Despite a compensation scandal that caught the attention of national watchdog groups for nonprofits, the Open Health Care Clinic’s board said in a statement Thursday that they are standing by their longtime chief executive officer, Timothy Young.
Young’s compensation structure as head of a nonprofit known for serving people with the virus that causes AIDS allowed him to receive a “finder’s fee” starting last year. Young requested the arrangement months after a major donor to the agency said he told Young that Open Health, also known as HIV/AIDS Alliance for Region Two, Inc., was likely to receive millions of dollars from a bequest.
Under a compensation the Open Health board approved, Young could receive up to $200,000 when a donor to the nonprofit gave them between $7 million and $10 million. Young could earn $2,500 if someone donated between $50,000 and $100,000.
Young’s No. 2 at Open Health, Kimberly Hood, sent board members a letter when she resigned in April that called the practice a “kickback on a donation.” Her letter alerted the board to both legal and ethical problems that Young’s compensation structure raised. Young’s compensation documents show his pay was also adjusted to $165,000 in 2017, up from the $121,694 listed on HAART's tax forms from 2016.
Board members suspended the finder’s fee section of Young’s compensation package and hired an attorney, Greg Frost, to investigate whether they had violated legal restrictions for nonprofits. They said Young never received money from the arrangement but several other employees and a board member resigned in protest and complained that the investigation was too narrow.
When Baton Rouge philanthropist Angelina Wilson died in 2016, her will specified that a portion of her estate — likely totaling millions of do…
The board released a statement Thursday that said Young and the board had done nothing wrong, based on the results of Frost’s investigation, and that praised the CEO’s actions. They did not release Frost's report, and Frost said he could not explain the reasons why his investigation said there was no wrongdoing unless the board agreed to let him do so.
In the statement, board chair Chris Oetjens referred to the former employees who resigned over concerns about Young as “disgruntled” and said they “impugned” the nonprofit. An online petition demanding that Young resign received more than 200 signatures.
Oetjens said in the statement that the board was pleased to know there was “absolutely no wrongdoing or breaches of fiduciary duty by the Board or the CEO, Tim Young. The findings of Mr. Frost confirm that the actions of the Board and its Chief Executive Officer were in compliance with all applicable regulations and the accusations raised by the former employees in that regard were found to have no merit.”
Young, Oetjens and Board Treasurer Billy Dudley did not immediately respond Thursday to a request for the contents of their investigation, or to requests for interviews. Their statement said Young has helped grow the agency since 1996, and the board and staff will work together to “safeguard the resources entrusted to us and ensure they are used to provide the best possible service to our patients, community partners and stakeholders.”
Baton Rouge philanthropist Angelina Wilson, who died in 2016, specified in her will that a portion of her estate should go to the HIV nonprofit. It’s unclear how much money the donation will amount to — likely in the millions of dollar range — because Wilson’s will created multiple charitable remainder trusts for the donations, and the nonprofits will not receive them until Wilson’s children die.
Baton Rouge is not only the nation's AIDS capital, but has a high percentage of residents without health insurance.
But the executor of her estate, Daniel Bevan, said in a recent interview that Wilson gave the money to the HIV nonprofit because of its mission, and not because of a special relationship with Young. He said she would not “look favorably” upon the idea that Young stood to receive a cut of her donation.
The problems at Open Health inspired recent posts from the Standards of Excellence, which promotes ethical behavior in nonprofit groups, and Nonprofit Quarterly. Standards of Excellence guidelines say employees and outside fundraising consultants should not be compensated based on percentages of money raised or commissions. The Association of Fundraising Professionals also calls the practice unethical.
In a recent post about Young’s arrangement at Open Health, Standards of Excellence said that finder’s fees can undermine public trust in nonprofits, that they place pressure on donors that can be detrimental in the long run and that the IRS could determine the compensation is unacceptable and an excess benefit.
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“As is often the case, the story in Baton Rouge has its share of twists and turns, including major planned gifts that were promised but not yet received, investigations that were promised, and concerned staff members,” the Standards for Excellence post reads.
“It is always courageous for leaders of an organization to stand up for the mission of the organization and their ethical principles," the post continues. "It appears that that is exactly what happened in Baton Rouge, where several executives left their jobs in protest over questionable fundraising practices that threaten the public’s trust in OHCC, and put its tax exempt status on the line.”
Charity Watch and the Association of Fundraising Professionals staffers also said in recent interviews with The Advocate that finder’s fees for those who cultivate donors are problematic. The chairman of the New Orleans Regional AIDS Planning Council also sent The Advocate a letter to the editor that said “leadership concerns” caused them to terminate an agreement with Open Health and Young nearly 10 years ago to be their fiscal agent.
Top managers of a local nonprofit healthcare clinic that specializes in HIV/AIDS resigned en masse after voicing concerns to the agency's gov…