Congress set up the separate entity nearly a decade ago to help veterans
as the economy shifted toward services and technology and away from
manufacturing. The Veterans Entrepreneurship and Small Business
Development Act of 1999 authorized a national network of business resource
centers where veterans could learn the skills, one on one, required to
open and maintain small businesses.
But, in 2006, the Veterans Corporation decided that it wanted to provide
small-business assistance through other existing organizations, and began
reducing funds for the centers. For the 2008 fiscal year, the $180,000
budget of the Northeast Veterans Business Resource Center in Boston was
cut to zero, its director, Louis J. Celli, said. The other two centers, in
St. Louis and in Flint, Mich., each received only about half of their
previous $140,000 grants.
Veterans began complaining that they were not getting help they needed,
said Joseph Sharpe, deputy director of economics for the 2.7
million-member American Legion.
“They were running the three centers into bankruptcy,” Mr. Sharpe said of
the Veterans Corporation, which was found wanting in two previous
investigations, in 2003 and 2004, by the Government Accountability Office.
The Senate underscored those findings, concluding that the organization
had been “troublingly irresponsible in its use of taxpayer dollars.” Its
top two executives — including the former president Walter Blackwell who
resigned this year — received compensation far higher that a typical
charity’s average compensation, according to the 25-page report.
In the 2007 fiscal year, Mr. Blackwell was paid $187,394, some $42,000
more than the average for nonprofits, according to the federal report,
citing Charity Navigator, a nonprofit organization that evaluates how
charities spend their money. The combined compensation for Mr. Blackwell
and his vice president, John Madigan, was $338,172, or more than 22
percent of the nonprofit’s Congressional appropriation for the 2007 fiscal
year, according to the Senate inquiry.
The report also found that executives dined at expensive restaurants,
including Bobby Van’s Steakhouse in Washington — where the group is based.
More than $5,000 was spent on two meals there — with no business
justification listed — according to the Senate committee’s findings.
The report blamed the organization’s board for lack of oversight. Mr.
Madigan, who is acting president, said the nonprofit had made strides in
meeting its objectives, which are not only to help veterans start
businesses but also to become bonded, to obtain loans and government
contracts and to enroll in business courses.
The Senate committee said its report also found that the nonprofit had
never achieved the Congressionally mandated goal of becoming
self-supporting. In fiscal year 2007, it spent $240,000 on fund-raising,
but collected only $64,000 from donors, the report found.
The investigation, Mr. Kerry said, “made me angry as someone who has worn
the uniform of my country.”
The Veterans Corporation is currently operating on a Congressional
extension of federal financing, which will expire in March 2009.
-------------------------
posted by Larry Scott
Founder and Editor
VA Watchdog dot Org
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