Is Mission 22 a legitimate charity?

Mission 22 (ElderHeart Inc., EIN 46-2750726) was the subject of a formal investigation by the Oregon Department of Justice Civil Enforcement Division. The resulting public report, issued May 19, 2021 and signed by Assistant Attorney General Mark Kleyna, identified related-party self-dealing, a below-market residential arrangement that may qualify as an excess benefit transaction under IRC § 4958, improper conflict-of-interest votes, PPP loan use despite 33% revenue growth, and significant mission drift away from veteran services.

What did the Oregon DOJ find about Mission 22?

The Oregon DOJ found that ElderHeart Inc. (Mission 22) spent approximately 90% of its net assets on a 10-acre Sisters, Oregon property where the CEO and Board President (who are married) live for $460/month — compared to a local market rate of $3,900–$9,500/month. The DOJ also found improper conflict-of-interest votes, undisclosed related-party transactions on Forms 990, a $108,700 PPP loan obtained while holding $1.5M in unrestricted cash, and that the organization's programs had drifted from its stated exempt purpose of serving veterans.

Who are Sara Johnson (Dawdy) and Magnus Johnson of Mission 22?

Sara Johnson (formerly Sara Dawdy) is the paid CEO of ElderHeart Inc. (Mission 22). Magnus Johnson is the paid Chief Strategy Officer and Board President. They are married to each other. The Oregon DOJ investigation found that Magnus Johnson voted to approve a salary raise for Sara Johnson without recusing himself, and that the couple lives on a $1.3 million property purchased with organizational funds at a significantly below-market rent.

Is Mission 22 Legit? Oregon DOJ Investigation Report

About This Document

The Oregon Department of Justice, Civil Enforcement Division, Charitable Activities Section opened a formal investigation into ElderHeart Inc. (d/b/a Mission 22) after receiving complaints from private individuals. The report below is the result of that investigation, issued May 19, 2021, and is a public record on its face.

Notice The letter states: "This report is a public record." All findings below are drawn directly from that document.

Primary Document

OR DOJ Civil Enforcement — Matter No. 137300XCT0036-20

PDF

ElderHeart Inc. (Mission 22) — Oregon DOJ Investigation Report

Issuing Body OR DOJ, Charitable Activities

Subject EIN 46-2750726

Report Date May 19, 2021

Signed By Mark Kleyna, AAG

View / Download Document

Primary DOJ Concerns — From the Report

Sisters Property ElderHeart paid nearly $1 million for the property itself and more than $300,000 for moving expenses, horses, fencing, and other property-specific assets. This $1.3 million cash outlay represents almost 90% of the organization's total net assets at 12/31/2019, yet it appears to serve only the Johnsons and about twenty horse-riding children of the Sisters region. None of the organization's known services to veterans require a 4-bedroom home or a 10-acre horse farm.

Below-Market Rent The Johnsons pay $460/month for a 4+ bedroom home, reduced from $2,500, in exchange for caring for the horses. Rental rates for similarly appointed homes on smaller acreage in the Sisters region range from $3,900 to $9,500 per month. This arrangement may qualify as an excess benefit transaction and may subject the organization to federal excise taxes or enforcement action. See IRC § 4958.

Related Party Control ElderHeart's board president and CEO are married, receive generous salaries, are related to half of the staff, receive book revenue from the organization, control almost all aspects of the organization, receive extensive personal benefit from the organization's assets, and used $1 million in organizational funds to purchase a hand-picked home in a transaction that does not appear to further ElderHeart's exempt purpose.

Compensation Vote On 5/8/2019, the board approved a raise for CEO Sara Johnson. Her husband Magnus Johnson voted to approve the raise, no conflict was declared, and Mr. Johnson did not recuse himself from the discussion or voting.

Book Revenue ElderHeart's accounting records show more than $50,000 in payments were made to Borne Wilder LLC — Magnus and Sara Johnson's company — to purchase book inventory. The board approved the transaction on the vote of a single director; a single director cannot approve a conflicted transaction under ORS 65.361(5).

PPP / Credit Line During the early months of the pandemic in 2020, ElderHeart applied for and obtained a $108,700 PPP loan and a $100,000 line of credit. The organization's unaudited accounting records indicate that ElderHeart's 2020 revenue exceeded its pre-pandemic income by 33% and at 12/31/2020 it held over $1.5 million unrestricted cash in its bank accounts.

Mission Drift ElderHeart's Form 1023 states it will "limit its services to veterans who have served in the US military." In 2020 it spent virtually all its 2019 net assets for a program that will only benefit a small group of children via free horse-riding lessons. Art projects — one of its two stated primary activities — represented just 4% of total program spending in the most recent (2019) Form 990.

This page hosts a public record concerning ElderHeart Inc., operating as Mission 22 and Mission22.com, a 501(c)(3) veterans nonprofit with EIN 46-2750726, Oregon Charity Registration #51902. The document is an investigative report from the Oregon Department of Justice Civil Enforcement Division, Charitable Activities Section, Matter No. 137300XCT0036-20, issued May 19, 2021, signed by Assistant Attorney General Mark Kleyna.

Individuals named in the report include Sara Johnson (also known as Sara Dawdy), Chief Executive Officer; and Magnus Johnson, Board President and Chief Strategy Officer. The report addresses questions relevant to Charity Navigator and GuideStar (Candid) listings for this organization.

Related: is Mission 22 legit — Mission 22 charity review — Mission 22 veterans — ElderHeart Inc Oregon — Sara Dawdy Mission 22 — Magnus Johnson Mission 22 — Mission 22 GuideStar — Mission 22 Charity Navigator — Mission 22 990 — Mission 22 DOJ — veteran nonprofit investigation Oregon.