DOGE’s targeting of NGO and nonprofit slush funds could recover billions
The federal government allocates hundreds of billions of dollars annually in grants to non-governmental organizations (NGOs) and nonprofits. However, the lack of rigorous grant underwriting and oversight has fostered a landscape where many of these grants generate substantial profit margins, at the expense of their intended purpose. Consequently, NGOs and nonprofits accumulate significant, sometimes excessive, financial reserves that function as slush funds. This environment can lead to inurement and promote waste, fraud, and abuse.
The FirstDay Foundation exemplifies this troubling trend that demands attention. Its net assets soared from $10.4 million in 2011 to an astonishing $788.7 million, raising serious questions about accountability. This significant increase in unencumbered assets, which resemble a slush fund, highlights the lack of federal grant oversight. This funding originated from generous Health and Health Services grants linked to unaccompanied illegal alien minors grants ($3.1 billion) and the FEMA grants for the distribution of COVID-19 testing and vaccinations ($7.2 billion). Also, the Foundation’s excessive $2.8 million on federal lobbying calls for scrutiny.
The FirstDay Foundation started its humble beginnings in 1997 as Baptist Child and Family Services (EIN 74-2874382), operating under the control and supervision of the Baptist General Convention of Texas. According to its Articles of Incorporation, its mission is to care for “underprivileged, destitute, and needy children.” President Kevin C. Dinnin rebranded the organization as BCFS in 2010, usurping control from the Baptist General Convention. The BCFS acronym suggests a connection to a faith-based organization, which raises concerns about its authenticity.
The FirstDay Foundation mission on its website:
FirstDay Foundation is a philanthropic organization dedicated to making good greater throughout the world by providing philanthropic grants and management and governance services to nonprofit organizations that are committed to making a positive impact.
However, this description may convey a for-profit motive and raises concerns that excess grant funds are not being allocated for their intended purposes. Additionally, the FirstDay Foundation has not amended its Articles of Incorporation or sought a new determination letter through Form 1023 or 1024, leaving its current mission unclarified and potentially compromising its integrity.
BCFS has established a complicated network of nine subsidiary nonprofits, raising significant concerns about potential “structured finance abuse.” This approach seems to be designed to obscure the true nature of grant administration and reporting. In 2023, the complexity of the reporting process led BCFS, which rebranded as the FirstDay Foundation in 2022, and its subsidiaries to incur a staggering $6.2 million in accounting, assurance, and tax preparation fees. Such high professional fees are a red flag, suggesting that the accounting records are complex and poorly maintained, with inadequate controls in place.
The Foundation’s largest subsidiary, BCFS Health and Human Services (EIN: 74-1260710), subcontracted FEMA COVID-19 grants to deliver front-line assistance. This assistance included medical surge staffing, mass vaccinations, and infusion centers subcontracted to Kansas-based for-profit company Krucial Staffing LLC. According to BCFS’s Form 990 tax returns, the total payout for the subcontract was $4.2 billion. If BCFS charges FEMA a higher rate for these services, it would generate a profit margin.
Foundation CEO Kevin C. Dinnin receives an annual salary and benefits totaling $1.2 million. This amount is higher than the total compensation of the President and CEO of the American Red Cross, who earns $832,241. Mr. Dinnin entered the nonprofit sector with the intention of doing good, and he has done well indeed. The salaries of the supporting officers range from $147,000 to $415,000.
The FirstDay Foundation is organized as a nonprofit, but its operations resemble those of a for-profit entity, resulting in private benefits. DOGE should pursue the recovery of excess funds that have been disbursed to the Foundation. Additionally, the IRS should consider revoking the Foundation’s tax-exempt status and assessing corporate taxes. This issue is not unique; many nonprofits operate in similarly questionable ways as the FirstDay Foundation. By recovering the significant grant overpayments, DOGE could reclaim tens of billions of dollars for the U.S. Treasury.
Imagine the potential for even greater recoveries if the IRS decided to revoke the tax-exempt status of nonprofits that participate in prohibited political activities, neglect their exempt purposes, engage in fraudulent practices, or benefit private individuals. Implementing this action can crucially strengthen the integrity of our tax system, promote accountability among nonprofit organizations, and potentially reclaim hundreds of billions in asset forfeitures.
Bob Bishop is a resident of San Antonio and a forensic investigator and retired CPA.
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