Nonprofit Board Crisis

Service on Subprime Lender Board: $200,000

Wow! According to the Chicago Tribune, one of Hilary Clinton's top advisors was paid approximately $200,000 to serve on the board of a subprime lender (yes, there's a bunch of issues here).

I can't think of a nonprofit board where a member is paid this kind of money for service while performing a whole lot more duties than folks sitting on these corporate boards.  The big question: what's wrong with this system? 

Incidence of Fraud in Nonprofits Huge, Maybe

The New York Times reported today on a study by four college professors who examined the incidence of fraud by nonprofit employees or volunteers and concluded it (fraud) is huge and maybe the money defrauded cumulatively equals the amount of funds given to nonprofits by foundations and corporations -- that would indeed be HUGE!

Clearly, the only thing wrong with tainted money is there taint enough of it.  And while the article visited with some of the notables in the nonprofit sector and these folks pooh-poohed the conclusions of how big fraud really is in the sector, any numbers even coming close to the conclusion is way overboard.

Who's to blame I ask?  Not surprisingly, I believe nonprofit boards are to blame, poor policies and poor procedures and poor oversight.  Nonprofit boards should be ashamed of these findings.  Even if the actual figures are significantly less than the $40 billion estimate arrived at in one study, obviously there is a significant problem. 

This is committed citizens' money being lost and committed causes not being served.  Nonprofit boards, WAKE UP! 

Insights about Nonprofits Generating Revenue

I first missed this New York Times article from March 17, 2008 but I don't want you to miss it.  The article focused on a new book edited by North Western University Professor Weisbrod, "To Profit or Not to Profit".  These cases were cited in the article: the Metropolitan Museum of Art which generates more than $96 million dollars from revenue sources like parking facilities; the Girl Scouts whose uniform sales represents 25% of annual budget; and Public Television which earns significant income from licensing fees for Tickle Me Elmo.

Professor Weisbrod's book sounds more critical than supportive, particularly because of the issues around tax exemption.  Anyway, this sounds like a good read for all those who are students of nonprofit social enterprise.

Zoo Not Meeting Acreditation Standards: Who's to Blame?

The Maryland Zoo, in Baltimore, is just not hacking it according to the Baltimore Sun which noted that pretty much anything that can go wrong, from crumbling buildings to underpaid employees and the failure to pay the water bill, is going wrong.  According to the article, if things don't change, the zoo faces a very questionable future.

So who can fix the problem?  The state?  The city of Baltimore (like it has the money)?  The under-resourced management?  The Board or Friends Of?  Me, I always think nonprofit fixes start with the volunteers (board) together with management.  What about you?

Funder Calls Shots -- Founder Says OK

Oral Roberts University, more like Oral Roberts, said ok to a life-changing gift of $70 million (according to the March 20, 08 Chronicle of Philanthropy).

This is the kind of deal that really gives me pause.  Mind you, I like the ending but...

Should a donor have so much to say about the way an organization conducts its business?  That's sort of the big question here.  Oral Roberts had a board that by most standards "wasn't helping the cause".  The founder-owner-operator, I think, basically got independence to run the university the way he saw fit.  Unfortunately, the way he saw fit wasn't ensuring the university a long life. 

In steps a donor who says he can do something about the situation but he wants a hand, at the board level, to make the changes necessary.  And the incentive, big bucks.

Short term analysis -- stuff gets fixed in the way the donor would have it and mission continues.

Good deal?

Blurring of Commercial and Nonprofit Realms

Today's LA Times reported on the "subtle and not-so-subtle blurring of commercial and nonprofit realms" as applied in this article, to the theater world.  As noted in the article, the "issue boils down to procedures, values and most important, who's in control."

And as stated toward the end of this piece:

This unfortunate shift in the balance of power between art and commerce is evident in the way bragging rights for the largest theaters in our area derive from snagging Broadway tryouts and tours to their subscriber-based houses. What's conspicuously missing isn't just bold vision but the courage to buck the commercializing trend.

But the fault, dear theater-lovers, is as much our own as it is our mushy leaders. After all, for many of us the words La Jolla Playhouse are synonymous with flashy products such as "Jersey Boys" and Billy Crystal's "700 Sundays" and what gets everyone's mouth watering is the word that "9 to 5: The Musical" will premiere at the Ahmanson this fall.

Lately, artistic directors seem more intent on wooing consumers than cultivating audiences. The chief losers in all of this are artists. The notion that there is a pile of masterpieces being overlooked while resources are squandered on yet another movie-turned-musical may be a wishful myth. Yet there are playwrights with potential masterpieces in them who are not being given a chance to evolve in the current corporate climate. Patch has helped quite a few of them in his long career in Southern California.

Before bidding him adieu, let's thank him for enriching our stages. And then let's all spend some time trying to figure out the secrets of his unbusiness-like legacy.

Effectively we must all be thinking about where nonprofit begins and ends, well beyond the theater void.  There are indeed core questions about control, voice, public interest and most importantly, purpose.  There are no simple answers except for those who would not ask these questions.  But for donors, these are the questions that frame giving.

Tainted Money or Not: Options for Paying for Mission

Wikipedia and the foundation that oversees it is at a crossroads for thinking about how to pay for its future and the "so what" of taking certain kinds (sources) of money.  It's a debate that is worth many nonprofits' listen and it's the age old -- what's wrong with "tainted money" beyond there tain't enough of it.

As one paper noted:

And so, much as how its base of editors and bureaucrats endlessly debate touchy articles and other changes to the site, Wikipedia's community churns with questions over how the nonprofit Wikimedia Foundation, which oversees the project, should get and spend its money.

Should it proceed on its present course, soliciting donations largely to keep its servers running? Or should it expand to other sources of revenue -- with ads, perhaps, or something like a Wikipedia game show -- to fulfill grand visions of sending DVDs or printed books to people who lack computers? Is it helpful -- or counter to the project's charitable, free-information mission -- to have the Wikimedia Foundation tight with a prominent venture capital firm? 

For a nonprofit, this is a good debate and one which staff and board should pursue regularly even if not facing the relatively huge challenges of Wikipedia.

Only Thing Wrong with Tainted Money

I think it was a quote I remember from a many years ago issue of the Grantsmanship Center News that said: the only thing wrong with tainted money is there tain't enough of it.

I guess that's the takeaway one can assume from a Feb. 20, 2008 Nonprofit Times <a href="http://nptimes.com">article</a> entitled Nonprofits Cash In On Questionable Contributions:

<blockquote>Well, here’s one way for charities to cash in on the presidential race. Nonprofits have been the recipients of cash contributions originally intended for campaigns...until the donors found themselves in hot water and committees looked to distance themselves by giving up the donations.

The campaign of Democratic presidential candidate Sen. Barack Obama said it would donate more than $40,000 to nonprofits, contributions received from a former friend and fundraiser who pleaded not guilty to fraud charges.

A spokesman for the Obama campaign told the Chicago Tribune that more than $44,000 in donations related to Chicago businessman Tony Resko, referred to as a slumlord by Obama’s rival for the nomination Sen. Hillary Rodham Clinton, has been divested.</blockquote>It seems to me that a nonprofit board should have the same conversation Obama's campaign had: when is tainted money "keepable"?

Hackers for Charity

Well it didn't quite sound right when I started reading the <a href="http://www.chicagotribune.com/features/bal-te.bz.hacker17feb17,1,4780766.story?page=1">Chicago Tribune</a> article but my take-away is that <a href="http://www.hackersforcharity.org/">Hackers for Charity</a> is worth checking out.

Nonprofits have enough worries and challenges these days and technology proficiency and security should be right up at the top for nonprofit boards and their execs.  It's not a safe world as it is and the last thing a nonprofit should have go wrong is their technology.  Hackers for Charity sounds like a good place to turn.

Lincoln's Cottage and $15 million

I am a huge Abe Lincoln fan and history buff.  I love visiting historical sites in whatever town I visit.  Here comes the but...But $15 million to restore Lincoln's cottage......geesh!  Abe spent some summertime time there.  Ok and that should be celebrated indeed and the place should be preserved.  But here we are in the worst housing crisis Americans have faced and we spend (ok, private philanthropy spends)  $15 million to rehab a cottage!  All those mortgage payments folks can't make and we spend $15 million to rehab one old house.  Where are our priorities?