Three weeks ago, Suffolk County Legislators Trish Bergin (R-East Islip) and Rob Trotta (R-Fort Salonga) sponsored I.R. 1687, a bill that would amend the Suffolk County Code to provide the County more oversight into the internal fiscal operations of non-profit entities seeking County subsidies.
Bergin and Trotta were joined by Deputy Presiding Officer Steve Flotteron (R-Brightwaters), Catherine Stark (R-Riverhead), and Dominick Thorne (R-Patchogue) in unveiling the measure. The Legislators argue that non-profits seeking government subsidies should have to prove their worthiness of said funds against executives’ salaries, which can often range well into six figures.
The current version of the bill would use Governor Kathy Hochul’s (D) salary – $250,000 annually – as a benchmark against which non-profits would be examined for County funds. The bill would also require disclosure of identities of individuals who make donations or gifts to non-profits. After the introduction of the bill, Legislator Trotta told The Messenger that if the legislation were to go into effect, there would be multiple pathways for examination and exemptions.
The current draft of the legislation would also not apply to hospitals.
Non-profits leaders, volunteers, and community members descended on Hauppauge during the Legislature’s Wednesday general meeting to voice their opposition.
Neil Falkenhan, an East Hampton resident and insurance advisor with Epic Brokers and Consultants, a large, national insurance brokerage, was the first to speak during the public portion.
“My understanding is that Suffolk County already imposes a cap on the administrative portion of contacts and most non-profit contracting with the County allocates only a small percentage of these allowable administrative costs to executive salaries,” said Falkenhan. “The requirements to disclose private funding sources will deter potential donors and hinder the ability to raise additional funds.”
Falkenhan also said that he finds the benchmark against Governor Hochul’s salary an “arbitrary and irrelevant metric,” stating the joint tax return filed by the Governor and her husband was close to $2 million.
“The county has processes to evaluate the overall cost and quality of services to ensure the prudent use of taxpayer dollars, the management of a contractor’s organization, including salaries, day-to-day operations, and the likes should be left to the contractor who knows their organization and industry the best,” said Falkenhan. “I feel that this resolution misses the mark and unfairly targets non-profit organizations that are providing valuable public and social services to residents of Suffolk County.”
Bob Creighton, Vice Chair of Governance and Nominating on the board of directors for Family Service League, said that charitable organizations such as the one he represents “cannot provide significant contributions” to their communities “without funding from various governmental agencies.”
“The partnership between governments and the not-for-profit community has allowed for the efficient delivery of essential services that government is ill-equipped to deliver on its own,” said Creighton, also a corporate lawyer with Farrell Fritz Attorneys. “While not-for-profits are driven by their missions and aim to meet community needs, they are businesses and face all of the same complex issues faced by their for-profit counterparts. The not-for-profit segment employs tens of thousands of Long Islanders and provides many millions of dollars of needed services.”
Creighton added that the legislation is “unnecessary” as “adequate checks and balances are already in place.”
“Programs funded by the county are held accountable both fiscally and programmatically and are subject to audit and control by the county comptroller’s office,” said Creighton, adding that not-for-profits report “detailed financial information” on IRS Form 990. “Boards work diligently to minimize administrative costs because this statistic is so important to the donor community.”
Creighton also said that the legislation would “unfairly burden the not-for-profit community without impacting any of the other organizations that do business with the county,” with the required disclosure of donations expected to have a “chilling effect” on their ability to raise funds.
“Many donors desire to give anonymously and certainly would not want the detail of their charitable giving made public,” said Creighton. Robert DeTour, a retired hospital CEO and former member of the Governor’s Mental Health Council, said that he understands the Legislature’s concerns about the salaries of trustees.
“As a trustee, we want the most for our funds,” said DeTour, who said that boards consider qualifications and costs of hiring an executive. “If contracts don’t cover it [salaries], it’s usually the trustees who pay for it,” said DeTour, who currently serves on four not-for-profit boards.
“We give you a deal because our objective is to get the most experienced and qualified leadership. The boards I’m on have established a 75 percentile salary range as the ceiling because we want to be competitive, attract and retain talent for our clients, but always be mindful of our fiduciary obligations to keep costs at a minimum and services at a maximum.”
DeTour criticized the legislation’s exemptions of hospitals receiving County subsidies, asking if “Northwell is better than the not-for-profits who run women’s shelters,” as an example.
“If you want money, rob a bank, not the corner grocery store,” said DeTour.
Interestingly, the meeting room produced a familiar face voicing opposition to the legislation: Dave Calone (D-Setauket), candidate for Suffolk County Executive last year.
“By eliminating qualified contract agencies that can do the job well and provide services for Suffolk County residents well, we’re reducing the number of qualified bidders on our contracts. We reduce competition for contract bidding, we drive costs up, not down,” said Calone. “If we eliminate qualified contract agencies, it may fall to the County to deliver these mission critical services. And for the County to develop that expertise, put together the workforce needed to deliver those services, as opposed to well trained, well experienced not for profits, that will cost the county more money. It’s a more expensive way to do it, not a less expensive way to do it.”
Calone leveraged his experience in the public and private sectors, stating that executives of not-for-profits have a “very different job” than those who are in the private sector or government sector.
“Unlike in government, they don’t get pensions, so they have their retirement savings built into their salaries. Unlike in the private sector, not-for-profits are very frequently understaffed, and the executives are often wearing multiple hats, doing multiple things. It’s not just really one job, sometimes it’s many jobs that they’re doing,” said Calone.
Towards the end of the public portion, Legislator Trotta attempted to ask a question to a concerned constituent.
“The purpose of this is to give more money to the frontline workers and housing,” said Trotta to the constituent, who rebutted that the Legislators are “missing the point.” She walked away from the podium before Legislator Trotta could ask further questions.
Legislator Bergin motioned to recess the legislation for further deliberation and said it was a “work in progress.” All six Democrats on the Legislature opposed the recess: Ann Welker (D-Southampton), Steve Englebright (D-Setauket), Sam Gonzalez (D-Brentwood), Minority Leader Jason Richberg (D-West Babylon), Rebecca Sanin (D-Huntington Station), and Tom Donnelly (D-Deer Park).
I.R. 1687 was recessed in a 12-6 party-line vote.