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Human and Civil Rights : Advocacy and Education

CN Advisory: High Concern

Operation Lookout

Every missing child deserves the chance to be found

6320 Evergreen Way Suite 201
Everett, WA 98203
tel: (800) 566-5688   Web Site
EIN: 91-1298249

Board Leadership
Mike Gibson


See Details About This CN Advisory

During our analysis of both the FYE 12/2009 and 12/2010 Forms 990, we discovered that Operation Lookout reported joint cost allocations for program expenses that were greater than the charity's total program expense figure for each of the two years.

Charities utilizing this technique allocate a percentage of their solicitation costs to program expenses from fundraising expenses. We believe that donors are not generally aware of this accounting technique and we have therefore built the reversal of joint cost allocations into our methodology. When we reversed Operation Lookout's joint cost allocations, the result was a negative value for their programmatic spending.

Our analyst team contacted Operation Lookout to obtain an explanation for the negative program expense figure and received a response from the Co-founder/Treasurer stating that the former accountant most likely filed the two Forms 990 incorrectly. Operation Lookout also stated its new accountant was not compensated for his work in a timely manner, and subsequently did not provide his review or proposed amendments for the past 990s.

In addition, the charity reported that it has closed its main office in Everett, WA and plans to cease operations at the end of 2014. An examination of the organization's website by our analyst team, however, revealed that the charity is still soliciting donations, and it provides no indication of the closed office in Everette, WA, nor its plans to terminate operations in 2014.

Charity Response

On June 30, 2015, Operation Lookout provided the following response: 

"OPERATION LOOKOUT did not set out to mislead the public concerning cost allocation (program vs. Fundraising). It has been the practice to allocate according to the IRS rules.  OPERATION LOOKOUT uses a hands-off approach leaving it to the professionals. It is readily acknowledged that fundraising over the phone is a costly venture. As a cost-saving measure, OPERATION LOOKOUT always included a CALL TO ACTION (a programmatic element) with its citizen outreach. Citizens were phoned to support casework and to pin up or pass forward a missing children poster in states parents otherwise could not search in. OPERATION LOOKOUT remained faithful to its mission whether donations were enough or not. 

The CPA hired in 2009 and 2010 to perform an audit and IRS 990, it was later learned, was very ill and heavily medicated. Once OPERATION LOOKOUT learned this long after the fact, an attempt was made to get the 'allocation' edited by the original CPA. A new highly respected CPA firm was hired to prepare a 2012 AUDIT and IRS 990 report. It was determined to be cost-prohibitive to revisit the work of the previous CPA.  

Although there was no misreporting of the total income and expenditures, the question remained how much was program vs. how much was fundraising expense? A 2012 990 report and audit cost $12,000; add to that state registration fees ranging between $3,000 and $4,000.  With the question of the cost allocation unanswered, OPERATION LOOKOUT closed its doors after 30 years; donations are no longer received. Third party contract companies accounted for every dollar on a daily basis with rules and regulations being respected. No board member, third party bookkeeping service provider or Certified Public Accountant would have permitted fraud to go unnoticed.  There was no employment claim fraud. OPERATION LOOKOUT laid off its employees same as other nonprofits being hit by hard times. The third party accounting services provided a plethora of proof to the court--ignored by ESD as it mixed, mingled and mangled critical details....Factual proof and reports were ignored and treated as not presented creating a NO-WIN outcome with the Government.

Starting in 1984, the Gibson's considered OPERATION LOOKOUT a life-saving mission and 'calling' to desperate searching parents at a time when few agencies existed. OPERATION LOOKOUT closed at the end of 2014 due to the ill health of Mike Gibson, its founder, (68). Since 2010, Melody Gibson, (65) worked for Caring For Our Children Foundation, operating a thrift store (closed in 2012); CFOC currently produces nonprofit programs that benefit young people." 

Operation Lookout has notified the IRS that they has ceased operations. For more information, see Operation Lookout's 2014 Form 990.

On October 27, 2014, the Washington Court of Appeals Divisions reported the Employment Security Department found that the directors and cofounders of Operation Lookout committed fraud in connection with their application for unemployment benefits. For this reason, we have issued a High Concern CN Advisory on Operation Lookout. For more information regarding the charges reported, please see the Washington Court of Appeals Divisions report.

The concerns raised about organizational legitimacy and/or federal tax law compliance are serious both in nature and scope and have thus warranted this CN Advisory. We have published this advisory to provide donors with content that they may find useful when making their giving decisions. The views and opinions expressed here are those of the authors of sources used for the reported information, and not those of Charity Navigator. Charity Navigator is not responsible for the nature or content of the information presented through such external sources and websites. For more information on how or when we decide to publish a CN Advisory, please review our methodology.

The data displayed on this tab is provided by the IRS in the form of Publication 78 and the Business Master File (BMF).

EIN 91-1298249
NTEE Code I24
NTEE Classification [Not Provided by IRS]
NTEE Type [Not Provided by IRS]
Classification Charitable Organization
Subsection 501(c)(3)  (View the list of codes)
Activities (320) Boy Scouts, Girl Scouts, etc.
Foundation Status Organization which receives a substantial part of its support from a governmental unit or the general public   170(b)(1)(A)(vi)
Deductibility Contributions are deductible
Affiliation Independent - the organization is an independent organization or an independent auxiliary (i.e., not affiliated with a National, Regional, or Geographic grouping of organizations).
Group Name [Not Applicable]
Ruling Date January, 1986
Filing Requirement 990 - Required to file Form 990-N - Income less than $50,000 per year
Fiscal Year End December
IRS Forms 990
(provided courtesy of Foundation Center)
(Log In or Register Now to View Forms 990!)
  • December, 2014
  • December, 2013
  • December, 2012
  • December, 2011
  • December, 2010

The data displayed in this profile is provided by the IRS for free in the form of Publication 78 and the Business Master File (BMF).

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Charity Contact Info

Operation Lookout
6320 Evergreen Way
Suite 201
Everett, WA 98203
tel: (800) 566-5688
fax: (425) 348-4411
EIN: 91-1298249

Visit Web Site

Board Leadership

Mike Gibson

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