Pink Cross Foundation and Shelley Lubben: An Expose Part 3 Financials

Pink Cross Foundation and Shelley Lubben: An Expose Part 3

The Financials

Note: Charities recognized by the IRS are 501(c)(3) organizations and are tax-exempt. Donations to them are also tax-exempt.  These charities are required to provide financials to anyone. Almost all post financials on their respective websites. And, most are extremely complex requiring experts to sift through them.

Pink Cross Foundation did post their 2008 and 2009 financials on their website. I am not a forensic accountant just a reporter so we’ll go through the financials line by line and see what we find. Their financials were not complicated at all. If you can file a 1040, you can easily follow along. I also downloaded both returns from guidestar.org.

Pink Cross Foundation financials are here: http://www.thepinkcross.org/page/financial-reports

Pink Cross Foundation Mission Statement

According to the 2008 tax return, it is: “To provide emotional, financial and transitional support to adult industry workers. And to reach out and educate the general public of the harms and effects of pornography. To combat community deterioration due to pornography”. Now, what ThePinkCross.org said in 2008 as the mission statement on their website is unknown. A proper investigation should not tell the party being investigated they are so no cover-ups, if any, can be staged.

Pink Cross Foundation Mission Statement Today

“Pink Cross Foundation, a humanitarian outreach and international movement will respond to needs of people who are victims of pornography. Our mission is to share the good news of Jesus Christ and to meet human needs in His name without discrimination. We also combat community deterioration due to pornography and prostitution through attempts to educate legislation in order to enforce health and safety laws within the pornography industry, to protect adult industry workers from sexually transmitted diseases and other job-related abuses, to ameliorate the secondary negative effects of pornography on the general public and to toughen laws to protect children from accessing online pornography. This ministry is motivated by the amazing love of God.”

The 2009 tax return is totally different from 2008 and their website. You are welcome to download them or ask me to send them to you are you can compare. I’m not retyping it due to length. The new statement does include “political action” called, “ 3) in defense of human and civil rights for adult workers as well…”

Pink Cross Foundation Website vs. Shelley Lubben’s Website

A charity website and a commercial website are not supposed to be a marriage due to IRS rules. However, thepinkcross.net redirects to shelleylubben.com, but only thepinkcross.org is listed on the tax return. On thepinkcross.org, some article(s) does link to shelleylubben’s website and her new book.  Shelley Lubben’s bio on thepinkcross.org also does link to her site.

Show Me the Money 2008 Tax Return

Pink Cross Foundation used the 990-EZ tax return and listed the address as 7101 Elias Avenue, Bakersfield, CA 93308. It is a nice single family home worth $250,000+ according to Zillow.com. It has a pool, four bedrooms and 1.75 bathrooms and is 2400+ square feet. Pink Cross Foundation basically runs their offices out of the Lubben’s private home. The address is posed here since it is on their 2008 tax return. Shelley Lubben signed the tax return and it had a tax professional sign it as well. The have no offices according to the return.

The Pink Cross Foundation listed $64,520 in gross receipts which all came from donations and gifts. No grants since there was no grant donation statement. This is not bad for a non-profit that just was formed in 2008. The big item on this tax return is that Shelley Lubben took $24,250 in compensation, which is 37.6% of gross receipts. It is the single biggest expense. The charity spent an extremely large $1,971 on financial assistance and gift cards, which is 3.1% of gross receipts. So, based on their accounting, 96.9% was spent on administration.

The better business bureau (BBB) recommends no more than 35% of gross receipts spend on Line 14, 15 of a 990 tax return. The federal government recommends, under CFC (Combined Federal Campaign), only 25%. So, 37.6% is above both the BBB and CFC. Some new charities can be higher if administration and fundraising goes over that percentage. The tax return does not say how much was spent on fundraising.

However, on the next year’s return, they listed travel expenses. This return had no travel expenses. Therefore, if Ms. Lubben used her compensation to cover her travel expenses, which the return does not list, the charity could have been under the BBB percentage. They spent $10,075 the next year. If she spent that amount from her compensation, or even half, the percentage of Line 14, 15 would’ve been under the BBB’s percentage and could’ve been under the CFC’s percentage by default.

Note: Employees deserve to be paid. However, if they don’t need the money, it might look better to forego pay for the first couple of years. If she used a good chunk of her salary for travel expenses, she needed the money.

Based on Statement 1, Federal Statements, it is impossible to know exactly where the charity money spent on the charity went. Conferences, Conventions (their outreach), and Meetings was put together so it is impossible to know how much went to outreach. Even of all $9,481 was spent on outreach, that is only 14.7% of gross receipts. Contract services were $2,450 dwarfing that charitable financial assistance and gift cards by $479. Now, they did spend $3,701 on event facilities and equipment.

A huge expense was supplies that totaled $7,105, or 11.0% of gross receipts. However, they do spend money on brochures at conventions so that could easily be a decent expense.

The simple fact is, without an audit, only 3.1%, or $1,971 went to financial assistance and gift cards. They fail to explain how much was spent on outreach. Again, if all $9,481 of Conferences, Conventions, and Meetings in addition to financial assistance and gift cards was spent on outreach, that is 17.8% of gross receipts.

New charities have to invest in computers and other equipment to make the charity work. However, more money could have been given on financial assistance to ex-porn stars. Then again, we don’t know what financial assistance means since it doesn’t say. We also don’t know how much Ms. Lubben spent on travel expenses from her salary. You can decide if this tax return is proper. Not enough information for this article to say.

Show Me the Money 2009 Tax Return

Note: A lot of things are blanked out on this return. They had three big donors but you won’t find out who they are (and they don’t have to say per federal law). We did pull them from GuideStar.org but the donor’s list was not in the file. And, this return is more complicated since a full 990 but the Pink Cross Foundation is not a huge charity.

Pink Cross Foundation used the 990 tax return and listed the address as 7101 Elias Avenue, Bakersfield, CA 93308. Garret Lubben, her husband and secretary-treasurer, was on the tax return this year but it was prepared by Business Management Services. They both signed the return found on GuideStar. So, the penalties of perjury do apply.

2009 was a good year for the Pink Cross Foundation since their gross receipts almost doubled to $125,100 from $64,250 (a typo but not a big deal). Shelley Lubben had an incredibly good year as well since her compensation went from $24,250 to $49,726, which is an amazing pay raise of 105.1% in this bad economy. That is 39.8% of gross receipts. This is above the BBB’s 35% and the CFC’s 25%. Again, they listed no fundraising expenses. And, the tax return listed travel expenses unlike in 2008. A lot of travel expenses.

On Part IV of the return, it asks if they engaged in lobbying activities. Since Ms.Lubben appeared at California State committee to push for a tax on adult entertainment, that is untruthful.

On question 28, C, it asks if a family member a party to a business transaction. It answered “NO”. However, Garrett Lubben, her husband, singed the return and it was prepared by a tax professional, which they had to pay. He’s also a director since he’s secretary-treasurer. Therefore, that has to be a lie since he’s secretary-treasurer.

On Part VI, is asks about officers and directors involved in the charity having a family relationship with another officer or director. They answered “Yes” confirming a lie to Question 28, C.

On the tax return, the Pink Cross Foundation again admitted having no offices.

In-Kind Contributions NOT Accounted For At All

In section VIII, No. 1(f) is blank. The Pink Cross Foundation has a wishlist on Amazon.com called “Pink Cross Outreach”. You can buy these products, including Bibles and gift cards, and it is mailed directly to the Pink Cross Foundation. The wishlist has items that appear to go into the gift bags they pass out at porn conventions. This would be “in-kind contributions” since they are goods it appears.

The tax return also does not include “in-kind contributions” such as volunteers (calculated on what their services would cost normally). Basically, in-kind contributions can include goods and services. You report most as a donation then as an expense. They basically cancel out each other out and are NOT tax-deductible for those making the donations of services or goods.

Therefore, the tax return does not include any in-kind contributions or expenses. Example would be if I bought Pink Cross a Bible on Amazon.com and it was given away this would be reported on Section VIII, No. 1(f) and then deducted as an expense. Basically, I gave someone a Bible but they actually did all the work but pay for it. It is a zero-sum gain but it is required to be reported. Even if it is just one thing. Services are not tax deductible.

The tax return does not list any “in-kind” donations so if they had any, this should trigger an IRS audit and they could be fined. She uses volunteers at porn conventions so where are the figures or do they know what in-kind contributions happen to be?

Lobbying Expenses

The Pink Cross Foundation did lobbying last year but on Section IV, Question 4, they said they didn’t. This is a lie and they would have to fill out a Schedule C. It should have have been completed and, like any other financial, is open to public inspection. This allows the IRS to determine if a charity can retain a 501(c)(3) status. It is known they tried to influence legislation, attended a California subcommittee, or committee, on that proposed legislation. Failure to fill out this form by lying and saying no lobbying was performed could cost them their 501(c)(3) status. Also, if you spend more than 20% of your gross receipts on lobbying, you may have to pay a tax or lose tax-exempt status. If you donate to a PAC, or Political Action Committee, it is not tax-deductible. Charities have to be extremely carefully they don’t cross the line in trying to influence political decisions.

Use of volunteers, mailings, advertising, direct contact with legislators, has to be accounted for on Schedule C. The Pink Cross Foundation did mail at least one legislator since I remember seeing the document. The video of the hearing did have at least one volunteer. This is a red flag. Of course, if the IRS claimed, “Tax evasion”, Garrett Lubben is responsible since he signed the return. It is interesting the tax return with lies on it wasn’t signed by the President, Shelley Lubben. The 2008 return she signed. On the return, Ms. Lubben claims to be the “president” but is “executive director” on their website. Which is it?

Addition Tax Things

The Pink Cross Foundation did pay $4,868 in payroll taxes and it was included in Ms. Lubben’s compensation since an employer would include it in an employee’s compensation. Total compensation is proper to count (no payroll taxes listed in 2008 so we’ll go with her, or their, figures).

Advertising and promotion was only $500 down from $941 the previous year. A big drop. But, they may not need as much.

However, office expenses was a new expense of $6,210. What office? Their home is their office. Hope they made sure that office is separate from the household or it could an illegal expense. It is suspect.

The Pink Cross Foundation did charity work of $40,651 on outreach/immediate assistance, care packages/outreach, financial assistance and utility expenses. That still doesn’t come close to Ms. Lubben’s almost $50,000 in total compensation.

Also, they spent $10,075 on travel. Compared to $5,820 in financial assistance and $8,287 in utility assistance, that is a lot. Direct help is apparently $14,107 or 11.3%. The Outreach/Immediate Assistance is $14,929 but it doesn’t list how much of that was “immediate assistance”.  Let’s say $8,000 was “immediate assistance”. Add $8,000 and $14,107 and you get $22,107 or 17.7% of gross receipts.

The website fees more than doubled from $1,565 to $3,554, which is listed as thepinkcross.org (same as 2008). This expense should go up since the more people view the website, they know about the charity.

The Final Word on the 2009 Tax Return

There are definitely problems with this tax return, IRS tax return problems. Ms. Lubben doubled her salary and no idea how much lobbying they did (and lied about on the return). There are also no in-kind contributions and expenses (there were volunteers at Pink Cross) but not accounted for neither were the donations through Amazon.com. The IRS should audit this return.

2010 Tax Returns

Unfortunately, that is not available yet. However, the Pink Cross Foundation has a wishlist on Amazon.com called “Pink Cross Outreach”. If you buy items there, it is sent directly to them. It is strange Ms. Lubben’s book was added to the “wishlist” as of November 21, 2010. This sounds like she is promoting her commercial endeavor, Shelley Lubben Communications, through a charity, which is illegal.

The Pink Cross Foundation should pay for an independent audit and file amendments to the 2009 return on things they did not account for as already noted. Also, they should hire an accountant to do their tax returns.

Other Tax Questions

Does thepinkcross.net belong to Pink Cross or Shelley Lubben? The website address does redirect to shelleylubben.com. According to WHOIS, ownership is hidden. Pink Cross does not appear to be trademarked so this could be legal. However, it really should go to thepinkcross.org not her personal website just for reasons that there is no conflict of interest between a commercial endeavor and a charitable one.

Does the Pink Cross Foundation Help Porn Actors/Actresses Out of Porn and How?

The Pink Cross Foundation has a form called “Recovery Assistance Program” that Anthony Kennerson sent me from http://www.redgarterclub.com/SDChronBlog2dot5/?s=Shelley+Lubben that Julie Meadows found. After reading this, we can’t recommend Pink Cross as a charity. The pictures of this form are included.

They do have Short-Term Assistance but only for $500 a maximum in one year. The form requires a lot of information to be approved. Long-Term Assistance is a maximum of $5,000 a year.

You have to be approved but the form does not explain what that approval process happens to consist of nor does it include a way to challenge a disapproval. It also takes seven (7) business days to make a determination. If someone is homeless and a former porn performer, what do they do for seven days? Also, on the form, they put disclaimers that they may or may not help even if approved. They should just explain up-front, we apologize no funds are available to help you.

Short-Term Requirements

You have to leave the porn/sex industry, have financial need, a desire to change, be 18 years old or older, open to our resources for help, photocopy of driver’s license or photo ID. Not sure if you have to fill out the rest of the form for short-term. Doesn’t say.

Long-Term Requirements

You have to leave the porn/sex industry, have financial need, a desire to change, be 18 years old or older, open to our resources for help, photocopy of driver’s license or photo ID, willingness to be accountable to Pink Cross Foundation mentorship team (who is that?), full-time employment (if employed full-time, why need much help?); stop receiving funds, royalties, and gifts from prior industry and sex work (not sure they have royalties or gifts in porn); cannot take jobs related to anything in the sex industry; will not promote sex industry; will abstain from illegal drugs and excessive alcohol use (so you can have a beer but not a case). If porn owes you money, you have to give it up. But, to whom? Hopefully not Pink Cross.

Their recovery program is a 1-year recovery plan. One question: does anyone with medical or psychological credentials run this program? Who exactly are the “mentors”?

The will help with housing by referral and will help with rent, security deposits and moving expenses. If you live somewhere, why would you move? Do you have to?

Counseling. Mentorship with a Pink Cross Foundation member and referrals to local counseling programs. The will find them at no cost. If they have funds, they will pay a portion of counseling costs up to six (6) months. Questions: who at Pink Cross has counseling credentials? Why only six (6) months of counseling for a 1-year program? Why are they paying only a portion? Doesn’t make sense. I guess you’ll pay for counseling if they are broke or pay the other portion out of the job you are required to have for the 1-year program.

Transition Assistance: for the first month out of the industry, we will provide some financial assistance to assist with purchasing of clothes, utilities, food, rent, etc, Why only some assistance?

Schooling if applicable and resources available.

Why not just tell someone up-front you can’t provide something? Most of this they aren’t providing in full anyway. This is a draconian program. Get a job and we’ll help. Give up any money porn owes you or we won’t. So, you got screwed by porn and have to give up the pay? Pardon the pun. Also, you will be accountable to some “mentor” of Pink Cross. What does Pink Cross do if you have a spouse in porn but you only want to leave? No idea.

The application also wants your real name, driver’s license, porn star name/names, SSN (why exactly?), DOB, address, know if you are eligible to work in the United States, and know if you have been convicted or pleaded guilty to a felony in the past five (5) years. Needing a copy of your SSN card before they approve you isn’t right. They also want to know what that felony it was as well.

You have to list your schools or colleges, degrees or diplomas, and graduation date. Hope the one they list is not a diploma mill like Shelley Lubben’s.

The need to know your skills and qualifications like licenses, skills, training, and awards. “I was in Best Gangbang of 2008 at the AVN Awards” probably doesn’t count. Hey, I need a joke after looking through this thing.

The do need your job title, responsibilities, salary and start date. Yes, a porn actress or porn actor strung out on booze or dugs has a real job. They also want references. You have to mail or fax in the application, wait seven (7) days, and then you’ll know if accepted. On Howard Stern’s show, Ms. Lubben claimed 100 or over 100 they’ve helped leave porn. Doubt that is true.

Final Thoughts

The big question is whether the Pink Cross Foundation is promoting Shelley Lubben, and paying her well at any rate, or doing the job they told the IRS to be a charity? I don’t believe they do. Personally, in an email (in early 2009 if I remember correctly), I advised Ms. Lubben just to work on helping porn stars get out of porn. She said “NO” that God had called her to do that and work on the political aspect. Why is giving porn actresses at conventions free lipstick, perfume, a Pink Bible, etc. so important? I can understand a gift bag with a brochure, Pink Cross Bible, and something small as a gift (under $5) would be okay. Also, who gets the gift cards? And, is the financial assistance really that big a pain in the rearend to get? Based on that application, it is almost as if the Pink Cross Foundation is trying NOT to help people who want out of porn/the sex industry. Just maybe, Nina Hartley’s comment that Shelley Lubben is just performing in another venue is true.

Note: Shelley Lubben, not anyone else, is welcome to dispute my article in an official capacity. I want it in writing (and with an affidavit if she’s willing to put her charity and herself on the line). If I missed anything on the tax returns readers find objectionable, please let me know. All comments are welcome. But, I can tell if it is propaganda or not and will call it out.