Monday, November 29, 2010
Chess Queen Rooked City
Charity queen's king's ransom
By HEATHER HADDON and JOSEPH GOLDSTEIN
New York Post
EXCLUSIVE - Taxpayers are getting rooked.
A high-society charity that funds chess programs in poor schools has become a gold mine for its executive director, a former Wall Streeter who pulls down a $244,000 salary, and its treasurer, who helps run a mutual fund that handled millions in the program's investments.
In 1994, Marley Kaplan, 61, left the investment-banking world to be a do-gooder at Chess-in-the-Schools, which teaches children the game.
At the time, she was heralded in media profiles for giving up her six-figure salary for a job that paid a meager $25,000. "[She] did not have a wealthy husband or any family money to make up the difference," one story gushed.
But quietly, her annual salary leaped, including a $100,000 raise between 2007 and 2008, financial records show.
"That seems quite dramatic," said Sandra Miniutti, vice president of marketing for watchdog group Charity Navigator.
Kaplan's kingly compensation is double the $120,000 that chiefs of similar-sized nonprofits in the Northeast receive, according to Charity Navigator.
The chess group's former development vice president pulled down $164,000 and its head administrator raked in nearly $100,000, according to financial records.
The Manhattan-based program runs chess classes in 51 low-income schools, teaching 13,000 students and running dozens of tournaments.
Students get free books, boards and coaching from 17 chess champs, who are paid $35 to $50 an hour.
Since 2005, the City Council has allocated $1.8 million in funding to the group to run programs for the departments of Education and Youth and Community Development.
"It's an excellent program," said Councilman Robert Jackson, chair of the council's Education Committee, who conceded Kaplan's salary was "a lot of money."
In addition to the salaries, the nonprofit spent $104,000 on "investment advisory fees" last year, according to its financial statement.
Of the $7.7 million it invested -- taxpayer money and donations -- nearly half was moved into a mutual fund run by Blackstone Partners, the firm where Robert Friedman, the nonprofit board's treasurer, is a managing director.
He sat on the board's finance committee when the shares were bought.
Charity watchdogs said such a move is a no-no. "[Board members] need to be absolutely objective in that role," said Bennett Weiner of the Better Business Bureau Wise Giving Alliance, a watchdog group.
And the investments backfired, with the Chess-in-the-Schools group losing nearly $2 million last year, according to financial records.
A Blackstone representative said Friedman recused himself when the board voted on investing in the fund, and the idea came from a different trustee.
Sources close to the group said salaries across the board were slashed this year because of the economic downturn, with Kaplan taking the biggest cut. Unlike many other nonprofits, she is both the president and CFO, which saves money, they said.
Kaplan said she could not immediately comment, citing the need to get approval from her board before speaking.