Mikey Weinstein Scrambles to Defend Huge Paycheck

As previously noted, last week the Air Force Times highlighted the fact Michael “Mikey” Weinstein’s self-founded “charity” pays its sole employee — Mikey Weinstein — nearly half of the money it brings in. This has been noted here every year, though it picked up significant steam in the past few months.

The original story spread quickly, getting picked up by the Stars and Stripes, The Chronicle of Philanthropy, NonProfit Quarterly, and even Foreign Policy.  Charity rating organization Charity Navigator, which participated in the original article, tweeted their disbelief about Weinstein’s pay scheme, in which he is part of the “board” that approves his own salary:

Weinstein scrambled for a response, calling the article “character assassination” — though he notably did not rebut its veracity.  If the article is factually accurate, as it appears to be, who is responsible for the impact to Weinstein’s character: the person who reported the conduct, or the person doing it?  Weinstein’s acolytes, teaming up to comment on some of the articles, derided the revelation as an “attack,” part of a Christian conspiracy, and defamation. Many critics — and a few more intellectually honest MRFF supporters — noted that while the revelation made Weinstein look bad, it was also true.

Weinstein eventually publicized an email he received from Daniel Borochoff, who runs “CharityWatch,” a somewhat smaller charity watchdog than those cited in the original Air Force Times article.  Borochoff indicated he had also been interviewed by Stephen Losey, author of the original AF Times article. Borochoff spent much of his email (which was clearly written for public consumption) praising the MRFF, and he expressed “disappointment” in the Losey article:

Even after explaining to Mr. Losey…that it does not make much sense to judge the reasonableness of a nonprofit salary on the basis of organizational budget size, he went ahead and did just that in his article.

Borochoff confidently praised Weinstein, though CharityWatch does not have an evaluation of the MRFF because — like other groups — Borochoff doesn’t rate charities whose income is less than $1M a year.

Ironically — or perhaps hypocritically — Borochoff’s own CharityWatch has also made a point of highlighting charities’ CEO pay excesses. For example, his website lists “Top 25 Compensation Packages” as a way to show how much some charity CEOs are paid — the #25 CEO on the list makes three times what Weinstein does, though that organization brings in more than 9 figures in donations.  Borochoff wrote another article highlighting potentially excessive CEO compensation, “Eye-popping Pay,” and he has called on the IRS to make CEO compensation more “transparent” to aid accountability to the public.  In other words, Borochoff is defending Weinstein for something over which Borochoff himself has criticized others.

There is another almost comical contradiction in the new relationship between Borochoff and Weinstein. Last June Weinstein announced the MRFF had become part of the Combined Federal Campaign (CFC), which allows government employees (including members of the military) to automate donations to charitable causes. In the announcement, Weinstein highlighted the MRFF receiving the “Independent Charities Seal of Excellence” from the “Independent Charities of America.”

Borochoff, meanwhile, had previously noted that the ICA Seal had been routinely awarded to “F-rated” charities and was essentially ‘pay for play.’ Nearly 6 years ago Borochoff wrote

Some donors may be disappointed to learn that ICA is funded by the very charities that use its seal, and that ICA generally does not screen charities for financial efficiency.

Further, while portrayed as “exclusive” due to low numbers of the seal, Borochoff says that’s more an indication of how many charities have paid to have it, not selectivity on distributing it. (And, by the way, the number of charities cited in the “award” text hasn’t changed in years.)

Most interesting, however, is CharityWatch’s 2011 letter to the IRS calling for more transparency in charity CEO compensation reporting. Despite downplaying Weinstein’s salary in 2014, Borochoff previously noted the need for highlighting CEO pay [emphasis added]:

Disclosures of compensation and related party transactions are vitally important to keeping charities and their executives honest by deterring those who have significant control over a nonprofit from using it for personal benefit. Those who might organize a charity primarily for personal gain are also deterred by these reporting requirements which highlight for public scrutiny the transactions between a charity and the people who control it.

Borochoff wrote that, unfortunately, the IRS left a loophole:  An executive could create a ‘shadow’ consulting firm and then consult to his own charity, masking the expense:

If [a] charity executive…sets up a for-profit company and receives this same amount of compensation in the form of consulting payments to his company, such compensation is not uniformly required to be broken out as salary or benefits to this individual officer on the charity’s tax form.

Instead, the charity is allowed to hide such payments to individual[s] by reporting them as lump sums paid to the consulting company…

At worst [this] deprives the public of the information it needs to determine whether the total compensation paid to any individual …by their charity is reasonable for the services provided.

This brings us back to Weinstein. In Borochoff’s 2011 letter, he exposed the loophole that charity executives can set up an outside consulting firm and get paid by their own charity (in essence, paid again) without directly reporting it.

In an interesting coincidence, Mikey and Bonnie Weinstein founded MIBON Consulting in 2010, which reportedly has only two employees and brings in more than $100K a year — while Mikey Weinstein, one of the two employees, still manages to work “80 hours a week” for his MRFF.

According to his tax forms, the second largest expense of Weinstein’s MRFF — behind only his own paycheck — is unspecified “consulting” fees (which amounted to more than $130,000 in 2007).  Simultaneously, Bonnie Weinstein is listed as an apparently unpaid MRFF staff member.

Kind of makes you wonder if Borochoff might have been a little too quick to defend Weinstein’s salary.