SOUTHERN POVERTY LAW CENTER PRELIMINARY REPORT July 3, 2017 TABLE OF CONTENTS TOP ISSUES ........................................................................................................................................................................ 4 MORRIS DEES, JR. ............................................................................................................................................................ 8 BACKGROUND ......................................................................................................................................................................................... 8 TRAPPINGS OF WEALTH ........................................................................................................................................................................ 9 MARKETING HIS OWN IMAGE ............................................................................................................................................................ 11 FINANCIAL OVERVIEW ................................................................................................................................................ 12 ASSETS AND GROWTH ......................................................................................................................................................................... 12 CASH FLOW AND OPERATIONS .......................................................................................................................................................... 13 OFFSHORE INVESTMENTS AND HEDGE FUNDS ............................................................................................................................... 15 SIX-FIGURE SALARIES AND OTHER PERKS ....................................................................................................................................... 17 QUESTIONABLE COMPENSATION PRACTICES ................................................................................................................................. 19 GENDER PAY GAP AT C.O.O. POSITION ............................................................................................................................................ 22 THE “POVERTY PALACE” .................................................................................................................................................................... 25 FUNDRAISING OVERVIEW .......................................................................................................................................... 27 GENERAL PRACTICES .......................................................................................................................................................................... 27 PROMINENT DONORS .......................................................................................................................................................................... 28 INDEPENDENT CONTRACTORS ................................................................................................................................ 30 OVERVIEW ............................................................................................................................................................................................ 30 FIRMS WITH DEMOCRATIC PARTY TIES ........................................................................................................................................... 30 FIRMS WITH INTELLIGENCE COMMUNITY TIES .............................................................................................................................. 34 CONTRACTORS WITH UNCLEAR RESULTS ........................................................................................................................................ 35 RATINGS AND PROGRAM SPENDING ...................................................................................................................... 37 ACCREDITATION AND WATCHDOG RATINGS ................................................................................................................................... 37 BREAKDOWN OF EXPENSES ............................................................................................................................................................... 38 LITIGATION COSTS ............................................................................................................................................................................... 40 2 GUIDESTAR CONTROVERSY ................................................................................................................................................................ 41 STATE-LEVEL OPERATIONS ...................................................................................................................................... 44 OFFICE LOCATIONS ............................................................................................................................................................................. 44 STATES OF INTEREST .......................................................................................................................................................................... 44 PUBLIC ACTIVITIES ...................................................................................................................................................... 49 RECENT SPLC LEGAL ACTION ........................................................................................................................................................... 49 HATE LIST METHODOLOGY ................................................................................................................................................................ 51 HATE LIST COMPOSITION ................................................................................................................................................................... 54 NOTABLE PUBLIC INCIDENTS ............................................................................................................................................................ 59 PUBLIC CRITICISM ........................................................................................................................................................ 60 LIBERAL DISCONTENT ........................................................................................................................................................................ 60 EMPLOYEE DISSATISFACTION ........................................................................................................................................................... 61 3 TOP ISSUES Leadership: • Morris Dees has been a millionaire since the 1960s and owns at least two homes in Alabama, including a sprawling “Neo-Mediterranean” estate where he lives with his fifth wife among horse stables, tennis courts, and 24-7 security. • Dees once drove a Rolls-Royce; a local journalist described the “spectacle” of seeing the car parked “day after day” outside a poverty charity. • Dees named the SPLC endowment after himself, sells postcards and photos of his own image at the Civil Rights Memorial gift shop, and has a “Morris Dees Legacy Fund Kiosk” where visitors can search an interactive touch screen for names of donors to the endowment fund. • Dees and CEO Richard Cohen have each earned more than $5 million in pay and benefits since 2000; last year, thirty employees received six-figure compensation. Financial Overview: • SPLC has grown by a factor of six over the last two decades and has assets exceeding $350 million, making it “probably the richest poverty organization in the history of the world.” • SPLC occupies a six-story “postmodernist” office building that it built with $15 million in tax- exempt bonds issued through the Montgomery Downtown Redevelopment Authority. • SPLC’s endowment currently sits at more than $300 million; none of that money is used for program services. • SPLC justifies the size of its endowment by claiming it might be unable to afford future fundraising by mail due to “rising postage and printing costs.” • In the most recent fiscal year, SPLC banked nearly $10 million in new cash and spent almost as much on salaries and benefits as it did on operating expenses. • SPLC spends far more on employee compensation, fundraising, and transfers to its $300 million endowment fund than it does on litigation costs. • SPLC has roughly $170 million – more than half its endowment – in alternative assets like hedge funds, offshore partnerships, and other exotic investments. • SPLC has disclosed having “financial interests” in Bermuda, the Cayman Islands, and the British Virgin Islands, three of the world’s most notorious tax havens. • SPLC funds health club memberships and a generous 401k match as well as a social club membership for its president and travel expenses for Morris Dees’ wife. • SPLC paid its former COO nearly $150,000 during a period in which he was – by his own account – CFO of a prep school 1,000 miles from Montgomery. 4 • SPLC appears to have compensated its former legal director for the difference between her mortgage and her home value when she moved to Alabama in 2009. • SPLC has decried the gender pay gap, but its first female COO earned less than either of her two male predecessors during a time when Dees and Cohen enjoyed tens of thousands of dollars in pay increases. Fundraising & Independent Contractors: • SPLC frequently claims its finances