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New York Times Investigates Shriners Bingo Problems

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New York Times Investigates Shriners Bingo Problems

Tuesday, November 07, 2006

by Paul M. Dolnier

In the New York Times today is a great article written by a reporter named Stephanie Strom.

She highlights a great example of potential abuse by a non-profit organization, here is a shrine temple club that runs a charity bingo game and is allowed to keep 49% of the charity money raised to maintain the upkeep of the club building.

There defense was it was OK under a local city ordinance that allows groups to keep 49% of the money raised, however it is NOT allowed under Internal Revenue Regulations, and it violates United States Tax Code Section 501.

Under IRC Code Section 501, 100% of net proceeds must be transferred to the public charity that was intended to get the public charity money

Which is more important ?

A local city ordinance or the United States Tax Code ?

The problem for the Shriners Hospital for Children an approved IRS Public Charity under IRC 501(c)(3) because of this type of actions by a small local club in Alabama they LOST over $ 119,000 in charity money that was supposed to be used for the operations and expenses of the Hospital, not for the operations of the shriners fraternity club in Alabama


Can you imagine if the local Alabama shrine club can keep over $ 119,000,00 of public charity money, than a organization that has over 177 shrine temples in the United States, what IF all the shrine temples had one club that did the same thing as the group in Alabama and kept charity money in the amount of $ 119,000.00 X 177 temple clubs $ 21,063,000.00 in LOSS revenues

New York Times

Shriners Seize a Clubhouse in a Dispute Over $119,000

November 7, 2006


The leader of a Shrine temple in Huntsville, Ala., seized an affiliated club’s building Sunday, saying it would be sold to raise $119,000 that should have gone to the Shriners Hospitals for Children but had instead been used to pay the club’s own bills.

Under Shrine rules, all money raised for charity by any Shrine unit must go to the hospitals. But Robert Utley, the potentate of Cahaba Temple in Huntsville, said an audit by the organization’s national headquarters had found that over the last three years, the affiliated club, in nearby Decatur, had donated to the hospitals only part of the money it raised through bingo games.

Having been ordered by the national organization to calculate the actual shortfall and make good on it, Mr. Utley said, he has no choice but to sell the clubhouse.

“This is the only way I can raise the money,” he said.

The Decatur Shrine Club has played host to a bingo game each Tuesday night for almost a decade. Lucian McCullough, a member of the club, said it had been giving 51 percent of the money raised from those games to the Shrine hospitals. Mr. McCullough said the rest had been used for the upkeep of the building, as permitted, he said, by a Decatur city ordinance governing bingo games.

“The Imperial is saying that 100 percent of the money has to go to the hospitals,” he said, referring to the national headquarters, the Imperial Council of the Ancient Arabic Order of the Nobles of the Mystic Shrine. “I guess Shrine law supersedes the city ordinance.”

Eric C. Terry, the club’s president, said Mr. Utley called him about 9:30 p.m. Saturday and told him to meet him at the clubhouse at 7 the next morning.

“We are all pretty well shook up about it,” Mr. Terry said of the club’s seizure. “We don’t like the way they handled it. They ought to have come in there and done it the right way instead of marching in on a Sunday morning and making demands.”

Auditors from the Shrine headquarters visited the club last month, Mr. Terry said. Nicholas Thomas, potentate of the national organization, subsequently told Cahaba Temple that the auditors “found no evidence that any person involved in the activity embezzled any money or was the beneficiary of any money for himself.”

But Mr. Terry said: “They think somebody was taking money, and I can’t say what’s happened over the last two years because I wasn’t president then. But everything this year is accounted for. I know it.”

Mr. Utley seized the club’s computer, which held its financial records, as well as some checks received by the club from bingo players and a few hundred dollars in cash that was on the premises. But he did not revoke the club’s charter.

“They can still continue to meet and have a club,” Mr. Utley said. “My home club meets in a restaurant.”

Under the Decatur ordinance, organizations are required to give to charity at least 51 percent of the money they raise on bingo games. But Shrine law goes further, requiring that 100 percent go to its hospitals, and Mr. Utley said Theodore Corsones, the Imperial’s general counsel, told him in August that the club had to donate to the hospitals the 49 percent of bingo earnings it had been retaining.

Mr. Utley retrieved almost $16,000 from the club at that time, he said, but it had no other money.

Mr. Terry, the club’s president, said it had given more than $50,000 to the Shrine hospitals this year.

“We don’t know what we’ll do,” he said. “I guess we’ll hire a lawyer and see what can be done.”

Further Reading:

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