March 18, 2004 | Read Time: 2 minutes
Responding to continuing investigations of its financial dealings by the Internal Revenue Service and the U.S. Senate, the Nature Conservancy, in Arlington, Va., has announced that it will restructure its governing board to improve oversight of the organization.
The changes include creating board committees to help avoid potential conflicts of interest between the charity and its trustees, and requiring board members and the charity’s managers to have more frequent contact than in the past, according to Stephanie Meeks, the organization’s chief administrative officer.
Federal Investigations
While officials at the Nature Conservancy said the organization’s expansion into 28 countries outside the United States provided the impetus for the board restructuring, they also acknowledged that the federal investigations accelerated the changes.
The Senate Finance Committee, which has been investigating the Nature Conservancy for 10 months for allegedly selling land to trustees, making loans to employees, and receiving money from the sale of land to federal and state governments, this month sent the organization an 18-page letter seeking hundreds of documents.
The letter, sent by Sen. Charles Grassley, an Iowa Republican who is chairman of the committee, and Sen. Max Baucus, of Montana, its top-ranking Democrat, asked the Nature Conservancy to turn over records related to tax-sheltered conservation easements.
When landowners donate easements — permanent deed restrictions that limit developments on property — to charities, they receive a federal income-tax deduction because the donated land is supposed to be preserved. However, sometimes easements are abandoned, allowing donors to sell their land to developers after receiving a tax deduction for its transfer to charity.
The letter asked how many easements the Conservancy has “abandoned as unenforceable,” and how many times the Conservancy has allowed landowners to modify the restrictions on development of their land.
In the letter, Mr. Grassley and Mr. Baucus also requested a copy of a promissory note and mortgage signed by Steven J. McCormick, the president of the Nature Conservancy, for a $1.55-million personal loan from the organization. The loan had a 4.59-percent adjustable interest rate and was due in 2012.
In addition, the senators asked whether Mr. McCormick reported the loan as income on his personal federal tax form before the start of the IRS examination of the Nature Conservancy. The IRS plans to move a team of auditors into Nature Conservancy headquarters to examine the organization’s 2002 informational tax return.
Mr. McCormick received the loan to help him buy a house when he relocated to the Washington area, according to Jordan Peavey, a spokeswoman for the organization.
After The Washington Post started an investigation into the activities of the Nature Conservancy in 2001, Mr. McCormick decided to refinance the loan on his own through a bank, she said. He paid off his debt to the charity in April 2003 to avoid an appearance of impropriety, Ms. Peavey said.
