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NRS Form 990 Review


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  • Root Admin

The National Rosacea Society is a 501 c 3 non profit organization according to its about us page is the "world's largest organization dedicated to improving the lives of the estimated 16 million Americans who suffer from this widespread but poorly understood disorder." So who is serving on its board of directors? Not one rosacea sufferer. All the board members are dermatologists or business professionals who have a vested interest in how the NRS spends its donations. So, let's look at how the NRS spends its donations. Follow the money. 

Do you even care how the NRS spends its donations? Read on if you do. 

NRS Review of Form 990 for 2016 thru 2019

(scroll down for 2017 in the next post and 2018 in the post after that and so on...)

2016 NRS Form 990 Review

Every year for some time now I have been reviewing the NRS Form 990 which was recently posted on its web site (the NRS filed an extension). It is similar to the other reviews I have given in the past (more info). Very few, if any, rosacea sufferers are interested in how the NRS spends its donations nor care at all. As far as I know I am the lone watchdog on the NRS. However, since the NRS was the chief reason the RRDi was formed because we thought donated funds could be better spent than how the NRS spends its donated funds giving rosacea sufferers an alternative, you may see why I continue to monitor and review the NRS spending and post my review. 

The nutshell version for 2016 is that the NRS received $748,671 in revenue and spent $712,214 in expenses. The NRS spent $65,092 on research grants. So that amounts to 8.69% of its donations. To put this in perspective, every dollar donated in to the NRS in 2016, about 8.6 cents was spent on research grants. 68% ($510,757) of the donations were spent on two private contractors, Glendale Communications Group, Inc. and Park Mailing and Fulfillment, Inc. that are owned by Sam Huff, President of the NRS.

Proof that these two corporations are owned by Sam Huff

It was also reported that Sam received $106,774 (from Glendale and Park) in salary while his secretary, Mary Erhard, received $32,253 (from Glendale). These two private corporations are owned by Samuel B Huff, the Director/President of the NRS. For proof, read this post

Here is a breakdown of the Form 990 for 2016: 

Form 990 Part 1 Revenue
Line 8 Contributions and grants  $697,448
Line 9 Program service revenue $  51,000
Line 10 Investment Income         $       223
Total Revenue                                $748,671
 
Expenses 
Line 13 Grants and similar amounts paid $65,092
Line 17 Other expenses                             $647,122
Total expenses                                           $712,214
 
Part VII Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees, and Independent Contractors
Section A
(1) Samuel B Huff, President 
Reported compensation from related organizations $106,774
(2) Mary F. Erhard, Secretary
Reported compensation from related organizations $ 32,253
 
Schedule R Part V Transactions with Related Organizations
Note 1
m Performance of services or membership or fundraising solicitations for related organization(s)
n Sharing of facilities, equipment, mailing lists, or other assets with related organization(s)
o Sharing of paid employees with related organization(s)
Note 2
(1) Glendale Communications Group, Inc (c) $467,936
(2) Park Mailing and Fulfillment, Inc.         (c)  $ 42,821
Total Transactions                                               $510,757
 

nrs_990_2016.pdf
For a spreadsheet of all the years reviewedclick here

Form 990 for 1998

Form 990 for 2013

Form 990 for 2014

Form 990 for 2015

More Links
Funded exclusively by donations from individuals
1998 - The Banner Year for the NRS

 

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  • Root Admin

NRS Review of Form 990 for 2017

In December 2018, the NRS published its Form 990 for 2017. This year marks the fourth highest banner year in donations, the first highest banner year was in 1998 which the donations totaled over $1 million dollars ($1,148,375). In 2017, the NRS received in donations $929,730.00, just $216,645 short of its 1998 banner year. So let's review what the NRS spent its donations on. First off, let's be clear that Samuel B Huff, Director, signed off on page one of the 2017 Form 990, and on page 7, under the heading, Part VII, Compensation, it shows that Samuel B Huff, President, was paid $119,100 under the column, Reported compensation from related organizations. Also Mary F Erhard, Secretary, was paid $27,963 making a grand total here of $147,063.

Grants spent this year on rosacea totaled $74,443. So if you do the math, the total spent on rosacea research grants in 2017 amounts to 8% of the total revenue donated to the NRS. Putting this into something you can understand a little clearer, for every dollar donated to the NRS 8 cents was spent on rosacea research grants. 

What did the NRS spend the rest of the money on?  On page 10, Part IX, Expenses, it shows a list totalying $763,980.  Of that total, $105,494 was spent on Information Technology. You can read the rest yourself.  Scrolling down to Schedule R (Form 990) Part V, you will note there are two corporations listed under TRANSACTIONS WITH RELATED ORGANIZATIONS, which are the following: 

Glendale Communications Group, Inc. $498,910.

Park Mailing and Fulfillment, Inc. $70,194.00

The above two corporations is where a total of $569,104 was spent which are the related organizations the NRS used and this amounts to 61% of its total donations received. These two private corporations are owned by Samuel B Huff, the Director/President of the NRS. For proof, read this post

Read the NRS Form 990 for 2017:
nrs_990_2017.pdf

 

 

 

 

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  • Root Admin

Time to review the 2018 Form 990 the NRS publishes on their website or you can read for yourself below (click to open pdf): 

nrs_990_2018.pdf

Review

Let's first try to concentrate on the positive aspects of this report. The NRS is the leading non profit organization for rosacea that supports research grants for rosacea. In 2018 a total of $12,500 was spent on research grants if you read Form 990, Part IX, Line 1. How can you figure out who received the $12,500?  You definitely have to do some digging since the Form 990 doesn't disclose this. The NRS website in its Awarded Grants page shows Dr. Anna Di Nardo and colleagues were awarded $25,000 in 2018. In reviewing the Form 990 it does indeed show that $25,000 was awarded to the Regents of UCSD shown below: 

regentsUCSD.png

So let's give the NRS a benefit of doubt and instead of $12,500 which is shown on Form 990, Part IX, Line 1, and commend the NRS for spending $25K for rosacea research grants. This means that the NRS spent 5.37% of its donations in 2018 on rosacea research. 

Putting into Perspective How the NRS Spends Donations

2018 donations were down from previous years with a total revenue of $465,042 (in the 21 years I have been following the NRS Form 990s, 2001 was the only year lower in donations). While acknowledging above that the NRS spent $25K for rosacea research, putting this into perspective is the fact for every dollar donated to the NRS in 2018 only a little more than a nickel (5 cents) was actually spent on rosacea research. What was the rest of the donations spent on? Answer: 

93% of the donations were spent on two private contractors that are owned by the president/director of the NRS Sam Huff. Here is a screen shot of the names of the two private contractors shown on Form 990: 

glendalepark2018.png

How do we know that Glendale Communications Group, Inc and Park Mailing and Fulfillment, Inc belong to Sam Huff?  The Illinois Secretary of State gives the proof. As you can see from the screen shot above, Form 990, Schedule R, Line 2 shows the amount sent to these two corporations which is $432,408. Is this legal? Yes, of course. You didn't know that NON profit corporations can do this? If you want an education, read this post

Here is a screen shot of Form 990, Part VII, Section A, Compensation which is interesting: 

boardincome2018.png

I didn't know that Zoe Draelos, MD who also serves on the RRDi MAC is now serving on the board of directors for the NRS. She received $2500 from the NRS in compensation. Good for her! Also Dr. Gallo who I have tried to contact to serve on the RRDi MAC to no avail also received $2500. Good for him!  Did you note how much Sam Huff receives? The RRDi would love to give Dr. Draelos $2500 but we didn't even receive half that amount in donations so all we can do is keep our website going and keep the RRDi afloat since our donations are quite meager compared to the donations given to the NRS.  

One other very interesting item on the 2018 Form 990 the NRS has released is the amount of Excessive Contributions which has never been revealed in the twenty years I have been following NRS Form 990s. See below: 

excesscontributions2018.png

 

If you note the screen shot above it says **Do Not File** ***Not Open to Public Inspection*** which if I had paid accounting fees of $26,691 to my accountant as shown on the NRS Form 990 for 2018, Part IX, Statement of Functional Expenses, Line 11, c, it would pose a question why is this made public? We have never before had any indication the amount of donations the pharmaceutical companies give to the NRS. And if you note in Form 990, Part VI, Governance, Section B, Policies, Line 11a, please note the question, "Has the organization provided a complete copy of this Form 990 to all members of its governing body before filing the form?" and also note that 'yes' was checked. This is also restated in Form 990, Schedule O, where it shows the following line: 

reviewedBoD2018.png

If the pharmaceutical companies discover that the NRS has disclosed its Schedule A,  IDENTIFICATION OF EXCESS CONTRIBUTIONS, what might the consequences of this be?  I find it odd in the first place that 501 c 3 non profits are not required to disclose the identification of who is donating when it is obvious they are private contributions and not pubic donations. However, you know who makes the IRS rules for non profits? Probably nothing will become of this disclosure but I find it really interesting. 

The only other interesting item I found was that the NRS reports an expense of advertising in the amount of $74,814 (Form 990, Part IX, Statement of Functional Expenses, Line 12. It also reports on Form 990, Part VIII, Statement of Revenue, Line 2a, Advertising Income in the amount of $85,000. I don't recall seeing any advertisements on the NRS website, but maybe I am missing something?  I wish I could figure out how to get advertising income for the RRDi. Does anyone know how this is done? Sure could use some help. 

For a spreadsheet of all the years reviewedclick here

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  • Root Admin

Addendum Post on NRS Form 990 2018

Since basically I am the lone watchdog of the NRS in how it spends its donations and generally speaking, the vast majority of rosaceans could care less how the NRS spends its donations, I will continue to raise red flags and point out some juicy facets of how the NRS spends its donations (i.e., in the second to last paragraph of the previous post in this thread did you notice how the NRS spends $74,814 on advertising just in the year 2018?). I thought it would be pertinent to point out how much the NRS spends on 'Information Technology' just in 2018 which was $60,377. Not sure what you think IT is but it could include the NRS website or possibly an IT geek who takes care of their computers and network in the office. You can find where this is listed in Form 990 for 2018 (available for your download and inspection at the beginning of the previous post) at Part IX, Statement of Functional Expenses, page 10 (see screen shot below). 

information_technology-NRS2018.png'

Now think about the amount spent on Information Technology ($60K) and then compare what the NRS spent for rosacea research ($25K) or as already pointed out $74K for advertising. What do you think about any of this? What do you think a non profit organization for rosacea should spend on rosacea research when considering 'functional expenses'? Any comments? 

 

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  • 3 months later...
  • Root Admin

In harmony with this thread, it is time to review the activities of the NRS for 2019 since the NRS doesn't post its Form 990 for 2019 until the END of 2020 which anyone can download and review on its financial page by clicking here (scroll to the bottom of the page to find the Form 990 download). The page paints a very pretty picture with a graph and a list of expenses which shows 'Research Grants' in the amount of $231,526. Here is a screen shot for your enjoyment: 

NRSScreenshotExpenses.png

The Form 990 for 2019 that the NRS reports to the Internal Revenue Service shows a very different picture than the math in the above screen shot for research grants. The actual amount shown on Form 990 for research grants is only $23,315 which is ten times less what is shown above. Here is a screen shot of Form 990, Schedule I, which shows the Regents of the University of California at Irvine received the grant:

NRSresearch201923K.png .png

So you can choose to believe what the NRS publishes on its financial page, painting a pretty picture of how it spends ten times the amount shown on rosacea research on its website, or you can read for yourself Form 990 reported to the Internal Revenue Service and discover yourself, but the math on the Form 990 shows ten times less.  The Form 990 for 2019 shows that the NRS received in donations and revenue $303,013 and the total expenses were $419,490.  If you note below in the screenshot of the first page, you can see LINE 13, Grants and similar amounts paid (Part IX, column (A), lines 1-3) in the amount of $23,315. You will be hard pressed to find anywhere reported ten times that amount on research grants. 

NRSform990_2019.png

So the NRS spent 7% of its donations/revenue received in 2019 on rosacea research. To understand this better, for every dollar received by the NRS in 2019 seven cents was spent on rosacea research in 2019. What is enlightening in Form 990 for 2019 is how much the NRS spent on Glendale Communications Group in 2019 which is shown below in this screenshot reported as Section B. Independent Contractors with the same address as the NRS in the amount of $285,871: 

glendale2019.png

That means that Glendale Communications group received 94% of the total amount received in donations/revenue for the 2019 year. Glendale Communications Group, Inc., is owned by Sam Huff. The Form 990 for this year also has an interesting report shown in the screenshot below on Schedule L regarding 'Business Transactions Involving Interested Persons.' 

NRSSamHuff2019.png

This is how the NRS operates. 

nrs_990_2019.pdf

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  • Root Admin

 “Many types of non-501(c)(3) tax-exempt organizations including social welfare organizations, business leagues and trade associations, social clubs, voluntary employees’ beneficiary associations, cemetery companies, and veterans’ organizations, among others, are prohibited, by statute, from allowing inurement of net earnings or assets of the organization to benefit any insider. An insider is a person who has a personal or private interest in the activities of the organization such as an officer, director, or a key employee. An example of prohibited inurement would include payment of unreasonable compensation to an insider.”

Private Benefit and Inurement, Page 5, Compliance Guide for Tax-Exempt Organizations

From 1998 thru 2019 the NRS has received in donations/revenue  $15.5 million and spent over $10 million (65%) on private contractors owned by Sam Huff who serves on the board of directors of the NRS.  During this same period the NRS spent less than 10% of the revenue on rosacea research. For details on the math for this period click here.

What do you think?  Sam Huff has served on the board of directors of the NRS for over twenty years. The NRS has spent over 60% of the majority of the donations/revenue received during this period on two private contractors owned by Sam Huff, Glendale Communications Group, Inc and Park Mailing and Fulfillment, Inc (see for yourself). Could Sam Huff be an 'example of prohibited inurement' [that] 'would include payment of unreasonable compensation to an insider'?

What You Can Do

Can you do anything about it?  Here are two recommendations: 

(1) Write the IRS that you want this non profit to be investigated: 

Internal Revenue Service
Exempt Organizations Determinations
Room 4024
P.O. Box 2508
Cincinnati, OH 45201

RE: National Rosacea Society (EIN: 36-4120334)

Here is a sample letter for your consideration: 

01_05_21.pdf

You may want to include in your letter that the IRS reconsider whether the NRS qualifies as a 501 c 3 since "A tax-exempt organization that does not restrict its participation in certain activities and does not absolutely refrain from others, risks failing the operational requirements for exemption from income tax and jeopardizing its tax-exempt status." [1] The NRS acts more like a 501 c 6 since the majority of its spending benefits businessmen and dermatologists qualifying it as a business league or professional association. For more information see the post about the difference between a non profit and a not for profit or how non profits work

(2) Support the RRDi with your donations and stop donating to the NRS which is obviously spending the vast majority of its donations/revenue not on benefiting the public but instead benefits businessmen and dermatologists. You don't have to worry about the NRS going under since the pharmaceutical companies that donate to the NRS will continue to do so since these companies are happy with how the NRS spends it money and benefit since dermatologists benefit from the money these pharmaceutical companies are giving to the NRS and you can probably figure out why this arrangement will continue on. The NRS is embedded in this relationship and both are benefiting so the NRS won't miss your paltry donation since it receives most of its funding from pharmaceutical companies that have a vested interest in how the NRS supports 10% of its donations/revenues on rosacea research. 

End Notes 

[1] Compliance Guide for Tax Exempt Organizations, Publication 4221-NC (Rev. 9 -2014) Catalog Number 52447N,
Department of the Treasury Internal Revenue Service

p4221nc.pdf

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  • Administrators

Hello Rosaceans, if you can donate some money to our non-profit organization it would propel us to post more matter on this topic. I know that many rosaceans view our site, read each and every material, gain knowledge from this site which you will never find anywhere on other rosacea website but you never appreciate us giving some donation money. We keep asking members for some donation but I think its all throwing stone in water and admin has already declared that if we don't get money he will close the organization and then where will you read such good material from? think on this.

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  • Root Admin
6 hours ago, Apurva Tathe said:

Hello Rosaceans, if you can donate some money to our non-profit organization it would propel us to post more matter on this topic. I know that many rosaceans view our site, read each and every material, gain knowledge from this site which you will never find anywhere on other rosacea website but you never appreciate us giving some donation money. We keep asking members for some donation but I think its all throwing stone in water and admin has already declared that if we don't get money he will close the organization and then where will you read such good material from? think on this.

Thanks Apurva. 
We have a little more than $300 left in the bank which may keep us going for a few months. I can't keep this non profit organization going by myself and have devoted a huge number of volunteer hours keeping this non profit organization legal to keep our IRS exempt status going which means donating to the RRDi is tax deductible. Keeping a non profit organization exempt, legal and active requires many volunteer hours. As you mentioned, we know that thousands visit our website each month and obviously take away huge amounts of rosacea treatment data which the amount on our website is significant since it reflects over seventeen years of rosacea research data to help rosaceans control their rosacea. It would be a simple gesture of appreciation if just half the members would donate ONE DOLLAR using the PayPal Giving Fund and that would keep us going probably for a year. That is less than the cost of a cup of coffee. 

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