Quote of the Day

Monday, August 17, 2009

Tax Implications?

I've wondered this for a while. One of the school's founders, Shanon Brooks, has his own business giving "Face to Face with Greatness" seminars. See here. Cost to attend: anywhere from $125 to $225 per person.

This appears to be a for-profit, sole proprietership owned by Mr. Brooks (see here and search for "face to face").

George Wythe University, a non-profit, actively promotes these seminars. Notice that the seminar dates on GWU's site are exactly the same as the dates on Brooks's site. These are the same seminars.

My question for anyone out there with tax knowledge is this:

Is the George Wythe Foundation, dba George Wythe University, violating any part of its non-profit charter by using its tax-free resources to promote the for-profit ventures of one of its board members?

Don't forget the earlier discussion on the school possibly using restricted assets meant for Monticello to fund other school programs. If true, that is a serious issue as well.

12 comments:

Publius said...

Um... - Dr. Brooks is no longer a member of the Board. Okay? I think that you need to check your information before you post it. It would make your blog a lot more convincing. I'm just suggesting. :)

R.C. said...
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The Real George Wythe said...

Publius,

I did hear somewhere that he's no longer on the board of trustees. Is he also no longer on the board of entrepreneurs?

To any CPAs out there, does this mean there's no conflict now? If so, what about in the past where he was on the board + was the CEO, and had this side seminar business going?

James F. said...

A non-profit legally can't promote and post the schedule for a for-profit? Or if we bypass the legality, ethically it is wrong?

I'm really trying to run this through my data-bank and figure out if it is right or wrong. But I do have a hard time thinking that publicly funded (non-profit) Universities never promote anyone or any other business entity that are for-profit.

If you want to explain the implications I'm missing, please go ahead. I'll agree with you if I see it laid out in a common sense way.

The Real George Wythe said...

James, my post was pretty clear. It's about a conflict of interest. Even though he may not be on the foundation's board now, rewind 6 months to when he was, and was also the president.

The question is this: Is there a conflict of interest if the president and board member of a non-profit directs that organization's resources to promote his own for-profit business enterprise?

Anonymous said...

Is it just me, or did Shannon Brooks not do a very good job recording this video? For a guy who puts on hundreds of these seminars, he sure stumbles a lot through this vid.

I have a hard time thinking that the president of a company whose purpose is to put on seminars has such a hard time speaking. Did he just not bother to correct all of his fumbling?

Example: "There is a natural process by which kids learn. Over time we'vvve . . . developed this and ... and we call it Thomas Jefferson Education."

There are a lot of "of ... of" and "a ...a..." and "Umms"

James F. said...

Anon: Agreed. I would expect better from Brooks in a promotional video. I've heard him lecture before and its a lot better than that. The script is pretty scattered too.

RGW--I see what you're saying...but at the same time "conflict of interest" is a rather odd way of describing it. You see if you agree with the interests of GWU and thought that Brooks was somehow muddling with their pure and bright interests that is one thing. However in this case Brooks and GWU actually do have the same interests. Brooks goes around and gives these lectures and as a result TJEd gains more converts and GWU more students.

Yes, it conflicts YOUR interests apparently, but that is all I see so far. Is it unethical for a university to pay a private business entity money to promote their ideas and encourage people to attend the university?

Really, I'm still not convinced one way or the other. I'm eager to hear some different ideas on this.

The Real George Wythe said...

James,

A conflict of interest is "a situation in which a person has a private or personal interest sufficient to appear to influence the objective exercise of his or her official duties." (Chris MacDonald, Michael McDonald, and Wayne Norman, “Charitable Conflicts of Interest”, Journal of Business Ethics 39:1-2, 67-74, August 2002, p.68)

Brooks was the CEO and a voting member of the board of directors for this non-profit. He started a for-profit side business providing related services.

As CEO and director for the non-profit, he had a fiduciary duty to the organization. The presence of this for-profit, TJEd seminar business means he had an interest that might compromise his actions.

I'm not saying he acted improperly. I don't know that. I'm saying he had a conflict of interest.

That's issue #1.

Now, take it one step further: GWU has clearly been sending business to "Face to Face With Greatness."

Was the foundation's action to promote and send business to its director's and CEO's side business based on improper influence?

That's issue #2.

Obviously, Brooks's exit from the board now resolves the issue, but the conflict appears to have existed for some time.

J.L.L said...

Yeah Brooks' deliverh was noticeably bad. In one screen wipe, you can see him look up from the paper he's reading from. It had a total of 190 views when I watched it. That's probably a good thing.

James F. said...

RGW said, "Brooks was the CEO and a voting member of the board of directors for this non-profit. He started a for-profit side business providing related services."

See, you are really trying to push this "related services" idea as though GWU is somehow just a non-profit front for Brooks making exorbitant profits from his own business entity. How are Face to Face with Greatness seminars related services to what GWU provides? Once again these seminars promote TJEd and funnel students to GWU. So while you are focusing on Brooks using GWU to increase his business, the converse is also true. That he by holding these seminars directly benefits GWU.

If the GWU board (including Brooks at the time) decided that the most effective, incentive based system for putting on seminars and increasing student enrollment was to create a for-profit headed by Brooks, then where is the conflict?

R.C. said...
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Anonymous said...

James F: Gains converts? Interesting choice of words here, " . . . as a result TJEd gains more converts and GWU more students."