POLITICS
12/13/2013 06:28 pm ET Updated Dec 14, 2013

Democratic Candidate Paid Herself Handsomely Out Of Own Charity

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WASHINGTON -- A charity run by Democratic congressional candidate Marjorie Margolies has spent an unusually large proportion of its revenue on her own salary and benefits, much of it paid for with taxpayer dollars, according to documents on file with the Internal Revenue Service.

The charity, Women's Campaign International, aims to get women into leadership and politics around the world, and has been a central part of Margolies' work since her first term as a Pennsylvania congresswoman ended in 1995. The charity has created programs for women abroad, and after lower funding between 2009 and 2011, has regained its financial footing, with more than $2 million in revenue in 2012 putting it back near 2008 levels, as reported in the organization's IRS filings. The tax documents were flagged for HuffPost by Philadelphia blogger Laura Goldman. Margolies has not taken a salary from WCI in 2013, a spokesperson for her campaign said.

Margolies' pay, which reached at least $109,000 from 2009 to 2012, has consistently been above the industry standard. For organizations with budgets from $1 million to $2.5 million, the median compensation for all CEO’s was $94,924 (with women, as in most industries, making less than that), according to Guidestar, which tracks nonprofits.

But beyond Margolies' own pay, her charity differs in another significant way from others of its size, said Sandra Miniutti, vice president of the charity-evaluation group Charity Navigator. "[It's] unusual to have both a president and an executive director for a charity as small as this," said Miniutti, noting that typically, both positions are filled by the same person.

Margolies' pay and benefits fluctuated between 2009 and 2011, hitting a low of roughly $116,000 in 2010 and a high of $164,000 in 2011 -- on top of what the charity paid a full-time executive director. Former Executive Director Kerri Kennedy made between about $78,000 and $100,000 from 2009 to 2011, according the charity's filings to the IRS.

Revenues can tend to fluctuate for public charities based on the economy, while salaries to employees often remain somewhat consistent, given the need to keep people on staff to maintain projects and pursue new ones. And because WCI has such a top-heavy structure, a drop in revenue can quickly mean that an overwhelming portion winds up going toward executive salaries, as happened in 2009. Revenue collapsed from about $2 million to about $700,000 in the wake of the financial crisis, and for every dollar the charity took in that year, nearly 30 cents went to pay either Margolies' or Kennedy's compensation, the filings state. Another 40 cents on the dollar went to other salaries and benefits, leaving less than 30 cents on every dollar given going toward the intended beneficiaries of the charity.

The charity's board, which approves compensation, includes Margolies and a number of people related to each other. According to the group's tax returns, board Chair Hetherington Smith is related to board member Sarah Smith; Treasurer Jon Stiklorius is related to board member Ty Stiklorius and board members Amy Gavin and Ted Gavin are related to each other.

Margolies founded WCI in 1998, the same year she ran unsuccessfully for lieutenant governor. She briefly ran for Senate in 2000 before dropping out and filing for personal bankruptcy. Her husband went to prison in 2003 for defrauding investors of millions. One of her first grants for WCI came from the Department of Defense, arranged, she later said, by then-Rep. Jack Murtha (D-Pa.).

The proportion of funding that went to programs at WCI shifted unusually between 2009 and 2012. Nonprofit watchdogs suggest would-be donors consider how much goes into program funding -- ostensibly what they want to see their money used for -- when making a decision on whether to donate. Many of them recommend picking an organization that puts about 75 percent of its total spending into programs. WCI didn't hit that mark in 2009 or 2010, when its revenue dipped considerably from 2008 levels. But between 2010 and 2011, the charity went from putting 58 percent of its total spending on programs to 96 percent -- a large jump aided by listing all of the top earners' salaries as program expenses, rather than saying part of that funding went to their management and fundraising work, as was done in 2009 and 2010, according to the charity's filings.

Charity Navigator does not officially evaluate WCI, and Miniutti said it differs from many of the groups they look at because a large proportion of its funding comes from government grants, rather than donations. (In 2011, WCI won a $558,528 grant from USAID and $127,076 from the State Department, according to the IRS documents.) Miniutti noted, however, that it was unusual for a charity to list all of the key employees' salaries as program expenses, given the work they do by necessity in general management.

WCI Executive Director Nancy Wallace said compensation for key employees was defined as program expenses only in 2011 and 2012, based on the projects in play at that time.

"The staff time is recorded based on the activities they performed," Wallace said in an email. "Some years we are implementing multiple grants and all efforts are on program implementation and other times our staff efforts are on fundraising and proposal writing to secure more funding for projects. We are a small organization which does not have a separate team for proposal development and operations."

Wallace went on to say that "WCI does not place expenditures in categories but records them as related to activities performed," and pointed to the organization's 15-year record of "empowering women to actively participate in civil society, political leadership and economic development."

Margolies is running for the 13th district congressional seat in Pennsylvania in a tight primary race against three other Democratic candidates. After serving one term in Congress in the mid-1990s, Margolies has devoted her work to women's issues, including serving in the U.S. delegation at the 1995 United Nations Fourth World Conference on Women in Beijing. She also penned a book, A Woman's Place, about the female freshman members she served with in Congress. WCI has a number of high-profile supporters, including Margolies' daughter-in-law, Chelsea Clinton, who spoke at a fundraiser for the organization earlier this year.

The Margolies campaign declined to comment for this story, referring questions to the charity. But the candidate spoke to HuffPost about her work on women's issues in an interview last month.

"After I lost in '94 ... I became the head of our delegation for the Beijing conference," she said. "And when we got back to Washington, it was very clear that what we were committed to was to be getting more women to the table. And I feel so strongly about it."

UPDATE: Ken Smukler, a spokesperson for Margolies, responds with the following:

Your headline is that Marjorie pays herself "handsomely" out of her own charity implies, that she does this with funds paid for by taxpayers and that her compensation is consistently above the industry standard…a story which posts in the middle of her race for a congressional seat…yet your reporter fails to ask wci for a response to this broadside before she prints, fails to ask the campaign about Marjorie's compensation before she prints…in fact, deliberately fails to mention anything about marjorie's compensation in written requests to both wci and the campaign for a response…then the reporter goes on to pick and choose which years of marjorie's 12 years of leading wci to analyze for the purposes of creating the false impression that marjorie has somehow used wci to line her pockets.

The following statement is flat out defamatory – false and published in reckless disregard of the truth:

Margolies' pay, which reached at least $116,000 from 2009 to 2012, has consistently been above the industry standard. For organizations with budgets from $1 million to $2.5 million, the median compensation for all CEO’s was $94,924 (with women, as in most industries, making less than that), according to Guidestar, which tracks nonprofits.

From 2002 – 2007, with the exception of one year (2005), margolies' pay was consistently well BELOW the industry standard (established by the reporter's reliance on guidestar at $94,924)…the reporter does not say that marjorie's pay just in the years 2009 to 2012 "has consistently been above the industry standard"…no, the reporter says her pay "which reached at least $116,000 from 2009 to 2012"…this creates the false impression that her pay has consistently been above the standard, with it peaking in those years throughout her career at wci - nothing could be further from the truth.

For six of the twelve years Marjorie has been leading WCI, her salary has been significantly lower than the industry standard. In 2013 Marjorie has, in fact, taken no salary at all.

That the reporter could have easily found the information listed below either in a simple web search -- anyone can find them at http://non-profit-organizations.findthebest.com/l/242480/Womens-Campaign-International – or by asking wci or the campaign for it makes her false statement one made in reckless disregard of the truth…that it is sourced by a woman whose earlier blog post about our campaign was scrubbed from huffpo hours after it posted put you both on notice.

wci's 990s are publicly available from 2011 back to 2002; 2012 was provided by wci to the reporter. marjorie's compensation for these years is as follows:

2002: 54,962

2003: 58,440

2004: 58,440

2005: 121,395

2006: 59,895

2007: 59,895

2008: 107, 252

2009: 125,008

2010: 116,017

2011: 164,159

2012: 109,678

2013: 0

an analysis of ALL the publicly available wci 990's — shows that marjorie's average compensation over a twelve year period was $89,603-- $5,321 BELOW the $94,924 median income for non-profit ceo's according to guidestar as cited in the article.

Smukler is correct that Margolies' compensation was smaller prior to 2008, but the charity was much smaller then as well. The year she earned $121,395, 2005, for instance, the charity spent a total of only $461,150 and took in just a bit more than that -- meaning Margolies' compensation was more than a quarter of all charity expenses that year. In 2006 and 2007, expenses were under $900,000. In 2003 and 2004, spending was under $600,000 and in 2002 spending was only $236,000 total. Median compensation for the head of a charity spending less than $500,000 is $58,120. For one between half a million and a million, the median pay is $72,793. In some years, Margolies compensation was below the median, but there have been more years that it was higher. The story was corrected to note that her lowest compensation between 2009 and 2012 was $109,678 in the most recent year.

This story also has been updated to include information about Margolies' 2013 salary.

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