Not So "Non" Profit When it Comes to Adoption Agencies

For many private adoption and foster care agencies, nonprofit status in the child protection business leaves plenty of room for lucrative rewards, according to an investigation by The Atlanta Journal-Constitution which confirms the findings of The Stork Market.

The newspaper’s review of federal tax returns and other public documents found numerous examples where top executives’ compensation accounted for one-fourth to one-third of agencies’ budgets. In many instances, administrative costs exceeded expenses on direct services for children.

This, despite the fact that private adoption agencies in Georgia are mandated by law to operate as nonprofit organizations. Big salaries for the agencies’ executives and corporate officers as well as overhead are paid for by adoption fees, none of which benefits the children the groups are supposed to help.

In 2008:

• Faithbridge Foster Care Inc. allotted nearly 40 percent of its budget to its top officers.
• Families First Inc. of Atlanta paid six employees more than $100,000 each in 2008, according to tax documents.
  
• Chinese Children Adoption International, which has an Atlanta office, paid its top two officers — who are married to each other — a total of about $410,000 in 2006, the latest year for which its tax returns are available.

In 2007 Bethany Christian Services of Grand Rapids, MI, with offices in Georgia -- which received $803,225 from the Georgia Department of Human Services for supervising foster children in 2009 -- paid the CEO $169,000, and $178,000 to the agency’s vice president. Bethany had a total budget of $9.1 million. However, $7.2 million, or almost four of every five dollars, went to management expenses. Another $1.2 million covered fund-raising costs — far more than the $694,000 that went to programs that directly served children.

A lack of industry standards and government rules enable people running such agencies to spend freely for their own benefit, said Pablo Eisenberg, a senior fellow at Georgetown University’s Center for Public and Nonprofit Leadership.

“What you’re finding is certainly the trend in nonprofits,” Eisenberg said. “An increasing number of people are pushing for a kind of free market in nonprofits.”

He described directors who don’t challenge excessive spending as “totally incompetent.”

“There’s no accountability,” Eisenberg said. “There are no guidelines by the IRS, even on self-dealing. It’s just appalling.”