Miracle Flights

According to the Miracle Flights (MF) tax filing for the fiscal year ended April 30, 2024, MF reports re: Noncash Contributions, Types of Property (IRS Form 990, Schedule M, Part I):

MF received noncash contributions during the fiscal year ended April 30, 2024, on which it placed a total value of $1,399,688. Of this amount, $979,537 and $337,151 was attributed to "Flights" and "Gifts for Fundraising," respectively.

[Note: CharityWatch generally excludes the value of in-kind (non-cash) donations of goods and services from its calculations of Program % and Cost to Raise $100. More information on how grades are calculated and the treatment of in-kind donations can be found on the Our Process page.]

According to the Miracle Flights (MF) consolidated audit of April 30, 2024 (Note 9, Legal Matters):

"In 2013, MFFK agreed to loan Med Lien $2,200,000 in exchange for Med Lien's repayment of the money plus interest, for a total repayment obligation of $3,520,000. On June 26, 2015, MFFK filed suit against Med Lien Management, Inc., ('Med Lien') and its two principals, Brad Esposito and Lincoln Lee 'Defendants', as a result of their default on a $2.2 million dollar loan obligation. On June 22, 2016, a judgment was entered in favor of MFFK and against Defendants for each and every cause of action (independently and severally), resulting in an award of $2,982,096 in compensatory and punitive damages. The financial solvency of these debtors however, remains questionable at best and thus, MFFK cannot determine the likely amount of total recovery based upon the judgment. While MFFK is zealously pursuing all avenues of financial recovery with respect to losses sustained as a result of the Med Lien loan, the likelihood of success in collecting on the full amount owed is subject to a number of unresolved variables. During the year ended April 2023, $85,000 was received as a full settlement for the release of one of the parties in this litigation. Thus, the timing and full extent of collection of the remaining amount remains unknown at this point and all balances have been written off. 

On August 1, 2019, the retired Miracle Flights CEO, Ann McGee and her husband, William McGee filed suit against MF seeking injunctive and declaratory relief with respect to the enforceability and validity of certain employment and/or consulting agreements related to her compensation and seat on the MF Board of Directors ('BOD'), as a result of certain disputes regarding the compensation and benefits package to which retired Miracle Flights CEO, Ann McGee and her husband, William McGee, were entitled. 

MF had filed counterclaims alleging Breach of Fiduciary Duty, Constructive Fraud and Declaratory Relief against McGee, as well as claims for Constructive Trust and Unjust Enrichment against both Ms. McGee and her husband, William McGee. In a nutshell, MF alleged McGee fraudulently inflated her salary and that of her husband, which ultimately resulted in MF paying excessive retirement benefits. William McGee did not have a written agreement formalizing the compensation and retirement benefits to which he is entitled. MF contends Ms. McGee unilaterally determined the benefits and compensation to which her husband was entitled. While Ms. McGee had a number of written employment agreements during her tenure with MF, the challenge has been determining which employment agreement was enforceable and should govern her retirement compensation and benefits. In March 2023, MF had arrived at a mutual settlement of all claims for a one time payment of $350,000, although such agreement was never subject to an executed final written agreement, but in draft only. McGee subsequently denied having agreed with the terms of such draft agreement. In August 2023, the court determined that such agreement was in fact binding for a one time payment of $350,000, a catch up payment of less than $15,000 for some past health insurance costs and annuity payments, as well as the continuation of the terms of the health insurance and pension payments that had been previously in place for the overall settlement of all of the McGee claims. The terms of the settlement agreement was finalized and executed in October 2023 by both parties."

According to the Miracle Flights consolidated audit of April 30, 2024 (Note 10, Retirement Plans):

"In November 2015, the founders of the Organization retired. The Board of Directors agreed on a retirement plan for Ann McGee to be funded by the purchase of annuities totaling $6,047,935, which would provide annual annuity payments to Mrs. McGee totaling an amount not to exceed 75% of her final salary during her lifetime.

The Organization is the beneficiary of the annuities and upon her passing, the annuities will be transferred back to the Organization in the form of a contribution from Mrs. McGee's estate.

The Board of Directors also agreed on a retirement plan for Bill McGee to be funded by the purchase of annuities totaling $1,145,090, which would provide annual annuity payments to Mr. McGee totaling an amount not to exceed 75% of his final salary during his lifetime. The Organization is the beneficiary of the annuities and upon his passing, the annuities will be transferred back to the Organization in the form of a contribution from Mr. McGee's estate. Mr. McGee's retirement plan is under no contractual obligations.

The annuities were purchased to cover Ann and Bill McGee's retirement liability. Although the annuities are held in the name of Miracle Flights, the Organization is contractually obligated to leave Ann McGee's annuities intact until the events described above occur.

As a term of the CEO's employment contract entered into in October of 2015 and renewed in September of 2021, the Company finalized in May 2023, a supplemental retirement plan for the executive funded through a split-dollar retirement plan. The split-dollar plan is being used as a supplemental and retention benefit for the CEO. Under the split dollar arrangement, the premium payments are made by the Company and are considered taxable benefits paid to the former executive. Upon the death of the CEO, the Company may recover all or a portion of the premiums paid. 

The Organization's Board of Directors have also agreed to fund the health insurance of Ann and Bill McGee, for their lifetime, as part of their retirement arrangement."

According to the Miracle Flights (MF) tax filing for the fiscal year ended April 30, 2024, MF reports re: Compensation, Officers, Directors, Trustees, Key Employees, and Highest Compensated Employees (IRS Form 990, Schedule J, Part II):

Mark Brown, CEO, received $545,500 of "Retirement and other deferred compensation" during 2023, with total reported compensation of $952,523. 

According to the Miracle Flights consolidated audit of April 30, 2024 (Note 12, Officer Salary):

"Mark Brown, CEO of Miracle Flights receives compensation via annual salary, 20% of Mr. Brown's salary is allocated to MFFK Holdings Inc. for the role of on-site manager."

MFFK Holdings, Inc., tax ID#46-2805958, is reported as a related organization of Miracle Flights, with its primary activity reported as "Real Estate Holdings."  (2023 IRS Form 990, Schedule R)