A light rain fell at the Zurich airport one Sunday morning in January 2023 as Sarah Kate Ellis made her way from a seat in Delta’s most exclusive cabin to a waiting Mercedes. It was there to chauffeur her to the Swiss Alps, where she and her colleagues would stay at the Tivoli Lodge, a seven-bedroom chalet that cost nearly half a million dollars to rent for the week.

Ellis, who was en route to the World Economic Forum in Davos, is CEO of the nonprofit organization GLAAD, one of the country’s leading LGBTQ+ advocacy groups.

The Group Paid for Ellis’ Trip

The group, which has an annual budget of roughly $30 million, paid for Ellis’ trip, according to internal documents reviewed by The New York Times and interviews with current and former employees and others with knowledge of GLAAD’s operations.

The trip was part of a pattern of lavish spending at GLAAD, much of it by Ellis, that may have violated the organization’s own policies as well as IRS rules.

The Times reviewed dozens of GLAAD expense reports and accompanying receipts from January 2022 through June 2023, as well as employment agreements, tax filings, audit reports, other financial documents and internal communications.

When Ellis traveled for work, there were first-class flights, stays at the Waldorf Astoria and other luxury hotels and expensive car services. Not to mention a Cape Cod summer rental and nearly $20,000 to remodel her home office.

All This on Top of Ellis’ Annual Pay

All of that is on top of Ellis’ annual pay package, which has the potential to stretch into the high six or low seven figures.

Such perks, luxurious business travel and large pay packages might be commonplace at a for-profit company. But legal experts said they were inappropriate for a nonprofit organization with about 60 employees that, in exchange for being exempt from federal and state taxes, must ensure that executive pay is reasonable and aligned with the charity’s mission and the intent of donors.

Based on advice from lawyers, GLAAD did not declare the money spent on the home office renovation as income on Ellis’ tax forms, a GLAAD spokesperson said, meaning that she most likely did not pay taxes on the spending. Nonprofit experts said this may have violated IRS rules.

Many of Ellis’ expenses also appeared to break GLAAD’s own rules for travel and entertainment, which at the time stated that all employees must fly economy, prioritize public transportation and try to keep costs to a minimum.

GLAAD’s relatively small size belies its clout. Under Ellis, 52, the organization has become one of the most prominent proponents of LGBTQ+ equality. The group is well known for campaigning against media coverage of LGBTQ+ issues that it deems unfair or inaccurate. Major companies pay GLAAD hundreds of thousands or even millions of dollars for sponsorships and for consulting and other services.

Employees Expressed Concerns

Yet inside GLAAD, some employees voiced concerns.

Last year, GLAAD’s chief financial officer at the time, Emily Plauché, warned Liz Jenkins, chair of the group’s board of directors, about what she said was excessive spending that conflicted with the organization’s policies and was not being properly disclosed to the IRS and the public, according to people with knowledge of the matter.

The board hired an outside law firm to investigate Plauché’s allegations. Based on the law firm’s recommendations, GLAAD changed its travel policies, including by permitting executives to upgrade flights to business class under certain circumstances, according to Richard Ferraro, a GLAAD spokesperson. He said Ellis’ travel arrangements complied with the updated policy.

Ferraro denied that Ellis traveled luxuriously and said the home improvements and summer housing enabled her to advance GLAAD’s mission. He said that GLAAD had relied on lawyers and accountants to ensure that the group complied with IRS rules and that its executives were “good financial stewards.”

Ferraro said the Davos trip was funded through a donation from the Ariadne Getty Foundation, and that GLAAD used the Tivoli Lodge as a venue for receptions and other events.

GLAAD was founded in 1985 as the Gay and Lesbian Alliance Against Defamation, with the goal to combat homophobic news coverage of AIDS. The group gradually expanded its mission to fight for “fair, accurate and inclusive” representation in the media.

By 2013, though, GLAAD’s finances were in shambles. The organization’s future was in jeopardy — GLAAD was in danger of being unable to make payroll — when Ellis joined in 2014.

Ellis made it her mission to elevate GLAAD’s profile and broaden its scope — and in turn to rev up the fundraising engines that would rescue the group’s finances. Soon she was doing regular TV appearances and gracing the red carpet at awards shows.

GLAAD’s Revenue Explodes

The strategy worked. By 2022, GLAAD’s revenue — from donors as well as new programs that she helped create — had quintupled to nearly $19 million.

In 2022, Ellis’ contract was up for renegotiation. With the organization’s fortunes having rebounded, board members saw her as indispensable and feared that she might leave for a lucrative corporate job, according to a person familiar with the directors’ thinking.

At a meeting in Provincetown, Massachusetts, that July, the board decided to give her more money to ensure that she stayed. Ellis’ new employment agreement, which the Times reviewed, increased her base salary by 5%, to $441,000, with automatic 5% increases each year through the end of the contract in 2027.

The contract granted Ellis a $150,000 signing bonus. Then there were additional payments of up to $300,000 per year tied to GLAAD’s fundraising. There was also a discretionary annual bonus of up to 40% of her salary. Finally, there was a $225,000 “farewell appreciation bonus” that Ellis would collect in 2027, assuming she still worked at GLAAD.

The new contract put Ellis on track to receive anywhere from about $700,000 to $1.3 million a year. Ferraro, the GLAAD spokesperson, said it was “practically impossible” for her to hit the high end of that range.

Legal experts said nonprofits can justify paying large sums to attract top talent but that, under federal and state rules, their boards of directors must ensure that compensation is fair and comparable to the pay of executives at similar organizations. Such determinations are subjective, but if the IRS or state regulators deem executive pay to be excessive, the nonprofit and its leaders can face penalties including the revocation of its tax-exempt status.

“It’s quite a generous package,” added David Samuels, a partner at law firm Perlman & Perlman who previously helped oversee tax-exempt organizations in the New York attorney general’s office.

Ferraro said the board set Ellis’ pay after reviewing the compensation at 10 other organizations. The board wanted her to receive more than the average of what those groups paid their leaders. Though some of those organizations are larger than GLAAD, he said, its “visibility, impact and influence is similar.”

Ellis’ New Contract

In addition to her salary and bonuses, Ellis’ new contract included a variety of other items.

There were airline tickets for Ellis’ wife and two children to accompany her on trips up to four times a year. There was a $25,000 annual allowance for Ellis to rent a home in Provincetown, the Cape Cod community and popular LGBTQ+ destination where she had long vacationed with her family.

Ferraro said it was important for Ellis to summer in Provincetown so that she could meet with donors and activists and attend events. Being there enabled Ellis “to raise millions of dollars during a traditionally slow time of year for fundraising,” he said, adding that GLAAD considered her housing to be a business expense.

Ellis’ contract also provided up to $20,000 to renovate her home office. She spent at least $18,000 overhauling the top floor of her house on New York’s Long Island. Ferraro said the spending ensured that Ellis’ home office was suitable for her television appearances and hosting virtual events.

And Ellis sought reimbursement for more than 30 first-class flights in the 18 months for which the Times reviewed expense reports.

Charity experts such as Samuels and Michael West, a lawyer who advises charities at the New York Council of Nonprofits, said first-class flights, high-end hotels and expensive car services are typically considered taboo at nonprofits. They said using charitable funds to finance summer housing or family travel or to remodel a home office was similarly questionable.

Several experts, including Phil Hackney, a law professor at the University of Pittsburgh who specializes in nonprofits, said that because the home-office renovation improved Ellis’ property, at least some of the spending typically would have been classified as taxable income for Ellis.

GLAAD’s accountants, lawyers and auditors disagreed, Ferraro said. He said they advised GLAAD that because the spending was work-related, it should not be classified as taxable income.

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This article originally appeared in The New York Times.

By Emily Steel/Meron Tekie Menghistab
c.2024 The New York Times Company