Kanakuk Financial Statements Reveal “Suspicious” Pattern of Self-Dealing
Joe and Debbie-Jo White Paid At Least $2-Million by Kanakuk from 2014-2017
Editor’s Note: This article has been revised based on concerns raised by Kanakuk Ministries. See editor’s note below. To read our full response to the concerns raised by Kanakuk, please click here.
An analysis of the financial statements by MinistryWatch, with the assistance of the Dallas-based Trinity Foundation, reveals what the Trinity Foundation calls a “suspicious” pattern of self-dealing between Kanakuk and founder “Coach” Joe White and his family.
Kanakuk Ministries is one of the largest Christian camps in the United States. Each summer, it serves more than 20,000 children from around the country. Its fiscal year 2017 revenue topped $35-million.
In fact, Kanakuk is part of an inter-related web of at least nine non-profit organizations and 10 for-profit organizations, all owned or controlled by Joe White and his wife Debbie-Jo White.
A quick look at the 2017 Form 990 for Kanakuk Ministries (for the fiscal year ending Aug. 31, 2018, the latest available) suggests that Joe and Debbie-Jo White receive modest salaries. Joe White’s salary was $36,844 and Debbie-Jo White’s salary was $39,864.
However, these numbers tell only a fraction of the story. A closer examination of the Form 990 reveals that Kanakuk Ministries rents a portion of its property from Kukorp LLC. In the 2017 tax year, Kanakuk paid Kukorp $166,481. Kukorp LLC is “wholly owned by Debbie-Jo White.” The rental arrangement is part of a 2008 agreement that specified a “50-year lease with a 50-year option.”
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Kanakuk Ministries also rents property from K-Land One LLC. This entity is “wholly owned by Joe and Debbie-Jo White.” Kanakuk paid $144,296 to K-Land One. It too enjoys a “50 year lease with a 50-year option.”
According to John Jensen, the Chief Business Officer for Kanakuk Ministries, “All the land tied to this lease [with Kukorp] will revert to Kanakuk upon the death of Joe and Debbie-Jo White.”
And in addition to their salaries, Debbie-Jo White receives an additional $142,738 in what is simply called “compensation.” Joe White receives an additional $41,909 in “compensation.” If you add up all these numbers, Kanakuk Ministries paid the Whites, or entities wholly owned by the Whites, $572,132 in 2017.
And 2017 was not unique. The individual numbers vary from year to year, but between 2014 and 2017, Kanakuk paid the Whites or entities owned by the Whites about $2.62-million.
(Editor’s Note: Kanakuk Ministries has disputed the numbers in the preceding two paragraphs, saying that we double-counted the salary portion of the Whites’ compensation. We dispute this claim. However, even if we conceded this point that the salaries were double-counted [which, again, we do not] the sum of the reported compensation would be $495,424 instead of $574,132. And the payments to the Whites during the four-year period 2014-2017 would still exceed $2-million.)
Such payments may not be illegal, but they are unusual. The Evangelical Council for Financial Accountability (ECFA) does not prohibit such arrangements, but it does strongly discourage them, even when they might benefit the organization itself. ECFA Standard 6 includes the following: “Certain related-party transactions may clearly be advantageous to, and in the economic benefit of, the organization. However, even if a transaction is economically beneficial to an organization, it may raise a public perception of questionable integrity or create a perception of self-dealing and, thus, should be avoided.”
The Kanakuk’s Form 990 claims that these transactions were done in compliance with Kanakuk’s “Conflict of Interest Policy and Procedure.” But even if that’s true, those policies were implemented by a board of directors that the White family controls. Kanakuk’s board appears to have has just seven directors, with three of them being Whites: Joe, Debbie-Jo, and their son Cooper. Another director, Doug Goodwin, is the current president of Kanakuk, and is therefore also not independent. Jensen said the transactions were approved by a vote of the independent board members.
The ECFA’s Standard 2 requires members to have at least five members, “a majority of whom shall be independent.” Kanakuk is not in compliance with this standard. It is perhaps for these reasons that Kanakuk Ministries is not a member of the ECFA.
Again, while these arrangements do not prove illegality, they do raise concerns about “private inurement,” which is against the law. According to BoardSource, “Private inurement…happens when an insider — an individual who has significant influence over the organization — enters into an arrangement with the nonprofit and receives benefits greater than she or he provides in return. The most common example is excessive compensation, which the IRS condemns through Intermediate Sanctions, significant excise taxes. Insiders — referred to in IRS parlance as ‘disqualified persons’ — can be high-level managers, board members, founders, major donors, highest paid employees, family members of the above, and a business where the listed persons own more than 35 percent of an interest.”
Scrutiny of Kanakuk has intensified following the release of recent articles by MinistryWatch and The Dispatch outlining a history of sexual abuse, lawsuits, and multi-million dollar settlements against Kanakuk or staff members. Kanakuk leaders say these problems are behind it and it has implemented strong youth protection procedures at the camp. However, it is impossible to verify the contention that Kanakuk’s troubles are in the past because many of the victims are bound by non-disclosure agreements. A new website, FactsAboutKanakuk.com, backed by victims and victim advocates, includes a petition drive to get victims released from their non-disclosure agreements.