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Forum -> Chinuch, Education & Schooling
School with money issues



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amother
Indigo


 

Post Mon, Apr 20 2015, 8:20 pm
The rumor is that one of the administrators is taking out PERSONAL loans, using them for the school, not paying back the loans, and about to be sued by more than one entity.

Without engaging in lashon hara or hearsay--- how do I find out the true story? Are all schools required to report on guidestar? If the school isn't there, what does that mean? How else do you find out a school's financial situation? I have a lot of friends who send to this school. Can a lawyer clue me in on the legality of an administrator using personal loans for the school? Currently, a rich member of the community is doing payroll each month. Not a long term solution, but supposedly a legal one?!?
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sourstix




 
 
    
 

Post Mon, Apr 20 2015, 8:22 pm
why is it your business? is this school private. then its his business. what he does. if he goes into debt and cant pay then its his business too.
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SRS




 
 
    
 

Post Tue, Apr 21 2015, 12:11 am
Regarding the above, private schools usually are public trusts, 501c3 organizations, so they are most certain "our business." Directors can be ousted, at least in theory. Directors and officers can be paid, but they cannot profit from the business under the structure.

If I understand correctly, the admin is borrowing under his own name and then donating the money to the school. Are the donors suing him personally or suing the school? If the school is required to submit a 990, which is a big IF, it should include a schedule of loans between a director and the school in both directions, that is loans to and loans from. But you might not be able to get accurate information because reporting is weak, reporting is not in real time, people doing the books don't know anything about reporting, so the information is only as good as the people doing the books, the 990 preparer doesn't know the form back and front.

If the administrator is borrowing money under his own name to donate to the school to keep it afloat, then the borrowers should be going after him personally and if he borrowed under false premises, I believe the liability would belong to him personally. But if the administrator is in bankruptcy, that there could be some recovery. Organizations sometimes do look into the background of large donors. (Oh, not a lawyer. . . ) I have no idea how a beis din would rule and if the money is gone, I'm not sure it matters.

When you mention the donor doing payroll, I assume you are referring to a donor loan. Generally donor loans are considered red flags regarding the health of the organization.

If this is a school that you care about, gather information and organize it. If the organization is a 501c3, you usually can request and the org is obligated to turn over basic financial statements. A group of parents should be able to exercise whatever rights are in the by-laws or constitution and elect a new board. But once a school goes into the road of insolvency, goodluck. My opinion is that it is better to let it die and start again with people who haven't failed in their management.
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amother
Indigo


 

Post Tue, Apr 21 2015, 9:24 pm
OP here--- I'm not a parent with this school but I have lots of friends who are. Trying to figure out what's legal, what's not, what's likely to happen.... just trying to help friends decide what to do-- looks like the school will most certainly fall apart but nobody thinks that's going to happen this fall. But if it does, hundreds of kids will need to go elsewhere. Should my friends pull their kids now or wait for the poop to hit the fan......

yes, the administrator is being sued personally.

as a community member, and not a school parent, I can't go in and ask for papers. Guidestar lists the school, but NO info--- no 990. It also lists it as "protestant" which I've noticed it does with some Jewish schools--- I've always wondered why.

So frustrating because our community needs this school. We need this school run CORRECTLY and WELL.

THANK YOU for the info!
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staten islander




 
 
    
 

Post Tue, Apr 21 2015, 9:35 pm
OP,is this a school in SI?
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SRS




 
 
    
 

Post Tue, Apr 21 2015, 10:24 pm
My take: the school started out of a synagogue and has retained that status, hence there is no 990. Regarding listing as Protestant I think that is just a coding from a bygone era. In New York, I think this is the common structure which means you are out of luck for a 990 which is public record. Synagogues are not required to make records available in the same manner. You can exercise many channels from asking for financials as a potential donor to determining if the by-laws make financials available to those who request to legal channels from the less aggressive which is a call to the Secretary of State or Department of Corporations to determine if state statue compels turning over financials to legal action that will force the organization to open the books.

I think the first step is to get the shul/school's bylaws and constitution and a group of concerned parents should start exercising their rights, calling in pro bono counsel as needed and quickly. The old board needs replaced and the new board needs to determine if, after keeping in cash what might need returned to the admininstator-donor, how much money there is to run the school in reality and what it takes to continue the school with the current student body.

If the money isn't there to actually run the school, collapse is painful but necessary. If the school can be appropriately managed, onwards and upwards.
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amother
Indigo


 

Post Fri, Apr 24 2015, 12:58 am
OP here.

Didn't know what SI was, but realized your handle was Staten Islander.

This isn't New York.

Thank you for the info!

there was once a shul where one campus of the school happens to be, but they're not connected and probably never were, but if saying they were connected got the school out of making their 990's available, then it makes sense that they would say they are.

Parent body is doing nothing but whining and making decisions based on hearsay as far as I can tell. I'm NOT a parent at that school and I feel like I'm more annoyed/ concerned than anyone-- so frustrating. I'll bring up these points to friends and hope they do what they should do.

thanks!
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SRS




 
 
    
 

Post Fri, Apr 24 2015, 11:18 am
It isn't making them available. If they were registered as a synagogue, they don't have to do any 990s, so it isn't just about availability. Chances are there is financial data, but if there is no accounting requirements, who knows what the data is and how it is prepared and what it means.

Hopefully people will do something productive. Goodluck to you.
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