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"Ever wonder if City Council is as contentious and chaotic as it is sometimes portrayed? Here you can get a progressive perspective on some of the issues from someone who spent four years in the trenches. Totally unbiased, though! Feel free to comment but keep it respectful, just like they do at council."

Tuesday, February 19, 2013

Charity case

Dale Henderson, the excited ward 9 councillor, has been the author of a lot of ideas that he believes will get the city to zero. In fact the ideas come so fast and furiously that his words and sentences have difficulty keeping up. They tumble out randomly, leaving staff bemused and onlookers in the public gallery amused. Even his council colleagues occasionally find it hard to keep a straight face. Since he does not bother to check out the practicality or legality of his suggestions, he often finds himself without a seconder for his motions.

But he is not easily discouraged. And so last weeks he reiterated some of his thoughts through a new medium, a series of videos that have been uploaded to YouTube. So far there have not been a lot of viewings, but he did manage to get some publicity for his most recent endeavours from a story in the online London Free Press.

The ideas themselves are not new. He has floated them on previous occasions at council as the opportunity arises: annexing the surrounding counties and building a ring road on the lands acquired; contracting out services; tendering all contracts no matter how small; paying employees a bonus for coming up up with cost savings ideas; contracting out police services to auxiliary personnel at $15 per hour. For Henderson, these are “out of the box ideas” that will “find the tried and true” methods. Go figure.

It's not easy to classify his rhetoric as left or right ideologically. In fact there seems to be no coherent or consistent thought that brings the ideas together. How do you reconcile his suggestion of a $15 an hour wage with his concern about the impact of trade agreements on job retention and security? And what about the claim that his Hamilton clinic had found a cure for cancer and fibromyalgia or his suggestion that building a factory that makes gunpower-free cigarettes could act as a tourist attraction?

But there was an “out of the box” suggestion that caught the attention even of the CBC a couple of weeks ago.

The idea that he had presented to council a day or two earlier was that since, as he put it, 60% of Londoners wanted their taxes frozen but the rest were prepared to pay a bit more for the services they valued, why not set up a charity that would allow those who were so disposed to donate to the city and specify to which service or activity they wished to donate. The city could issue tax receipts for donations to the library or for a new age medical research clinic. Maybe throw in a couple of bucks for your favourite bus route. Or perhaps a cup of soup for school kids in a low income part of town. The local farmers could provide the ingredients and the kids could learn to make it. Just get 1,000 people to kick in $100 apiece and away you go.

Mostly the reaction of other councillors and the public was one of amusement. After all, we have lots of charities now. Schools, churches, service clubs, the United Way—all are competing for the charitable dollars that seem to be more difficult to get every year. The most recent reports from Statistics Canada suggest that the pool of donors is shrinking. Do we really need to turn the city into a charity case as well?

But not so fast. After all, if any city is positioned to make a success of raising money through a charity approach, it is London. And we have the expertise right on city council in the form of the top guy, Mayor Joe Fontana.

The mayor, as you may recall, is—or was—the chairman of a board of directors of a private charitable foundation known as Trinity Global Support Foundation. He had been invited to sit on the board by his old pal, Vince Ciccone, who was running into some problems with the Ontario Securities Commission and who was subsequently ordered to pay $15M to investors he had defrauded and $800,000 to the OSC. Fontana, in turn, recruited his son Ugo, a.k.a. Joe Junior, to be president and some other political and business friends to sit on the board with him.

With the mayor at the helm, the charity was a tremendous financial success, issuing tax receipts that skyrocketed from $72,000 in 2009 to almost $72,000,000 in 2011.

The key to its success appears to be the partnering of the charity with a tax shelter, Global Learning Gifting Initiative (GLGI) which somehow managed to turn donations of a few hundred dollars into tax receipts worth many thousands by claiming to get great deals on antiretroviral drugs and computer software from willing companies and inflate the market value. The Canada Revenue Agency (CRA) has since been investigating the claims and the tax shelters and yanking the charitable status from associated charities but it does not appear to have gotten around to looking at Trinity Global Support Foundation. It has, however, given notice to tax filers looking for refunds that their claims may be held up for sometime to come until their investigations are concluded.

All this is old news which has been written about by the London Free Press and others, me included. In fact, the charity took offence at some of the stories published and through a Toronto lawyer notified some of us of its intention to sue.

That happened last summer, but by fall there seemed to be a change of heart. In fact, president Joe Fontana Jr. suggested that when the current contract with GLGI came due at the end of the year, it would not be renewed. And another curious thing happened. According to the CRA website listing charity returns, almost all of the board of directors of Trinity resigned in November of last year. That included Fontana's former campaign co-chairperson and former London North Centre Liberal Party president Dave Broostad, Joe Fontana himself, and Loredana Onesan of Fincore who is currently asking the city to sell her some land near the Old Victoria Hospital Lands so that she can build a $300M anti-aging complex there.

There were others too. Only the president, Ugo Fontana, and the treasurer, Patrick Holmes who had been there almost from the beginning were listed as still on board.

So why had they left?

Certainly not because the charity was failing. Early in the new year, the returns from May of 2012 were posted on the CRA website.

It had been another successful year. Trinity boasted $153.5 M in revenues and had issued tax receipts of $152M! Very little of that was in actual cash donations, however. Nearly $137 of that was in the form of non-cash gifts, described as medical equipment and supplies and educational courseware, leaving about $16M in actual money donated.

So what was that money spent on?

There have been many criticisms of charities which seem to spend all their money on high salaries and glossy advertising.

Not so Trinity. It spent less that $800,000 on advertising and $70,000 on professional and consulting fees. The total spent on compensation was just over $23,000 so the charity certainly wasn’t a big job creator. There was, however, the matter of more than $12M spent on management and administration.Who handled that management and administration wasn't indicated.

And where did the rest of the money go?

The Trinity tax return identifies ten “donees” through which Trinity meets its stated charitable purposes of supporting health, children and youth services, and religious/social outreach. None of these seem to be the same as those that received its largesse in the previous year. The two top winners this time are San Romanoway Revitalization Association, a Toronto organization dealing with at-risk youth, and the Western Area Youth Servces a little closer to London. Each of these received $900,000, far more than any charities received in the previous year. The gifts must have been awarded near the end of the reporting term because neither organization noted the gift on its CRA return which had been made some months earlier. Both charities previously relied primarily on provincial and federal government funding.

Other charities receiving amounts between $45,000 and $450,000 include Ponoka Neighbourhood Place Ottawa), Youth of Today Society (Whitehorse), Urban Promise (Toronto), Youville Centre (a clinic in Winnipeg), Abigail's Learning Centre (Belleville), and a school in Inuvik. What all have in common is significant municipal, provincial and federal funding. It's an interesting choice. There is also a $5,000 gift to a Rotary Club in St. Lucia. That brought the total to something less than $6M.

But three times that much was sent off shore to the Organisation of Eastern Carribean States, to a Ministry of Health in some unspecified country and to the African Jesuit AIDS Network. Over $19M in total. All told, Trinity reported spending $113,095,545 on programs outside Canada.

Much of this will be the non-cash gifts, the medical equipment and educational courseware. Nearly $137M was the “market value” of those items. About $30M of the HIV/AIDS units went to St. Lucia, Belize, Togo and Benin. It's not easy to keep track of it all.

And yet someone must have been keeping track of it. It is hard to see how one could get away with compensating someone less than $23,000 for looking after $153M in tax receipts, purchasing and evaluating courseware and medical supplies, sending them to various organizations overseas, researching and identifying worthy recipients for millions of dollars worth of donations. And all from a location on York St which didn't generate any occupancy costs, and for which no purchases of office supplies were made. There weren't even any bank charges, and only $5 earned in investment or interest.

It's an amazing story. I went back to the website to see if there was any accounting for such a huge financial success. But strangely, the website seemed to be out of date. It referred to its goals for 2010-11, but nothing for the current year. The application form for grants listed the physical address as being in Kitchener rather than London although the contact information was still for 148 York St., Suite 204.

But the strangest thing of all was that it was impossible to get information on making a donation. The tab on the upper right hand corner pleaded PLEASE DONATE NOW but the link simply returned me to the homepage. No form to fill out; no phone number to call.

And the Honourable Joseph F. Fontana is still listed as chairman of the board.

Regardless, he should be able to give Henderson a hand with setting up a charity for the city. One hundred fifty-tree million dollars could go a long way to helping buy those library books, a bus or two, and maybe even a performing arts centre. They just need to prepare the business case.


Fly Me to The Moon said...

If NASA had the foresight 40 years ago to hire Dale Henderson, we'd have a man on Jupiter by now.

With any luck, it would have been Steve Orser.

Anonymous said...

As always this is remarkably helpful Gina. I hope Councillor Henderson doesn't have something like Trinity Global in mind as some kind of 'pro-London foundation'. Unless we COULD run a city on gifts-in-kind? Somebody could donate a bus? A sewer upgrade? Anybody?

The mystery remains why our Mayor still cannot (or will not) explain what is going on with this charity. And where, pray tell, are all the donors lined up to share their satisfaction with TG's performance?

Anonymous said...

So that people understand, $153,000,000 in donation receipts equates to $68,000,000 in reduced federal and provincial tax revenues. That is our money, us, taxpayers. Because of inflated receipt values, we are short $68,000,000 this past year and another $32,000,000 last year.

Our mayor is working so hard to save London taxpayers money, respects us that much.... wait.... I'm confused.

Anonymous said...

Maybe a lot of the money in cash is going to help Joe's buddy Vince, pay back the investors that have been defrauded??

Anonymous said...

Things certainly don't seem to add up, do they. Do you think that that government is investigating this properly? This seems to have a very bad smell. If it is as bad as it looks, I hope that they don't get away with it.

Why's woman said...

ooooh Gina!

That was pretty sneaky ... how you started out with Dale Henderson and switched to Joe and the False Foundations (a shaky group that I only hope lose all their supports before he is out of office)

On a more serious side, and in reference to the astounding millions of dollar figures being tossed about in the Trinity Global and whatevers ... a gentle friend of mine, who had not read about this until last week's article, was absolutely incensed. She pointed out that the United Way of London, a most reputable organization, has a budget of around $9million; that money is brought in by donations from thousands of people, including teams of fundraisers working in businesses all around the city. From all that effort, only $9million ... an amount that the UW is proud of, and that goes towards so many projects that are critical to the participants. My friend could only come up with one way in which a recently established charity no one had ever heard of could rake in $150million: tax fraud, scam, illegal and all 'round disgusting.

Best regards,

Why's Woman

Kathy Clee said...

If Dale Henderson had ever bothered to set foot in a library, he'd have noticed a charity called "Friends of the Public Library" which has only been around for maybe twenty years. The man is a doofus!

Joe just needs to go. Now.

Anonymous said...

Good points, Why's Woman. I think that you have it right. Please tell me that they won't get away with this.

Gord Drimmie said...

Yes, it's hard to defend Dale's often wistful and wild musings. But he keeps it interesting.

However, his charitable giving meanderings reminded me that when the City decided to donate many millions of dollars to Fanshawe, Western, and local Hospitals using a portion of MY municipal taxes, I immediately stopped personally donating to all of those organizations. When I participated in funding those organizations myself, I was able to afford substantial higher donations by virtue of the resulting tax credits. But when the City decided to give MY tax money on my behalf....no such tax credit was applicable. And so I decided, rightly or wrongly, that if the City was going to donate my money for me, why should I bother?