WHY WE NEED NEW BYLAWS
Because since 2003 our Bylaws have not provided a workable way to recruit and elect competent Directors of the Foundation. Instead, we have elected dozens of “Delegates” to Local Station Boards from polarized and competing “slates” who have elected the 22 Directors each year from among themselves, and have produced factional and dysfunctional national Boards of Directors each year, with both sides trying to prevent the other side from accomplishing anything.
This has led to near total financial collapse. Below is a list of some of the results of this factional dysfunction:
- In 2019, the board had 39 open meetings and 23 closed meetings over 44 days.
- At the end of 2019, the board had not completed 2018 year’s audit, risking the non-profit status of the Foundation.
- At the end of 2019, the board had not come up with the plan to pay off the $3.25 million loan due in full, with interest, on April 1, 2021, which is secured by all of Pacifica’s buildings, furnishings, equipment, and intellectual property, including that of the Pacifica Radio Archives (everything except the broadcast licenses). There is no plan and no funds to pay off this loan!
- There has been a 31% drop in listener donations from 2007 to 2017 (the last audited report) – was $12,610,907 in 2007 and $8,663,786 in 2017. The auditors’ reports are posted here
- There has been a 162% drop in total net worth from 2007 to 2017 – was +$7,446,164 in 2007 and -$4,612,278 in 2017 (not including broadcast licenses).
- Independent Auditor’s 2017 report expressed serious concerns about the accuracy of Pacifica’s financial reports: “we were unable to obtain audit evidence to support the amounts and disclosures in the financial statements due to difficulties in obtaining sufficient supporting documentation from some of the locations.”
- Independent Auditor’s 2017 report expressed: “the Foundation has suffered recurring losses from operations and has a net deficit that raises substantial doubt about its ability to continue as a going concern.”
- Recurrent late filing of Independent Audits has caused the loss of approximately $1,000,000 per year in funding from the Corporation for Public Broadcasting since 2013.
- Currently delinquent in renewing non-profit registration with the California Attorney General’s Office. (Pacifica is a California non-profit public benefit corporation required to renew its registration every five years.) Read it here.
- Pacifica has been a revolving door for Executive Directors and Chief Financial Officers. Since 2003 there have been 19 Executive Directors or Interim Executive Directors (most of them being Board Chairs serving on a volunteer basis while searches were conducted for qualified permanent hires). And since 2003 there have been 7 or 8 CFOs or Interim CFOs.
In addition:
National Board is too large to function – With 22 members, the board is too large to function effectively. Pacifica cannot pay for in-person meetings to help them get to know each other and learn to work together in a collegial way. And 22 people trying to work together on phone conferences would be unworkable, even with board members who got along. Under the new Bylaws, the Board size will be reduced to 11 Directors.
The National Board is too factionalized to function – The board is divided, year after year, into opposing factions who see their jobs as blocking and obstructing the “other side” from getting anything done. This happens no matter which faction is in the majority, and majority control shifts from year to year, leading to changing the Executive Director and/or the Chief Financial Officer, and the inability to establish and carry out plans to solve Pacifica’s problems and challenges with any continuity year over year.
Serious concerns about the integrity of the books – The 2017 independent auditors’ report states, top of Page 2, “Basis for Disclaimer of Opinion,” states that:
“… we were unable to obtain audit evidence to support the amounts and disclosures in the financial statements due to difficulties in obtaining sufficient supporting documentation from some of the locations. Certain stations do not use the same accounting software as the national office. Some of the data from these stations could not be fully verified because it was missing. As a result, we were unable to determine whether any adjustments were necessary to make relating to the Foundation’s statement of financial position; and the elements making up the statements of activities, functional expenses, and cash flows for the year then ended.”
You can read it here: https://www.pacifica.org/finance/audit_2017.pdf
What this means in plain English is that the door is wide open for misuse of funds and/or embezzlement, among other things, and no one can tell for sure.
Successive Boards have known this since at least 2017 but have blocked successive Chief Financial Officers from solving these problems. The former CFO resigned, alleging “constructive termination” because the Board would not give him the authority and resources to do the job. The most recent CFO also reported to the Board that she cannot get necessary information from WBAI. You can listen to it here: https://kpftx.org/archives/pnb/pnb191010/pnb191010a.mp3 Her report starts at 22:30.
AG Warning to the PNB
On Dec. 17, 2017, Julianne Mossler, the Deputy Attorney General of California in charge of non-profit organizations chartered in that state, read a statement to the Pacifica National Board, especially warning them of the importance of their fiduciary duties as Board members. Unfortunately, many on the PNB then and now have not heeded her advice. Here are some relevant excerpts, which you can listen to in the audio recording of the meeting, starting at 9:30 after the start of the meeting, at kpftx.org/archives/pnb/pnb171214/pnb171214a.mp3:
“As directors on the national board, each of you owe a duty of loyalty to Pacifica to help it achieve these standard purposes. It means that your personal interests and or the interests of your local radio station must take a back seat to the Pacific’s interests when you’re acting in your capacity on the national board.
When your personal interests, or those of your local station, diverge from Pacifica’s interest, Pacifica’s interests must always take precedence. As a director on Pacifica’s national board each of you must act in a manner you sincerely believe to be in Pacifica’s best interests. That means every decision you make must be made for the purpose of advancing Pacifica’s interests, even if that means that the interests of your local station or even your personal interests are adversely affected. To do otherwise, constitutes an impermissible conflict of interest that can result in your removal from the board, litigation or even Pacifica’s collapse and closure.
As Directors on national boards each of you also owes a duty of care and inquiry towards Pacifica. The duty of caring inquiry requires that each of you be reasonably informed and take whatever steps are necessary to make sure you have relevant information about whatever issue is being addressed at the national level. All of the decisions you make about Pacifica must be made in good faith.”
“Paralyzing the national board by bringing it to deadlock in order to serve interests of a local station is a blatant conflict of interest and a violation of your duties as a director. If you fail in your duties as a director, or if you actively sabotage Pacific’s efforts to operate its business, you can be subject to legal repercussions, including, but not limited to removal from the board, an order prohibiting you from serving on any board of any nonprofit in California, or civil judgements against you personally.”
(from the statement by Julianne Mossler, the Deputy Attorney General of California, to the Pacifica National Board)