JUMPSTART JUMPING WITH BIG SALARIES

Submitted by Roldo on Fri, 02/05/2010 - 13:56.

We haven’t heard the next barrage of fireworks from the tiff among the Cleveland Foundation, the Gund Foundation and the Fund for Our Economic Future but I’m wondering how much big salaries have to do with the Cleveland Foundation’s desire for more control.

 

The Cleveland Foundation has sliced its hefty contribution to the Fund and says it will give individually to some of the same entities funded through the Fund for Our Economic Future.

 

Apparently, a major issue is where resources should be most concentrated. Cleveland Foundation suggests Cleveland and Cuyahoga County is its major concern. The Fund apparently wants to focus more outside those confines to a larger northeast Ohio area.

 

The issue has became fodder for the Plain Dealer recently and today’s paper has three letters to the editor on the matter.

 

The issue seems to be one of control. The Cleveland Foundation has given some one-third of the Fund’s budget annually but it has only one vote of 70 since each contributor giving $100,000 a year gets an equal vote. The foundation has cut its usually $3 to $4 million grant to a $100,000, the entry fee for a vote.

 

I looked at one of the funding recipients for money going to the Fund – JumpStart, Inc., a venture capital entity - and the salaries at least to me are rather shocking.

 

The top ten employees of Jumpstart received in salaries and benefits in the 2007-08 report, latest available, to the Internal Revenue Service $1,871,354.

 

The top salary went to Ray Leach, President and CEO, at $369,311 with contributions to his benefits of $34,260, or a total of $403,571.

 

Other top salaries went this way:

 

 - Rebecca Braun, Chief operating officer, $178,981 with $42,359 in benefits.

- Lynn-Ann Gries, Chief investment officer, $161,482 and $42,359 in benefits.

- Dawn Redus, Chief Economic Inclusion officer, $153,397 with $37,560 in benefits.

- Richard Jankura, Chief financial officer, $143,121.

 

- Jerold Frantz, manager, $143,273 and $35,772 in benefits.

- Kevin Mendelsohn, Entrepreneur in residence, $120,524 with $19,297 in benefits.

 - Kerri Breen, Vice president, finance, $105,837 with $19,297 in benefits.

- Tiffan Clark, Vice President, marketing, $89,126 with $21,556 in benefits.

- Remsen Harris, investment associate, $88,205 and $34,821 in benefits.

 

Pension benefits seem to have become an issue for the Plain Dealer as they take after public employees. I’d suggest that they look at this benefit packages for non-profit executives. They make the benefits to public employees seem rather skimpy. Especially when one sees the salaries bestowed upon executives of non-profits. But fair isn’t one of the attributes of our news media.

You can read about JumpStart here: http://www.jumpstartinc.org/ForDonors/

 

And here’s a link to the kind of positive promotion JumpStart gets from the news media: http://blog.jumpstartinc.org/index.php/archives/117

 

Here’s a link to Ed Morrison’s take that offers some good information at Brewed Fresh Daily:  

http://www.brewedfreshdaily.com/2010/whats-next-for-the-future-fund-and-the-cleveland-foundation

 

Unfortunately, private and even non-profit organizations are not as open to public scrutiny as public agencies. They don’t have to be so they aren’t too forthcoming. That’s why there should be more attention by the news media to philanthropic organizations than there typically is.

 

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I wonder if they actually make much more...

JumpStart is an early stage investment fund, which should receive equity in the organizations they fund, and bring in other funding from friends/VCs, along with their funding... lots of behind the scenes dealmaking (all behind the scenes, at this stage of an enterprise). So, who gets start-up equity in the entities funded? Do JumpStart staff, executies, and board members have any equity in any of the organizations they fund, and is that reflected in these compensation figures?

And how are the JumpStart portfolio companies doing, really?

I don't know the answers, but there are good reasons for us to know.

Disrupt IT

non profit compensation

Roldo,

Non profit executive compensation warrents further investigation.  Little or no oversight on this.

Janet

small circle - well paid

I agree, Janet.

I also have noticed a few situations which involve giving "good jobs" to our friends and/or our political colleague's family. Names seem to pop up over and over again. Sometimes they are so common we don't even notice... (I am not related to Sam Miller and I don't hold one of those "good jobs" with lush benefits).

From Guidestar: Private Inurement Primer (you have to email them for this free document)

 

The private inurement prohibition requires that a public charity that has been granted tax-exempt status under section 501(c)(3) of the Internal Revenue Code (“charity”) operate so that none its income or assets unreasonably benefits any of its board members, trustees, offcers, or key employees. These types of individuals are commonly referred to as “insiders.” Thus, the prohibition precludes any of the income or assets of a charity from unfairly or unreasonably benefiting, either directly or indirectly, individuals who have close relationships with their organizations and the ability to exercise control over them.

The most common type of private inurement is excessive compensation paid to insiders and is discussed in Section II below. There are, however, many other forms of private inurement that can also result in the revocation of a charity’s tax-exempt status and/or in the imposition of significant “intermediate sanctions,” discussed in Section III below. These other forms of possible private inurement include, but are not limited to, transactions such as:

 

•   the sale of a charity’s asset to an insider;

•   the charity’s purchase of an asset from an insider;

•   the charity’s rental of property from, or to, an insider;

•   the charity’s lending of money to an insider; and

•   the use of facilities and/or other assets of the charity by an insider.

“The prohibition precludes any of the income or assets of a charity from unfairly or unreasonably benefting, either directly or indirectly, individuals who have close relationships with their organizations and the ability to exercise control over them.”

Cleveland and Cuyahoga County has always seemed to be a small number of tightly knit groups who feed each other. As we see time and time again - some eat and some serve and watch them eat.

 

 

 

Good Points

Thanks, Roldo for bringing Jump Start to mind. First, It is interesting to note that The Cleveland Foundation is taking heat because they are no longer in lock step with how the Fund for our Economic Future is headed. It appears that FFEF straying from its mission helped Cleveland Foundation revisit its own and find that they themselves were straying.  I found it amusing that The Plain Dealer jumped on The Foundation just as it has bloggers, public officials, businesspeople and others who are not in lock step with the GCP. 

Let's follow the money-- the Third Frontier Funds are fronted by Ohio taxpayers.  Fund for Economic Future receives funds and distributes said funds to Jump Start, Nortech, MAGNET, TEAMNEO ETC. Jump Start for example chooses a start up to fund after friends, family, credit cards and savings of entrepreneur are exhausted and the future of the dream and local employees are at risk.  Here is where Norm's point of equity shares come into play.  Jump Start funds company to get it over the  hump. When start up moves to Early Stage. At this point, Jump Start steps back because company should be sustainable.  If not, company dies or if the company is sustainable but needs an influx of capital to expand and grow venture capitalists agree to fund for equity shares.  Company soon is no longer the entrepreneur's. Many say that not all entrepreneurs are meant to be CEOs, and this is true butventure capitalists do not always have a community in mind. To them, a company that served a community can move elsewhere because human capital is everywhere.  not so, with an entrepreneur who built a company in a specific geographic area. 

I have three questions: Why are taxpayer's now fronting funds that venture capitalists once provided?  With the FFEF now branching out into Effective Government Now are we tying government and economic development together, and should we? Are Ohio texpayers facing undue  risk by underwriting eonomic ventures?

I know that this is a rather simplified version of how I perceive the taxpayers in our state again taking the risk for the private sector. I am a believer in balance, and when I see and read about these issues I see something that is very off kilter.  

   

Socialism for capitalists

There is entirely too much government/taxpayer money being shifted to all  kinds of businesses in all kinds of ways.

The desire of the new refomers of Cuyahoga County want to cut, as I understand it, 15 percent of the County budget. Then use it for "economic development," which essentially means give it to developers and other businesses.

What it suggested as a cut in government is merely a shift in the use of tax money from public purposes to private use.

Doesn't make sense to me.

it's time to stop waiting

It's time for government to stop waiting for someone from outside to come in and save us. If they want to come, let them. Just stop using tax dollars to prepare comfy nests for them.

It's time for county and city governement to begin investing in the people who are here - I don't mean our standard dveloper crooks. Municipalities should not prepare land for CVS, RiteAid, Target, Gap, McDonald's and other franchises. They should invest in worker owned businesses owned by Clevelanders.

ODOT's Bonnie Teeuwen repeatedly referred to the innerbelt project as "the biggest project they have sold". Dudette, you don't have to sell it, we're already up to our armpits in debt over that abomination.

The opportunity corridor ia another scheme to attract out of town franchises. Evergreen Cooperatives might be a better option for many struggling parts of the city.