Al Sharpton drew a $241,545 salary from National Action Network in 2013, even as the social-justice organization’s finances worsened, with the nonprofit ending the year $1.33 million in debt, new tax filings show.
As the 2013 tax filings clearly show an organization in financial trouble, the records list most expenses in only vague, unhelpfully broad categories. Several of the expenditures listed in any detail suggest behavior considered questionable for nonprofits. And as of December 31, 2013, the organization’s unpaid tax liabilities, highlighted by the New York Times recently, had grown slightly over the past year, to around $819,000.
Sharpton’s high salary, especially when the group is more than a million dollars in the red as a matter of net assets, could raise concerns about the nonprofit’s long-term viability, says Ken Berger, CEO of Charity Navigator, a group that evaluates the finances of nonprofits.
Little data exists about appropriate compensation for leaders of 501(c)(4)s like National Action Network, Berger says, but Charity Navigator found that the median compensation for a comparably sized 501(c)(3) is about $172,000 — around $69,000 less than what Sharpton earns.
Last December, National Action Network also owed $328,881 to Sharpton, who had loaned the money “due to deficits,” the tax filings said.
Sharpton tells NRO: “The organization at times had shortfalls, and I loaned the money to keep it going. I believe what the organization is about, and I put my own money in it, in non-interest loans. That should be admired. . . . Nobody creates an operation where they lend more than they get and say they’re doing it for personal, self-serving interest. That doesn’t make sense.”
But Berger says Sharpton’s loan to National Action Network may also be problematic. A loan from a nonprofit’s CEO “raises a lot of red flags,” he says. “I would want a lot of details about it.”
“Even if they’ve put controls in place, just the appearance of [a loan] can raise many questions about whether this is truly arms-length, independent, and the best possible transaction that a charity should engage in,” Berger says.
Sharpton declined to go into the specifics of the loan, telling National Review Online that the justification “is immaterial” and that loans were made for “different reasons.”
National Action Network also ended 2013 owing the federal government $819,721 in unpaid payroll taxes, penalties, and interest, according to the newly released tax filings. That’s a slight increase from 2012, up from $813,576.
National Action Network’s 2013 tax-liability figures emerge only weeks after the New York Times reported that Sharpton and his for-profit businesses owed more than $4.5 million to the government. Sharpton says that sum is inaccurate and based on outdated records.
#page#Sharpton would not provide an estimate of the current unpaid tax liability for National Action Network, telling NRO to wait until the 2014 tax filings come out next year. He also declined to provide an estimate of what he and his for-profit entities currently owe in taxes, saying only that it was “a fraction” of the $4.5 million New York Times estimate.
“In terms of National Action Network, [the tax liability] would be zero in the next filing, and in terms of my own, it would be just about that as well — in terms of past taxes. We don’t owe any new taxes,” he says.
Sharpton says National Action Network’s unpaid taxes date back more than six years, to when the Internal Revenue Service determined that some workers classified by the nonprofit as contractors should actually have been taxed as employees.
National Action Network and the IRS worked out a settlement, though Sharpton says “there’s no way I would provide it to you. We deal with the IRS in a private [way].”
The nonprofit pays the IRS at least $15,000 a month, an independent auditor’s report of National Action Network says.
The new tax filings also show that in 2013, the nonprofit paid $100,001 to CGK Partners. Though few details exist online about the political consultancy, a 2009 Aspen Ideas Festival bio says CGK Partners’ CEO is Charlie King — National Action Network’s former national director.
National Action Network also paid $126,880 in 2013 to Noerdlinger Media, run by former Sharpton spokesperson Rachel Noerdlinger. In February 2014, she became chief of staff to New York City’s first lady, Chirlane McCray. Noerdlinger is currently on leave of absence after a series of news stories revealed, as the New York Times recently summarized, her “ethics lapses, unpaid parking tickets, [and] a boyfriend with a serious criminal past.”
National Action Network’s 2013 tax filings also list $644,395 spent on additional consulting fees, without specifying exactly where the money went. Sharpton said that money could have gone to “any number of people.”
When asked to provide to NRO a list of consultants, he declined, saying, “I don’t even know that there’s someone who could make that available at this point, but we’re not required to make that public.”
Berger, the CEO of Charity Navigator, tells NRO that good nonprofits adhere to high standards of disclosure and transparency, answering questions even when not required by law.
“You should be able to call that nonprofit, and they should be very forthcoming in giving the details,” Berger says. “If they don’t, our advice would be to run — do not walk, run — away from that organization.”
— Jillian Kay Melchior writes for National Review as a Thomas L. Rhodes Fellow for the Franklin Center. She is also a senior fellow at the Independent Women’s Forum.