Passavant Memorial Homes, stung by reports about its chief executive's high pay, wants its board to stop talking to reporters and has asked a judge to silence a former board member. On Wednesday, Passavant Homes' for-profit subsidiary, Passavant Development Corp., asked an Allegheny County judge to stop former board member Dr. Ravi Kant of Bridgeville from talking about Passavant Homes. The organization claims Kant violated a confidentiality agreement. The lawsuit was filed after a story in the Pittsburgh Tribune-Review quoted Kant, a head injury specialist, questioning the salary paid to Passavant Homes' president and chief executive, Rick D. Senft. In 1999, Senft earned $446,631 from Passavant Homes and Passavant Development Corp. "For them to be silencing their board members should be raising a very big red flag with donors," said Daniel Borochoff, president of the American Institute of Philanthropy in Bethesda, Md. "These are people who should be talking up the organization from the mountain tops." Borochoff isn't alone. Pennsylvania's Chief Deputy Attorney General Mark Pacella and former Passavant Homes board members criticized such practices as removing board members, allowing managers to help set their own pay and, in one instance, providing about $9,000 worth of work on a board member's home. Senft's salary made him the 12th-highest-paid charity head in the nation, just ahead of the director of the noted St. Jude's Children's Research Hospital in Memphis, based on a study done by the American Institute of Philanthropy, Borochoff said. Senft has declined to discuss his salary or the organization. The 107-year-old Passavant Homes, based in Harmarville, provides residential and vocational services to 410 mentally retarded people in eight counties surrounding Pittsburgh. In its most recent tax filing, Passavant Homes reported revenue of $22.4 million. Officials at Passavant Homes declined to be interviewed for this story. In fact, attorney Jay D. Marinstein sent a letter to the Pittsburgh Trib saying, "I would request that you cease contacting members of the Board of Directors, officers, and employees of PMH and PDC regarding the substance of the articles that the Tribune-Review has recently published." Three board members declined to speak and directed questions to Passavant Homes. Several more did not return phone calls. In the past, board members have defended Senft's salary. "As a community, we can choose to take exception to the salaries paid to senior executives in this and other healthcare institutions in our region," wrote the Rev. Robert Hartman of Trinity Lutheran Church in New Brighton, chairman of board of directors. "But it is a fact of business that to compete and survive, organizations like ours must offer compensation to attract and retain individuals who can navigate the many challenges inherent in our industry." Decorating as a side business The lawsuit filed Wednesday is the second time Passavant Homes has taken Kant to court in two weeks. On March 14, Passavant Development Corp. sued him for nonpayment of $8,879.75 for work done on Kant's house by Passavant Homes employees. The lawsuit states workers painted several rooms, added ceilings in the kitchen and family room and replaced window treatments. Kant said workers had done some redecorating at his office, and he had paid Passavant Homes for it. But Kant said he did not receive bills for the work done on his home in July 2000 until March 2001 — days after he complained about Senft's compensation to fellow board members. Patrick DeMico, chief operating officer for Passavant Homes, said in an interview last week that fixing up board members' homes "was one of our very minor business lines. We were selling the excess capacity of our renovators." On staff at Passavant Homes are an interior design coordinator, a maintenance director and a property director. The organization owns 87 group homes in residential neighborhoods. DeMico said such work was done for family members, too, and that everyone who benefited was expected to fully reimburse Passavant Homes. "It's not something we advertise," DeMico said. "It's not something we do regularly. It's not something we do any longer." Borochoff, from the American Institute of Philanthropy, said employees doing work for board members and others is a bad idea. "That is not something the organization should be doing for its board members because it could bias their decision-making," Borochoff said. "It could clearly create a conflict of interest." Pacella, chief deputy attorney general in charge of charities, would not comment on Passavant Homes' case specifically. But he said gifts to board members become a problem when they are so large that they probably did not come from the manager's personal bank account. "I would be interested in the source of the money," Pacella said. "Can the giver do it with his salary, or is he using the nonprofit's money?" Most of Passavant Homes' revenues come from contracts with state and county governments. Removing dissent Two board members were removed and two others quit the Passavant Homes board in March and April last year after raising questions about salaries. Ed Rayburg, a pharmaceutical sales manager, said board chairman Hartman accepted a resignation he never offered. Rayburg had mentioned to a Passavant Homes secretary in January 2001 that new job duties might make it difficult to attend board meetings. But Rayburg said he discovered there was no conflict. He began raising questions about proposed salaries for DeMico, Chief Financial Officer Russell Wise and then-Chief Operating Officer Barbara Colbert. In a 1999 report to the Internal Revenue Service, DeMico's pay was listed as $187,100, Wise's as $98,168 and Colbert's as $301,286. Rayburg said he could not remember the proposed increases last year, but he recalled his reaction. "I was at home reading the salary proposal, and I was basically floored by it," he said. He expressed his concern to DeMico and within days he received the letter from Hartman accepting his resignation based only on the months-earlier conversation with a secretary. Rayburg contends he was dismissed for challenging the salaries. Lisa LaMontagne, a spokeswoman for BoardSource, which publishes guiding principles for good nonprofit board management, said challenging staff proposals is a board member's duty. "The responsibility of the board member is to ask the tough questions," she said. Further, a board member should be voted off, not dismissed by the chairman alone, she said. If there is a dismissal, the full board should vote as soon as possible on whether it agrees. A pamphlet for nonprofit boards, published by Attorney General Mike Fisher's office, specifically charges board members with asking financial questions: "They must exercise the degree of care, caution and diligence that prudent persons would exercise in handling their own personal investments and finances … Fiduciaries who carelessly or negligently invest funds may be personally liable for any losses sustained." State law also says that individuals should not be involved in setting their own compensation. Kant and Rayburg said that when they asked for a salary survey to compare Passavant Homes with similar organizations, they were shown a two-page document pulled from an Internet site such as salary.com, which does not include nonprofit organizations. Rayburg said Passavant Homes' salaries were being benchmarked with big Pittsburgh companies such as Alcoa and PPG Industries. Another board member who resigned, Carolyn Buick, said managers refused to show her supporting documentation for the salaries. If salaries are found to be excessive, the IRS may fine managers as well as board members themselves. The IRS audited Passavant Homes last September, including a review of salaries, and gave the organization a clean bill of health. The IRS has refused to discuss its audit, saying Passavant Homes has a right to privacy. But an IRS spokesman said the issue will be referred to the Exempt Organizations division. Openness and trust LaMontagne, of BoardSource, said the atmosphere at a nonprofit should reflect an "open working relationship" between board members and management. Most people who join the board of a charity don't expect to deal with weighty issues of fiduciary responsibility and what to do when things go sour, Borochoff said. "A lot of people use it as a networking opportunity or as social time," he said. "But they need to take it very seriously because they're the ones ultimately responsible for the organization." If board members fail to involve themselves and ask questions, he said, management ends up with too much power. "Far too often in the nonprofit world, the board of directors does not fulfill its responsibility to oversee and govern the organization. They lean too heavily on the staff to make decisions and call the shots, " Borochoff said. "It's not clear that the (Passavant Homes) board members are truly independent, and that's what they need to be."

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