By
Joe Stephens and David B. Ottaway
Washington
Post Staff Writers
Sunday,
May
4, 2003
;
Page A21
Officials
at the Nature Conservancy say their finances are an open
book, a stance charity experts describe as essential to
promoting public trust. Still, simple answers can prove
difficult to get.
Questions
about the compensation of Nature Conservancy President
Steven J. McCormick and his access to a discretionary
fund required prolonged discussions with Conservancy
officials or brought conflicting or incomplete
responses.
In
February 2001, the Conservancy persuaded McCormick, a
former longtime executive at the charity's
California
branch, to leave his
San
Francisco
law practice and move to
Virginia
to run one of the nation's largest nonprofit
organizations.
That
fall, the Conservancy reported
to the Better Business Bureau's charity-tracking service
that McCormick's compensation was $275,000, plus usual
health and retirement benefits.
In
November 2002 Conservancy communications director David
Williamson sent The
Washington
Post a chart
showing that some nonprofits paid their presidents more
-- from the Boy Scouts of
America
at $308,000 to the American Red Cross at $377,000.
Williamson also disclosed that McCormick had received a
$75,000 down payment on a house.
After
repeated inquiries over months, McCormick and other
senior officials said that the Conservancy had
underreported McCormick's compensation. In addition to
his base salary, they said, McCormick also got a $75,000
signing bonus, a $75,000 yearly living allowance and a
$1.55 million home loan from the Conservancy.
McCormick
ultimately provided information showing that his
compensation and benefits for 2002 totaled about
$420,000.
He
used the loan to buy a new $1.7 million house in the
Reserve, an upscale subdivision in
McLean
.
Williamson
initially said
the Conservancy made the adjustable-rate home loan at 7
percent, which he described as the prevailing rate at
the time. McCormick later said the rate was 6 percent. Real
estate records showed it was 4.59 percent.
McCormick apologized for providing inaccurate
information. "We were wrong," he said.
A
Jan. 17 memo to hundreds of Conservancy trustees
informing them of the mortgage and The Post's inquiries
described the rate as "above market." Mortgage
specialists, however, said 4.59 percent appeared below
market for such adjustable-rate loans last May. Keith
Gumbinger, vice president of loan-monitoring company HSH
Associates, described the terms as a "pretty good
deal."
A
Conservancy internal memo suggested that McCormick would
have had trouble securing outside financing because he
already had a mortgage in
California
and "did not have the ability at that time to carry
two loans." After confirming the Conservancy's
loan, McCormick said he planned to immediately repay it
with bank financing to avoid "scrutiny of the
propriety of the loan." On Thursday, a Conservancy
spokesman said McCormick had repaid the home loan.
"I
don't want to do anything that jeopardizes the
reputation of the Conservancy," McCormick said.
In
an interview Thursday, Williamson said he will be
leaving his job on Friday, after 12 years at the
Conservancy, to pursue "other business
opportunities."
Other
Conservancy documents obtained by The Post revealed a
pool of cash known as "the President's
Discretionary Fund." Those funds, memos show, paid
for ads in six major national markets featuring nature
scenes and Paul Newman's voice.
Questioned
about the fund, Conservancy officials were initially
vague. They eventually supplied figures showing it had
swelled from $9.5 million in 1998 to $23 million last
year.
Williamson
told The Post the fund had been abolished. McCormick
said that the discretionary account, renamed the Quick
Strike Fund, held $3 million this fiscal year.
The
documents identify the fund as the source of millions
spent on marketing. Some of the fund's cash came from
the sale of land considered ecologically insignificant,
a memo shows.
The
fund also paid for donor-tracking software, government
relations programs, an Indonesian ecotourism project and
unspecified "emergency needs" determined by
McCormick, according to a
written statement from the Conservancy
in response to reporters' inquiries.
McCormick
also used the fund last fall to dole out $600,000 to
losing participants in a United Nations environmental
competition. In August, at a South African conference,
he announced the Conservancy would give $30,000 to each
of competition's 20 runners-up. McCormick told The Post
his announcement of the gifts was a spur-of-the-moment
decision.
Public
financial reports do not mention the discretionary
account, but Conservancy officials said the funds are
included in amounts reported in various categories.
Conservancy finance director Craig T. Neyman described
the account as money "in the budget without a
corresponding use."
Told
about the fund by a reporter, charity expert Daniel
Kurtz called it "bizarre." Kurtz, a former New
York charity regulator and author of guides for
nonprofit managers, said such a large sum should be
under direct board of directors' control.
"That,"
he said of the fund, "is a hell of a way to run a
business."
Staff
researcher Alice Crites contributed to this report.
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