The Bernie Mac Foundation has overhauled its leadership, banned salaries for board members and laid out a formal conflict-of-interest policy, according to documents filed over the past year as part of an audit by the state attorney general.
Once governed by three people — Bernie Mac’s widow, his sister-in-law and a longtime associate — the organization listed eight board members on its most recent tax filing, including a range of community leaders and professionals.
The Bernie Mac Foundation also said it has stopped making tens of thousands of dollars in annual payments to companies that a Tribune report linked to the organization’s treasurer.
“We’re attempting to make bigger plans,” said Anthony Young, a retired Cook County judge and former state legislator who joined the board in July. “We’re meeting more regularly. We have a committee structure, and we’re trying to promote the organization, the goals and the vision of the foundation started by Bernie Mac while he was still alive.”
Mac’s widow, Rhonda McCullough, will continue to serve as board president for as long as she chooses under the new bylaws.
“Moving forward, I look with excitement and anticipation to the continued important research and awareness created by the Bernie Mac Foundation around the critical issue of sarcoidosis,” she said in a statement.
The late comedian founded the group in 2005 to help fellow sufferers of that disease, and after his death in 2008 the Bernie Mac Foundation collected hundreds of thousands of dollars in donations. But as the Tribune reported in April, much of that money ended up going to salaries and contracts that benefited board members, and the foundation fell far short of recognized benchmarks for charitable spending.
Young, whose son lives with sarcoidosis, said the Bernie Mac Foundation’s charitable spending is expected to increase this year.
The organization also will stop contracting with two companies controlled by Mac’s longtime associate, board Treasurer Edward Williams, according to new board member Manotti L. Jenkins, who is serving as a spokesman for the group. Several experts told the Tribune that the sums paid out to one of Williams’ companies seemed large for the financial consulting and investment management services it was listed as providing.
One of those experts, Michael Fine, an attorney with McDermott Will & Emery who advises nonprofit organizations, called the changes “an incredibly positive step.”
“Adding more independent voices is a good thing,” he said. “Looking back, the two biggest issues were the board makeup and the inherent conflicts of interest.”
The Bernie Mac Foundation’s most recent tax documents — unlike previous filings — acknowledge the relationship between Williams and the two companies, IOTA Investments and Edward A. Williams Ltd.
Young said an outside accountant is now providing the services for which Williams’ companies were paid in previous years. Williams continues to serve on the board.
Charoni Smith, McCullough’s sister and the foundation’s paid budget director, stepped down from the board in July in accordance with a new rule prohibiting board members from collecting salaries. Another sister, Mary Ann Grossett, draws a salary as the organization’s executive director, and does not serve on the board.
The rule barring board members from receiving salaries is part of a revised set of bylaws filed with the attorney general. The new bylaws also require a minimum of six board members, and they prohibit board members from voting on matters in which they have a financial interest.
In response to questions from the Tribune this week, the Bernie Mac Foundation said it also intended to prohibit McCullough from discussing or voting on matters affecting the employment or pay of her sisters.
“To the extent this is not specified in the by-laws, it was an oversight and we will address this matter expeditiously,” a statement provided by Jenkins said.
Fine and other experts recommend nonprofit boards require that a member leave the room during any vote that would affect his or her relatives.
The newly constituted board has not yet considered personnel matters involving Grossett or Smith, Jenkins said.
Chuck McLean, vice president of research at GuideStar, a company that tracks nonprofits, said in an email that McCullough’s lifetime appointment and the employment of her sisters is not optimal. But, he said, “both of those are understandable circumstances and probably represent a fair compromise for instituting the other reforms.”
In addition to revising its bylaws, the Bernie Mac Foundation has taken steps to formalize its arrangement with its primary beneficiary, the Bernie Mac Sarcoidosis Translational Advanced Research (STAR) Center, established in 2012 at the University of Illinois Hospital & Health Sciences System. Beginning that year, the organization has donated about $ 50,000 to the center annually.
The Bernie Mac Foundation and UI Health agreed in September that the 2014 donation would be the first of five $ 50,000 annual donations for a total pledge of $ 250,000, said Sharon Parmet, spokeswoman for UI Health. The Bernie Mac Foundation had previously laid out a 10-year giving plan in its tax filings but had never formalized that arrangement with UI Health, which favors a five-year timetable, Parmet said.
The foundation continues to attract donations, raising about $ 3,000 during the Respiratory Health Association’s 2014 Hike for Lung Health, a fundraising event that brings together a range of charities, according to association President and CEO Joel Africk. That’s about $ 1,000 more than the Bernie Mac Foundation raised in 2013, Africk said.
The organization’s new bylaws also require that each board member either donate or “obtain sponsorship” for $ 3,000 worth of contributions per year.
Sarcoidosis, a complex disease whose cause is unknown, causes inflammation of the body’s tissues. It predominantly affects the lungs, though almost any organ can be involved, according to research compiled by the American Lung Association. In the United States the disease disproportionately affects African-Americans.
Bernie Mac died at age 50 from complications of pneumonia. Born Bernard McCullough in Englewood, Mac performed in nightclubs, television and movies and was perhaps best known for “The Bernie Mac Show” and “The Original Kings of Comedy.”
The Illinois attorney general began its audit of the Bernie Mac Foundation after the Tribune raised questions last year about the operations of the small nonprofit.
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