Nonprofit Board Crisis

America's Clean Water Foundation: Dirty nonprofit?

Another Obama administration nominee bites the dust, but this time over a past engagement with a nonprofit.  The Deputy Chief EPA nominee, Mr. Jonathon Cannon, apparently has served as a board member of America's Clean Water Foundation.  That Foundation in turn has been accused by EPA auditors of mismanaging a contract/grant of $25 million.  Embezzlement is being hinted at (no, not of the Obama nominee).  And, to top it off, America's Clean Water Foundation is out of business. 

Something for sure's not right if a nonprofit can attract a contract of this size and go out of business. And for sure, board members have to have some pretty deep knowledge of the facts, at some point.  Mr. Cannon was probably right to remove his name as a nominee although with this background, maybe he shouldn't have let his name get entered in the first place.

The San Francisco Chronicle story is here.

How many nonprofits pay overly huge salaries?

How many nonprofits pay overly huge salaries?  Apparently enough to get renewed attention by Washington on the tails of the AIG scandal.

While maybe one out of every 15 or 20 of my blog entries actually does focus on outrageous pay levels of nonprofit execs, I would say that the number of overpaid nonprofit execs is likely pretty small.

But according to the Wall Street Journal the number may be enough to warrant government attention and a review to determine if the Intermediate Sanctions penalty that can be used by the IRS when salaries are too high is enough.

I honestly believe that there's enough greed in the for-profit sector to take care of before we start using government resources to examine the nonprofit sector.  And yes, exec greed and maybe some bad judgement on the part of nonprofit boards certainly does exist, but on the whole I believe you really can't pay enough for the work that the nonprofits do for society, especially at orgs that are smaller than the big guys (like the hospitals, museums, colleges and maybe mega-church ministers).

Make Newspapers Nonprofit: A Legislative Solution

What to do about the plight of the newspaper industry?  According to an article in the San Francisco Chronicle- legislator "Sen. Benjamin Cardin, D-Md., would allow newspapers to become nonprofit organizations and solicit support from foundations and private individuals."

Now let's see - I noted yesterday about the recent report on how economically "frayed" nonprofits are.  Then of course there's the foundation world that has been hit hard by the market and other events (like Madoff). 

Now it's true that I have indeed suggested that maybe becoming nonprofit is a possible idea for the survival of newspapers but I think this is a market issue, not a legislative issue.  And one thing for sure, the donative market may not be fit enough to support the newspaper industry.

And the survey says: nonprofit financial safety net fraying

Clara Miller from the Nonprofit Finance Fund reported on a survey of 900 nonprofit leaders to the New York Times:

Only 12 percent of those organizations expect to end the year with an operating surplus, compared with 40 percent who ended their most recent fiscal years with money on hand, according to the survey by the Nonprofit Finance Fund, a charity that provides loans and other financial services to nonprofit groups.

Almost a third said they did not have enough cash on hand to cover more than one month’s expenses, while roughly another third said they only had enough money to get them through the next three months.

Clara suggests that part of the problem lies in nonprofit's not having a strong capacity in telling about their financial condition (presuming I think that the public would be more responsive if they fully understood the problem).   

I have no doubt that Clara is correct but I propose there are additional challenges (beyond the glaring economic conditions).  I propose that nonprofit execs are working much of these challenges on their own and their boards are not as helpful in coming to a rescue and perhaps have not been very strategic in their thinking about the long term financial conditions of their nonprofits -- not mindful of the duty of care.  And, one strategy that nonprofit boards should really be thinking about in these times is partnerships and mergers -- maybe right now there's just too many nonprofits to really weather a much smaller pool of available money.

How much do taxes affect charitable giving?

How much do taxes affect giving?  That was one of the questions President Obama was asked last night in his press conference and it's one of the questions posed in the Wall Street Journal.  Interestingly, the same question is being asked about two different populations. 

President Obama is proposing, as I understand it, to lower the tax credit that "wealthier" folks can get from making a charitable contribution.  His rationale is that the credit for the wealthier is unfair to the middle income person and more importantly, charitable giving is not about taxes.  I certainly agree on his latter point and would imagine that Mr. Obama has figured out the inequity so I would want to agree that inequities should be diminished.  What's confusing is that some of the very folks that say a change is bad also agree that taxes are not one of the motivators for charitable giving.  And to that point, I agree -- people give charitably because they have some passion about the issue -- taxes are just a bonus -- but, if the deduction was taken away altogether, I'd bet some folks might find other ways to invest their money.

Meanwhile, from the Wall Street Journal we learn there's a proposal to change the tax requirements for Foundations so that they give more.  How ironic is it that foundations, institutions who's first middle and last names are about charitable giving, should need an incentive to give more.  Something's wrong with this system.

Nonprofit: It's Still About Passion and Relationships

Over this past weekend the New York Times reported on a recently released study by Blackbaud about sustaining on-line donors.  The study effectively indicates that folks who give on-line are not often repeaters.  They give to the call that got them to the site for that first gift but after that, there's not enough to get them back again.

I offer that this failure to attract a repeat giver is about relationships and that nonprofit causes are still just that - they are causes - mission driven efforts that rally individuals who care, not just about an event, but who have a deep-seated mission driven passion that drives repeated giving. 

This thought then reminds me that big gifts are often generated from the combination of a passion and a relationship.  The relationship is one that may have to do with the connection between people or connections between the people and the cause -- just like good governance.  Good governance is actually both the connection between people and the connection between people and the cause.  Successful fundraising is all of this and more.

Nonprofit Founder says this is a time for opportunity, not fear

In a good article from the San Francisco Chronicle, Daniel Ben-Horin, the founder of Tech-Soup (and one of BWB Solutions' big Yale & Goldman-Sachs Foundation Social Venture winners), offered that although these may feel like the worst of times, they are indeed times of great opportunity for achieving good things for the nonprofit sector.

Mr. Ben-Horin said: "This is a time that will actually be good for nonprofits. It's a time that will be good for reinvention. It's a time when a lot of talented people will reexamine how they spend their time." 

On the one hand, I have to hand it to Mr. Ben-Horin for being an optimist.  On the other hand, Mr. Ben-Horin has proven that with the right "oomph" many trials can be conquered.  Tech-Soup is clearly a fine example.

Nonprofit Crisis may make strange alliances and Foundations playing different roles

Nonprofit crisis may make strange or at least out-of-the-expected alliances with Foundations playing different roles.  That's my take-away from the New York Times article describing what is happening in Detroit and many cities around the country.

For my money the good news is that indeed, nonprofit behaviors are changing - alliances, partnerships and even radical internal corrections are now common place, principally as a result of less money.  But the less money means that some nonprofits can't get away with a norm of dysfunction.  And Foundations, according to the article, recognize the same and play a role in helping take corrective action.

I think this is all for the better.

Another religious nonprofit in governance/ceo hotwater

Here we go again with one of those spiritually appointed CEO's having a power fight with his board.  The story, outlined in the March 12, 2009 Chronicle of Philanthropy, describes an unhappy board, an unhappy founding exec, fired board members, secretly recruited board members and a court case not to mention the internal family based management intrigue.  Whew, what a mess.  What a good case study on how everything can go wrong when power is at first centralized and then taken away.  (You'll need to have a membership to the Chronicle on Philanthropy to view the entire article.)

Nonprofit Boards As Fiscal Leaders

The Standards for Excellence Institute is offering some helpful and no-cost information that should "empower your nonprofit board to be fiscal leaders".  Check it out here.