The New York Times reported on Thursday that the executive director of a prominent LGBT nonprofit allegedly misused the organization’s funds for personal luxuries. Sarah Kate Ellis, the CEO of GLAAD, an LGBT advocacy organization, reportedly used donor money for extravagant expenses like renovating her home office with a chandelier, renting a property in Cape Cod, flying first class, and staying in luxury hotels.
Legal experts have suggested that these expenses may violate both the organization’s policies and IRS regulations. According to Michael West, a lawyer from the New York Council of Nonprofits, this spending represents a potentially inappropriate use of charitable funds that could be seen as disrespectful to many donors.
“It appears she may have fallen into the trap of excess,” he continued.
According to the New York Times, Ellis received up to $20,000 in her renewed 2022 contract for the purpose of renovating her home office. She utilized approximately $18,000 of this amount to refurbish the upper floor of her residence in Long Island. Richard Ferraro, a spokesperson for GLAAD, informed the publication that these expenses were incurred for television appearances and virtual events.
Prior to the commencement of her new 2022 contract, Ellis had already expended around $15,000 on a three-week stay in Provincetown, Massachusetts. Additionally, it has been reported that she made a down payment of $14,636 for a rental property in the same town for the upcoming summer.
Ferraro alleged it was important for Ellis to stay in the town during the summer to “raise millions of dollars during a traditionally slow time of year for fund-raising.”
She also indulged in numerous first-class flights and stayed at luxurious hotels such as the Waldorf Astoria, where she splurged over $6,000 for a three-night stay in October 2022, as per invoices disclosed by the NYT. Additionally, she reportedly spent $3,120 on a luxury limousine service in December 2022. The new agreement entailed a $441,000 base salary along with a $150,000 signing bonus, as reported by the NYT. With potential bonuses, the new contract made Ellis eligible for earning approximately $700,000 to $1.3 million annually.
Legal experts informed the NYT that the IRS prohibits extravagant spending on executive compensation that is considered unfair or not in line with other executives at similar organizations. While boards of directors may sometimes offer high pay to individuals they perceive as highly skilled or valuable to the organization, excessive amounts could lead to the loss of tax-exempt status or other financial penalties if deemed inappropriate by the IRS or other regulators.
Brian Mittendorf, a professor at Ohio State University Fisher College of Business, stated to the NYT that Ellis’ compensation package resembled more that of a for-profit executive rather than a charity director. According to the NYT, GLAAD has concentrated a significant portion of its advocacy efforts on monitoring media outlets. GLAAD has previously criticized the outlet for being “inaccurate and biased” in its coverage of transgender issues, although the NYT has defended its past work.
