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OWS’s Rolling Jubilee Has Yet to Explain What They’ve Done With $590,000 Despite Promises of “Full Transparency”

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Last year, the Occupy Wall Street group Strike Debt announced its Rolling Jubilee initiative to help address the problem of debt collection abuses. Rolling Jubilee’s approach is to buy debt which sells for pennies on the dollar and forgive it. Their idea was to bring attention to the unresolved problem of high levels of consumer indebtedness and to try to develop new, creative approaches for dealing with it.

Because this effort was part of Occupy, and many Occupy groups, like Occupy the SEC, Occupy Sandy, Occupy Homes, and Alternative Banking, have done impressive and important work, it goes against the tide to criticize a well-intended initiative like Rolling Jubilee. But if Occupy is to serve as the incubator for new ways to organize, provide aid, and govern, that includes holding individuals and groups accountable. Otherwise, Occupy simply becomes a different type of tribal entity, like the legacy political parties, rationalizing its actions because its cause is supposedly nobler than that of its opponents.

Rolling Jubilee’s Failure to Live Up to Its Plan of Action and Promises of Transparency

According to its website, Rolling Jubilee has raised nearly $617,000. It had hit the $500,000 mark by November 2012. Its main site declares (emphasis ours):

All contributions go to The Rolling Jubilee Fund, a non-profit 501(c) (4) organization with the exclusive mission of buying and abolishing debt. 100% of the money raised will go to the process of buying and abolishing debt (a process that includes some associated costs such as paperwork, accounting, and legal fees). The volunteers managing the fund receive no compensation. In the interest of transparency, a full accounting of funds received and spent will be reported on our website.

From its Transparency page:

RJ is committed to operating with transparency, integrity and in the spirit of the Strike Debt principles. The Board has agreed to a policy of transparency and openness while being careful not to compromise the complicated work of carrying out its mission. This page is an attempt to practice the principles we preach. It contains the following information about RJ, all of which will be updated regularly.

1. Status of funds
2. Operations, policies & protocols
3. Individual debt buys

Despite the promises about openness, the site does not appear to have been updated since February 2013. We aren’t the only ones to notice the lack of apparent activity. On September 17, when Strike Debt re-tweeted some old news stories about Rolling Jubilee debt buys, the responses were skeptical:

Screen shot 2013-09-21 at 12.29.44 AM

Initially, Rolling Jubilee was forthcoming. It made two purchases of medical debt, one in November 2012 and a second in January 2013. For each, they provided a summary of the key statistics that was easy to scan and helpful. Those summaries allow you to see that so far, Rolling Jubilee has spent $28,079 buying debt, which provided relief to 1108 people. This is a mere 4.6% of the total funds Rolling Jubilee has raised. So it’s legitimate to wonder what they’ve been doing with the rest of the dough in the meantime.

They also held two board meetings, one in January and the second on February, but the minutes were skimpy, troublingly informal and fell well short of basic requirements (no indication of who submitted them, whether there was a quorum; contrast the Rolling Jubilee record with those from this legal guide for not for profit board minutes).

But the big problem seems to be the lack of a proper governance structure. A board, be it for a profit-making organization or a not-for-profit, is not supposed to be identical to the people running the venture. It is designed to oversee the people doing the work and to serve as a check and control on them (boards will typically have some key people from the organization involved, such as the executive director, but the majority are not in operating roles). However, the titles of the individuals listed as board members are all corporate officer titles: President, Vice President, Secretary, etc. At this remove, it looks as if Rolling Jubilee has an inherently defective governance structure, with the board too involved in the actual work of Rolling Jubilee to provide proper oversight (no one will put on his board member hat and find fault with the work he did while wearing his Rolling Jubilee worker bee ha).

And there red flags even in what little we can see of what Rolling Jubilee has been up to. They’ve publisheda statement of financial and control policies, and some of them are troubling. Individual board members have the power to spend significant amounts of Rolling Jubilee funds and make binding commitments:

– All Board members are authorized to individually sign checks up to $10,000. Checks greater than $10,000 require a signature of a second Board Member.
- All Board members are authorized to enter into contracts for activities that fall within the purview of the organizational mission.

To put it politely, a $10,000 signing authority for a board member is simply unheard of. And in general, there’s no reason in any organization for lots of people to have spending authority — let alone board members who, as we see above, should not have executive authority. It’s preferable to have as few people as possible empowered to disburse funds (the board minutes also show that unnamed tech people are handling PayPal, and funds can be disbursed from PayPal, so it may well be that people in addition to the board members are disbursing funds).

I spoke to someone who sits on the board of a foundation with a $100 million endowment and has also been on the boards of smaller not for profits. When I told him that Rolling Jubilee gave board members signing authority up to $10,000, the first sentence out of his mouth expressed shock. The second had the words “criminal” and “attorney general” in it. An investigative journalist who looked at the financial policies page said by e-mail: “This is shocking. They’re either corrupt or incredibly incompetent, either way this is appalling.”*

Now the board did plan to develop and “Operating Reserve Policy” and a “Document Retention Policy” by June. But due to the lack of updates, we have no idea whether that happened. And in any event, those policies would not address the governance and control concerns we’ve flagged.

Even worse, there are no apparent constraints on the contracting powers of individual board members. As the policies read, a board member can sign a contract for any amount unilaterally, without discussion with or approval of fellow board members. The only restriction is that the Board must approve the use of the “designated cash reserve fund” (which as we will see below is only 10% of the funds raised). To put it another way, I produced amateur theater in college and we had better controls over funds collection and expenditures than what I see from Rolling Jubilee.

In addition, even though the main section of the site states that board members and volunteers receive no compensation, the policies give some wriggle room:

- Advances of funds to volunteers or directors can be authorized by the Board. Direct and necessary expenses by volunteers or directors including travel for meetings and other activities related to carrying out responsibilities shall be reimbursed.

The more conventional approach is for parties making expenditures on behalf of Rolling Jubilee to get expenditures approved in advance and then submit for reimbursement with receipts for anything other than very trivial expenses. While I can see that a volunteer might need a cash advance upon occasion, I’m troubled by the idea of allowing board members to take cash advances.

But even with these concerns, Rolling Jubilee gets credit for providing information through early February. But they went quiet after that. They had already stopped tweeting from their Twitter account on December 18, so any Rolling Jubilee news appears on the Strike Debt account. They maintain a separate Facebook page, but it’s largely inactive.

Rolling Jubilee reaffirmed its commitment to transparency and the timely release of financial information in a March 17 press release (emphasis ours):

With a focus on transparency and a policy of humble indebtedness to our donors, supporters and the public, we decided to release the following on our newly launched transparency page:

FY12 CPA audit (in process, will be forthcoming ASAP)
Quarterly financial reports (in process, will be forthcoming ASAP)
Names of Board of Directors
Board of Directors meeting minutes
Financial Policy
Redacted purchase agreements
Debt buy summaries

It is difficult to understand, particularly in light of an “ASAP” promise made over six months ago, why no further financial disclosure has been made. Anyone who runs a small business can see what a simple operation Rolling Jubilee has, or more accurately, should have if they have minimal controls in place. They have limited sources of funds: PayPal, WePay, checks, and proceeds from a big party they had last November. It would both streamline reporting and improve controls if they had all transactions flow through the corporate checking account (as in no use of PayPal to make payments; the board minutes of January 22 indicate funds are “automatically deposited” but given that PayPal is the equivalent of a bank account, the discussion is not clear). But even if they used PayPal and a corporate credit card too, there simply aren’t that many sources of funds or disbursements for a bookkeeper to reconcile.

In addition to publishing the summary information about the debt purchases, the March 17 press release also listed their other major expenditures:

We decided to put aside 10% of our donations in reserve, and have spent some initial money on start-up costs: CPA fees, consulting fees, insurance fees, registration paperwork, etc. Going forward, we expect these costs to be significantly minimized; most of the remaining money will go directly to buying and abolishing debt. We still expect to abolish around 20x what we raised: which would be nearly $12 million.

It’s important to keep in mind that the total amount abolished is actually not the most important metric. Not for profits are judged to a significant degree on how much of the money raised goes to the goal of the program, rather than for administrative expenses. My understanding is the usual rule of thumb is for 90% of funds raised going to the program’s goal (readers who are more current can correct me if the calculus is more complex. Update: Reader Eleanor in comments says that the target is more like 30% for overheads, fundraising costs, and other admin like accounting. My intel was stale and from someone involved mainly in really big charities which can often be run more efficiently than small ones). In theory, Rolling Jubilee should score well here by having so much work done by volunteers. But there are reasons that may not prove to be the case.

The first is that certain types of overheads like annual accounting tend to have de facto minimum levels (and not for profits require more extensive reporting than a for profit). In addition, it is likely that Rolling Jubilee will have to register as a debt collector in states where it buys debt. That entails another set of filings, legal costs, and fees. In addition, both of fact sheets on the debt buys listed the amount spent as “Total Cost (w/ Servicing)”. A footnote stated: “Servicing: Data review, data input & cleanup, tracking, mailing, etc.”

Now it isn’t clear whether the servicing costs were paid to a debt collector or debt seller (raising the troubling issue that Rolling Jubilee is enriching the very parties that are part of the problem) or were incurred by Rolling Jubilee. I’d like to see more detail and disclosure on the servicing component, particularly since some of it might be considered to be part of general administration.

The reason for the concern with the administrative costs is that it may not be possible, even with Rolling Jubilee getting so much free labor in the form of volunteer help, to buy debt efficiently for reasons of scale (too much fixed costs relative to how much money they’ve raised) and complexity (as they’ve gotten into it, the project is more difficult than they thought). The March 17 press release confirms these concerns:

If you are wondering why we have not spent all of the funds we raised on debt yet, fear not. We are proceeding with care and caution, and more announcements will be made and actions planned in the coming months. A significant amount of due diligence must be done on each portfolio and we are weighing our options carefully. We think it’s more important to spend donations well–on debts that will actually help people–than spend them quickly. Each portfolio of debt we buy also provides an opportunity for public education and political momentum, and we hope to use these opportunities as wisely as possible.

When starting Rolling Jubilee we committed to buying medical debt first and foremost, wanting to call attention to the profound inhumanity and inequity of our for-profit healthcare system. We have spent a great deal of time learning about the medical debt market, and the healthcare industry at large. It is an industry designed to confuse, overwhelm, and exploit….It’s also hard to purchase. Unlike credit card or payday loan debt, it is usually sold by hospitals and practitioners to local debt collectors, sometimes in bundles or by physicians groups. Because we don’t want our purchases limited to New York, we have to work locally and regionally rather than in the national market. This means building relationships, one at a time.

Now while that sounds responsible, consider: if it takes Rolling Jubilee more than a year (and at the rate it is going, it’s going to take a LOT longer than that) to spend the money they raised in 2012, are they really doing what is highest and best for the people they say they want to help? Justice delayed is justice denied.

One benchmark for measuring whether this experiment is successful would be to compare what the results would have been if the same amount of money had been give to Legal Aid or to law schools for the express purpose of helping individuals discharge medical-related debt (many law schools have clinics that provide legal advice and representation to stressed borrowers). These are low-cost, efficient, established channels that can achieve the same end and might provide higher leverage of the funds and more rapid relief to debtors than the Rolling Jubilee initiative.

Rolling Jubilee’s Reluctant and Incomplete Responses to Our Inquiries

We started in mid-August trying to find out why Rolling had stopped making disclosures. Our diligent intern Jessica made inquiries through several channels with no success. The one that seems to have finally worked was FaceBook message on August 26. Even so, she didn’t get this reply from the president Laura Hanna until September 4:

Apologies for the delay, we have been very busy and some of us traveling for the holiday. We have made significant progress and would be happy to provide further information but it would need to remain off the record until our next public organizing effort.

Please let me know if you would like to discuss further, perhaps we can meet for coffee? If that is not possible, a GHO? [Google Hangout]

Needless to say, given all the promises of “full transparency,” off the record does not cut it. We asked Jessica to send a politer version of that response and ask more specific questions on September 18. She received this reply from Laura on September 21:

Hi Jessica,

The team is happy to talk on the record according to a timeframe that works with our organizing and media strategy, early November. If you want to perform any interviews earlier it will need to remain off the record.

Yves here. Notice how “full transparency” has become subordinate to other, unexplained priorities.

However, November is right around the corner if she would rather wait for all of our updated material?

Yves here. Ahem, November is not “right around the corner” from September 21. And Rolling Jubilee said it would publish financial statements “ASAP” in writing, on its own initiative, in March, so its track record does not lead one to put much faith in this promise about November.

As we say on our website, all donations go to buying and abolishing debt and minimal administrative costs, the primary one being the services of our CPA. The Rolling Jubilee team and the legal team all work pro bono. Our taxes are on extension for mid-November, day to day work is carried out by the RJ team and while we are under no legal obligation to provide board meeting minutes we will probably be inclined to do so.

Yves here. You can see how they’ve repudiated an earlier commitment to provide full transparency to taking as their starting point the minimum of what the law allows. Contrast Hanna’s “no legal obligation” and “probably be inclined” to this commitment on its website:

RJ is committed to operating with transparency, integrity and in the spirit of the Strike Debt principles. The Board has agreed to a policy of transparency and openness while being careful not to compromise the complicated work of carrying out its mission.

And Rolling Jubilee had earlier established that they thought more or less contemporaneous releases of debt purchases and prompt disclosure of board decisions met Occupy standards of transparency. Now they’ve retreated considerably. Back to the e-mail:

We do recall Yves having concerns about our legal team. She should have learned that we created this project with a legal team and our tax attorney is David Miller, a partner at Cadwalader. He is ranked the top tax lawyer in the United States for the seventh consecutive year by US Lawyer Rankings, Chambers Global’s The World’s Leading Lawyers, The Legal 500 etc.

If she would like a current public update about Strike Debt, Rolling Jubilee is not our only initiative. We recently released this piece in Jacobin. http://jacobinmag.com/2013/09/higher-education-can-be-free/ and will be publishing the second edition of our Debt Resistors Operations Manual. I am happy to put you in touch with others working on the second edition.

Yves here. Notice that the “created this project” and the immediate mention of Miller would leave someone not familiar with the history with the impression that Miller was involved from the inception. But in fact, it’s only in their final published board minutes, on February 7, 2013, that they say he has agreed to help pro bono. In fact, they make a critical tax decision, which form of organization to use, well before Miller was involved, when they set up a 501 (c)(4) in October 2012. And Miller in November told Bloomberg he would have done it differently. From Bankrate in November 2012:

Tax attorney David Miller suggested to Bloomberg Businessweek that Occupy Wall Street form a tax-exempt 501(c)3 organization to negotiate directly with credit card companies on behalf of individual debtors and structure the Rolling Jubilee payments as grants.

That tax code charitable designation also would be helpful to folks who want to contribute to the cause. Occupy is asking for donations to its strike debt fund, and you and I can only deduct gifts that go to IRS-approved groups.

Because Occupy is a 501(c)4, a nonprofit tax structure that allows it to allow lobby for causes, our donations to it are not tax-deductible. If it were, however, a 501(c)3 then we’d be able to deduct our donations.

In other words, Rolling Jubilee had already made some basic tax decisions, such as what type of tax exempt organization to use, before Miller was involved. In the summary above, he’s not speaking as their attorney but as a helpful outsider offering some advice that differs from what they’ve already done.

Back to Laura’s e-mail:

We are not sure how else to say this but we have nothing to hide, we are just trying to be as responsible and strategic as possible. Because we work on this as volunteers (and need to work other jobs to make a living) it takes a little longer to do our work. We are proud to be able to say we have met our public promise, on a reasonable timeline… and the supporting evidence will be provided to the public November.

Rolling Jubilee was created as an organizing tool that would also help some debtors along the way. We are very concerned about not wasting the opportunity to educate and mobilize people we hope will come with the upcoming announcement.

Sincerely,
The Rolling Jubilee team

Yves here. It’s clear that the Rolling Jubilee position is that being “strategic” is somehow in conflict with the sort of prompt and full disclosure they were providing early on, and they’ve now decided that being “strategic” is more important than repeated, specific promises they’ve made regarding transparency and financial accountability, such as releasing quarterly financials.

Needless to say, I did not find this response satisfactory. We had told them repeatedly the facts in the public domain did not tell a pretty story and we were not prepared to wait till November when more disclosure might or might not be made.

To give them a final opportunity to respond to the issues that concerned us most, rather than go on the ugly-looking information we had at hand, I drafted a reply and asked Lambert to give it a go and send it on directly:

Laura:

Yves has returned to her desk, and I have some more detail for you.

We’d like on-the-record answers to the following six points in 24 hours (that is, by 10PM EST Sunday, September 22). Please explain your failure to:

1. Document the rationale for the unusual $10,000 signing limit for board members;

2. Make more debt purchases as promised, or if you made them, to disclose them properly;

3. Engage in normal corporate governance practices like holding regular board meetings, or if you did hold them, to publish minutes;

4. Disclose all professionals you have hired and/or what you have paid them;

5. Publish your quarterly and annual financials, which were promised “ASAP” in a March 17 press release. Given your claim that you have few types of expenditures, the inability to produce any information after repeated promises of “full transparency” is troubling;

6. Explain the servicing component of your debt purchases more clearly; it is bundled in and not broken out separately. Was Rolling Jubilee paying the debt seller for this servicing? Or were these tasks performed by Rolling Jubilee? If the latter, why are these tasks being treated as part of the debt purchases?

We understand your desire to be “strategic.” That’s why we feel it would be best to go on the record with explanations for the above six points.

Thanks!

lambert strether

We got this reply an hour and a half later. However, notice how they did not answer the questions we had just sent, but instead provided a Q&A which included most but not all of the questions our intern Jessica had sesnt earlier (emphasis theirs):

Yves and Lambert:

We will continue to work with Fuoco** until the end of the initiative. You are right, it is a shame… so we have provided a statement.

Everything written below is on the record:

The Rolling Jubilee has been able to abolish more debt that we had initially hoped. We are preparing an announcement in mid-November about our most recent debt purchases. We will publish full transparency reports about these debt purchases as we have with our previous debt purchases. We want to use these announcements strategically to focus media attention on the injustices of capitalism and build a debt resistance movement.

Q) If there have been more debt purchases, why have they not been disclosed?

RJ) Yes there have been more debt purchases, ones that are much bigger than our earlier purchases. We are planning an announcement for mid-November. Each debt purchase will be accompanied by full transparency reports just like our earlier debt purchases.

Yves here. Hopefully we will see the promised reports in November. But notice that the response fails to answer the question, what their rationale is for refusing to adhere to what their earlier actions indicated they thought “full transparency” mean, which was punctual and fairly detailed disclosure of major expenditures. Absent providing the promised quarterly reports, they have still not explained their justification for a policy change. Instead, they are trying to pretend they have not retraded one of their fundamental promises.

Q) Are the board meetings still being held? If so, why are the minutes not published?

RJ) The board is required to meet once a year and will probably not meet more often than that unless there is some specific need to. The Rolling Jubilee working group which researches the debt portfolios and does the day to day volunteer work for the project meets often.

Yves here. It’s worth noting that the financial policies allow for the board to make decisions by e-mail, without having a meeting. And as we’ve indicated, the extremely lax policies (large signing authority, ability of board members to make large contractual commitments) would normally lead one to hope for more concerted, rather than “bare minimum the law allows” approaches to oversight to compensate for such unusual arrangements.

Q) Why have financials not been published? Tax returns were due no later Sept 16th for 2012.

RJ) We are on an extension, when we make our upcoming announcements in mid-November we will also be publishing a transparency report and a Quarterly Report, created by our CPA. While we have hired a professional team of CPAs for the duration of this initiative, the list below covers all other professional and administrative costs per purchase:

- portfolio purchasing and other debt costs

- consulting and professional fees

- bank wire fees

- state registration fees

- mailing and postage fees

All of this information will be forthcoming. To be diplomatic, we do not want to break the news of our next purchase on your blog right now.

Yves here. This still leaves us in the dark as to whether the servicer is paid or Rolling Jubilee makes these payments, and how large they are relative to the actual amount of debt purchased. And even though one hopes they’ll meet their extension deadline, it is hardly unheard of for organizations to file late. So we’ll have to see what Rolling Jubilee provides in November.

Back to the e-mail:

The Rolling Jubilee team (including legal) all work as volunteers. We do recall Yves having concerns about our legal team. She should have learned that we created this project with a legal team including our tax attorney is David S. Miller, a partner at Cadwalader.

He is ranked the top tax lawyer in the United States for the seventh consecutive year by US Lawyer Rankings, He is listed in Chambers Global’s The World’s Leading Lawyers, Chambers USA: America’s Leading Lawyers, The Best Lawyers in America, and The Legal 500.

David was Chair of the New York State Bar Association’s Tax Section in 2008. He is a recipient of The Burton Award for Legal Achievement, which recognizes exceptional legal writing. He is a member of the Tax Forum and a member of the board of directors of the International Tax Institute.

David has represented more than two hundred charities on a pro bono basis. In 2011, he was named as one of eight “Lawyers Who Lead by Example” by the New York Law Journal. David has also been recognized for his pro bono work by The Legal Aid Society, Legal Services for New York City, and New York Lawyers For The Public Interest.

Lastly, we would like to inform you that we will plan to publish our full email interaction with Naked Capitalism.

Thanks!

The Rolling Jubilee Team

Notice what happened:

1. It took a “strategically” stern warning and a deadline to elicit an on-the-record response.

2. While we do appreciate getting some sort of answer, notice what they did. They answered the questions Jessica asked in August and not the later ones Lambert sent relating more specifically to our main concerns. This is better than nothing but less than fully forthcoming. Moreover, the tone of their message makes clear that they feel they answered under duress. Again, both the attitude and the level of disclosure is inconsistent with what they represent, now, on their website, which remains open for donations (Lambert gave them $20 on Friday).

3. Rolling Jubilee does indicate they will publish a “Quarterly Report”. That will hopefully be the first of regularly quarterly financial reports, but it could be less than that (as in some key financial metrics as opposed to full financials). Stay tuned to see what sort of disclosure they provide.

4. Since Laura brought up Miller again, it is is only fair to remind readers that he joined their effort in February, after we had written three posts in November and December questioning their tax position and urging them to get a heavyweight tax attorney involved.

It’s troubling to find the members of the Rolling Jubilee board try to avoid answering basic questions and living up to promises they made by taking the position, in effect, that they have good intentions and a good cause and thus aren’t required to provide much in the way of responses. Yet they use the Occupy brand in marketing (Google the press on Rolling Jubilee), profess to represent a more ethical, humanistic approach to the problem of indebtedness, and made repeated, specific promises about openness. All we’ve asked is that they walk their talk. It’s disappointing to see egos and concerns about appearances, couched as their desire to be “strategic,” get in the way.

____
* If you think we are asking too much of a board of a comparatively small non profit, please look at the following:

Right From The Start: Responsibilities of Directors of Not-for-Profit Corporations New York State Office of the Attorney General

Ten Basic Responsibilities of Nonprofit Boards National Center for Nonprofit Boards

Bylaws of the Model Railroad Club (NJ)

http://tmrci.org/

http://tmrci.org/assets/bylaws.pdf

All institutional documents:

http://tmrci.org/assets/

Example of minutes, Central Arkansas Model Railroad Club

http://artrains.org/index.php5?title=CAMRC_MINUTES_8_05_2013

“At this point in time, all bills are paid. Current account balance is $1,500.13. 2013 club dues have been paid by….

**Fuoco is an accounting firm mentioned in the board minutes but it was not clear whether or not they had been engaged.

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67 comments

  1. Brandon

    I agree with Yves that the actions of RJ so far have not lived up to their promises. I also agree that RJ needs to reform its oversight structure, the hiatus described is inconsistent with transparency. For all the talk of strategy RJ puts forward, it doesn’t seem they have a strategy that inspires confidence in its chief supporters. I guess we’ll find out mid-November if one of the biggest arbiters of the Occupy brand can uphold it.

  2. kimsarah

    Off the record — at minimum, Rolling Jubilee is in over its head or incompetent, or both. At maximum, this is a scam that used the OWS brand to swindle lots of suckers. Perhaps someone who donated to this organization could step forward and provide insight.
    On the record — nice story, and I can’t wait to hear the next announcements (and answers to Lambert’s questions) in November!

  3. vlade

    Agree, either corrupt or criminally incompentent.

    Either way, not good for OWS brand or the cause (if one was into conspiracy theories, one would posit that that could be another cause to join the two above, although technically it could fall under the corrupt).

    It reminds me of a phrase from the depths of socialism – proactive idiot is worse than a class enemy.

    1. Ned Ludd

      I’m not sure if this falls under proactive idiot: a lot of people are eager to volunteer and take on tasks, then they blow everything off and leave others in the lurch. In college, ten of us volunteered to go to a shelter to help them with some basic tasks like cleaning. Only two people showed up; the rest never even bothered to call to cancel or apologize.

  4. William

    Yes, nice story. I agree with the idea that they are not being criminal, instead are over their head and incompetent. I have seen this very thing happen with other hippie-type groups when put in charge of large sums. Or simply hippie-type groups. Governance and decision-making are not their strong suits. They prefer to operate in the realm of dreams and ideas and short-term action. But suffer from short attention spans.

  5. Hugh

    Rolling Jubilee looks like a remarkably sloppily run organization. My guess is that they are hoping to parlay Miller’s participation into a splashy November PR event that (A) will draw in more cash and (B) paper over their gross administrative incompetence. Yves’ pointed questions are for them inconvenient in both their content and timing. Their failure to adequately address them means the November relaunch of their brand is going to carry a lot of old baggage and question marks, –not what they wanted at all. Indeed to some degree these concerns pre-empt it.

    “Strategic” is really just code for their plan to merchandize themselves, and part of a good merchandizing plan should have been exactly how to deal with queries like Yves’ in a positive and forthright manner, or at least a passing resemblance to one. You know something like the following: Since name heavy hitter tax lawyer came on board, he strongly advised us to do a complete rethink of our whole approach to helping those drowning in debt. This caused us delays and variances from our stated commitment to transparency as we rebuilt our organization from the ground up. We are near finishing our rebuild and will be ready to present to the world a new, more effective Rolling Jubilee in November. We are proud of our efforts and hope you will be too. blah, blah, blah.

    It’s not hard to write this kind of copy, and I have to wonder what it says about Rolling Jubilee that they are engaged in a major PR effort and yet have no one there who knows how to do this kind of PR.

    1. vlade

      “they are engaged in a major PR effort and yet have no one there who knows how to do this kind of PR”

      You mean they are like someone who’d engaged in an activity with potentially huge tax implicatons but has no-one who knows how to do that? Unbelievble.

    2. Robert Frances

      I’m assuming the November date corresponds to when their federal tax return gets filed (and perhaps released to the public). If the organization chose a calendar year-end the Fed return would be due on May 15, and with two 3-month extensions available, that puts the final due-date at Nov 15.

      And I agree with your assessment – the founders of the organization had these starry ideas but didn’t do the initial heavy background work to ensure they set up and operated the organization in a proper manner. To their benefit, the IRS is usually fairly accommodating with non-profits that are being earnest with their compliance of the often complicated tax exempt rules. Tax penalties are often waived for first time infractions unless it appears to the IRS that some sort of scam or fraudulent scheme is involved.

  6. PaulArt

    I gave money to these creeps. There was one dude who came on Real News Network with a Brit accent and spoke about this Debt Jubilee thinggie and solicited donations. I watched that and gave money.

    We need more names than this. Please give us the names of the top people who are involved so that we can prevent our pockets being picked by the same people again.

    1. diptherio

      From their website:

      President: Laura Hanna
      Vice President: Thomas Gokey
      Treasurer: Amin Husain
      Assistant Treasurer: Ann Larson
      Secretary: Christopher Casuccio (“Winter”)

  7. s spade

    If you’re not careful, they will insist you take over the operation yourself.

    You think it’s easy buying 1108 separate medical debts for $28,079? I wouldn’t get too excited until I knew the principal amount. What are they, $75 each?

  8. Eleanor

    Back when I was doing accounting for 501(c)3 nonprofits, we kept overhead (administration and fundraising) under 30%. Ideally, we wanted to be well under, in the 20-25% range, but 30% was the absolute top. A 10% overhead — with 90% going to the mission — would be insanely good.

    1. diptherio

      Yeah, I run my charity project through a local 501(c)3 and they charge me 10% just for bookkeeping/using their tax-status (fortunately I am by far the largest donor and I’m not concerned with tax-deductibility).

    2. YankeeFrank

      Wow. This makes CRS (Catholic Relief Services) look like the most competent and efficient organization ever, which they probably are. Their total overhead is 7%. They obviously have decades of experience and commitment. I think this Strike Debt thing is testimony to the fact that good intentions without sufficient organization and realistic support structures can wind up doing harm.

      I hope they get their act together soon.

    3. Yves Smith Post author

      Thanks for the sanity check. I’ll put an update in the post, since this is an important factoid. I heard 10% a really long time ago (like 20 years ago). This was from someone involved in large charities, and I bet there are scale factors (the bigger you are, your costs generally don’t increase at the same rate, so big charities that don’t have ridiculously expensive fundraising, like society parties in pricey venues, can be operated more cheaply than little ones). Plus I bet compliance costs (the accounting and IRS stuff) have gotten more burdensome over time.

  9. PaulW

    Beware those with good intentions. This is no surprise. The entire bleeding hearted charity industry has evolved into something similar. Up here, we have people running the Heart & Stroke Foundation, Canadian Cancer Society and major Toronto hospitals(just to name a few examples) who earn more than $200,000 a year. Plus who knows how much in bonuses! Like Wall Street, it’s just another example of insiders enriching themselves. After all, when the entire government is one big fraud we basically live in a fraudless society where anything goes.

    What do you expect from a society which can murder a million Iraqis and no one in the entire western world can offer anything more than protest to make themselves appear to care? We live in a morally bankrupt and irresponsible civilisation which, if it’s on its last legs, deserves to go. Charity racketeering is just part of the whole package.

    1. Yves Smith Post author

      It is much more likely that these folks are incompetent rather than skimming. I’ve gotten some e-mails privately from people who know the folks in the effort saying they’d be shocked if they were doing anything shady.

      However, their laxity about control of the money could allow someone to steal (or the common variant, borrow with the intent of getting it back before someone notices, and then not be able to return the funds), which would give everyone involved a huge black eye. For instance, they have this in their first board minutes: “Incoming cash goes through AB (tech volunteer) via websites (Wepay & PayPal).”

      Why does a tech person have anything to do with $? We Pay and PayPal are super simple. The only reason a tech person would need to be involved would be to link new $ coming in to the counter on the first page on their site. There’s no reason to have them involved on an ongoing basis once they wrote the code to do that. You want comparatively few people touching the $ and good checks and controls over them. They appear to have done the reverse.

  10. Watt4Bob

    My guess; they’ve had some ‘problems’, which are serious enough to endanger their organization’s existence.

    It only takes one or two board members abusing their check writing authority to sink the whole endeavor when you consider the likely reaction of the M$M which is hostile to the whole OWS movement.

    1. diptherio

      That’s why for my little Nepali school we require two signatures from board members (from different villages) before any disbursements are made from our account…and we’ve never had more than a few thousand dollars to worry about.

      As Kali Baba explained to me after an initial faux pas, “Accounting important, without accounting no one believe. Big tension.” Wise words…

  11. Robert Frances

    The point about setting up a 501c3 makes total sense so that contributions to the organization are tax deductible by the contributors who qualify. Advocacy organizations often establish both a c3 (“education” fund) and c4 (operating and advocacy). In any case, the debt relief payments could be considered taxable income to the debt holders even if made directly to the lender. There should be memo in their files as to whether the payments are or are not taxable to the debt holders, along with discussion of any 1099 reporting requirements for the payments.

    The organization, operation and management of non-profit orgs is not trivial. There is often significant tension between the people operating the non-profit and any people who are trying to make sure the non-profit follows the detailed, often arcane, rules to ensure the org is in compliance with the IRS regulations. Hopefully Mr. Miller and others are helping them with their organizational and operational structure as well as with any tax reporting requirements.

    Allowing board members of any organization (for-profit or non-profit) to authorize expenditures is a flaming red flag that shows complete lack of organizational controls and oversight. This practice should be ended immediately. It’s usually easy enough to find board members who are sympathetic to the mission of a non-profit without the overlap of the organization’s operations and board oversight.

    Kudos to Yves and NC staff for bringing these issues to the attention of people who care about the “Occupy” name and its legacy.

    1. Ulysses

      I can well remember one early morning in October 2011, being asked in Zuccotti park my opinion on whether we should think about raising and spending money to further our goals. I said then what I repeat now, let others do that stuff, we should follow the example of St. Francis as illustrated in this story from the Legend of the Three Companions: “One day a man of the world placed some money by the crucifix in the church of the Portiuncula; and a simple-minded brother took it in his hands and put it on the window sill. When Francis heard from the brother what had happened and how he had touched the money, he ordered him to take it in his mouth, carry it out of the church, and drop it on the nearest dung heap he could find.”
      http://www.francis-bible.org/writings/legends_2.html

    2. jpe

      to be a 501c3, though, they’d need to ensure that the debt forgiveness only went to the poor. the way they’re doing things, I don’t see how they could do that logistically.

  12. chrisb

    Another explanation for the behavior is “capture” by deep-pocketed parties who would stand to lose from the success of RJ’s stated approach. There is a PR industry segment devoted to creating astroturf organizations which mimic grass-roots ones. Maybe now they have moved onto capturing and converting grass-roots to astroturf.

    http://techrights.org/2013/01/03/penn-astroturf/

    1. Ché Pasa

      If there is actually something wrong vis a vis the Rolling Jubilee — as opposed to simply not meeting outside expectations nor necessarily following rules set for other organizations — then capture is certainly a possibility.

      The Rolling Jubilee operation appeared to go dark sometime last spring, though it didn’t stop collecting donations. The reasons for essentially ceasing public communications about its operations are anybody’s guess, and that’s highly problematical. Leaving themselves open to speculation about what’s going on is rarely wise.

      The responses to queries by NC are not particularly detailed, though the questions may have struck RJ volunteers as prosecutorial/adversarial rather than helpful/supportive — which in turn could lead to less informative replies.

      RJ is innovative and ultimately has a highly disruptive potential which the PTB likely have no intention of allowing to succeed.

      1. Lambert Strether

        If RJ is really going the “disruptive” route — and I’m all for that — they’re going to have to learn how to deal with adversarial questions, so Yves is doing them a favor; far tougher questioning could be on the way, and they’ll have a little experience dealing with informed skepticism. Win-win all around, I’d say.

        In any case, the entire correspondence clearly shows these guys had no willingness to go on the record at all when the questions were “supportive.” Only when we set a deadline for an answer and made the questions much more pointed did we get any transparency at all, and you will notice they picked the softer (and somewhat less comprehensive) set of questions to answer.

  13. diptherio

    Rolling Jubilee needs to be called-out loudly. This is f–king ridiculous. Board members able to write $10,000 checks without so much as an approving nod from anyone else?!? If their goal was to make their organization appear to be a scam, they’re doing an excellent job. Please, no one give these ‘tards any more money until they get their sh*t figured out (apologies to those with actual cognitive disabilities, I mean no disrespect).

    I mean, excuse me if I don’t necessarily trust a bunch of people whose names I’ve never heard before, who refuse to answer simple questions directly, and who have designed a made-to-be-embezzled charity. Listen Rolling Jubilee, you don’t get a free-pass just because you’re associated with Occupy (same goes for the Occupy Money folks). If anything, it means you will receive increased scrutiny from all sides. You do not get the benefit of the doubt. We’ve had it up to here with pretty words and PR, we get enough of that from the PTB, WE DEMAND PROOF.

    Even if these people turn out to be well-intentioned but clueless (as compared to scruple-less and rapacious) their org needs to be consigned to the round-file or totally reorganized under new leadership. This crew has shown that they’re not up to the task, at the very least. They should disclose all their financial information, pass-on their remaining funds to related non-profits, and close-up shop. Maybe they can try again after they’ve figured out the basics of non-profit management. Right now, they’re just giving Occupy a bad name.

    And for the record, running an org on volunteer labor sounds good, but is practically impossible to pull off. In a perfect world people wouldn’t need to be paid to do good work, but in the one we’ve got remuneration is generally necessary if you want the work done (on time and well).

  14. AliceS

    I’m not sure I understand why people seem to be on the war path about this. So far the reports have been incredibly thorough and the next one is coming soon; November is just around the corner when you are talking about a project of this scale.

    My understanding of the Rolling Jubilee has always been that it was meant to get people thinking about and questioning debt. (I would have been more critical of the project if the point was simply to buy and abolish debt.) Part of the public promise that was made was also to use this money tactically; I would be more upset if I felt that that wasn’t happening than I am over having to wait an extra couple of weeks while they organize an announcement.

    1. Yves Smith Post author

      The promised quarterly reports as soon as they had their site up. They also promised a 2012 report “ASAP” on March 17. That means they are over six months late on their promised annual report and have missed 2 quarterly reports and clearly intend to miss the next one.

      On top of that, I’m told via e-mail that their treasurer resigned and has asked to have his name removed from the site, but no one has done so. A board member resigning (as well as other founding members of RJ) is also material information that is being withheld.

      And their own disclosures show that they have astonishingly bad controls. That ALONE is a big cause for concern. The going silent and giving obfuscatory answers when asked basic questions isn’t a way to engender confidence.

      Oh, and you managed to pretend RJ never made repeated promises of full transparency. What about living up to your word don’t you understand? Are you telling me that it’s OK to let RJ tarnish the Occupy brand by acting just like the big banks and engaging in bait and switch? It would be one thing if they were being open about their problems, but they are acting exactly like a big company in trouble, except they are being inept about the PR part of it.

  15. PeonInChief

    Whoa! Any nonprofit auditor would be freaked at the very idea that all board members could sign checks for $10K. In most nonprofits, only one or two board members can sign checks, and they only do so for checks where two signatures are required. Ordinary bills (rent, phone, and so on) are signed by authorized staff, but not ever by the bookkeeper. The goal is to have at least two sets of eyes on every expenditure. And it’s not because you don’t trust the staff, but to catch errors (like issuing a check for $4,000 instead of $400).

  16. joanneleon

    Oh god, I hope they haven’t f’d up such a beautiful idea and haven’t hamstrung OWS from future fundraising.

    The Strike Debt program was one of the most wonderful ideas I’ve heard in forever.

  17. Darrell Prince

    Unfortunately this seems to be a pattern.. Similar things happened with the original OWS finance- currently at least 100000 is unaccounted for from there(bail fund- goes away and comes back to the person who signed it out),and same pattern, Alliance for Global Justice filed late tax returns, 20,000 short, even if you just counted online donations, and not the more than 100,000 that came in cash. That story is being written right now- and I have bank statements. I was a little worried about what that would (will, now) do to the entire not for profit system- but let’s let the truth be told and the chips fall where they may..
    p.s. 10,000 is a real curious number for the limit.. anybody who took out that much is so easily tracked- it’s an auto register with the feds.

  18. Ames Gilbert

    A tiny non-profit I was involved with authorized the treasurer-with-one-other selected officer to sign checks. Just as importantly, the bank (credit union) DEMANDED that, since it was a non-profit, that there be a two-signature policy in effect before they would complete the process of setting up the account.

  19. chicagogal

    Just a guess on their November timing: that is traditionally the top giving time for people due to the extended holiday season. By choosing that month for their release of information, they may be hoping to capitalize on the feeling of goodwill engendered by people’s emotions and turning it into another round of big money donations.

    Thank you Yves for following up on this story! Unfortunately there are those who think they know how to do a better job than the experts and end up creating nothing but confusion. Charities are businesses like any for-profit business and must be run as such. This is one of those situations where you absolutely must have a hierarchical structure of leadership, which tends to run counter to the normal OWS non-leadership model.

    1. Lambert Strether

      On the requirement for hierarchy, maybe. The absolute requirement is to do serious thinking about transparency and accountability, especially where money is concerned. How do you prefigure anything important if you don’t do that? (Stalin was a bank robber, after all. That turned out well!) That serious thinking does not appear to have been done in this case — and necessarily there would be some public record of it.

  20. Bernardo Issel

    Rolling Jubilee (RJ) touts in its response to Naked Capitialism that it benefits from the pro bono advice of a tax lawyer David Miller from a firm it refers to as Cadwalader, failing to note that it is a corporatist Wall Street law firm by the full name Cadwalader, Wickersham & Taft, clients of which include Morgan Stanley, JPMorgan, Goldman Sachs and Deutsche Bank according to Chambers-Associate.com. While in response to Naked Capitalism, RJ notes various aspects of Mller’s biography that appear to have been copied and pasted from the firm’s website, RJ neglects to include the first paragraph that shows that Miller himself has directly been working for Wall Street interests. “David Miller advises on the taxation of financial instruments and derivatives, cross-border lending transactions and other financings, international and domestic mergers and acquisitions, multinational corporate groups and partnerships, private equity and hedge funds, bankruptcy and workouts, high-net-worth individuals and families, and public charities and private foundations.” If a Wall Street lawyer is comfortable giving you pro bono counsel which probably occurs with approval of his firm, is what you’re doing really that substantively challenging to the interests of Wall Street? Yes various specific individuals will be helped but don’t we need systemic and structural changes, now band-aids. Yes there is the intangible value of the press derived from such an effort, but might not such be derived from directing $600,000 or so in another direction? http://www.cadwalader.com/professionals/david-miller

    1. Mary

      Just because a tax lawyer works for Wall Street firms doesn’t mean they don’t have a soft spot for anti-capitalists. Seriously, have you tried finding a decent tax lawyer who could get into really complex legal issues in New York whose company didn’t in some way service Wall Street clients? Banking is 30% of the New York City economy. Every Occupy group from Alternative Banking to the Occupy Card has gotten advice from sympathetic folks who either work on or in the periphery of Wall Street. It’s really not a big deal.

  21. Bridget

    Dunno if Occupy Austin is a representative sample, but if they are, good luck with your well intentioned advice…..it’s going to go right over their heads.

  22. Ishmael

    Big surprise there. Get a bunch of people to run something who have never ran anything in the world and you get one screwed up mess. Hello!

    1. jrs

      The exact same thing you get when you get the poeple who run everything to run stuff. A screwed up mess. Odd that, isn’t it?

  23. psychohistorian

    Nice bit of reporting, thanks!!!!

    I suspect it is high on the priorities of TPTB to insure that anything connected to OWS is demonized, infiltrated and made to look bad. I expect TPTB to be happy paying more than the value of the organization to make them look bad. I think exploring the affiliation of all the members would be instructive……some propaganda costs more than other propaganda.

  24. Joseph

    I’ve had enough of the dysfunctional and disorganized left. No more excuses for this crap. I’ve been involved in enough activism and organizations to know what’s going on here. The lies, false hope, wishful thinking, and delusion…we can’t just “trust you”. is completely unacceptable and this group must dissolve itself or pass it on to mow competent and honest people.

  25. Godwin

    When movements in the US “collapse” they money they have raised goes somewhere. Often it ends up in the hands of the sponsoring 501c3 who offers their accounting infrastucture for free so that a group can operate on the fly. Sometimes the cash laying around ends up paying the living expenses for the most visible “leaders” who rationalize that their hard work for “free” ought to be compensated.

    Some of us saw this coming a mile away, based on their behavior, particularly the groups on the west coast who were being handled by the Stalinist WWP. This was a really really smelly duck from the get go and if it looks like one too….

    1. Avery

      Honestly I think it would have been a net bonus to have Occupy openly marketed as a campaign of the WWP. Then the WWP would have had to take responsibility, instead of the current state of affairs where nobody takes responsibility.

  26. Tod

    You all are becoming very hysterical about a project that has not failed. This is a blog post pre-supposing that it has to make everyone panic. No one has stolen from the Rolling Jubilee money.

    Rather than wait for the completion you immediately assumed that it has all disappeared?

    A good piece of sabotage to what end I’m not sure.

    1. Yves Smith Post author

      The only saboteurs here are in Rolling Jubilee, who are tarnishing the name of Occupy Wall Street by making repeated, specific promises regarding the disclosure of information and getting angry, defensive, and evasive when asked simple, legitimate questions.

    1. Yves Smith Post author

      Please re-read the post.

      Their published financial policies, which we linked to, state that any board member has signing authority up to $10,000.

      In our messages to them before publishing, we not only asked about that specifically, it was our first question. Yet they refused to provide us with any additional information even though it was obvious we were concerned about that issue.

      Even if turns out only two board members have check signing authority of up to $10,000, it is still very irregular.

  27. Mary

    Geez, sounds like you really have a fish to fry. I’m not involved with the RJ but I know some of the folks involved. It’s disappointing that you couldn’t wait to hear their answers. As an organizer, I know just how long it can take volunteer groups (especially when the volunteers are also working full time at other jobs) to respond, especially when they’re operating on a consensus model. This is okay.
    Justice delayed is justice denied? Give me a break. They’ve been saying for awhile that they plan to have another announcement this winter (likely another debt buy.) Futhermore, RJ has been clear from the beginning that this isn’t just a bailout, it’s an organizing tool. If they’re going to be spending people’s money it behooves them to look carefully at the debt they’re buying. I think the pace they’re moving at is perfectly fine. Maybe it’s too fast for frenzied, New York media types, but organizing-wise they’re doing just fine. Plus, they’ve produced an updated version of the Debt Resistors Operations Manual as well as a new medical report. That’s quite a lot! Breathe a little. You’ll get your answers in due time.

    1. Lambert Strether

      Your comment is a long-winded way of saying Rj/SD doesn’t have to keep its publicly stated commitments.

      If you want to see how it’s possible for non-profits run by volunteers can keep proper minutes and disclose their financial decisions, see the examples from model railroad clubs (!) at the end of the post.

      These things sren’t hard if the willingness is there. If indeed your comment is representative of Rj/sd thinking, the willingness is not there. In fact, you’re doubling down and digging yourselves in deeper.

      can’t you see that endangers the Occupy brand?

    2. Yves Smith Post author

      The Debt Resistors’ Manual is a separate project. It’s nice that Strike Debt did that, but it is utterly irrelevant to the matter at hand.

      Rolling Jubilee has its own 501 (c) (4) and specific requirements that go along with that, as well as the promises they made when they raised the money.

  28. Lambert Strether

    “OWS’s Rolling Jubilee Has Yet to Explain What They’ve Done With $590,000 Despite Promises of “Full Transparency”

    That’s the headline, and — very unfortunately — is just as true today as it was when it was written.

    SD/RJ’s responses boil down (using the classic “shorter” form) to:

    1. Shorter SD: We don’t have to, and

    2. Shorter SD: We don’t have to yet.

    ‘Tis a pity!

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