The celebrated business journalist Carol Loomis, who worked at FORTUNE magazine for decades, used to say, only half in jest, that there were only two FORTUNE stories. One was “Oh, the glory of it!” The other was “Oh, the shame of it!” This is even more true of press coverage of nonprofits, which tend to be portrayed as saintly/admirable or corrupt/incompetent, and rarely as anything in between. This isn’t good for the press, it isn’t good for nonprofits and it isn’t good for the rest of us.
Consider, as an example, the story of Pari Livermore. Ms. Livermore, a former TWA flight attendant, married into a prominent San Francisco family and became what GQ described as “the matchmaker of choice among the high-tech millionaires of Silicon Valley.” She has, by her own account, arranged more than 300 marriages, including those of Larry Ellison, the chief executive of Oracle; Scott McNealy, the former CEO of Sun Microsystems; Marc Benioff, the CEO of Salesforce and Frank Caulfield, a founder of venture capital firm Kleiner Perkins. In exchange for her services, she asked her clients to donate to charity.
Her unorthodox business model generated glowing coverage in The New York Times (“Fall in Love for a Good Cause“) and favorable exposure on the CBS Evening News (“all the money from this match-making venture goes to charity“) and NBC’s Today show (“one of America’s top matchmakers“). Much of it was pegged to her 2007 book, How to Marry a Fabulous Man.
On NBC, Livermore said:
“I don’t accept money myself. I ask mostly the men to make donations to me–not to me, but to the charities. It doesn’t go through my bank accounts. It’s to the nonprofit organizations. And the women do a lot of volunteer work. I want people to do wonderful things for good causes.”
Her local paper, the San Francisco Examiner, gushed:
Pari takes no money. Every dime she collects from titans looking for the love of their life is deposited directly to charity — this year it’s Spotlight on Heroes, whose mission is to highlight volunteers and nonprofit organizations.
Oh, the glory of it!
The trouble is, Spotlight on Heroes is not and has never been a charity. Spotlight on Heroes never sought 501(c)3 status with the IRS. It filed papers with the Secretary of State of California in 2006 and 2009, but never registered with the attorney general, as charities are required to do. California’s Franchise Tax Board suspended Spotlight on Heroes in 2009 for non-filing of a tax return and non-payment of taxes. The state attorney general is now asking Spotlight on Heroes to register, and report on its activities.
This may have been a careless mistake, or a series of mistakes, but they are mistakes with consequences. They mean that donations to Spotlight on Heroes were not tax-deductible, although Livermore assured her donors that they were. Look at the FAQs (below) on the website for an event she organized called the Red & White Ball.
More recently, after a potential client named Nancy Levine, who had agreed to donate $1,000 to Spotlight on Heroes, asked Livermore whether her donation was tax deductible, Livermore replied by email: “It is definitely tax deductible.”
Levine checked with her accountant, and did a bit of research. She works as an executive recruiter, so she’s accustomed to fact-checking. She soon learned that Spotlight on Heroes had been suspended by state authorities and had failed to register with the attorney general. She began calling reporters–most ignored her–until she connected with Kendall Taggart, an investigative reporter for Buzzfeed News who has experience with charity fraud.
Taggart’s story, published on July 31, was headlined Famous Matchmaker’s Pet Charity Wasn’t A Charity at All.
“I’m a great fundraiser,” Livermore told BuzzFeed, by way of explanation. “but not a good businesswoman.”
Hmm. In her bio, Livermore calls herself as “an expert in the field of nonprofits.”
Meantime, Buzzfeed reported, Livermore had told the San Francisco Examiner that she had degrees from NYU and Cal Berkeley but neither university has any record of Pari Livermore (or Pari Caldwell, her maiden name) as a graduate.
As Albert Einstein has said: “Whoever is careless with the truth in small matters cannot be trusted with important matters.”
Last month, The Daily Beast asked Where is the Matchmaker’s Charity Money? and reported that California officials are looking into Livermore and Spotlight on Heroes.
Oh, the shame of it.
Levine wasn’t done. She reached out to The New York Times, asking whether they would correct or update the newspaper’s 2007 story about Livermore. She exchanged emails with executive editor Dean Baquet, who wrote:
Unfortunately, no newsroom in the country has the capacity to do “background checks” on everyone it writes about.
Well, no, not background checks, but as Gene Takagi — a lawyer who is, in fact, an expert on nonprofits — has written in a blogpost called Nonprofit Law 101 for Journalists, reporters can in few moments search for a nonprofit on an IRS website called the Exempt Organization Select Check to determine if donations to the group are tax-exempt. Had The Times, NBC or CBS searched the IRS website, they might have had more questions for Ms. Livermore.
A veteran reporter, editor and blogger named Steve Buttry has taken more than a casual interest in press coverage of Pari Livermore. (See Is there a statute of limitations on correcting errors or updating flawed stories? and Why are journalists so reluctant to correct and re-examine challenged stories? and Deni Elliott: Journalists often fail to think beyond ‘Charity = GOOD’) Buttry argues persuasively that The New York Times should update its 2007 story, which described the Red & White ball as a “charity event.” The Times could, for example, simply add a note to the story saying that Charity Navigator recently attached a donor advisory to its rating of Spotlight on Heroes — essentially, a red flag designed to warn away donors.
What were they thinking?
And what about those donors to Spotlight on Heroes? Did they do no due diligence? If the press isn’t good at holding nonprofits to account (and we aren’t), you would think donors would ask a few questions before writing checks.
It’s impossible to track down individual donors to Spotlight on Heroes, since the organization, if indeed it is an organization, filed no documentation anywhere. Livermore has declined to open up her books. Foundations that listed Spotlight on Heroes on their Form-990s include the Furnessville Foundation (which gave $10,000 in 2006), the J. V. Lowney Fund ($2,400, 2006), the Seligman Family Foundation ($2,000, 2012), and the Taube Foundation for Jewish Life and Culture ($20,000, 2006).
I emailed them to ask why they donated. A spokeswoman for the Taube Foundation said its $20,000 grant went to a cable TV show to “highlight impressive everyday people doing things that make a significant impact on the community around them.” Tad Taube, the foundation’s founder, has said that Livermore introduced him to his wife.
Andrew Conru, president of the Furnessville Foundation, told me by email that he
was told it was a registered charity and that she does matchmaking services as a hobby. Her events were well attended and she was an enthusiastic host. I hope that your research shows that the funds did go to a charity. I know that many donors expect the funds to be tax deductible.
It’s impossible to know where the donors’ money went.
The Red and White Ball website says:
Spotlight On Heroes produces television and radio programs and public service announcements as well as web sites, brochures, and newsletters highlighting the accomplishments of charitable organizations and volunteers in the San Francisco Bay Area.
In fact, Livermore did host a local cable show called Everyday Angels about “everyday people that have accomplished the extraordinary.”
More recently, according to Livermore and her friends Ken and Marilyn Nemzer, who run a nonprofit called The California Study (which may or may not be affiliated with Spotlight On Heroes, depending on who you ask and when you ask), Spotlight on Heroes turned its attention to needy children in Middletown, California, a low-income community about 70 miles north of Livermore’s former home in Marin County.
[If for some reason you want to dig into the weeds to try to understand the relationship of the California Study and Spotlight on Heroes, I’ve posted an email exchange with Ken Nemzer here.]
By email, Livermore told Nancy Levine: “Your email will go towards our 4H Scholarship.” The former principal of an elementary school in Middletown told the Marin Independent Journal that Livermore “spent a lot of money and did a lot of good for kids” in the community. How much money and how much good is anybody’s guess.
What are we to make of all this?
In an excellent analysis for Nonprofit Quarterly, reporter Amy Butcher asks whether fundraising for an unregistered charity is A Simple Mistake or Something More? An astonishing 279,000 nonprofits lost their tax-exempt status, the Urban Institute reported in 2011. Sloppiness, it seems, is rampant in the sector, particularly among small nonprofits.
There’s no evidence that Pari Livermore looted any of the donations she was sent. (Incidentally, donations to Spotlight on Heroes were sent to her home address.) She claims to have raised more than $5 million for a variety of charities over the years. She and her husband, Putnam Livermore, a conservationist and once-prominent attorney, who is in his 90s, appear to be wealthy, but you never know.
What we do know is that Ms. Livermore misled donors by telling them that Spotlight on Heroes was a tax-exempt charity. Some surely took federal tax deductions. I asked Gene Takagi, the lawyer who specializes in nonprofits, whether she put her donors at risk. “Absolutely, she has,” he told me. “I’m sure there were laws that were not complied with here.”
For her part, Nancy Levine, who never sent any money to Livermore, says there’s more at stake here than the operations of a single charity. What she sees is a failure of philanthropy — donors and a nonprofit alike — and a failure of journalism.
“While Pari and Spotlight may be small potatoes,” Levine says, “the story is emblematic of how irregular fundraising by nonprofits and remiss reporting by media outlets are corrosive to trust in both. Whether intentions are nefarious or not.”
Levine told me: “I’m a fan of journalism. I’m a consumer of journalism. I grew up reading the New York Times. I want to trust journalism, and I want to trust philanthropy.”
Trust is an issue in the sector. A recent Chronicle of Philanthropy poll found that 35 percent of Americans had little or no confidence in charities.
“Philanthropy is very important,” Levine added. “Bad actors threaten to poison the well.”