Three Cups of Tea disputed

CAI has posted all of their financial documents online, read them for yourself instead of depending on your "GOD" to do it for you.

Central Asia Institute Accountability Update
Published March 30th, 2011

In mid-2010 Central Asia Institute did finally publish audited financial statements for its fiscal year-ended 2009. However, the information contained in the audit unfortunately did not assuage AIP's concerns about the lack of segregation between Central Asia Institute's financial activities and the personal business interests of its executive director, Greg Mortenson.

According to Central Asia Institute's 2009 audit, "The Organization has an economic interest in a book written by the Executive Director, Greg Mortenson, which is written in regards to his journeys in Afghanistan and Pakistan while pursuing the organization's mission. During the fiscal year ended September 30, 2009, the organization paid $1,729,542 for book-related expenses associated with outreach and education." As in past years, Central Asia Institute does not report receiving any revenue from book sales in its 2009 audit or tax form.

A donation to Central Asia Institute, at least in 2009, was more likely to be spent on costs related to educating people in the U.S. about problems in Pakistan and Afghanistan than on helping children in central Asia with their education. According to the charity's 2009 tax form, Central Asia Institute spent $4.6 million on "Domestic outreach and education, lectures and guest appearances across the United States telling Central Asia Institute's story and the plight of children in Pakistan and Afghanistan." In contrast, the charity's 2009 tax form reports that expenses related to serving schools in central Asia totaled less at $4 million, including $3 million for building materials, supplies, labor, and transportation; $759,000 for school operating expenses like teachers' salaries & supplies; $40,000 for scholarships; and $139,000 for project managers' travel expenses.

AIP continues to be concerned about conflicts of interest at Central Asia Institute. Greg Mortenson, who not only benefits personally from sales of his books promoted by the charity, also regularly receives $30,000 in speaker's fees for his lectures. The charity does not report earning any revenue from speaker's fees in its 2009 audit or tax form. AIP is concerned that Central Asia Institute looks to be covering expenses related to "domestic outreach and education, lectures and guest appearances…" while apparently not receiving a portion of the related speaker's fees or any other revenues generated at these events.

In October of 2010, AIP mailed and e-mailed questions to Central Asia Institute's executive director, Greg Mortenson; its operations director, Jennifer Sipes; and its outside auditors, Anderson, Zurmuehlen & Co., PC. We asked why the charity does not report receiving any revenue from books for which it incurs significant, related expenses, or speaker's fees for any lectures Greg Mortenson gives as a representative of the charity. We also asked what controls the organization has in place, if any, to ensure that activities that generate personal income for Mr. Mortenson or for outside, for-profit companies are kept separate from activities that generate revenue or incur expenses for Central Asia Institute, and inquired as to the role the charity's board of directors plays in enforcing these controls.

No one from Central Asia Institute has responded to these and other questions posed by AIP. As of the end of March, 2011, AIP continues to issue Central Asia Institute a rating of "?" based on the charity's fiscal year-ended 9/30/2009 reporting.

Tuesday August 16, 2011
by Jon Krakauer

GREG MORTENSON TRUTH CHECK

CAI’S LATEST FINANCIAL STATEMENT

THE CLAIM: The financial page on the CAI website states,

Central Asia Institute is a non-profit 501(c)3 organization dedicated to use every dollar contributed as efficiently as possible. Our pledge to our donors is to continue to keep our overhead (administrative and fundraising costs) low, maximize the percentage of contributions that go towards our programs and spend program dollars wisely so that thousands of children may benefit.

THE TRUTH: This morning CAI posted its latest tax return (IRS Form 990, for the fiscal year ending September 30, 2010) on the same web page as the statement above. What this document reveals is troubling. In 2010, CAI had total revenues of $22.7 million, most of which came from donations. In 2010, CAI spent:

$2.5 million on “advertising and promotion” (much of it to buy magazine ads for Mortenson’s books)

$2.2 million on “travel” (much of it for private jets to fly Mortenson to lectures)

$1.7 million on “publications and subscriptions” (much of this, apparently, went to purchase copies of Mortenson’s books at retail cost; although CAI doesn’t provide details of exactly where the money went)

$300,000 on “printing and reproduction”

By comparison, in 2010 CAI spent:

$2.8 million on “building materials and equipment”

$1.5 million on “school operating expenses”

All told, in 2010 CAI spent $8 million on “outreach,” promotion, advertising, fundraising, and lectures, compared to $5.1 million for educational programs and other community support in Pakistan and Afghanistan. It should be noted, as well, that the audit of the 2010 tax return has not yet been completed.

Included in this new tax return is a “Master Project List” of the schools CAI claimed to be supporting in some fashion in 2010. I haven’t had time to analyze this list carefully yet, but a cursory glance has revealed a number of ghost schools being claimed as operational. For example, CAI claims that the Bozai Gumbaz school—one of its most prominent projects, the centerpiece of Mortenson’s second book, Stones into Schools—had 35 students and 3 teachers in 2010. In fact, it sat empty through all of 2010, and didn’t hold its first class until late June 2011, as I pointed out last week. CAI's misrepresentation of the truth about this showcase school raises unsettling questions about its willingness to report honestly on the status of all its schools.

$2.2 million on “travel” (much of it for private jets to fly Mortenson to lectures)

4.b Expenses $7,201,512
CAI GLOBAL OUTREACH PROGRAM PROMOTES AWARENESS OF THE IMPORTANCE OF PRIMARY EDUCATION, LITERACY, AND CROSS-CULTURAL UNDERSTANDING ABOUT THE REMOTE MOUNTAIN REGIONS AND COMMUNITIES OF CENTRAL ASIA. THIS IS MANIFESTED AND ACHIEVED WITH THE WEBSITE, PUBLIC EVENTS, PUBLICATIONS, GLOBAL OUTREACH, THE PENNIES FOR PEACE PROGRAM AND GREG MORTENSON’S BOOKS, "THREE CUPS OF TEA" AND "STONES INTO SCHOOLS".

many if not most non-profits use their resources, including volunteer time, more efficiently and effectively than many governments and corporations. And allow us to participate in and direct our corners of the world.