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United Way report critical of King, inattentive board

A report released Monday places much of the blame for a pay scandal at the United Way of Central Carolinas on the shoulders of the CEO who took the money. WFAE's All Things Considered host Mark Rumsey talks with reporter Julie Rose about the report's findings. United Way officials are declining to discuss the report until a news conference Tuesday morning. Here's a rough transcript of the segment we aired Monday at 5:45 p.m. MARK RUMSEY: A lot of details have come to light today regarding the pay scandal that ousted local United Way CEO Gloria Pace King and has severely the nonprofit's fundraising. Joining me with more information is WFAE's Julie Rose, who's been following the news since it broke in August. So, Julie, what are we learning today about the controversy? JULIE: Well, the main thing we learning is that Gloria Pace King was the driving force in securing the pay package of more than $2 million, of which she received $1.2 million before being fired. And it's clear the board was lax in its duties. The report is very comprehensive report. Basically a 240-page play-by-play. And early reaction to it from the community is a bit of disbelief. For example, here's Mark Pierman - he's the CEO of United Family Services, which relies on the United Way for funds. PIERMAN: "I'm a little surprised at some of the things that happened in terms of, just the way it happened. You know, I think there should have been some red flags somewhere along the way." MARK: Well, Julie, it seems obvious now, given all the public outrage in the last few months, that King's compensation crossed a line. But what were some of these red flag's the report brings to light? And more importantly, how were they missed? JULIE: King started pushing for more pension benefits back in 2004. The effort continued for about two years and included a staff committee that made recommendations to a subcommittee of board members. The report says King was very involved in this process. At one point there was an attorney that expressed concern that the pay package would violate IRS rules for nonprofit executive salaries. King's response - according to the report - was to cut that attorney out of the review process. King even managed to get a last minute change to the pay package in favor of more money right before it went to the board for approval. Members of the board admit in the report they didn't understand the full scale of the package they were approving. MARK: So what does the report say about the board members who gave her pay the green light? JULIE: They're certainly not off the hook. One of their biggest shortcomings was to not establish an independent compensation committee. Instead, King and her personal financial advisor were very involved with that committee. That was a direct violation of national United Way policy. I spoke with the United Way of America's Chief Operating Officer Joseph Haggerty about the report this morning: HAGGERTY: "You know those procedures are pretty well laid out by the United Way of America and the Internal Revenue service. And the compensation committee has to be independent and has to report directly to the board. If that's done you can prevent much of this compensation controversy." So the board dropped the ball and clearly didn't exercise enough oversight. But the underlying message of the report is that board members may have misplaced their trust in King. I spoke with Jane McIntyre - a former United Way board member and the CEO of the YWCA. She suggests that King may have been more focused more on her own interests than the agency's. MCINTYRE: "You really do have to put trust and confidence in the CEO. And that is what the executive committee of the board did. They probably didn't ask enough questions, they probably didn't take it seriously enough. But clearly they were given information that was from one perspective, which in this case was hers." JULIE: One other interesting, Mark, is that United Way staff were apparently worried about how the pay package would look when it became public. According to the report, King brushed aside their concerns. MARK: So what comes next for the United Way? JULIE: The report recommends an overhaul of the board to put checks and balances in place: things like enforcing term limits and creating oversight panels. The agency also could be in trouble with the IRS for having paid King so much. Financially speaking, the United Way is also stuck paying King her $260,000 salary for the next two years to fulfill her contract. And perhaps most sobering, donations to the United Way are down significantly right now - which is impacting the way many nonprofits in the community are able to serve the needy at a time when they need all the help they can get. MARK: I understand you'll be attending a press conference with United Way officials and the panel that did the report tomorrow morning. We'll look forward to hearing more from you on that.