Attorney General, experts confused about how nonprofit tied to Duggan operates
While Wayne State University officials insist that the Make Your Date nonprofit — under scrutiny for its ties to Mayor Mike Duggan — is dormant and inactive, the Michigan attorney general is questioning the organization's nonprofit status and has been unable to get any answers for nearly three months.
The attorney general's office wants to know about Make Your Date's fundraising practices, including why it is not registered with the state to solicit charitable donations and where the donations ended up, the Free Press has learned.
The newspaper's review of Make Your Date’s finances, organizational records and fundraising activities shows that Make Your Date used its nonprofit status in some instances, including obtaining a federally issued logo used prominently in its charitable solicitations.
Several experts say Make Your Date's set-up is confusing. After reviewing financial documents obtained by the Free Press, they said it is difficult to reconcile claims of a dormant, inactive nonprofit with annual fundraisers Make Your Date has held and also its routinely updated registrations with state and federal agencies that suggest nonprofit activities.
The Duggan administration and Wayne State University officials have been vehement in their positions that Make Your Date is entirely a university program and that the nonprofit — which happens to have a similar name — is dormant. The organization aims to prevent preterm birth in Detroit.
The debate over Make Your Date's nonprofit status comes while the Detroit Office of Inspector General investigates whether Make Your Date received preferential treatment from Duggan and the city. The probe was launched last month after a Free Press investigation showed the city directed $358,000 in federal grants to Make Your Date and Duggan ordered a city-led fundraising effort for the program.
Days later, Michigan Attorney General Dana Nessel's office confirmed that it, too, was reviewing issues raised by the Free Press investigation.
The office's queries into Make Your Date began with a Feb. 13 letter seeking clarification on its registration with the state. The letter to Hassan requested a reply within 30 days but went unanswered. The office sent a follow-up letter on April 22 reminding the nonprofit to respond and advising that it is against Michigan law to raise money without proper registration.
The office said its review of Make Your Date’s nonprofit status could ratchet up if it again fails to respond.
“The bottom line is, if they choose not to respond to the second letter, that seems to be defiant,” spokeswoman Kelly Rossman-McKinney said. “It would definitely ramp up our interest.”
The Free Press began examining Make Your Date's operations and funding several months ago, after possible conflict of interest issues arose because of revelations about the mayor's close ties to its director, Sonia Hassan, a noted Wayne State physician. Duggan and Hassan were seen on surveillance footage last year arriving at the same suburban residence. The video prompted the mayor and his wife to defend their marriage when the video became public in November.
Duggan's wife, Lori Maher, filed for divorce last week.
Duggan handpicked Hassan to lead Detroit's efforts to reduce preterm birth after he was elected in 2013. The Make Your Date nonprofit launched in 2014, but it was never operational because the university took over the program, Wayne State officials have said. Make Your Date has raised more than $1.5 million since its inception, according to Wayne State.
Make Your Date is designed to help pregnant women deliver full-term babies. The organization holds pregnancy education classes and says it connects women to doctors and midwives, and provides other medical services.
The Make Your Date nonprofit filed paperwork with the Internal Revenue Service last year to maintain its tax-exempt status and it filed an annual report with the state. Hassan also registered a logo with the federal trademark office last year, using the name of the nonprofit as registered with the Michigan Department of Licensing and Regulatory Affairs. The logo is featured in fundraising materials, along with descriptions of Make Your Date as a nonprofit organization.
Several experts familiar with nonprofit regulations whom the Free Press interviewed expressed confusion about how the organization is set up because it has used its nonprofit status in various ways.
Paul Streckfus, a former IRS tax official who runs an online publication devoted to exempt organizations, said Wayne State’s affiliation with Make Your Date is irrelevant because donors are writing checks in Make Your Date's name and the nonprofit entity has maintained its tax-exempt status with the IRS.
“The issue is that they are recognized by the IRS as a tax-exempt entity,” said Streckfus, editor of the EO Tax Journal. “It doesn’t matter what Wayne State and the others are saying then, if they have established themselves with the IRS.”
Wayne State officials have given the Free Press varying answers about how Make Your Date's money is handled. They said last December that Wayne State is Make Your Date's fiduciary and identified other nonprofits for which the university serves in that role. They have said Make Your Date is entirely a Wayne State program. But then in April, a spokesman for Hassan told the Free Press for the first time that the Wayne State University Foundation handles some of the organization's donations.
Duggan, in defending the city's support for the organization, has joined Wayne State officials in characterizing Make Your Date as a dormant nonprofit. He predicted the city's inspector general will also find the nonprofit was inactive when the city directed federal grants to Make Your Date between 2015 and 2017.
"I am 100% confident when the OIG does this they will find a dormant nonprofit that never spent any money, never took any money, that never ever opened a bank account and that the City of Detroit in no way did anything to support that," Duggan said at a news conference last month. "Everything was in direct partnership with the university."
Detroit Inspector General Ellen Ha has not said when her report on Make Your Date will be released. Some have questioned whether Ha, who previously worked in the law department under Duggan, can be impartial.
Wayne State and Make Your Date officials refused last week to answer the Free Press’ questions seeking clarification on how Make Your Date solicits donations, where the money goes and how its donations are reported to the IRS.
Despite Wayne State's refusal to discuss the inner workings of Make Your Date, an attorney for Hassan on April 23 threatened the Free Press with a libel suit, demanding the newspaper retract its characterization of Make Your Date as a nonprofit in previous coverage.
“My client is not a public figure and has never had her reputation attacked before. At no point does the Free Press story cite a single case where the nonprofit started by Dr. Hassan got any money, any support, or any benefit,” Thomas Cranmer, an attorney with the Miller Canfield firm, wrote April 23 to the general counsel for the Free Press’ parent company, Gannett. The city has hired Miller Canfield in the past for representation, notably in its municipal bankruptcy case and the federal demolition investigation.
“Dr. Hassan has been libeled, it was done with malice, and it was done with full knowledge the story was false,” Cranmer wrote. “If you fail to move quickly to print a full retraction of the false allegations and apologize in order to offset some of the damage to Dr. Hassan’s reputation, we will take the necessary legal action to clear her name.”
Through its attorney, the Free Press has refuted defamation and libel claims in its response to Cranmer.
Nonprofit experts said it is difficult to understand officials’ explanation that Make Your Date is entirely a Wayne State program with no active nonprofit.
They point to the fact that Make Your Date has maintained its tax-exempt status with the IRS and the State of Michigan. And they point to a logo obtained last year from the U.S. Patent and Trademark Office, which has been used for fundraisers, the program’s website and promotional items.
The fundraising brochure for Make Your Date's 2017 gala instructs donors to make their checks out to the Make Your Date Detroit 501(c)(3), the IRS's designation for a nonprofit organization.
George W. Smith, a certified public accountant in Southfield who works with nonprofits, reviewed Make Your Date’s regulatory filings and fundraising documents and said the organization’s structure is unclear at best.
“They’ve done an outstanding job of blurring everything to the point (of) how do I tell you what’s right and what’s wrong?” Smith said. “If it’s deliberate, they’ve done a hell of a job and they should print a book on it.”
There has been no suggestion that Make Your Date or Hassan have misused any funds.
Its own literature raises questions
Make Your Date created a brochure in 2017 for its annual gala downtown that sought donations of up to $25,000.
Duggan, as the gala’s honorary chairman, was featured on the brochure along with comedian Louie Anderson, who was the headlining act. Individual tickets cost $250 and event sponsorships ran between $2,500 and $25,000.
Insignias for Wayne State, the City of Detroit and the Detroit Medical Center were included in the brochure as the event’s presenting sponsors. But nothing on the package indicated Make Your Date is a program run by Wayne State or that the university's foundation was involved in any way.
“Make Your Date Detroit is a nonprofit organization leading the way to ensure every pregnant woman in every neighborhood in Detroit knows that our great city is stepping up to ensure she delivers a full-term healthy, happy baby,” the sponsorship package said.
Legal experts said the brochure is an example of how confusing Make Your Date’s structure is. If Wayne State runs the Make Your Date program, then it should be clear to donors that they are giving their money to Wayne State.
“So, to me, that’s the question — who’s really soliciting? Is Wayne State soliciting or is Make Your Date? If Make Your Date is not registered to do charitable solicitation, then they shouldn’t be soliciting. Wayne State should be soliciting,” said Sally Wagenmaker, a Chicago lawyer who represents nonprofits.
Even references to Make Your Date on Wayne State’s website are confusing. Despite the university’s insistence that Make Your Date is only a program of the university, its Wayne State website for accepting donations describes Make Your Date as a “powerful and free nonprofit program, offered through the City of Detroit.”
In the financial documents provided by the university, there is a copy of a $5,000 donation from the Community Foundation of Greater Flint in 2017 that includes the Make Your Date nonprofit’s federal tax identification number.
On its Facebook page, Make Your Date is classified as a nonprofit organization. Information about its ties to Wayne State is minimal — visitors to its Facebook page only are provided boilerplate information about Make Your Date’s backers.
On the 2017 gala brochure, Make Your Date is very specifically referred to as a 501(c)(3) nonprofit. In other public-facing documents it calls itself a “not-for-profit organization” a designation that also conveys a charitable purpose but has different requirements from a nonprofit.
“With the support of the Mayor’s office, major medical institutions, universities, foundations, and insurance companies, we’ve built a caring and supportive team dedicated to turning the tide against dangerous preterm births,” reads the “Our Story” section of Make Your Date’s Facebook page.
Who do I make the check out to?
Make Your Date's 2017 gala brought in tens of thousands of dollars, but the nonprofit did not report the income to the IRS in its 2017 tax return.
Make Your Date collected at least $59,000 from health care organizations and other groups who sponsored the gala or bought tickets to the event.
The donations included a $25,000 sponsorship by DMC and $20,000 from Henry Ford Health System. Make Your Date financial records obtained from Wayne State via the Freedom of Information Act do not indicate exactly how many tickets Make Your Date sold for the gala.
Make Your Date raised a total of $224,105 in its 2017 fiscal year.
But when Make Your Date filed its 2017 tax return, it reported that its income was less than $50,000.
Hassan spokesman Bill Nowling previously told the Free Press the Make Your Date nonprofit never opened a bank account or spent “a single cent.”
“The nonprofit never received any funds from any funder, the city or otherwise,” Nowling wrote in an email. “Make Your Date is a program run by Wayne State University. WSU manages all the organization’s finances, including the receiving of outside funding, the approving of expenses, and maintaining annual budgets.”
Bruce R. Hopkins, author of “The Law of Tax-Exempt Organizations” and a professor at the University of Kansas School of Law, said Make Your Date should be marketed either as a university program or a stand-alone nonprofit.
“I don’t know quite what’s going on here,” Hopkins said. “It’s either a program of the university or it’s a separate nonprofit. I haven’t the faintest idea which way it's structured.”
A contract between Make Your Date and the Detroit Medical Center in 2017 is also unclear about whether Make Your Date was operating as a university program.
The contract spelled out DMC’s $25,000 donation to sponsor Make Your Date’s third annual gala in 2017. DMC received 20 tickets to the event, which included cocktails, dinner and entertainment, according to the contract, obtained by the Free Press via the Freedom of Information Act.
As the recipient of the donation, Make Your Date was listed on the contract as “Make Your Date ℅ Wayne State University, a nonprofit organization.” Hassan signed the contract as director of Make Your Date. The Wayne State University Foundation is not mentioned anywhere in the contract, contradicting Hassan attorney's contention that the 2017 gala was strictly a foundation event.
Experts in nonprofit regulations said the contract language makes it difficult to tell if Make Your Date was a nonprofit entity or a Wayne State program when the contract was signed.
“The way this is written it’s a bit ambiguous,” said William Fournier, of Caplin & Drysdale, a Washington, D.C., law firm. “Including it as ‘care of Wayne State’ suggests that they’re trying to treat it as a program, but the recipient signing the contract — signing as director of Make Your Date — which suggests they’ve got kind of legal authority to sign as a separate entity,” said Fournier, who specializes in nonprofit tax requirements.
Smith said the contract language is vague, and that he was unable to tell whether it is deliberate.
“Are they lazy, ignorant, (or) they just don’t know what they’re doing,” he said. “I can’t tell you enough with any of this to say which way it is,” he said.
The trademark application
Another sign that Make Your Date’s nonprofit is up and running is the program’s use of a trademarked logo.
The Make Your Date nonprofit corporation received a trademark certificate in 2018 from the U.S. Patent and Trademark Office.
The certificate was sent to “Make Your Date, Inc.,” which is the nonprofit corporation registered with the State of Michigan that city and Wayne State officials claim has been inactive since 2014.
Make Your Date’s trademark certificate described its logo — a baby’s footprints inside pink and blue hearts, which is prominently displayed on the organization’s Facebook page, website and promotional material.
Nonprofit board active and changing
The Make Your Date nonprofit has a seven-member board currently headed by Hassan’s sister, Susan Hassan. New members have come and gone since the nonprofit was incorporated in 2014, according to regulatory filings.
The current board also includes Conrad Mallett, CEO of DMC Sinai-Grace Hospital, and David Cotton, who was CEO and founder of Meridian Health Plan until it sold last year to WellCare Health Plans for $2.5 billion. Neither Mallett nor Cotton could be reached for comment.
A spokesman for Wayne State downplayed the board’s role.
The board was set up when Make Your Date launched and was applying for tax-exempt status as a nonprofit organization. Make Your Date opted to be run as a Wayne State program instead of an independent nonprofit, spokesman Matt Lockwood wrote in an email last month.
“Wayne State has never used a board to govern the Make Your Date program. We have, from time to time, consulted with voluntary advisors on the development of the Wayne State program, but those meetings were informal and did not have minutes or formal reports,” Lockwood wrote.
Fundraising materials for Make Your Date offer donors who give $100,000 or more a spot on an “advisory board” and the “operating committee” for the organization. But the materials aren’t clear on whether those are seats on the board of directors.
Despite Lockwood’s characterization of the board as idle, emails Sonia Hassan sent in 2017 suggest the board influenced Make Your Date’s operations. The Free Press obtained the emails through an open records request.
Hassan weighed the board’s input when considering whether Make Your Date would participate in the creation of a directory for young expectant mothers.
“We would very much like to partner with you,” Hassan wrote on Feb. 1, 2017, to a representative of the National Council of Jewish Women. “However, at this point would have to present the plan of your project and some of the logistics to our team overall. It’s also likely our Board members would want to know a bit more about this project before moving forward as it could potentially impact some of our partners — including the one we intend to work with soon.”
Later that year, in August 2017, Sonia Hassan anticipated the board’s reaction to an upcoming public announcement involving Make Your Date and SisterFriends, a city initiative. In emails with Duggan Chief of Staff Alexis Wiley and Joneigh Khaldun, the city's then-health director, Hassan debated contents of a news release to announce the partnership.
Hassan wanted to modify the health director's quote in the release because it didn’t “optimally capture the spirit of the collaboration …
“As written it implies that the current program ignores the other issues a woman faces — transportation, social issues, home visiting, and more — which is not the case. Our program, supporters, funders and board will be surprised at the messaging — especially in light of the success of the program thus far. Perhaps we could focus on the message as discussed previously.”
Whether Make Your Date is a Wayne State program or an independent nonprofit, a board of directors for an organization its size would be expected to keep meeting minutes, said Smith, the Southfield accountant. If the IRS were to audit Make Your Date, meeting minutes would be among the first things it requests, Smith said.
“If you don’t have minutes, they’re going to say you’re not even functioning like a nonprofit,” he said. “It’s not a requirement; it’s an expectation standard. Particularly in something like this with nonprofits, they would expect to see minutes.”
Ultimately, the set-up for Make Your Date is irrelevant when examining whether the organization received preferential treatment from the city, said Leslie Lenkowsky, a professor at the Indiana University Lilly Family School of Philanthropy.
“The organizational form doesn’t matter at all,” Lenkowsky said.
The issue is whether the city’s conflict-of-interest policies were followed in its support of Make Your Date, he said.
Viki Harrison, director of state operations for the nonpartisan grassroots organization Common Cause, said the debate about whether Make Your Date is a nonprofit or solely a university program doesn’t get at the heart of the issue, which she said is the appearance of a conflict of interest.
Common Cause is a national organization that advocates for open and clean government.
“Whether it goes to a nonprofit or a school, that’s a bunch of background noise,” Harrison said. “That doesn’t matter. She’s working with the program over at Wayne State, too. ... He has just put her in a bad situation.”
Harrison, whose expertise includes ethics and accountability, said elected officials such as Duggan should always be mindful that the decisions they make could raise ethical and morality concerns among their constituents.
“I think that our elected officials in this country have to go above and beyond the law to make sure there are no conflicts of interest when you are talking about money,” Harrison said