Impressive retirement goes with hefty salary for Miracle Flights founder

Now it seems pretty obvious why Miracle Flights for Kids founder Ann McGee was reluctant to provide the nonprofit’s 2013 tax returns to me. The 990 form disclosed she has a retirement plan costing the nonprofit more than $2.3 million, which by all accounts is a big one in the nonprofit world. Or any world.

Before her charity received a $40 million windfall in tax year 2012 as a result of a class-action suit involving fuel surcharges by British Airways and Virgin Airlines, that $2.3 million retirement plan would have matched about a year’s worth of the charity’s revenues.

By the end of last Thursday, when I wrote about the 2013 returns I requested, I had three copies from other sources, plus one for a real estate holding company. Thank you, dear readers.

McGee, 68, who has refused in-person interview requests since Feb. 12, ignored my request for this column, although I told her I would be asking about the retirement pension.

She still won’t say who the current board members of Miracle Flights are, although the secretary of state’s website lists Keith Flynn as a director and McGee holding the positions of president, secretary and treasurer of Miracle Flights. Flynn did not return a phone call.

McGee holds the same positions as president, secretary and treasurer in MFFK Holdings Inc., which spent $10 million buying buildings and land at 5740 and 5820 S. Eastern Ave. in June 2013. The real estate holding company reported rental income of $589,768 from those two buildings. Jeana Yeager is listed as a director for the holding company.

I’m told the likelihood that the IRS will ask the questions I asked are slight because Congress has cut the agency’s budget repeatedly.

One question the IRS could ask is who are the people from either a compensation committee or the board who set her salary and approved the retirement. The public is not entitled to that information, just the IRS. I would like to see the board minutes of that discussion, but they aren’t public.

The IRS might ask why, after landing the big $40 million, Miracle Flights continued to pay two fundraising companies $1.1 million in total to raise $192,000, which seems like spending a lot for a little return, which has been a longtime complaint about Miracle Flights.

While the 2013 tax returns listed former Henderson City Councilman Larry Scheffler, former Las Vegas City Councilman Mike McDonald, McDonald’s close friend Rick Henry and Jeana Yeager as board members, at least the first three are not on the board. They refused to discuss anything to do with Miracle Flights or the retirement plan. McDonald, nabbed at the North Las Vegas State of the City speech, said they signed a nondisclosure agreement with McGee.

So for now, I can’t tell you exactly who approved a $2.3 million retirement plan. The forms do not specify how the plan is structured. It’s likely an annuity that would pay yearly rather than a lump-sum hand-over.

McGee started the charity in her apartment in 1985, but she and her husband have been compensated generously since at least 2006, the earliest figures I could locate, when records show they belonged to the 300k club.

According to the forms filed with the Internal Revenue Service since 2009, she has been receiving a salary in the range of $230,000 to $255,000, and when husband William McGee’s fluctuating salary is added, the couple take in more than $300,000 a year from the nonprofit. Their salaries go up and down, but in 2013, she was paid $255,125, and he was paid $75,087 for a family income of $330,212 from the charity.

The $40 million donation boosted Miracle Flights from small potatoes to one of the big boys among local nonprofits. While based in Las Vegas, it operates nationally and is one of a number of charities that help sick children who need to travel for their medical care. It provides airline tickets, many which are donated by the airlines, to sick children.

Angel Flights West, based in Santa Monica, Calif., and founded in 1983, does similar work in 13 Western states, including Nevada. Its executive director was paid $120,000 a year. It relies on volunteer pilots, who provided 5,875 flights in the year 2013, compared with Miracle Flights’s 6,674 flights on commercial airlines. Angel Flights West reported revenues of $3.8 million, more than Miracle Flights pre-$40 million windfall.

Charity Navigator, which rates nonprofits, gives both Miracle Flights and Angel Flights West three out of four stars. But its website also shows differences between the two. Angel Flights spends 91 percent of its money on programming, Miracle Flight spends 62 percent. Out of its annual expenses, Angel Flights spent 4 percent on fundraising costs, Miracle Flight spent 30 percent on fundraising.

Miracle Flights requires a $50 fee to apply for their “free” service. Angel Flights West does not. Miracle Flights children have to be able to sit in an airplane seat. Angel Flights can handle children on stretchers.

By coincidence, today is Nevada’s Big Give Day, the day when charities solicit funds online. Columns like this one discourage giving, which is too bad because there are worthwhile nonprofits. Check them out through Guidestar, where you can find their 990s and see how much they pay their executives. Charity Navigator also gives free information about nonprofits and provides a star system of rating. (Last Thursday’s column incorrectly attributed an F rating for Miracle Flights to Charity Navigator instead of Charity Watch.)

I don’t want to discourage giving to nonprofits, but once again I want to encourage people to check out the recipients of their money. See how much goes to the programs and how much goes to pay salaries. The standard is that at least 75 percent should go to the programming.

Jane Ann Morrison’s column appears Thursdays. Email her at jmorrison@reviewjournal.com or leave a message at 702-383-0275. Find her on Twitter @janeannmorrison