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June 28, 2020

How Revenue is Spent at the International Union of Police Associations (IUPA) (2019)

by Anne Paddock

The International Union of Police Associations AFL-CIO (IUPA) is a non-profit, tax-exempt 501 (c) (5) – a labor union –  whose mission is to be “the voice of law enforcement officers.”  With an estimated 23,000 members, IUPA is the largest police union in the AFL-CIO..

According to the Form 990 (2018) covering the year April 1, 2018 to March 31, 2019 submitted to the IRS, IUPA reported $11.7 million in revenue (down 40% from $19.5 million the previous year) of which only $3.7 million came from membership dues. $8 million came from contributions which were primarily phone solicitation and telemarketing fundraisers who raised $7.9 million and were compensated $7 million, netting IUPA about $900,000. In other words, for every $1 raised by the phone solicitation fundraisers, only 11 cents went to IUPA because the phone solicitors kept 89 cents of every $1 or $89 of every $100 raised.

IUPA reported total expenses of $11.7 million, which were categorized as follows:

  • $2.8 million (24% of revenue):  Fees paid to Fundraisers
  • $1.9 million (16% of revenue):  Salaries, Benefits, Pension, and Payroll Taxes
  • $1.5 million (13% of revenue):  Legal, Accounting and other Fees for Services
  • $5.5 million (47% of revenue):  IT, Office, Occupancy, Insurance, Interest, Per Capita Taxes

It is important to note there appears to be a discrepancy on the Form 990.  In Part IX, (Statement of Functional Expenses) Line 11 e, professional fundraising fees are listed as being $2.8 million. However, on Schedule G, Part I (Fundraising Activities), Section 2 b, professional fundraising fees are listed as being $7 million (note:  the professional fundraisers raised $7.9 million, retained $7 million as their fee, and provided IUPA with about $900,000).  So, it is unclear why only $2.8 million in fees paid to fundraisers are listed on the Statement of Functional Expenses when IUPA also reports $7 million paid to fundraisers in Fundraising Activities.

It is also important to note that IT expenses were way up in 2019 compared to previous years.  IT expenses were reported to be $4.2 million (out of the $5.5 million in office-related expenses) while in previous years, IT expenses were typically a few hundred thousand dollars. The significant increase in IT expense is partially explained by looking at the compensation received by independent contractors. The five most highly compensated independent contractors were reported to be:

  • $1,477,759:  Compliance Consultants LLC dba “Americ” of Milwaukee, WI (note: a google search for this company did not appear at the address listed on the Form 990, which could be due to the full dba name not listed on the Form 990) for data security compliance)
  • $1,158,493:  American Technology Services LLC of Phoenix, AZ  for tech support
  • $  771,313:  Porac Legal Defense Fund Co of Sacramento, CA for legal services
  • $  533,922:  Unified Data Service dba Cloud Data SE of Indianapolis, IN for data services
  • $  359,951:  Ringling and Orange 2 LLC of Sarasota, FL for rent

However, in an investigation by the Center for Public Integrity and published in the Tampa Bay Times in December, 2019, “data security compliance” and “tech support” may simply be another way of classifying fundraising fees.

In reference to the rent, it appears IUPA bought an office for $2.6 million in 2018-2019.  Land, Buildings, and Equipment increased from a cost basis of about $400,000 the previous year to $3 million in 2018-2019.  The Tampa Bay News reports the IUPA bought a 17,400 square foot office building for $2.6 million with intentions of using 10,000 square feet for the IUPA and leasing out the remaining space. The balance sheet reports a mortgage of about $2.1 million which means the IUPA put down about $500,000 (20% of the purchase price) to acquire the building.

Compensation totaled $1.9 million for 24 employees which equates to an average compensation of $79,000.  5 employees received more than $100,000 in compensation:

  • $223,606:  Samuel A Cabral, President
  • $153,048:  Holly Van Horsten, General Counsel
  • $147,266:  Hugh J Cameron, Secretary-Treasurer
  • $124,431:  Garry Lippman, Associate General Counsel
  • $114,416:  Thomas Jordan, Chief of Staff

4 of the 5 most highly compensated employees are male while 1 is a female.  Each director (15) of IUPA received $800 in compensation.

Using the above information, every $100 in revenue was spent as follows:

$100:  Revenue

-$ 47:  IT, Office-related Expenses

-$ 16:  Salaries, Benefits, Pension, and Payroll Taxes

-$ 13:  Legal, Accounting, and other Fees for Services

-$ 76: Subtotal: IT, Office, Compensation, Legal and other fees for services

 $ 24:  Revenue Remaining

-$ 24:  Professional Fundraising Fees

  $  0:  Revenue Remaining

Many questions arise from the Form 990 because there are so many changes and unexplained discrepancies in 2018-2019, including:

IUPA is a labor union that has employed about 25 employees for the past several years. Annual expenses have historically (for the past few years) been about $4.5 million (with the majority of expenses being staff compensation and fundraisers) but membership dues only brought in between $2.5-$3.7 million. So, IUPA had to make up the shortfall through fundraisers and they relied heavily on outside telemarketers to do this (but they paid a heavy price for these funds: about 90% of every contribution went to the fundraiser, leaving just 10% for IUPA).

In the most recent year, organization expenses shot up to nearly $9 million primarily because of a huge increase (about $4.6 million) in “IT” spending.  Yet, total reported revenue decreased by $7.7 million to $11.8 million.  At the same time, fundraising fees reportedly decreased to $2.8 million (compared to $14.4 million the prior year). However, IUPA also reports that $7 million was paid to professional fundraisers who raised $7.9 million, netting IUPA about $900,000.  What’s up?

There are three possible explanations:

  1. IUPA made errors on the Form 990; or
  2. IUPA netted some of the fundraising information meaning instead of reporting an additional $7.9 million in revenue and an additional $7 million in fundraising fees, only the net amount paid to IUPA ($900,000) from these fundraisers was reported, resulting in IUPA showing significantly lower revenue and fundraising expenses in 2018-2019. If the numbers were restated to include these numbers, then total revenue would have been $18.7 million ($11.7 million plus $7.9 million less the $900,000 already counted) while total expenses would have been $18.7 million ($2.8 million to fundraisers, $7 million to fundraisers, $1.9 million for compensation, $1.5 million for fees, and $5.5 million for IT/Office), leaving the year a breakeven as reported.  However, this still does not explain why IUPA only reported $2.8 million in fees paid to fundraisers on the Statement of Functional Expenses on the Form 990? And, who were these fees paid to? Backing into the numbers would seem to indicate IUPA paid $2.8 million to fundraisers who raised $8 million and yet, this doesn’t make sense to have one group of fundraisers who raised $7.9 million and retained $7 million and another group of fundraisers who raised $8 million and retained $2.8 million; or
  3. IUPA’s classification of “IT” expenses may, in fact be fundraising expenses.

IUPA has affiliate organizations whose names are used by fundraisers. These organizations operate out of the same business address in Sarasota go by the following names:

  • The Institute for Police Research
  • The IUPA Law Enforcement Officers Relief Fund
  • The US Secret Service Uniformed Division Officers Association
  • International Union of Police Associations – Florida Local 6000 – AFL-CIO:  
  • Law Enforcement Political Action Committee (listed in prior years but not in 2018-2019)
  • Lee County Deputy Sheriff’s Association

The phone solicitation fundraiser’s names are:

  • Outreach Calling of Reno, Nevada
  • Jak Productions, Inc of Atlanta, Georgia:
  • International Union of Police Associations Call Center (operates out of same office as IUPA)
  • Donor Relations of Las Vegas, NV
  • Public Awareness of Irving, TX
  • Residential Programs, Inc. of Eatontown, NJ
  • Midwest Publishing of St. Paul, MN
  • Sponsored Relations of Houston, TX
  • A Good Call of Waller, TX
  • Group Consultants of Kennesaw, GA

If you receive a phone solicitation call, ask who is calling (the phone solicitors usually say they are calling on behalf or an organization and don’t tell you who they work for) but do not make a donation unless you want 89% of your donation to go to the above organizations.

It is also important to note that it appears IUPA set up/recruited/ or simply allowed a call center as a separate for- profit organization (International Union of Police Associations Call Center) in their own office.  This organization raised $4.7 million but kept $4.2 million for fees, netting IUPA about $500,000.  How can IUPA condone the fundraising behavior of a call center that calls itself the International Union of Police Associations Call Center and who solicits money for the IUPA (out of the same office that IUPA occupies) but keeps 89% of what they raised, giving only 11% to the IUPA?

To read the IRS Form 990 (2018 for the year ending March 31, 2019), click here.

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