The following story of a rogue fiscal sponsor offers a rare opportunity to detail a fiscal sponsorship that truly did turn into a trap for the unwary.

A fiscal sponsor in Arizona is accused by at least six of its previously 27 listed projects of accepting donations and grants amounting to many thousands of dollars, but refusing to disburse, reimburse or even account for the funds.

The six project directors say that Help Is Here, whose fiscal sponsor profile was posted on this directory, has tied up funds from theirs and other HIH projects that, collectively, amount to around $300,000. Most of that total is a single grant from Walmart that the project director believes was awarded to HIH on her behalf. She cannot prove that, however, because Help Is Here insisted on submitting the grant application for her and excluded her from any contact with Walmart.

Even so, the roughly $50,000 the other five projects claim they lost to HIH is not to be sneezed at — in the nonprofit world or any other.

Rogue fiscal sponsors had been extremely rare until 2012, but this is at least the third case this year. HIH project losses don’t reach the magnitude of the $1 million lost by 40 projects when International Humanities Council shut down in January. Nor the $600,000 that two faith-based projects were out when Christian Community Inc. of Fort Wayne, Ind., went belly up in February.

Those were clear cases of mismanagement so inept that, arguably, they constituted malfeasance.

Project Abuse

Help Is Here may be something different. Incorporated in California but operating in Arizona — currently from a post office box in Queen Creek, hometown of Maggie Lane-Baker, chief operations director — HIH generally started out helpful to new projects, but eventually things soured and the project directors, who couldn’t deal with the erratic behavior and stonewalling on finances, wanted out.

But they didn’t get their money back, and two are still included in Help Is Here’s project roster, which plummeted from 27 July 1 to 15 two weeks later. Help Is Here, still in business, has other presumably functioning projects, though few responded to our emails and phone calls for comment.

The rocky relationship Lane-Baker maintains with the disgruntled projects — amply documented in emails, logged phone calls and Skype messages that they have made available to the Study Center — may reach the level of another form of social abuse, one that perhaps is peculiar to fiscal sponsorship: project abuse. Certainly these projects feel battered by HIH, initially trying to beg and plead for an accounting of their funds, eventually resorting to filing official complaints. Tieing up funds can disable a project, if not kill it; however, none of these projects has shut down.

Projects fight back

The project directors say they have filed complaints with the FBI, IRS, Wisconsin Rep. Tammy Baldwin, Arizona’s Pinal County sheriff and attorneys general in Arizona and California. Two have filed small claims court suits, with one case already settled in favor of the project. Following are the aggrieved projects we know about and their stated losses:

• Julie Call of Hogar de los Suenos, a project she founded in Guatemala, says HIH has $26,500 of its funds that it won’t disburse or reimburse.

• Judy Rogg, director of Erik’s Cause, says her project has lost about $4,600 plus a $5,000 grant from Pepsi Corp.

• Maryanne Garon says her Gregg’s Goals scholarship fund has $7,461 hung up at Help Is Here.

• Lisa Benitez says her Rhumy Wara group in Salasaca, Ecuador, received $5,000 from the Jack Taylor Trust that HIH has not acknowledged; and $1,400 is missing from a Rotary Club donation.

• Jennifer Gurecki says her Zawadisha Fund is out $4,850.

• Marilyn Parker says she believes her National Defensive Training project has a $250,000 grant from Walmart sitting in Help Is Here’s bank account. Lane-Baker told her in a phone call Sept. 25, 2011, that the Walmart check had arrived and she was “transferring it to another project, as she is required by law,” Parker writes in a chronology of project’s relationship with HIH.

Five of these projects contacted Study Center — whose, they say, led them to Help Is Here — with their complaints, including copies of their emails and other attempts to discuss their situation with CEO Lane-Baker and other HIH staff, pleading for us to remove Help Is Here from the directory, requests we considered carefully.

Investigation Begins

Attempts to contact the other HIH projects to learn their relationship with HIH met with little success. Perhaps many were wary because, in February, Lane-Baker had emailed all the projects, warning they may be contacted by Jennifer Gurecki or Julie Lowe of Zawadisha Fund, and enlisting their aid in her dispute with Zawadisha.

“If you received a phone call please send an affidavit of the conversation,” she wrote. “We are prepping ourselves to move forward with litigation, it is easier to ask you for the info now than to have you subpoena (sic) for court.”

Study Center does not vet the fiscal sponsors who complete our questionnaire to create a profile that prospective projects use to find a sponsor. The directory home page disclaimer clarifies that. Screening the fiscal sponsors is an impossible task.

Our initial contacts with Lane-Baker when Help Is Here joined the directory were more than cordial, very accommodating.

But we had to listen to these projects as their evidence of dysfunction mounted. Early on, I called Lane-Baker, told her of the complaints and asked for an explanation.

The projects didn’t follow procedure, she said, going into detail on how Gurecki’s Zawadisha Fund had erred. I accepted her explanation then.

Finally, it came down to common sense. Any fiscal sponsor with such a cacophony of well-documented complaints is at the very least violating the best practices guidelines of the National Network of Fiscal Sponsors, industry standards for well-managed fiscal sponsorship. Not criminal behavior, but certainly worthy of censure.

“The fiscal sponsor establishes and maintains the means to account for and report on each of its sponsored project’s funds separately, providing regular and timely fund documentation to project leaders for management, stewardship and reporting purposes,” reads the NNFS guidelines for handling Model A projects.

Accounting for a project’s funds is second nature to a fiscal sponsor, and regular financial reports must be provided, whether the project is in compliance with the sponsor’s rules or not. HIH wasn’t meeting that responsibility.

Give ’Em the Ax

So Study Center removed Help Is Here’s profile from the directory.

Persuasive in our decision was the blow-by-blow record of attempts to communicate with Help Is Here by Jennifer Gurecki of Zawadisha Fund, who Lane-Baker had warned the other projects about.

Gurecki counts “67 e-mails since we signed the contract (to become a fiscally sponsored project of HIH) on October 18, 2011.” She says she received nine responses from HIH, but no answers about the status of her funds.

Gurecki documents dates and times for 28 Skype messages and attempted another 20, “with only one call accepted by Maggie on January 12th.” And Gurecki says she made 11 phone calls, and couldn’t get through.

“Maggie said that both phone lines and everyone’s e-mails didn’t work for over a month,” Gurecki’s email reported.

Help Is Here does not directly receive funds designated for its projects. It set up a Bank of America account #457002161972 to accept initial funds, a strange arrangement for a fiscal sponsor. “Scan and e-mail or fax your deposit receipt to Maggie,” reads the instructions.

If documentation of the deposit is tardy, Help Is Here gets the money.

“If a deposit slip is not received within 48 hours of the deposit being made,” HIH says in its “warm welcome” to new projects, “the funds will be considered HIH funds and your account will not be credited.” HIH’s Standard Operating Manual, which piggybacks in its entirety onto the projects’ fiscal sponsor agreement, cuts the documentation requirement to 24 hours.

“I’ve never heard of this practice,” said Jane Levikow, formerly a vice president in charge of fiscal sponsorship at Tides Center, now vice president at Community Initiatives, when she heard about the 48-hour rule. “It’s not a suggested best practice of the National Network of Fiscal Sponsors.”

“I’ve never heard of anything like that,” agreed Prudy Kohler, director of fiscal sponsorship services for Community Initiatives.

I emailed Lane-Baker, asking her why she required such a procedure, and what happens to the funds HIH gets in that manner. A follow-up phone call the next day was not returned either.

Questionable Practices

Help Is Here’s fiscal sponsor agreement contains many necessary and reasonable requirements to assure proper accounting and use of funds for charitable purposes. But it also contains numerous practices that are questionable and worse.

Help Is Here requires projects to sign a three-page fiscal sponsor agreement that tacks on the 27-page Standard Operating Manual, which lists every project’s do’s and don’ts, details procedures for every transaction, and is salted with veins of opportunity to mine additional fees, performing administrative tasks that are taken into account by most fiscal sponsors in their fee of a percentage of a project’s gross revenue.

“HIH Inc. is the responsible legal entity for all project activities,” says the SOM, which is standard language for a Model A fiscal sponsorship. Yet HIH will not employ project staff, or sign leases and other contracts that projects may need to do business, as Model A fiscal sponsors do. Nor will HIH add new projects to its general liability policy as most fiscal sponsors do.

And, the SOM makes clear, transactions take time at Help Is Here. Too much time, the project directors say.

“No project will be able to pull funds until it has raised $5,000.00 and it has matured for 45 days,” it says.

“This (payment request) process may take up to 60 days, so don’t promise something anytime before that time period,” the SOM admonishes the projects.

The capper in the SOM is the punishing procedure for being tardy in documenting donation deposits.

“Remember that if you deposit funds but don’t send a receipt within 24 hours then those funds will be put into HIH general fund.” After this statement is a hint that if you’ll jump through a couple more hoops and complete another bit of paperwork, just maybe you’ll get the funds back.

But these projects did not get their money back.

* * *

Our cautionary tale will continue. How fiscal sponsors relate with their projects is of primary concern to the field and details of dysfunctional relationships are instructive.

Marjorie Beggs, Jonathan Newman and Wayne Heuring contributed to this report.

Posted July 23, 2012.

Other stories in this series about Help Is Here

Help Is Here CEO Responds — Part 2

Judges Are Listening to Abused Projects — Part 3

Erik’s Cause Wins Suit Against HIH

Scholarship fund out $7,900

$6,400 from 2 Donors Disappears