$26K Per Kid?

The I-Man is taking heat for the Imus Ranch For Kids With Cancer. This philanthropy raises a lot of money. There is an embarrassment of riches here. On a per capita basis, the Imus Ranch spends $26 thou per kid. Deduct airfare (paid by the Imus charity) from that, and a week for a kid at the Imus Ranch rivals any resort in the world. This is supposedly a working ranch where the boys and girls learn to work cattle. Ironically, the I-Man and his wife (and presumably their son) are vegetarians. I don't know what the kids eat, but $20+K buys an awful lot of broccoli. If this is (fair & balanced) skepticism, so be it.

[x Wall Street Journal]
Don Imus' ranch for sick children draws scrutiny
by Robert Frank

Every weekday morning, listeners across the country tune in to radio host Don Imus to hear his trademark rants about politics, Hollywood, sports and Iraq.

Most days, they also hear about his favorite philanthropic cause: the Imus Ranch.

Mr. Imus and his wife, Deirdre, opened the 4,000-acre ranch, nestled in the mesa country of northern New Mexico, in 1999 to help sick children. Dubbed the "Cowboy Taj Mahal" by locals, the complex has a 14,000-square-foot adobe mansion, swimming pool, billiard hall, herds of longhorn cattle, buffalo and sheep, and a replica of an 1880s mining town. Its stated mission is to give "children with severe illnesses an opportunity to experience the life of an American cowboy."

The ranch has also burnished Imus's image. With his signature scowl, gruff voice, 10-gallon hats and tendency to refer to some public figures as "creeps," "thugs" and "fascists," Imus, 64 years old, has built a top-10 national radio show with 3.25 million listeners a week. It is also simulcast on MSNBC television. The ranch has helped shine a spotlight on his softer side, transforming Imus and his wife into two of the country's best-known philanthropists. They've donated more than $1 million to the ranch over the past four years and raised $20 million for its start-up and operations. Celebrity donors, including TV-news star Barbara Walters, former New York Stock Exchange Chief Richard Grasso and former New York City Mayor Rudolph Giuliani, receive praise on Mr. Imus's show.

"Having grown up on a cattle ranch, what I liked about the experience was the sense of accomplishment, discipline, self-esteem and structure," says Imus, who was raised in Arizona.

Yet the charity's large budget, and the Imus family's personal stays at the ranch, are drawing scrutiny from tax officials and regulators. The ranch's expenses totaled $2.6 million last year, while it hosted only about 100 kids - an unusually high dollar-to-child ratio, charity experts say. The Imus family stays at the ranch all summer with the children, but they also visit for weeks at a time during holidays as well as dropping in for occasional weekends, Mr. Imus says.

The law says the charity is supposed to account for or be compensated for his use of the ranch, but it hasn't done so. The controversy highlights the blurred lines that can emerge when the wealthy combine their personal interests with their public charity work.

Earlier this year, New York Attorney General Eliot Spitzer questioned Imus about the ranch. While the focus and scope of the questions aren't known, people familiar with the matter say Spitzer's office asked about Mr. Imus's personal use of the ranch and the charity's financial controls. The review isn't an investigation, these people said, and the questions were prompted by the ranch's delayed filing of its financial statements.

The inquiry follows a ruling in 2000 by the San Miguel County, N.M., assessor's office that the ranch shouldn't be granted a full tax exemption from local property taxes. In its decision, the county said that since the ranch hosts kids for only part of the year, and portions of the ranch are used for personal housing, only 55 percent of the ranch is exempt from property taxes. Imus complied with the ruling. The ranch retains its federal tax-exempt status.

Imus's nemesis, radio jockey Howard Stern, repeatedly attacks the Imus Ranch on his show, saying it's a summer home for the Imus family and calling it a "big scam."

Imus calls claims that he uses the ranch as a vacation home "absurd." He says he and his wife manage the ranch as volunteers, working the entire time they're there. "I'm not getting anything out of this other than having fun helping the children," he says.

According to its latest tax filings, the ranch's expenses totaled $2.6 million in 2003 and $2.7 million in 2002. That works out to $27,000 per child, or just under $3,000 per night for their typical nine-day stays. For the same amount, a child could stay in a top suite at New York's Waldorf Astoria or secure a cabin on the Queen Mary 2.

By comparison, Camp Starfish, another well-known kids charity, hosts over 150 kids a summer on a budget of $360,000 a year, according to tax filings. Actor Paul Newman's charity, The Hole in the Wall Gang Fund, has a budget that's more than twice as large as the Imus Ranch but hosts 10 times as many kids at its summer camp, its filing says. It also sponsors year-round programs.

"Does it cost too much per kid? Maybe it does," Imus says, adding that "I would spend $2.6 million or $1.8 million per child if I thought it could change their lives."

Most of the ranch expenses go for annual overhead, including $709,000 in salaries for the ranch's 15 staffers, $770,000 for insurance, animal feed, repairs and other costs, and $106,000 to fly and transport the kids to the ranch, according to the ranch's 2003 tax filing.

The ranch hosts 10 sessions a year with about 10 kids attending each. The sessions run from June to September, with an additional session in March. The Imus family stays in the mansion with the children, but the family also visits during the off-season. The Imuses and their 6-year-old son, Wyatt, stay at the ranch for about a week around Thanksgiving and another one to three weeks around Christmas. Imus says he and the family also fly out for occasional weekends if there's work to do, such as training a new chef.

During their visits, the Imus family stays at the mansion, hikes on the land and uses the ranch facilities. The ranch chef, who's employed by the charity, often cooks for the family when they're visiting, current and former staff say.

Under the federal tax law governing charities, Imus would normally be required to pay the ranch for the value of any personal or family-related use on fair and reasonable terms. That would include the value of lodging, food and other expenses. Tax filings show that the ranch hasn't collected any rent or service payments during its four years in existence.

Imus says he isn't aware of such rules, and hasn't paid any rent or fees, but that he and his wife draw no salary as board members or ranch managers. He says he and his family pay their own way to and from the ranch, drive their own vehicles and ride their own horses when visiting. He adds that the ranch has to remain open year-round because of the animals, so his visits don't add to the costs. He said that when he's on the ranch, he and his wife do chores such as cleaning the horse stalls, caring for the animals or working with the staff on problems.

"I have a $30 million estate" in Westport, Conn., Imus says. "I don't need the ranch for a vacation."

Mr. Imus and his wife dreamed up the ranch in 1997, after learning about Mr. Newman's Hole in the Wall camp. Mr. Imus had planned to buy a personal ranch, and he and his wife hoped to start a charity for kids, so they merged the two ideas into the Imus Ranch.

The price tag for the ranch ballooned to more than $20 million. Deirdre Imus, 40, an artist and fitness buff who describes herself as "color aggressive," took charge of the design. The main mansion was done in bright red, orange and black, with Asian and American-Indian rugs, giant fireplaces and rustic chandeliers.

It has five bedrooms for the children, a library, dining hall and great room complete with a Steinway grand piano. The Imuses' master-bedroom suite, positioned according to Chinese feng shui principles, features a screened-in sleeping porch overlooking a mesa and an outdoor shower designed to look like Aztec ruins.

"We had fun," Deirdre Imus told Architectural Digest in a 2001 interview, "but I drove the plasterer crazy."

They also built an entire village in Old West style, with buildings designed to look like a general store, marshal's office and saloon. There are bunk houses for doctors, other medical staff and ranch hands. Don Imus also has a broadcasting studio on the site, so he can do his show - a production of WFAN radio, which is owned by Viacom Inc. - from the ranch. The charity paid for the building housing the studio but not the equipment.

Imus raised funds from listeners, friends and companies. Former Merrill Lynch CEO David Komansky donated more than $1.4 million, while Executive Jet Chief Executive Richard Santulli gave $1 million, according to filings with the Internal Revenue Service. Nasdaq, American Express Co., Ford Motor Co., General Motors Corp., General Electric Co. and other companies are sponsors. There's an AFLAC Rodeo Arena and Hay Barn, and AT&T Horse Barn.

Donors could sponsor an acre of land for $5,000, while companies paid for the buildings and equipment. Deirdre Imus wrote a cookbook, "Cooking for Kids and Cowboys," which has sold nearly 100,000 copies, with the profit going to ranch. The ranch also gets proceeds from a line of food products, including Imus Ranch dressing.

The philosophy behind the ranch, the Imuses say, is to give children with cancer and other illnesses, as well as siblings of kids who have died from sudden infant death syndrome, more pride and confidence by learning how to be cowboys and cowgirls. Kids learn to ride horses, clean their stalls, rope steer and collect eggs from the chickens.

The sessions can be tough: Staff say that during the summer, children sometimes work in 100-degree heat pulling weeds and shoveling horse muck. There are no televisions, videogames or CD players for the kids, and their day starts with chores at 6 a.m.

Under Mrs. Imus's orders, the ranch is also strictly vegan and organic. They serve no meat or cheese. The ranch doesn't use pesticides or cleaning agents, since Deirdre Imus believes that environmental chemicals are a cause of cancer.

Grace Serrame, a single mom and restaurant hostess in Jersey City, N.J., sent her 16-year-old daughter, Athalia, to the ranch for two summers. Ms. Serrame said the ranch transformed Athalia - who has Ewing's Sarcoma - from a shy, reclusive girl into an active teenager.

"At the ranch, they treat the kids not like they're sick, but just like normal kids," Serrame says. "She did the chores and rode the horses, and no one treated her like she was special."

Mr. Imus says he prefers to oversee the ranch and kids himself, rather than hiring a manager to run it. But the close relationship has raised questions by regulators.

In February of 2000, the ranch filed for a property-tax exemption from the San Migel County Assessor's office. The office conducted an investigation in response to the request, visiting and inspecting the property. The assessor determined that while the primary use of the property is as a charity, "those services are not rendered and undertaken in their entirety, or 100 percent, of the year." The assessor also determined that "certain improvements on the property are utilized, in part, for personal housing or other purposes not directly related to the day-to-day basis (of) providing services for the children."

Mr. Imus declined to comment on the decision, but his attorney, John Silver, says the decision for the ranch to pay their share of the property taxes, which amounts to $17,000 a year, was a compromise with the county.

Charity attorneys not connected with the ranch say that because the taxes stem in part from his personal use of the ranch, Imus could face penalty taxes for failing to reimburse the ranch.

The personal-use issue flared up again in December and January, when Mr. Spitzer's office sent a list of questions to Imus. Spitzer oversees New York-based charities such as the Imus Ranch.

Spitzer's office asked Imus about his family's use of the ranch, how often they visited and how they accounted for or disclosed the Imus family's use of the ranch, Imus said. He said he explained to the attorney general's office that "we run the ranch when we're here. We're always working." He also said it would cost over $100,000 a year to hire a qualified manager to do the same job.

Yet according to tax law, the value of any benefits received by Imus and his family should be accounted for. Those benefits should also not exceed the value of any services he provides to the charity. Most charities avoid allowing directors and officers exclusive use of their facilities.

"Arrangements of this sort aren't customary, and an independent board would typically refrain from providing significant personal benefits to a volunteer director or his family," says John Sare, a partner at Patterson, Belknap, Webb & Tyler LLP and an expert in charity law.

Imus can offset the charges by working for the charity. But that too has to be expensed or accounted for by the charity board. Mr. Imus says the board doesn't see the need to do such accounting.

The board consists of Imus, his wife and his two personal accountants.

Ian McDonald contributed to this article.

Copyright © 2005 The Wall Street Journal