The sketchy story behind last week’s Chapter 11 bankruptcy filing by Rainbows United looks like every nonprofit organization’s worst nightmare — a board and staff misled and, now, public revelations of “financial irregularities” including a shocking $2.3 million in unpaid federal withholding taxes. Friday’s announced reorganization plan of 70 layoffs, sales of two buildings and fewer services won’t be easy on the organization or the families of the 2,300 children with special needs served by Rainbows. Many questions remain, including how the board members could have missed the financial shenanigans for so long. But it’s a reflection of the community’s respect for and reliance on Rainbows that so far, the focus isn’t so much on blame as on ensuring the organization’s rescue and full recovery.
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Thanks to holdover county commissioners, Tim Norton and David Unruh and other pro-arena conspirators, many of whom have left Wichita …. Sedgwick County has the 1/2 billion dollar, tax funded, white elephant downtown ice hockey Intrust arena.
But no food or heat for kids at Rainbows United.
That’s a shame, they had worthy goals of helping children with special needs.
Will anyone be held accountable for $2.3 Million in Payroll Taxes Withheld from Employees, but Not Sent to the Federal Government?
Board of Directors 2008 – 2009Board Members LoginChair
Steve Cox, Cox Machine*
Vice Chair
Pat Gearhart, SNB Bank of Kansas*
Secretary
Stephanie Galichia, Community Volunteer*
Treasurer
Jeff Jabara, Spirit AeroSystems
Appointed July 28, 2009
Past Chair
Naaman Ritchie, Blake-Clotia*
Norman Bessac, Cargill
Monte Cook, Commerce Bank
Robert P. Cusick, M.D., Kansas Joint & Spine Institue*
Daniel Drake, Liberty Assets Management*
Kimberly Edmunds, Cox Communications*
Timothy A. Emerson, Esq., McDonald, TInker, Skaer, Quinn & Herrington
Lisa Farris, Community Volunteer
Terry Heldman, Community Volunteer
Shirley Jefferson, Senior Services, Inc.
Walt Malone, INVISTA
Roger Mulanax, The Law Company
John Newton, Cessna Aircraft Company*
Derek Park, Law Offices of Derek Park, LLC
Gary Schmitt, INTRUST Bank
Grant Stannard, Stannard Construction Co.*
Christi Tannahill, Hawker Beechcraft
Vicki Tiahrt, Community Volunteer
*Executive Committee
Board Emeritus
Joseph F. Bunk, C.P.A.
Richard Gilmartin, M.D.
++Leddy Greever
Helen Healy
Hal McCoy
Doug Pence, M.D.
Jane Ritchie
++Proctor Ritchie
++Jack Spines, Jr.
++Gladys Wiedemann
Linda Weir-Enegren , Founder of Rainbows United
++deceased
President/CEO
Lorraine A. Dold
http://www.rainbowsunited.org/about_more-board.php
GOOD NEWS! New Job Available!!!
As part of the reorganization, the Board has accepted the resignation of its Chief Financial Officer and started efforts to recruit a Chief Restructuring Officer, who will report directly to the Board of Directors.
http://www.rainbowsunited.org/user/file/Rainbows%20Reorganizes%207-28-09(1).pdf
More Good News! More Jobs Available!!!
Current Openings:
Speech-Language Pathologist
Early Childhood Special Education Teacher
Teacher’s Aide
Physical Therapist
Early Childhood Teacher
Occupational Therapists
Intensive Individual Supports Worker
Parent Support Training (Peer to Peer)
Autism Respite Care Worker
Long-term Community Care Attendant
http://www.rainbowsunited.org/about-careers.php
Apparently liberals can mismanage or even commit fraud with taxpayer dollars, without any call for an investigation.
Their heart was in the right place. Sorta like the ACORN co-president embezzling millions from that organization. Hand slap.
Poor baby.
“Thanks to holdover county commissioners, Tim Norton and David Unruh and other pro-arena conspirators, many of whom have left Wichita …. Sedgwick County has the 1/2 billion dollar, tax funded, white elephant downtown ice hockey Intrust arena.
“But no food or heat for kids at Rainbows United.”
Don’t be absurd, J Wink. The money from one would hardly have gone to the other. The revenue streams for organizations like Rainbows and other County Developmental Disability Organization (CDDO)affiliates are well defined (although in Rainbows’ case because they serve children, the funding streams would be different). Please don’t try to turn this into another rant about the holdover county commission and your Moby Dick obsession with the Intrust Arena, it has nothing to do with that.
And it’s not an issue of food and heat, it’s an issue of education and therapy services.
There is no excuse, none whatsoever, for what has happened at Rainbows. The failure to pay withholding taxes (one of the few taxes an organization like Rainbows has to pay) requires such gross incompetence that it must have been intentional, and it reveals a terrible weakness within many non-profits that has developed within the last 20 years.
It used to be that boards for developmental disability service providers consisted largely if not primarily of family members and other stake holders. However, over the last 20-30 years, many of these boards have almost entirely shifted over to business leaders and wealthy doners handpicked by the CEO (many of them CEO’s themselves). The structural changes make sense in that these board members know where the money is, and have important fund raising connections. However, what you end up having is an organization where the Board, in the name of institutional chain of command, only communicates with the CEO. The Board consists of people who are busy with their own companies, and their Board activity is just their public service volunteer work. Otherwise, they have no personal stake in it, and no connection either to the people served by the organization or the people who work for it. Thus, by handpicking their boards and knowing how to talk to them, CEO’s are able to easily sidestep accountibility and hide potentially lethal activities. The CEO’s speak the language of their business leader board members, and can cover their activities by “restructuring” their organizations in the name of providing services “more efficiently”, or to save money so that they can expand operations rapidly and massively. But what the restructuring may actually be accomplishing is removing the people in the management team who know the organization best (and by the way, this is done not necessarily by firing or layoffs, it is done by making conditions so unacceptable that the employees leave on their own).
It is a perfect recipe for mischief.
Solutions:
1) If possible, make sure that at least a third of the board consists of family members and stake holders (potentially including clients themselves) who actually deal with the service side of the agency. Having personal experience with the agency puts you in contact with more people than just the CEO, and also gives you direct experience with how well the agency performs its mission.
2) CEO’s should have limitations as to their ability to select and recruit their own boards. One way to do this is to make the Board responsible for recruiting a proportion of the board without CEO participation. It is a good thing for CEO’s to build connections in the community, and one of the best ways to do so is to recruit prominient people to the board. However, a predetermined proportion of the board should consist of people not recruited by the CEO.
3) Board members themselves need to be more cognizant of their responsibilities. Just because they are successful businessmen and women does not mean that they have special insight into the management of a non- or not-for-profit service agencies. In particular, if all of a sudden you have lots of staff departures, particularly at mid management or professional levels, and the explanation the CEO gives is “well, some people are just not accepting of cultural changes we are making”, that is a RED FLAG that something may be really wrong.
4) Board members should take it upon themselves to have regularly scheduled contact with agency staff without the CEO present. This wouldn’t be all of the staff, but selected staff. This contact would be kept confidential. This allows the Board to see what is happening in an agency through more than one set of eyes.
I do not claim to know the particulars of what happened at Rainbows (except again, to know that there is no excuse for it). However, I have to suspect that the vulnerabilites I mention above concerning the relationship between the board and the agency had something to do with it. I do have particulers of what happened in other agencies, and they involved a CEO and sometimes other management team members doing pretty much what they wanted right under the noses of their board.
And no, I won’t be naming names.
Note: Also, it should not be assumed that I am impugning the integrity of all or even most organization CEO’s, even if they have predominantly “professional” hand picked boards. The sort of board creation I am talking about is considered standard practice and CEO’s are even encouraged to form boards like this by their professional organizations. However, this style of board recruitment and management leave agencies highly vulnerable to unethical management teams.
“Apparently liberals can mismanage or even commit fraud with taxpayer dollars, without any call for an investigation.”
So are you saying that people who manage social service agencies that provide services to people with developmental disabilities are liberals?
Do you really want to go there?
One other point of clarification to my earlier post.
Sometimes, the CEO is a wonderful guy or gal, but s/he makes the mistake of trusting a CFO or someone else in the organization who has un-monitored access to agency money (I know of one situation where an administrative assistant made out like a bandit until she was caught in an audit). The problem is, with the single point of contact, if the CEO trusts, do does the hand picked board (although a lot of financial mischief can be hidden as long as the paychecks are paid and the services are provided, at least until the bills come due, or an audit reveals the foundation of sand).
Where does this Rainbow group get their funding? It is obviously a huge operation…how is it funded, does anyone know?
What would we do without Hope for Rainbows?
My God, parents would have to raise their own children!
I’m sure the entire Board was simply ‘misled’.
Wonder where all the money went though?
“Where does this Rainbow group get their funding? It is obviously a huge operation…how is it funded, does anyone know?”
A big (probably the biggest) chunk of funding would be Part H funding for early childhood education services (kids under three). They also provide case management services for children that are funded through Medicaid waivers. I think they may also receive special education funding by being a special education service provider for some school districts/coops, although must districts/coops now provide their own early childhood special education services. I think Rainbows also accepts private pay for therapy services.
“What would we do without Hope for Rainbows?
“My God, parents would have to raise their own children!”
You’re an idiot.
“I’m sure the entire Board was simply ‘misled’.
“Wonder where all the money went though?”
I can’t detect for sure whether that was intended to be sarcastic. If you think that the Board would have had something to do with the misplacement of the money, I’ll simply go back to what I said before about you in this thread.
I would also like to know where the money went, though. Whether it was embezzled, or simply redirected back into the agency where it had no business going, however, the loss of the money has to be due to more than simple incompetence, it was intentional.
What? The Board of Directors is RESPONSIBLE for running the organization?
Oh no, they were misled.
Like when Obama says, “Watch me pull a rabbit outta this hat”, and some of y’all actually are waiting to see a rabbit.
So, is anyone Responsible for running any organization? (If not the Board of Directors)
Hmmmm….
It must be Somebody Else.
Is it just as wrong to expect someone to work for nothing, as it is too expect someone to get something for not working?
“What? The Board of Directors is RESPONSIBLE for running the organization?
“Oh no, they were misled.”
Like I said, you’re an idiot, posting about a subject you clearly don’t know anything about to make some sort of general slam against public spending and now Obama.
1) No, the Board of Directors is not responsible for the day to day running of the organization. They are responsible for approving major changes to the organization and for oversight of the CEO, who, along with the management team, is responsible for RUNNING the organization. The Boards of these organizations meet maybe once a month. It is a VOLUNTEER activity.
2) I am not saying that the Board is without responsibility (obviously, they are responsible for oversight of the CEO, and through the CEO, the management team). However, given the reality of 1) above, and the nature of how boards are picked, the board is easily misled. And the way to fix this is not to castigate the board, but to reform how boards are formed and how they operate (keeping in mind that these people are very busy with their own professional and personal lives). The sorts of reforms I listed above would be much more helpful than just blaming the board.
Always someone ELSE’s fault.
Blame someone else.
Hold no one accountable for misuse of public funds.
It’s the lib way.
SpamWay posts: “Always someone ELSE’s fault.
“Blame someone else.
“Hold no one accountable for misuse of public funds.
“It’s the lib way.”
You keep posting that stuff over and over, and you’ll fail the Turing Test.
Are you going to answer my question? Is it really your contention that people who provide services to people with developmental disabilities are automatically liberals? Do you really want to go there?
The ‘jawless fish’ invokes the Turing Test and as result, develops mental gimble lock.
After calling ME an idi ot, Agnatha The Jawless Fish says:
1. The Board of Directors is not responsible.
2. The Board of Directors is responsible.
Not only do the CONservatives hate government funding for programs for those less fortunate than themselves, but they also hate private organizations that aspire to help those less fortunate.
The motto of the anti-choice movement – “after that baby passes through the birth canal, you’re on your own b*tch!”
So much for the compassion of conservatives.
“After calling ME an idi ot, Agnatha The Jawless Fish says:
“1. The Board of Directors is not responsible.
“2. The Board of Directors is responsible.”
I invite anyone to read my posts in this thread and find where I said “The Board of Directors is not responsible”, followed by “The Board of Directors is responsible”. The fact that you choose to read my posts at a third grade level is not my problem.
I am not responsible for Jim Johnson’s ignorance of how non-profit corporations are run, and of Board versus management team responsibilities. From my very first post in this thread:
3) Board members themselves need to be more cognizant of their responsibilities. Just because they are successful businessmen and women does not mean that they have special insight into the management of a non- or not-for-profit service agencies. In particular, if all of a sudden you have lots of staff departures, particularly at mid management or professional levels, and the explanation the CEO gives is “well, some people are just not accepting of cultural changes we are making”, that is a RED FLAG that something may be really wrong.
4) Board members should take it upon themselves to have regularly scheduled contact with agency staff without the CEO present. This wouldn’t be all of the staff, but selected staff. This contact would be kept confidential. This allows the Board to see what is happening in an agency through more than one set of eyes.
This is hardly me saying that the Board has “no responsibility”. But to assume that the Board is involved in day to day operations of places like Rainbows or any other non-profit agency that provides human services is simply ignorant. And to continue with that line of argument after having information posted to the contrary is the sort of willful ignorance that earns JJ the title of “idiot”.
What it comes down to is that when CEO’s select their own boards and also the only person who provides information about the boards, failures in oversight will occur, which is why I posted the suggestions that I did.
Whether a firm is nonprofit or not, there is still an obligation to be good stewards of the corporations money.
If that money is public – there are additional burdens placed upon the entity.
There are very good reasons for this.
It’s not a matter of being “compassionate”.
It’s a matter of responsibility and good financial management.
“Not only do the CONservatives hate government funding for programs for those less fortunate than themselves, but they also hate private organizations that aspire to help those less fortunate.”
Actually, when it comes to many human services that is not necessarily true. The fact is, most self described conservatives accept that the “truly needy” should get services. I personally know a number of people who are poltically quite conservative who are nevertheless very supportive of services, including public funding, for people with developmental disabilities. The exceptions are those faux fiscal conservatives who are so committed to their worldview of opposing any government funding for human services as “redistribution of wealth” that they oppose not only public programs, but private agencies that receive public funding. Such exceptions require an incredible amount of willful blindess. In my experience, these exceptions are rather rare. In fact, may self described conservatives will use their support of private non-profits, even those that primarily exist on public funding, to argue against public agencies.
For example, go back and take a look at the list of names JJ the spam troll posted for the Rainbows Board of Directors. Some of the names are fairly well known, and not for their “liberal” politics.
“Whether a firm is nonprofit or not, there is still an obligation to be good stewards of the corporations money.”
I completely agree.
“If that money is public – there are additional burdens placed upon the entity.”
Again, agreed, and not because they receive public funding, they also get substantial public tax benefits by being tax exempt (when I saw the headline in yesterday’s paper, I said to my wife “My God, they failed to pay their withholding taxes?” because that is the only tax that it could have been). That is what makes the situation at Rainbows so egregious. There is no excuse, none whatsoever, for not paying withholding. This is a major, MAJOR scandal.
“It’s not a matter of being “compassionate”.
“It’s a matter of responsibility and good financial management.”
It is a matter of both. An agency that serves people with developmental disabilities, or provides human services, has a mission. The funding that agency gets, public and private, is in trust to perform that mission. Failure to pay withholding taxes and not only leaves the agency liable, but it provides misleading information as to the fiscal health of the corporation and its ability to fulfill and expand its mission. Payroll taxes are basic, and the fact that Rainbows owes $2.3 million in taxes is outrageous, and that is greatly, greatly understating the problem. Heads do need to roll.
If an agency wants to fulfill its mission of compassion, then it has to be financially healthy to do so. Rainbows is not the first agency of this sort to get into trouble, and unless there is substantial reform in how boards for these agencies are selected and communicated with, and unless there are substantial safeguards in accountibility, they will be far from the last.
By the way, “responsibility and good financial management are not exclusively conservative values any more than compassion is exclusively a liberal trait. I have known plenty of self described liberals and conservatives who have dedicated their professional and sometimes their personal lives to human services. Many of them work in publically funded private non-profits.
Does anybody find it the least bit interesting that, while JimJohnson never has said anything about ANY connections to Wichita, yet he had commentary to make about a Wichita non-profit, such as Rainbows United…
Oh yea, anybody involved with the SCANDAL at Rainbows should be fully investigated, and charged appropriately in the incident…
Since I more or less live in the non-profit sector, there is absolutely NO excuse for not paying witholding tax for employees of the organization.
American_Way
Posted August 2, 2009 at 7:57 pm | Permalink
Whether a firm is nonprofit or not, there is still an obligation to be good stewards of the corporations money.
If that money is public – there are additional burdens placed upon the entity.
There are very good reasons for this.
It’s not a matter of being “compassionate”.
It’s a matter of responsibility and good financial management.
————-
Amen. It’s business managment 101. And the Libs swarm out to defend mismanagement, except for when it’s a for profit corp.
Chas
Posted August 2, 2009 at 8:43 pm | Permalink
Oh yea, anybody involved with the SCANDAL at Rainbows should be fully investigated, and charged appropriately in the incident…
Since I more or less live in the non-profit sector, there is absolutely NO excuse for not paying witholding tax for employees of the organization.
——————–
Really? Complying with tax law is important?
Ummm……
Geithner, etc….
Rainbows probably gets a little over a third of the funding from the state. There is some federal, some self pay by clients, donations etc.
The board does hold some responsibility. One of their problems has resigned, the other is on paid leave (which should be happening), Deb Voth needs to be held accountable as well.
There may be others as well.
This is a sad time for the children in need.
“Amen. It’s business managment 101.”
Which, evidently, you have flunked, at least Business Management 101 for Non-Profits.
“And the Libs swarm out to defend mismanagement, except for when it’s a for profit corp.”
Like I said, you are an idiot. You don’t even understand the topic of conversation. If what you got out of it was that I was one of the “Libs swarm(ing) out to defend mismanagement”, then frankly you have flunked Business Management 01.
Reread my posts. I am certainly not defending the mismanagement of Rainbows. Completely the opposite. Your problem is that you have no clue, none whatsoever, of where mismanagement occurs in an agency like Rainbows.
When you proudly display and persist in abject ignorance, and don’t even pay attention to what someone is posting while falling all over yourself to post script bits from your right wing memes, calling you an idiot is almost too kind.
“Rainbows probably gets a little over a third of the funding from the state. There is some federal, some self pay by clients, donations etc.”
I don’t presume to know what the percentages are, but I suspect the state funding is probably higher than a third (although some “state funding sources” are federal dollars funneled through the state). I suspect, from reading the articles, that early childhood special education funding is still a bigger part of their revenue than I suggested upthread.
“The board does hold some responsibility.”
Yes, they do. Probably the biggest responsibility they have is to learn from this mess, and to be a more skeptical (without cynicism or suspicion) of the information they get from the CEO (who may end up being someone different).
“One of their problems has resigned, the other is on paid leave (which should be happening), Deb Voth needs to be held accountable as well.”
Strongly agreed. Again, it is important for all involved to know just how stunning this mismanagement is. Failure to pay withholding tax is so egregious that it can not be explained by simple incompetence.
“There may be others as well.
“This is a sad time for the children in need.”
Yes. I am hoping that this crisis serves as a wake up call to other boards of other area non-profits, especially those serving people with developmental disabilities, as well.
I am not optimistic, however. The Boards of other organizations are probably thinking “Glad we don’t have to worry about something like that happening here.” To board members of other organizations who think that way, I hope you are right (and some/many of you probably are), but you might want to think about where and how you are getting the information about your organization now.
Nice posts from the Jawless Fish.
Agnatha, you really need to get laid.
The entire Board of Directors should be investigated for gross errors of negligence in overseeing this business, gross incompetence, and outright criminal activity.
The Board should realize they have have liability for criminal actions either of their own, other board members, or the management which reported to them.
$2.3 Million in tax withholdings missing would have been found by even the most basic of internal audits.
The Board either failed to ensure appropriate controls and audits were in place, ignored audit findings, or were part of the corruption themselves.
There are no excuses for this level of incompetence and/or outright criminal activity.
Did Rainbows United have Directors and Officers Liability Insurance? If so, that may be their only hope of surviving.
If not, then that’s just one more point of evidence showing the incompetence of this Board of Directors.
————————————————–
Board of Directors 2008 – 2009Board Members
Steve Cox, Cox Machine*
Vice Chair
Pat Gearhart, SNB Bank of Kansas*
Secretary
Stephanie Galichia, Community Volunteer*
Treasurer
Jeff Jabara, Spirit AeroSystems
Appointed July 28, 2009
Past Chair
Naaman Ritchie, Blake-Clotia*
Norman Bessac, Cargill
Monte Cook, Commerce Bank
Robert P. Cusick, M.D., Kansas Joint & Spine Institue*
Daniel Drake, Liberty Assets Management*
Kimberly Edmunds, Cox Communications*
Timothy A. Emerson, Esq., McDonald, TInker, Skaer, Quinn & Herrington
Lisa Farris, Community Volunteer
Terry Heldman, Community Volunteer
Shirley Jefferson, Senior Services, Inc.
Walt Malone, INVISTA
Roger Mulanax, The Law Company
John Newton, Cessna Aircraft Company*
Derek Park, Law Offices of Derek Park, LLC
Gary Schmitt, INTRUST Bank
Grant Stannard, Stannard Construction Co.*
Christi Tannahill, Hawker Beechcraft
Vicki Tiahrt, Community Volunteer
*Executive Committee
Board Emeritus
Joseph F. Bunk, C.P.A.
Richard Gilmartin, M.D.
++Leddy Greever
Helen Healy
Hal McCoy
Doug Pence, M.D.
Jane Ritchie
++Proctor Ritchie
++Jack Spines, Jr.
++Gladys Wiedemann
Linda Weir-Enegren , Founder of Rainbows United
++deceased
President/CEO
Lorraine A. Dold
“Nice posts from the Jawless Fish.
“Agnatha, you really need to get laid.”
JJ the Spam Troll is now simply trolling. I’m not even bothering with the post where JJ simply reiterates his ignorance in bold print. One of us knows something about how non-profits operate. The other is the second most prolific spammer on the blog.
I don’t average anywhere close to the 50 posts a day. Nobody that I am aware of has even attempted to play “Agnatha bingo” with the recent comments window, unlike, say, “JimJohnson bingo”.
I am busy with real life activities, including getting laid. You, apparently, not so much, since you are willing to spend so much time posting to yourself.
And oh yeah, you’re still an idiot.
And after this, the soup line is closed.
I wonder which Board Member is Agnatha?
Not too tough to audit Payroll.
1. Amount withheld for Federal Taxes should equal amount remitted to the Federal Government.
2. Bank account deposit/disbursements for Federal Taxes should equal amount withheld from employees and remitted to the Federal Government.
Worse Board of Directors Ever
Oh, but it was just a $2.3 Million error.