Nonprofit Board Crisis

Charity Auction nets $1.1 Million

Maybe it's only the fashion industry or music industry but a charity auction in Milan with a lot of star-studded (literally and figuratively) folks raised $1.1 million for AIDS research (amfAR).

This is of course good news for the charity but might also be recognized as good news for others that there is still, in this economy, a lot of money "out there".  Of course, the right cause and the right people need to be linked but.....

See the San Francisco Chronicle for the story.

Nonprofit Mergers: A Strong Case

A really nice piece on why nonprofits should consider merging was laid out in the UK's Business Times On-line. 

The article first offers some interesting stats on the proportions-to-need ratios in a number of nonprofit areas (in the UK at any rate).  The article further discusses the basis for why folks start new organizations even while other nonprofits already exist serving similar needs (bottom line: heart over head).  And, there's a good review of some of the downsides to mergers.  But, all in all, this is a good discussion piece for a board committee trying to wrestle with what steps it must take to address ongoing struggles while remaining dedicated to mission.

Nonprofit Journalism Project

As you likely know by now, a really rich guy in San Francisco has invested $5 million to develop a nonprofit journalism venture that will provide regional news coverage and feed stories to media partners.  

Basically, this effort is touted as a big deal with lots of jobs etc.  This is essentially raising the bar on what will supposedly be the ultimate demise of the commercial news media industry.

But will it?  Again there is basically the question of what is different about the business model that hasn't been the reality for the commercical press?  What, other newspapers didn't start with this kind of investment?  The overhead, because it's on-line is a lot lower?  Staff will be much lower paid (albeit, employed)?  The donor will keep giving adinfinitum? 

Just what is it about the business model that makes our really rich guy think this is a viable venture?  I certainly can't tell but I guess we'll have to wait and see.

See the San Francisco Chronicle (kinda ironic, huh) for the story.

Nonprofit Hospital Charity Minimum

Since beginning this blog, I have consistently taken the position that while nonprofits have to manage effectively and efficiently, they also have to be focused on achieving mission-related results.  One institution I'm particularly focused on around this position is nonprofit hospitals.  I do believe that most nonprofit hospitals are particularly bad at being charitable -- a key part of their nonprofit mission.  I believe they should find ways to serve the poor -- not a little, but a lot.

I know that nonprofit hospitals, by default at least, then become part of the health care debate currently going on in the national legislature.  Phaps as a part of this debate, the Illinois State Supreme Court will be discussing this issue by attmpting to answer the question: "what do charities have to do to keep their nonprofit status?"

As tax exemption is awarded by the US federal government, I'm not quite sure what role a state can have in this type of debate but I'm sure that question has been answered.  But, more importantly, having the debate in this forum may be helpful in thinking about how small a percentage of charity care can be given to define a nonprofit hospital as nonprofit. 

Can you believe though we actually have to ask the question: how LITTLE care a nonprofit hospital HAS to give to be considered charitable?  Given this question, shouldn't we more importantly be rethinking what nonprofit means at all?

See the Wall Street Journal article here.

Nonprofit Board Size

How big or small should a nonprofit board be? 

This is a topic frequently discussed by the "experts".  I believe there is no right answer except that size needs to reflect organizational need and organizational stage of development (see my articles on stages of development here and here).  On the other hand, a lot less board stress and a lot more efficiency would indeed be achieved if nonprofit boards only had 3 members (generally the legal minimum according to many state laws).  But 3 members doesn't necessarily provide a lot of resources nor diversity nor guidance that can truly benefit a nonprofit.

That being said, there's a little artile in ThirdSector UK that provides some thinking about board size and how to pare down when the time comes (although there's no real insight about when that time is right).

Nonprofit Governance: What is Best Practice?

I've run accross a nonprofit that has a $15 million budget (according to its '07 IRS filings - see Guidestar) and somewhere in the neighborhood of 50 staff.  Over its 25 year history it has been, by most standards, very effective in implementing its mission of "making the promise of America real for every American".

So why do I write about People for the American Way?  Because from a nonprofit governance perspective, the organization doesn't appear to implement the so-called best practices that many governance gurus might preach.  For one, the current president of the organization (the exec) is listed as a board member.   Actually, he is on both boards -- the organization's board and the organization's foundation board.

Norman Lear, a founding board member along with a few others continues to be a board member of both organizations -- that's 25 years if you are counting.   And, each board is comprised of 23 and 24 people respectively.

Now, without an interview, it's not clear whether these 25 year board members are voting or honorary.  It's not clear whether the president has a vote.  And its not clear what role the board members have and how well they do their job in attending meetings or participating in committees or micro vs. macro managing.

BUT, it's safe to conclude that despite what differs from "best practice" this organization is still making a positive impact and appears to still be "working".  Could People for the American Way be a best practice for nonprofit governance?

Entertainment Sales Tax Discriminates

A new sales tax is one of the products of the Pennsylvania Legislature's efforts to balance the state budget.  The "so what"?  This revenue generator will "extend sales taxes to arts and cultural performances and venues - but not to movies or sports events".

Arts folks suggest that the new sales tax "will price everyday people out of arts experiences, and it will push key cultural institutions to the brink."  I'm not sure I quite understand this point.  Many folks currently pay sales tax on lots of other services but continue to use them, especially gas, cigaretts, and alchohol and effectively support the businesses that make available these offerings.  So, I'm not convinced this is the strongest argument against applying a sales tax to arts and cultural activities. 

The question this event does raise for me, and one I think the arts as well as the social services and remainder of the nonprofit community must ask is whether such efforts to generate monies from nonprofits is indeed a step toward eliminating the nonprofit community and in effect, recouping the "forgone revenues" that are "lost" through nonprofit designation.  One might propose that this first step could be just that, a first step. 

On the other hand, sales taxes are not levied toward donative transactions.  At least, not yet.

See related article in Philadelphia Inquirer.

Newspaper Revitalization Act

The Newspaper Revitalization Act?  Yes, there is now such a thing floating in the US Senate halls via a bill by Senator Benjamin Cardin.

It appears that Senator Cardin, for some reason, cares deeply about newspapers or investigative journalism.  While it is clear that the business model for newspapers is indeed broken, it is not clear that it is appropriate or timely for the US government to step in for a bailout.  Plus, I believe there are options already in place to ensure that investigative journalism (what I believe to be the most important component of newspapers) is preserved.  We have already seen this association in California and some successful web-based journalism.  And, as I've proposed previously, the for-profit paper can go through a conversion process and even ensure there are some resources preserved for the benefit of what is most important about newspapers.  Bottom lines, there are currently solutions to the problem. 

But a federal initiative to preserve newspapers?  In effect the public has already spoken -- they are not valuing this form of printed media.  Do the feds know better?

Docs on the Take?

Maybe it's a coincidence but last week the San Francisco Chronicle had a story (I blogged on) about a group of doctors who headed up a medical research foundation and were apparently personally profiting from the work of the foundation. 

This week, in the New York Times, we learn about a doctor who "might have failed to tell Columbia about significant amounts in consulting fees, speaking fees and other payments.  Dr. Leon appears to have failed to report millions of dollars that he has received in outside income.”  Senator Grassley is on top of this case like the AG is in the California story.

So clearly there are systemic and governance failings here.  But while we are talking about health care reform, are we also talking about the "cost" of medical research and when we talk about cost, are we talking about "profits"? 

Corporate Giving: A Debate

In a "maybe not what you would expect" debate over "Should companies give more money to charities?", the head of marketing for Transport of London declared that:

"Businesses should not give money to charities because their customers do not want them to".  He went on to say that: "If customers wanted their money to be given to charity, they would choose the charity and make a donation directly.  Charitable giving is a personal act.  This should not be another thing that is taken over by big business."

Rebuttle's included identifying gifts-in-kind "as more valuable" and that, "Companies want to share in our values, passion and energy," he said. "But they are massively underpaying for this because they want to do it on the cheap. Businesses should give more money to charities, not less."

So, is whether companies should give more money even the best question?  At this time in the world, I might think an alternative question should be around whether corporations have any responsibility to be socially responsible, which in the long run may reduce the need in many areas for even needing charities.  Hm...

News note is taken from ThirdSector UK.