THE MODEST NEEDS 2015-2017 ANNUAL REPORT

Introduction

In keeping with our commitment to operational transparency, Modest Needs publishes an annual report which is freely accessible to the public at large both via our website or in hard-copy.

The purpose of this annual report is to update interested persons on our prior year's program service achievements and to report on other significant accomplishments by Modest Needs between 2015 and 2017.

Our Mission Statement

At Modest Needs, we work to prevent otherwise self-sufficient but low-income households from entering the cycle of poverty and to strengthen the communities in which these persons live. We do this by offering two specific grant types:

  • The Self-Sufficiency Grant: Our Self-Sufficiency grant is our hallmark grant and helps low income workers to afford short-term emergency expenses that would otherwise pose an enormous burden to the applicant;

  • The Homecoming Heroes Grant: Our Homecoming Heroes grant is designed to assist persons returning home from active military service with short term expenses they may incur as they adjust to civilian life.

Modest Needs in 2015-2017: Our Most Eventful Years Ever

I simply cannot tell you how long I've been waiting to post this annual report, which actually covers three years (there'll be no more of that, by the way - our annual reports will be posted annually, as they should be). And indeed, it has been a VERY long time coming - seven YEARS in fact.

Everything you're about to read - I've wanted to share this information with you for so, so long. For reasons you'll shortly understand, I simply couldn't. But now that I AM free to tell you what's been happening in the background at Modest Needs over the past several years (and why), well, I'm thrilled. And I think you'll come away from this VERY long annual report as proud of Modest Needs and its team as I am, not just of the work we do at Modest Needs, but the integrity with which we do it.

So, pull up a chair, settle in, and prepare for an annual report that charts the ups, downs, ins and outs of the non-profit industry - an industry I thought I understood when I launched Modest Needs, back in 2002.

Oh, how naive I was . . . .

Part I: One VERY Rotten Apple

In 2009, the person who was Modest Needs' CFO at the time attempted to oust me from my position as the organization's CEO - a position she'd made clear that she wanted for herself. To that end, in early 2010, this person undertook to undermine my integrity (and therefore my fitness to lead Modest Needs), first by remotely accessing Modest Needs' financial records and illegally adjusting those records so as to cause it to appear that, throughout 2009, I had borrowed but failed to repay substantial sums of money from the organization - something that all concerned, including our CFO, knew absolutely NOT to have been the case. She then withheld all records related to these adjustments from Modest Needs' external auditors as they worked to complete their examination of the organization's FY 2009 books and records, thereby ensuring that the "red flags" she had fabricated found their way into Modest Needs' FY 2009 financial statements, and then fraudulently represented to Modest Needs' directorship that the she had incorporated the aforementioned, materially inaccurate disclosures into the organization's FY 2009 financial statements at the insistence of the organization's external auditors. Acting on her misrepresentations and despite their own misgivings, in May 2010, Modest Needs' board ultimately approved the organization's FY 2009 financial statements as presented to them by our former CFO, to both my and Modest Needs' immediate detriment.

In October 2010, these machinations on the part of our former CFO finally came to light, and Modest Needs' directorship immediately terminated her employment with the organization. Shortly thereafter, Modest Needs' Board of Directors received a letter from our former CFO demanding that my employment with the organization be immediately terminated and that she be rehired to replace me. She ended her letter with a threat: if Modest Needs' directorship failed to comply with these demands, she concluded, she would be obligated to take actions that would cause all of us to "regret that decision." Needless to say, Modest Needs' directorship refused to comply with this person's demands, and within a matter of weeks, in late November 2010 and BEFORE we could submit corrected FY 2009 Forms 990 and financial reports, Modest Needs received notice that it had suddenly been "selected for examination" by the Internal Revenue Service.

Part II: Never, Never, NEVER Give Up

Our IRS examination began in January 2011, with just one year's financials (those for 2008) scheduled for review. That examination lasted for nearly a year and half, during which the IRS reviewed literally every receipt for every expense incurred by the organization in the year they were examining. In the end, save for a few small errors related to the calculation of payroll taxes on the part of our former CFO, the IRS ultimately conceded that they could find absolutely NOTHING WRONG with any element of Modest Needs' operation. Imagine our surprise, then, when in May of 2013, the IRS notified us that, rather than closing this audit of Modest Needs and moving on to another project, they would instead be opening every available year of our financials (at that time, this included FYs 2009 - 2011) to examination. More disturbing, though, was the IRS' justification for this decision. When asked by our tax attorney to explain why the IRS manager overseeing this audit of Modest Needs why he would continue to audit an organization that clearly had done nothing wrong, that manager unbelievably stated - point blank - that he was continuing the audit because "he didn't like me" (he'd never met me) and that he'd decided to continue this "audit" of Modest Needs until either I resigned my position as the organization's CEO or the cost of examining the organization drove us "out of business," "whichever came first." Sadly, that is a direct quote.

Of course, if the IRS knew anything about Modest Needs or its history, they'd have known from the beginning that I'm more of a fighter than a quitter. And when I utterly refused to just quit a job I love for no reason other than that an IRS manager threatened to hurt me personally (or, through me, an organization serving thousands of people with no other means of assistance) if I didn't - even going so far as to tell me, point blank, that if I would just give up and quit my job, these audits would "go away" - these IRS employees kept their word and did everything in their power to drive Modest Needs out of business. From 2013 to 2016, they conducted microscopic audits of our financials for FY 2009 - 2011, and each year's audit followed exactly the same pattern. For each year under examination, the IRS essentially began by requesting all documentation for all expenses incurred by the organization that year, thereby forcing us to stop work and compile a documentation packet containing thousands of paper receipts. After giving this documentation a facial review, the IRS agents performing this audit would then dismiss all of the aforementioned documentation out of hand and then "close" each year by issuing enormous, entirely unjustified tax assessments, not against Modest Needs, but against me personally. When we then attempted to appeal these assessments, we were told that the IRS Appeals Office "could not help us," and we were forced to protest these assessments in the US Tax Court - the most cost-prohibitive venue possible.

Simultaneously, the IRS agents conducting these audits were working to harm me / Modest Needs in other ways. They worked to limit Modest Needs' revenue (and, consequently, our ability to help those in need) by illegally and unnecessarily contacting a number of our major donors for entirely perfunctory reasons, knowing full well that these donors would likely suspend their support of Modest Needs until our IRS issues were resolved (and in many cases, this is exactly what happened). They similarly contacted some of our partners, thereby ensuring that we lost certain valuable partnerships upon which we'd depended in the past. And then for good measure, having already subjected me - for a period of years - to the greatest amount of mental and emotional distress I have ever personally experienced, the IRS agents conducting this audit illegally contacted business colleagues, personal friends, former romantic interests, family members - virtually any and every contact of mine that they could locate - all in an effort to portray me as a "dangerous" person, the kind of person who might very well get you audited if you were to maintain your relationship with them. As a result, many of the people in my personal support system just kind of stopped returning my phone calls / emails for fear of finding themselves under the IRS' microscope.

Part III: When "Enough" Is Already Too Much

In the end, thanks to actions of the IRS employees and managers responsible for overseeing what all concerned now recognized to be an "examination" of Modest Needs in name only, I was left to face the most difficult events of my life to date essentially on my own. Nevertheless, I persisted. I refused to resign my position with Modest Needs. And my refusal to give in - even after years of abuse - ultimately made these IRS agents so angry that they finally played the last card they had in their deck. When, after all of the foregoing, I AGAIN refused to resign my position with Modest Needs, the IRS agents conducting this examination attempted to revoke Modest Needs' tax-exempt status. And that, my friends, is when I decided that enough was finally enough.

As it turns out, I have some very close friends who are also extraordinary attorneys, some of whom specialize in Constitutional Law. When I finally broke down, told them about this IRS "examination" and asked for their help, they immediately sprang into action, and with their help, under "Bivens" (a Supreme Court decision that allows people to personally sue federal employees for Civil Rights violations), we filed an absolutely CRUSHING lawsuit against the specific IRS employees who, by this time, had been working to illegally "audit" Modest Needs "out of existence" (exactly as they'd threatened they would if I refused to resign my position as Modest Needs' CEO) for nearly six YEARS.

Within a few weeks of filing that suit, the IRS Office of Appeals - the same office that had refused to speak to us for SIX YEARS - suddenly contacted Modest Needs' tax attorney, asking if they could please "take a look at" the documentation we'd provided to other IRS agents, all of which they'd essentially dismissed. While our suit worked its way through the courts, the IRS Appeals Office furiously worked to re-audit Modest Needs. And wouldn't you know it? At almost EXACTLY the time we learned that our suit - which had been initially dismissed over a technicality - had been fast-tracked into Federal Appeals court, where the IRS stood to lose BIG, the IRS Appeals office decided that they would prefer to bring this "audit" to a close.

To that end, the IRS offered us the following settlement: if I would agree to pay a token amount of tax (because, you know, after all of this, the IRS is going to have its proverbial pound of flesh), they would void all of the fictitious tax assessments against me, close all audits of Modest Needs, leave us alone, and give us the closest thing anyone in this position will ever get to a complete apology on the part of the IRS: an agreed judgment from the US Tax Court affirming Modest Needs' tax-exempt status once and for all. For the sake of putting this nightmare behind us, I accepted the offer, and in January 2018, our SEVEN YEAR fight for our right to exist in the non-profit space was over, once and for all.

Part IV: The Million Dollar Question

Modest Needs is now free to begin the process of regaining the ground we lost during this seven year ordeal, but everything I've written above begs a (literal) million dollar question: Why would the IRS spend seven years and millions of your tax dollars trying to audit a relatively small non-profit like Modest Needs "out of existence," especially after they knew, for sure, that there was nothing amiss at the organization? Well, Interestingly, I've actually known the answer to that question since 2013, when the IRS' audit of Modest Needs turned both personal and vicious, and I asked some really close friends of mine with friends in VERY high places to see if they could find out why Modest Needs / I had been so obviously "targeted" in this way. Well, my friends didn't let me down. They found out EXACTLY what was going on, though I confess I was reluctant to believe what they'd told me they'd learned until late last year, when I saw the documentation for myself during the settlement process. Get this:

As it turns out, a "competing non-profit organization" with an EXTREMELY well-connected, very powerful Board of Directors was placed under audit at about the same time we were. Through a series of events that don't merit repeating here, that org's CEO, who has never thought very much of me personally, came to mistakenly believe that, in an effort to harm that organization, I had successfully lobbied for that org to be audited. This is, of course, ridiculous. I don't have the power to effect a plan of this kind, even if I wanted to, and if I DID have that kind of power, I certainly wouldn't use it to hurt a fellow non-profit. But evidently, not all of my colleagues think the way that I do because, operating under the mistaken impression that I'd tried to harm their org, this "competing non-profit's" CEO and board retaliated against me by reaching out to their own contacts, several of which extended to the Federal Government. Those people instructed their friends in the IRS to put us out business by whatever means necessary, and the rest, as they say, is history.

I've thought long and hard about whether I should name the org responsible for what has been, realistically, the most difficult period of both Modest Needs' work and my personal life. After careful consideration, I've decided that naming this organization would be not only petty and counterproductive; it would serve only to hurt, not so much the people responsible for everything Modest Needs & I have been forced to contend with for the past seven years, but the people that organization exists to help. Sadly, it is true that the non-profit sector can be every bit as ruthless as the most ruthless for-profit sectors, but I didn't get into this line of work to find ways to hurt people, so as tempting as it might have sometimes been to "call out" this organization for its very bad behavior, revenge just isn't my style. As far as I'm concerned, this matter is closed, and now that it is, rather than dwell on the past and allow some misguided persons to rob me of my greatest joy, I'm going to focus my energy where it belongs: on finding more and better ways to aid the hard-working families who turn to Modest Needs for help.

Part V: Moving Forward, Stronger than Ever

There's an old saying: "That which doesn't kill you makes you stronger." I can now tell you that this is absolutely true. As difficult as this ordeal has been, Modest Needs is now a stronger org (and I'm a stronger leader, I think) because of it. With regard to Modest Needs, for example: when some of our major donors understandably decided to "sit it out" until this IRS matter was resolved, we were left with no choice but to dramatically cut Modest Needs' own expenses. And while we did slash expenses (including / especially salaries, including my own), we also had to get creative, find free / inexpensive ways to accomplish the same high quality work for which we've long been known on a much smaller budget - a budget provided primarily by individual donors. And now that we're on the other side of this horrific series of events, guess what we've discovered? Modest Needs is finally self-sustaining at its current revenue level! That's right! Modest Needs can now be funded entirely by individuals, and as foundations / larger donors return to Modest Needs (as they've already begun to do), because we have such low overhead, we'll be able to allocate nearly all of that funding to the hard-working families who need our help the most. That's a "win" for everyone!

And this ordeal has actually helped me too, both personally and professionally. Professionally speaking, for example, I'm certainly more savvy than I was seven years ago, and I think I've solidified my reputation among my peers as someone who'd prefer focus on his work but who isn't afraid to fight to the end to protect and preserve the values upon which Modest Needs is based. And speaking personally - well, let me put it this way: from virtually the moment I launched Modest Needs, I've had to contend with the "nay-sayers," the people whose life experiences have made them skeptical of everyone and everything. For the past 16 years, those people have questioned my integrity on a near-daily basis. Up to now, I've simply had no choice but to endure those personal attacks. But that's something I'll never have to do again. The bottom line is that if you really aren't doing everything right, you don't survive a seven-year IRS onslaught. And the fact that, after all of this, I'm still here - I think that says everything any reasonable person needs to know about how seriously I take this work, how much I value and respect it, and whether or not my work with Modest Needs is / has been "informed" by some kind of insidiously self-serving agenda. Clearly, it is not and it never has been. So if you believe in the work we're doing at Modest Needs and want to support this work, the IRS itself, after an aggressive, seven-year audit, has itself conceded that you can do so with nothing short of absolute confidence in both the organization and its leadership.

I hope that, as one of Modest Needs' supporters, you're as proud of that vindication as I am grateful for it.

***

Below, for your review, in addition to the information we normally attach to our annual reports, I'm pleased to provide for your review a copy of the judgment affirming Modest Needs' tax-exempt status. And I have to say, I'm also pretty proud to have that document because the IRS issues it under exactly ONE set of circumstances: complete and total exoneration of an organization and its leadership at the conclusion of a contentions examination.

Also, please note that we're still finalizing our 2017 Form 990. We'll have that posted for you before our deadline to file, which is 15 November 2018.

***

I realize that was a VERY long annual report, but I appreciate your bearing with me on this one. It has been a long, long time coming. And now that this has come and gone, I'm thrilled to be able to return the whole of my attention to the hard-working families whom Modest Needs exists to serve. Thank you, as always, for continuing on this journey with me. Onward, upward, and Excelsior!

--Dr. Keith P. Taylor, President / Executive Director, Modest Needs Foundation (21 August 2018)


Judgement Affirming Modest Needs' Tax-Exempt Status

You may download a copy of this judgment in PDF format View our by following this link.


2015 Financial Information at a Glance

Income and Expense Categories Amount
Income from Direct Public Support $1,605,360.00
Other Program Service Income $0.00
Other Income $0.00
Total 2015 Income $1,605,360.00
Program Service Expenses (90.33%) $1,755,544.00
Management / Administrative Expenses (4.62%) $89,797.00
Fundraising Expenses (5.05%) $158,313.00
Total 2015 Expenses $1,943,442.00
Net Assets & Fund Balances, Beginning of Year $468,617.00
Net Assets & Fund Balances, End of Year $320,246.00

You may view a breakdown of the functional expenses listed above by accessing either our FY 2015 Form 990, linked below

Supporting Financial Documents for 2015

Please note: all documents below are in PDF format and can be viewed via the free Adobe Acrobat Reader.

2016 Financial Information at a Glance

Income and Expense Categories Amount
Income from Direct Public Support $1,005,324.00
Other Program Service Income $0.00
Other Income $0.00
Total 2016 Income $1,005,324.00
Program Service Expenses (88.81%) $1,088,877.00
Management / Administrative Expenses (6.06%) $74,346.00
Fundraising Expenses (5.13%) $62,911.00
Total 2016 Expenses $1,226,134.00
Net Assets & Fund Balances, Beginning of Year $320,246.00
Net Assets & Fund Balances, End of Year $47,428.00

You may view a breakdown of the functional expenses listed above by accessing either our FY 2016 Form 990, linked below:

Supporting Financial Documents for 2016

Please note: all documents below are in PDF format and can be viewed via the free Adobe Acrobat Reader.

  • View our 2016 Form 990 (Warning: Large File - May Take Time to Download)

2017 Financial Information at a Glance

Income and Expense Categories Amount
Income from Direct Public Support $1,022,236.00
Other Program Service Income $0.00
Other Income $0.00
Total 2017 Income $1,022,236.00
Program Service Expenses (88.81%) $937,488.00
Management / Administrative Expenses (6.06%) $43,034.00
Fundraising Expenses (5.13%) $59,567.00
Total 2016 Expenses $1,040,089.00
Net Assets & Fund Balances, Beginning of Year $47,428.00
Net Assets & Fund Balances, End of Year $82,845.00

**Note: For the reasons outlined in our 2015-2017 Annual Report, above, Modest Needs neither sought nor received major grants (grants from foundations, for example) in 2016. The contributions reported as "Income from Direct Public Support" for 2016 are therefore somewhat less than in years past but represent a 27.53% growth in contributions from individual members of the public. The organization saw similar gains in public support and renewed support from private foundations in 2017.

You may view a breakdown of the functional expenses listed above by accessing either our FY 2017 Form 990, linked below:

Supporting Financial Documents for 2017

Please note: all documents below are in PDF format and can be viewed via the free Adobe Acrobat Reader.

  • View our 2017 Form 990 (Warning: Large File - May Take Time to Download)

Donor Privacy Policy

Modest Needs has long maintained a strict Donor Privacy Policy. However, because this policy is listed within our Terms of Use and sometimes is missed by our donors, we include it in our Annual Reports for their reference:

Modest Needs respects the privacy of our donors. To that end, Modest Needs will not sell, rent, loan, give away, or otherwise disseminate the personal information of our donors, including their names, mailing addresses, email addresses, contribution amounts, or any other data of any kind to any entity for any reason whatsoever. Persons who choose to contribute to Modest Needs may rest secure that their data will never be shared with any other entity under any circumstances, ever.

Modest Needs Board of Directors

Current as of 1 November 2018

  • Charles Cissel, Chair (Independent, Voting)

  • Rosa Ng, Vice-Chair & Chair of Audit Committee (Independent, Voting)

  • Maria Castillo, Treasurer (Independent, Voting)

  • Thierry Mellon, Board Member (Independent, Voting)

  • Rebekah Hoffman, Board Member (Independent,Voting)

Modest Needs Key Employees

  • Dr. Keith P. Taylor, President

  • Annemarie Galvin, Associate Director and Compliance Officer

Would you like a hard copy of our finalized 2015-2017 Annual Report or audit reports for these years?

If you do not have regular internet access but would like to receive a hard copy of the Annual Report above, along with accompanying materials, please send your request to:

Modest Needs Foundation
120 E 23 St, FL 5
New York NY 10010

We will provide a hard-copy of our 2015 - 2017 annual report along with all attachments to anyone who requests them at no charge. You may request a hard copy of this report by calling Annemarie Galvin, Associate Director, at (844) 667-3776, ext 2.