Jackson well knows the importance of good money management. At the end of the Carter administration, Jacksons nonprofits received $6.5 million in grants from federal agencies, including $5.7 million to PUSH for Excellence (also called PUSH Excel). A federal audit launched in 1979 found PUSH Excel misspent $737,000 and questioned the use of another $1 million in grant monies. The government filed suit in 1984 and later said PUSH Excel owed more than $1.4 million to the Education, Commerce and Labor departments.
In a 1988 settlement negotiated by Ohio attorney John Bustamante, who helped found several of Jacksons organizations, PUSH Excel agreed to repay the government $550,000 in installments over five years, finally completing the payments in 1993. The groups financial statements indicate that it has not received any government grants since at least 1992.
Although there do not appear to be current problems of this magnitude, Organization Trends identified several items in the financial reports of Jacksons groups that are unexplained or appear unusual, raising questions about the organizations accounting practices and use of funds that might be answered by a thorough audit. Questionable items include:
Jacksons annual salary of $120,000 is paid by People United to Serve Humanity. This group is able to keep its finances secret because it is a religious organization exempt from filing state and federal returns. But in February, Rainbow PUSH chief financial officer Billy Owens disclosed that Jacksons salary is not really compensation for work performed for People United. Instead, People United divides the full salary and charges it to two other Jackson groups: the Citizenship Education Fund (58 percent or $69,600), where Jackson spends much of his time with the Wall Street Project and related efforts, and the Rainbow PUSH Coalition (42 percent or $50,400), which Jackson heads as president.
Why dont CEF and Rainbow PUSH pay Jackson directly? Probably because People United is not required to publicly disclose its finances or activities, hiding payments to Jackson and other transactions in a veil of secrecy. Its unknown whether Jackson gets additional funds from People United in the form of reimbursements or consultant fees.
Jacksons salary is not reported by CEF or Rainbow PUSH on their tax returns, and neither group discloses the salary arrangement with People United in any of their recent filings or financial statements. But if Jackson is providing services to CEF and Rainbow PUSH through People United, the groups reports should identify Jackson or People United as an independent contractor. Rainbow PUSH is also required to report any compensation to its officers, including Jackson.
Media reports have made much of the fact that the Citizenship Education Fund did not identify its highest-paid employees on its 1999 report to the IRS, as required. CEF has said that was an oversight, and it will probably amend its 1999 filing to include any salaries that exceeded $50,000.
Was CEFs reporting failure a simple oversight? Perhaps not. In its IRS reports as far back as 1994, CEF also did not identify employee salaries except for amounts paid to CEFs executive director, which ranged from $44,500 to $95,667.
One employee who probably should have been listed on CEFs 1999 report is Jacksons former mistress, Karin Stanford, who reportedly earned $120,000 before resigning in 1999. But because Stanford directed the Washington, D.C. public-policy bureau for both CEF and Rainbow PUSH, its unclear what portion of her salary was paid by each organization and whether it was more than $50,000. CEF also allowed Stanford a "draw" of $40,000 against future consulting fees when she departed, according to an internal CEF memo dated September 10, 1999. CEF officials say she actually received only $20,000 in consulting fees and another $15,000 for moving expenses.
In its 1999 financial report to the Illinois attorney general, CEF did report compensation to the three highest paid employees during the year. The reported salaries ranged from about $59,000 to $85,000, and Stanford was not listed.
Media reports also have made much of the fact that the Citizenship Education Fund did not list any independent contractors paid more than $50,000 in its 1999 IRS report, as required. CEF reported more than $1.3 million in consulting expenses that year, and Owens said the amount increased to $1.85 million in 2000. Of those amounts, $878,523 in 1999 and $940,529 in 2000 went to Rainbow PUSH for management and general expenses, according to Owens. It appears that Rainbow PUSH and People United, which is paid for Jacksons work, should have been listed as independent contractors on CEFs 1999 filing.
CEFs practice of not identifying contractors was not limited to 1999. CEF did not identify payments to independent contractors in any of its reports to the IRS from 1994 to 1998, the years for which filings were reviewed by Organization Trends.
Critics of Rainbow PUSH and the Citizenship Education Fund have questioned the high travel costs incurred in recent years. In a February disclosure report, Owens claimed total travel costs in 1999 were $739,843 for CEF and $537,022 for Rainbow PUSH. Jesse Jacksons travel accounted for almost a third of those amounts. But Owens 1999 figure for CEF is significantly less than what CEF reported to the IRS. In its 1999 filing, CEF reported more than $1.3 million in travel expenses, almost 20 percent of the years total budget.
CEFs reports to the IRS disclose an odd arrangement in which CEF incurred almost $257,000 in accounts payable by the end of 1996. The next year, almost the entire debt ($254,020) was forgiven. The generous party is not identified.
For much of the past decade, PUSH for Excellence has operated in the red. At the end of 1999, the group had assets of only $44,538 and owed $114,500 to undisclosed vendors. PUSH Excel has reported $114,500 in accounts payable since at least 1992, the earliest year for which financial reports were available from the Illinois attorney general. None of the organizations financial reports explain how the debt was incurred and to whom.
On its 1999 tax return to the IRS, the Rainbow PUSH Coalition did not itemize its "other income" as required. It appears that the "other income," which totaled $124,658, included a payment from People United to Serve Humanity retiring all or most of its $45,500 debt to Rainbow PUSH. The debt was incurred by Operation PUSH sometime prior to 1991.
In its filings with the IRS, the Rainbow PUSH Coalition reports "volunteer stipends" separate from taxable salaries and wages a legal practice as long as the stipends cover actual travel and other expenses related to a volunteers activities. But the amounts seem extraordinary. In 1999, volunteer stipends totaled $68,504, equivalent to 46 percent of the total wages paid to regular employees.
In 1998, the Jackson Foundation paid the IRS more than $6,000 in penalties and overdue excise taxes on its investment income, which is taxable even for charitable foundations.