Well, last week there was this, and it’s created quite a buzz:
Many have weighed in on both sides and there’s not been much or any critiquing of the takes—on either side—of others who are, at this point, speculating in-part as to what the research will actually show once fully published. I intend to follow the lead on that, as I have another post coming with clarification and observations as to my own thinking…in terms of how many angels can dance on the head of a low-carb pin.
In the meantime, I woke up to a rather shocking revelation this morning, via Anthony Colpo. I do have a side of me that hates to do this. I know both Gary and Peter and on personal levels, like both of them a lot. And I have respect for their drives and other aspects of their characters I know on a personal level. I have defended both against criticism a number of times and I led cheers for NuSI several times. I had a chance to have dinner with Peter once, while NuSI was in the planning. But Anthony lays out facts that are too compelling for me to ignore, and I’ll get to why this bugs me on a personal level after laying out the basic facts. I have deep personal experience with the non-profit world.
Here’s the portion of Anthony’s post that gives the facts. Unless 2015 was hugely materially different, the $1.8 Million is a reasonable estimate but at any rate, it’s going to come out between $1.3 Million and $1.8 Million, unless it’s more than that! So, keep in mind that at this point we’re dealing with 74% established fact via public tax filings, 26% reasonable estimation.
Here are some links you won’t find on the NuSI website; they’re NuSI’s 990 (tax) forms for the years 2012-2014:
In 2012, Attia, listed as “President” of NuSI, received $272,500. Taubes, listed as “Director” received $85,000. Both claimed to have spent an average of 40 hours per week working for NuSI (see page 7).
In 2013, obviously highly impressed with themselves, they decided they deserved a pay rise. So they petitioned the President and the only full-time Director … uh, that would be themselves … for a pay rise.
Lo and behold, they got it! Yep, in 2013, Peter Attia, who now claimed to be working an average of 75 hours per week, received a hefty $342,500. Taubes, meanwhile was still clocking a claimed 40-hour week but now pulling in $110,000. A Stacy Spector, “VP of Strategy and External Relations” earned a nice $126,798 while a Lacy Stenson, “Director of Operations” took home $120,000.
In 2014, Attia was claiming an average 60 hours per week devoted to NuSI, and pulling in $361,302. Taubes made $129,690, Spector $245,844, and Stenson $144,920. New to the NuSI fold in 2014 were Mark Friedman (“VP of Research”), and Kira Baccari (“VP of Development”) who were paid $212,840 and $264,799, respectively.
So just in the years 2012-2014 alone, Attia and Taubes have paid themselves $976,302 and $324,690, respectively. Assuming a similar rate of pay inflation in the yet-to-be-published 2015 990 form, this means the ‘non-profit’ NuSI has so far garnered Attia and Taubes around $1,360,000 and $470,000, respectively (according to this post at his website, Attia bailed from NuSI in December 2015 to concentrate on his medical practice).
Anthony goes on to characterize his own opinion of this. Mine is largely the same, but I also have direct experience with this.
…As a guy with the principles and political views I hold—that taxation is theft—I certainly do not begrudge money making, profits, freedom of association, and so on. Taubes has been criticized over apparently negotiating a $700,000 advance from his publisher (a for-profit business) for Good Calories, Bad Calories. I disagree with this sort of criticism. He’s bargaining for himself and I have no more concern over that, than I do sports and entertainment stars and celebrities pulling down astounding sums by means of a contract between two entities acting voluntarily, each in the furtherance their own interests, freely associating with one-another. Gary could have gotten $10 or $100 Million and I wouldn’t care.
But, much like publicly traded corporations and very large privately held corporations enjoy shielding from personal liability—and a host of other state, force-backed privileges and protections at your expense—”non-profit” entities enjoy all of those protections and privileges, plus the added benefit of relief from taxation (and costs of compliance, that can go to the millions for large entities).
An aside… I’ve never been a “tax protester,” in spite of holding them to be theft. In legal definition terms, taxation is “a legal taking.” In other words: ‘we’re taking your money, but it’s ok because it’s legal. You can’t take other people’s money, but we can. We’re “representative” and “democratic,” and we promise to give those who support, lobby, and vote for us some of your stuff we take and we’ve held it’s OK for us to take that from you, and give it to them, because we we’ve gone through this circular process.’
I’ve actually had many lawyers over the years argue in my direction that while taxation is a taking, it’s not theft, since theft is an unlawful taking. (See the circular reasoning?) This is easy to point out, since theft or robbery was a well understood moral and ethical concept long before the formalization of legal codes. In fact, theft, robbery, and other objective moral crimes are what gave rise to legal codification in the first place. So, the state exepmting itself and its friends is much like Congress still operates today, passing many laws that would otherwise affect them, but they exempt themselves. [/aside]
I could do yet another aside on the vast complexity of the US tax code and the $Billions spent on compliance, but to make it simple, for-profit corporations are taxed on their own earnings, and their employees are taxed personally on their compensation from the corporation (and if you own or have a big chunk in the corporation you’re taxed twice—unless it’s a pass-through organization… but then we get into aside complexities), but non-profit entities get to skip the first step.
The result is that you get heads of large non-profits, and TV-evangelists, flying around in private jets, staying in Presidential suites, and dining in Michelin 3-star restaurants at corporate expense, generally immune to tax scrutiny (I once had to write a $12,000 check to the IRS because my Hummer H2 was not deemed an appropriate accelerated-depreciation corporate write-off—but it was the only ding in an audit covering three tax years…so there’s that) because it’s so easy for them to justify almost any lavish thing as part of their mission, or contributing to it. And it goes the opposite way. A big donor is going to write a big check. But it’s very easy to justify going out and spending a few hundred thousand or even million—depending on the size of the donation—to “lobby” for it even though you knew it was coming anyway (perhaps for tax purposes).
So, onto my personal experience with “non-profits.” Way back, 1993, I started a business in a bedroom with a few hundred bucks to my name. After squandering $50,000 savings on two failures, this was my last shot and so, that $50K has always been chalked up to tuition, because I did about $250k my first year, and I only had a single employee for about half the year (both of us working from home). My tools of trade were a phone, computer, fax machine, suit of clothes, and a briefcase.
I consulted small companies in debt troubles with suppliers. This was the early 1990s recession. Silicon Valley. It was pretty fat for a few years. I owned the thing outright, had nothing substantial in terms of cost of doing business, and was making a lot of money. I made money by negotiating on behalf of businesses to renegotiate or settle their trade debt…payment terms, cents on the dollar, etc., similar to what Donald Trump proposes we do with the trillions in Treasury Bond obligations.
I got paid on performance. So, if through my efforts, a company objectively saved $10,000 of invoiced liability, then I got $3,500 of that. I had some nice paydays. It’s cool when in one single 2-letter and 3-phone call negotiation, a big company gives a tiny start-up a break, and $65,000 was my fee for a few hours of work, because I saved them $185,000 on a $300,000 bill. I can be very persuasive (there was, however, substantial hours of research, fact gathering, preparation, and plain quiet contemplation in advance of that negotiation).
Then the dot-com bubble hit and there was so much money in Silicon Valley that if a small company was having financial troubles then they they were either trying to sell buggy whips; or it was women, booze, or drugs…in no particular order and often enough, all three. Not ideal clients, not the ones who were simply undercapitalized and had over-extended, because: human. And so my fortunes began to dwindle as the entire valley was rolling in cash. …I noticed that individuals were racking up credit-card debt at alarming rates.
Surely there must be many people who, while having accumulated a lot of debt by being dumb or overly exuberant, nonetheless had serious hardships like unemployment, an asshole spouse, asshole kid, health problems, etc. You can’t make money servicing deadbeats. Nor are you particularly enamored of helping them.
Anyway, so I shifted to a consumer focus in 1998, and began the building. It took five years, until 2003, paying myself $2,000 – $2,500 per month and scrounging every penny to get to where I was finally doing $80K per year personal take, then $120K, and in the last few years, caught $200 – $250K when the company was doing $3 – $3.5 million. At the same time, I was signing $250K worth of paychecks for employees monthly. I also had matching 401K, full-ride family health insurance, and vacation pay.
Here’s where this ties in. During those years of shifting focus to “consumers,” while making less than $50K for myself the first five years, I was faced with non-profit “Credit Counseling” companies as primary competitors. And they did crap for work. Absolute crap, and the failure rate was well over 80%; whereas, we were like 30% (some legitimate hardships never go away, or get worse, and Bankruptcy becomes a better option and we were the first to tell them that).
Get this. Not only did they have a crazy failure rate, they never saved clients a dime. They cost them money, over and above the obligations. They just extended it out, and yea, there was typically a reduction in interest; but in the end, it was rather like saying ‘OK, your 15-year mortgage payment is more than you can handle, so let’s lower the rate, refinance at 30, and your payment drops from $1,500 to $1,000.’ OK, it’s a reasonable Band-Aid, no argument there (if you stick with it long enough to re-fi again, with a $10K mortgage company “hidden fee”), but in the end, the person is going to pay $350,000 total for that $100K house, rather than the $175,000 they’d have paid under the 15-year amortization (I’m wildly winging it on the numbers, just from experience…did not run this through a mortgage calculator…for illustration only).
Now, run that same deal through 20% and plus credit card rates that go up and up each time a hardship debtor is 30 days late (I’ve seen rates as high as 33%). Now, read up on compounding interest, in an adverse sense. Yields on compounding rates are curves with an exponential look to them, and the higher the rate, the more frightening the curve. I could go on and on. You would not believe what a CC obligation looks like at 20% plus compounding interest with a less than 2% of balance minimum payment. I’ve run the numbers. It can amortize out more than 50 years on minimum payments (which decrease, as the balance decreases).
OK, so the CC companies are sharks. On the other hand, nobody is forced to use one. On the other other hand, the “non-profit counselors” exploit this expertly. They lower the rate, lower the payment. In the end, the client pays more total inflation-adjusted dollars (it costs more: really). Well, that’s fine, since they’re taking more time and paying less per installment.
But guess what? The “non-profits” have to get paid, so who pays them? The client? Oh, no, grasshopper. They’re “non-profit.” They charge a monthly administrative service fee (around $30, as I recall) to “clients,” but most of their money came from the opposition. It came from those whom the “non-profit” had promised their “clients” they’d be their representation against (it’s a quasi-legal-dispute situation).
It’s called “fair share.” Has a nice “non-profit” ring to it, right? “Fair.” “Share.” And Kumbaya. Essentially, the credit card companies gave the “non-profits” a “fair share” of all the payments the “non-profits” had negotiated tooth and nail for, to the death, on behalf of their “clients.” Back then? It was about 15%.
Do the math. The better deal you get for your “client,” the less “non-profit” money you make. But, if you really get nitty-gritty with the client, look under the mattresses, etc., you might be able to “counsel” all your harship cases more effectively and craft a “hard-won deal” that really takes those nasty credit-card companies to task. You’ve “counseled” them to pay $100-200 more per month because after all, this is a non-profit and counseling situation, and as such, you, client, must be hiding something and to “come clean” is all part of the healing process. No wonder 80%+ failure rate, after a few years of “fair share.”
That extra $100-200 more per month might benefit a few stalwart clients, of course, but was that the motivation, or was it that in the face of tens to hundreds of thousands of clients, that extra $15-30 per client of “non-profit” “fair share” adds up?
…Back when I was paying myself $50 – 80K, I used to go to conferences as a spy, and rub elbows with some of the heads of the biggest “non-profits,” and I knew what they made since their filings are public. Most of them, about $250-500K “non-profit” salary, on average. Amongst the conference attendees, is was as though I was afflicted with leprosy. ‘You’re a FOR-PROFITZ?’ Add to that, the marketing. Hard to compete against someone lying to people and using the altruist angle.
As a for-profit company, we charged a fee to legitimate-hardship clients: 25% of what we actually save you off the principle amount of obligation when you signed up. In total, the deal was that—given our average client sign-up CC debt of $30,000, with compounding interest rates in the 20%s, late and over-limit fees adding up,—you get out in 2-4 years, debt free, for about 60-70% of what you owe right now, paid in monthly installments into a trust accumulation account over that 2-4 years, and it includes all fees.
Basically: Guy owes $30k. Grows to 35-40 while not paying and stacking up in all ways. In 2-4 years depending on what he can pay monthly, he ends up owing nothing, for a total cost of $20K +/-. About $5k went to us, $15k to the CC companies or their collection agents. Credit is compromised, of course, but since debt/income is a big factor, not as much as you’d think, and no BK. Plus, the client gets the moral satisfaction of doing the best they could and not just punting for a $1,000 BK attorney fee.
(Eventually, a combination of CC companies backed by “non-profit” consumer advocate institutions, lobbying, legislatures passing laws to “protect” the “clients” of “non-profits,” and a sudden influx of letters from AGs—and one “investigation” that cost me a half-million dollars and led to ZERO indictment, legal action, or even fine or settlement, drove me out of business.)
I wonder. Is there a comparative story there in terms of how medical research used to be done, with how it is now, and how NuSI did it?
I reiterate that I don’t begrudge Gary, Peter, or anyone else making lots of shit-tons of money honestly and forthrightly, and gladly cheerlead for anyone doing that. But, there are many ways to analyze this. As you saw from the data Colpo provided, there’s hundreds of thousands going to others primarily in 2013 and 2014, with a big jump and two more Vice Presidents—with titles that look great on Resumes for Dummies—over the space of a year. Why? They’ve produced a single completed study, and word is the current unpublished study was actually completed in latter 2014…and it takes a year-and-fucking-half to put it to paper all the while upwards of a $million for a single year of NuSI salary—with everyone working themselves to the bone, 60-hr-weeks, nights and weekends—goes toward what, exactly?
I. Call. Bullshit!
I am never the sort of person to use the words “I feel betrayed.” First of all, if I ever talk about how I “feel,” it’s filtered through what I think. Betrayal isn’t the right word, principally because I have nothing at stake that rises to that level. But I did use a portion of my blogging, enthusiasm, and yes…trust capital to defend and promote Gary, Peter, and the NuSI initiative. Wasn’t that the gig? Just test it! And gentlemen, you didn’t have it in your hearts to do that, not without being enriched to the tune of 99.5 percentile of compensation. Shame on you.
Even if the most recent study, once published, goes the way of those still picking apart Kevin Hall’s poster presentation, I’m left underwhelmed. One person wrote a decent post countering Hall and it left me wondering how many more angels we can crowd on the head of a pin, and what’s the most appropriate dance music.
This was touted the next “Manhattan Project.” Have people forgotten? Donations were solicited from the public. Hey, if this was between a billionaire philanthropist and Gary and Peter, I’d shut my face. But people are still being admonished to donate to a cause that, so far as we can tell, is lavish and effective only so far as the lavish salaries it bestows upon a few.
Disgusted. Disappointed. I can’t lie about that and while I’m often willing to look the other way while I hope the noise others are making motivate an evolutionary change, there’s only one real judgment I can render to Gary and Peter at this point, and it’s a moral judgment:
This ought be a good object lesson for all. Do profit with your head up, making no apologies, no excuses, or equivocations. You’re going to make a fucking obscene profit—enough to send leftists to their fainting couches with a case of the vapors if you succeed—because you’re going to deliver no-shit phenomenal results. Or you fail, go broke, start the fuck all over.
Instead, Peter treats us to a long 2016 update post, shortly after leaving NuSI with very little to show so far, on just how he’s spending that money.
Update: HOW NUSI REFLECTS ONE FABLE OF AESOP.