Nonprofit Board Crisis

Deeds Counted More than Philanthropy Cred

Also from the LA Times, an NAACP Image Award was given to "Wyclef Jean received the Vanguard Award for raising funds and cultural awareness after the earthquake in Haiti."

Philanthropy Cred -- taking all the "proper" steps institutional philanthropy and perhaps the IRS demands (as uncovered in The Smoking Gun) -- was clearly not the foremost standard for the NAACP's recognition of Mr. Jean with the bestowing of this year's Vanguard Award. 

Just the same, and possibly something to consider for today's younger philanthropists, "it's not about how you tie your shoe, it's that you have and wear shoes at all."  The NAACP is smart to establish Mr. Jean as an example for all who find themselves with means, especially stars and athletes and others regularly in the spotlight, to step forward and be part of the society that supports its community when in need.

International Olympic Committees Remain Annoyed with US Olympic Committee

In an AP staff interview in the LA Times, the CEO discussed the current and long term tension the US Committee has with IOC members over, what else, money.  According to the article:

the USOC still receives a 20 percent share of global sponsorship revenue and 12.75 percent cut of U.S. broadcast rights deals.

I actually think the issue is way more simple to address than these "high level" talks:  Ask what the sponsors want!  I mean really, this is marketing 101 and it's really on the sponsors to determine where their money goes -- effectively, where they perceive they will get the most bang for the buck.  Case solved!

As  a side thought, I note that McDonald's has been making a huge connection to the Olympics.  Do they really like athletes and/or winter sports?  Undoubtedly, there are McDonald's executive team members who do.  But more importantly, the Olympics provides McDonald's with a really positive identity to all the countries involved and this of course translates into short term and long term sales.  So, is this a win-win proposition?  May well be one of those cases for the academics to document and teach how marketing and philanthropy can sometimes fit so well together.

 

Nonprofit American Idol

This month, perhaps coinciding with another TV season of American Idol, Pepsi started its own american idol of sorts.  It's called Pepsi Refresh and according to the Refresh website:

We're looking for people, businesses, and non-profits with ideas that will have a positive impact. Look around your community and think about how you want to change it. 

And, consistent with American Idol the show, nonprofits get to present themselves and their idea and the public vote for their favorite.  Like American Idol, ideas don't actually have to be great nor do the nonprofits that are offering the ideas.  There's no real due diligence by the public -- this is a popularity contest.

The good news -- Pepsi says it will give away $20 million.  Yes, good news but will this American Idol redux really make the social impact Pepsi suggests?  Really, what's the biggest impact?  Pepsi does some great marketing at a relatively low cost.  Nonprofits learn how to use social media to MAYBE build a constituency. 

One thing that might have an even deeper impact: Pepsi should make sure all the voter email addresses for a particular idea are transferred to the votee -- that way a possible donor base is in the making.  Might be as good as the actual cash Pepsi is dolling out and for those who don't win Pepsi $, this is a tangible replacement with multi-year promise.

Nonprofit Status is Akin to Good Housekeeping Seal

The legal work on what to do about James Arthur Ray following the deaths of participants in this "spiritual" leader's sweat lodge has begun.  The basic issue: if and how responsible is Mr. Ray for the loss of lives that occurred in his sweat lodge.

My thoughts today are not about the culpability of Mr. Ray and his sweat lodge.  My thoughts are focused on why Mr. Ray (and his company) are viewed as spiritual entities.  As best as I can tell, Mr. Ray is an entrepreneur who tells a really good story -- one in which appears to resonate for folks seeking something to add to their lives.  But Mr. Ray and James Ray International, at least from his website, are for-profit entities -- neither a spiritual organization or a nonprofit -- but a for-profit quite effectively making Mr. Ray, at least until today, quite rich.

Now I know that nonprofit tax structures are just that -- they provide a vehicle where folks can pursue interests and beliefs that profit more than themselves and subsequently, are not taxed. Mr. Ray and James Ray International ultimately pursue interests that primarily benefit Mr. Ray.  That of course is an American institution.  Fine for Mr. Ray.

This makes me wonder thought why Mr. Ray's followers didn't look for or care about the "label" and perhaps saw themselves investing in an individual who was meeting their needs and their ability to deduct the expenses didn't really matter.  But doesn't the tax exempt status also provide some degree of confidence that to "donors" the greater good is served vs. the well-being of one?  Isn't nonprofit status more like a Good Housekeeping Seal that provides assurances to folks such that they might pause when considering investing in an organization that doesn't have the Seal?  

And besides just being a Seal, nonprofit status also offers another benefit: there's a group of passionate people who want to ensure that the nonprofit only does that which is right for all the organization encounters.  That group of folks, a board (I know, not always a guarantee as this blog frequently points out), sits to ensure mission first.  Would Mr. Ray have run his sweat lodge more prudently with a nonprofit board overseeing his actions?

Nonprofit Status Best For Fannie Mae and Freddie Mac?

Making Fannie Mae and Freddie Mac nonprofits is a proposal made by the National Association of Realtors as reported in the Wall Street Journal.  Many details would have to be rolled-out not to mention resolving the political issues challenging this proposal. 

The proposal for these bohemouths does raise for conversation two questions: 1) the role of the nonprofit effectively "replacing" government and   2) what kind of governing body would need to be in place to ensure that the two organizations, as nonprofits would be effective and efficient? 

So, interesting idea but  these two questions really must be answered to move forward this way.  I for one am glad there's a Fannie Mae and Freddie Mac and have a difficult time perceiving if and why a nonprofit status and structure would address the challenges faced to date -- is not their mandate one which is best achieved by government?  I also have a very difficult time conceiving of how the governing bodies might be constructed at least partially free from political drivers which would in effect, not make the organizations any different as nonprofits than as extensions of the government. 

Nonprofit Organizing and Advocacy Group Takes On New Identity

Well, I suppose it was inevitable.  After-all, its Board failed in its governance.  It's management failed in managing.  Its bad deeds internally and its bad media management way overshadowed the really important role it played for the un-empowered throughout the US.

Now, to pick up the pieces, some of the previous staff and what appears to be some of the previous board members are reorganizing and changing the name from ACORN to other new and unconnected and possibly more positive names.  Yes, ACORN has just about died and we can all hope that its replacements can do the job.  More importantly, I truly hope that the new caretakers and all other nonprofit managers and boards have learned the lessons ACORN leaders have helped teach us.   The story continues in lots of press but for one perspective, see Crains.

International Corporate Philanthropy Day

Did you know that February 22 is now International Corporate Philanthropy Day?

I for one did not.  I was scanning a number of newspapers and stumbled upon this fact in the San Francisco Chronicle which was primarily telling the story about all the who's who that showed up to celebrate the day but more importantly talk about empowering women.  Good topic, nice article.

But what is this International Corporate Philanthropy Day.  According to the Committee Encouraging Corporate Philanthropy(CECP),

International Corporate Philanthropy Day is a two year-old opportunity to:

• Tell your company’s philanthropy story on an internationally recognized day.
• Further engage senior management, employees, and nonprofit partners in your giving programs.
• Raise awareness of the important role of corporate philanthropy in fostering stronger relationships across sectors.
• Publicize your company’s philanthropic initiatives, benefiting from the added media interest.
• Enhance relationships with peers and thought leaders in the corporate giving community.

So, it seems like the reason I would not have heard about this event is that it's really for the members - to encourage their philanthropic work.  That's a good thing I believe.  And, of course there's a bit of marketing benefit -- both internal and external.  Corporate philanthropy people are faced with the constant challenge of making the case for their efforts internally.  After all, profits do come first for shareholders and philanthropy isn't a profit-making activity - -is it? 

All that said, seems like Corporate Philanthropy Day would be an excellent day for those who are socially minded to reinforce that corporate philanthropy is a good thing but for sure, only one illustration of being a responsible citizen of the world.  Beyond that of course are the basics like offering fair wages, avoiding doing bad things to employees and/or not hiring children -- you know, stuff like that.  And then there's ensuring the minimal environmental harm.  Oh, and what about letting individual citizens have a say in their political systems (versus heavy financed lobbying). 

Corporate Philanthropy is certainly important but corporations, especially those who are trans-national, have a whole lot more responsibilities and when they exercise these, I'd be very excited about a Good Corporate Citizen Day.

Nonprofit Hospital Not Better Off than Public Hospital

According to the New York Times,

The city’s public hospital system, the largest in the nation, is facing a fiscal crisis because New York State is threatening to cut its financing for the care of poor patients at a time when the number of uninsured patients has soared, city officials said Sunday.

The cuts, included in Gov. David A. Paterson’s executive budget proposal, could drain from the public hospitals up to $370 million, much of it in federal financing, and shift the money to programs in voluntary, or private, hospitals, the city officials said.

Within this article, the folks running the public hospital system noted that they are beginning to have the same experience as New York City's Catholic Hospital system which is "near bankruptcy and struggling to avoid shutting down."

Now, if this isn't a call for health care reform, what is?  Also, in the short-run, why can't some of the private hospitals that are "making it" share their wealth?  Ooops, that's just sooooo not capitalism at its best....

 

 

Nonprofits: A defense

In an interview with The Conference Board Review, Michael Edwards (former director of the Ford Foundation's Governance and Civil Society Program and author of Small Change: Why Business Won't Save the World) argues that "Philanthrocapitalism does not effectively address tasks like rebuilding the cohesion of communities, strengthening the ways in which people care for each other, and pushing for changes in the economic system itself". 

For reader's reference, Philanthrocapitalism is explained as a movement behind the belief that Nonprofits should be run like businesses and businesses can find new sources of revenue by marketing goods and services that benefit society. Philanthrocapitalism supporters believe that business principles can and should be the primary drivers of social transformation.

Mr. Edwards goes on to state that it's a mistake to use the market to solve social problems.  

Philanthrocapitalism seeks to apply competition in the social sector.  But by forcing nonprofits to compete for scarce resources, donors are doing more harm than good.  A survival-of-the-fittest approach ensures that only the big nonprofits survive, while smaller grassroots organizations are pushed out.  That's a problem because the smaller groups tackle issues that the big groups don't......this often means that the big nonprofits retain powerful constituencies arguing for them because they have the sexy causes but the non-sexy causes can't attract resources.  Sexy causes give immediate gratification resulting in the most root-cause issues failing to get addressed and attract resources.

Mr. Edwards believes that business do have a role in solving the world's problems.  He offers that business should "see and work with the poor, not only as consumers but as producers, activists and participants in shaping the conditions under which they are offered market opportunities."  At minimum, business could begin by "paying taxes, obeying regulations, ending monopolies and removing lobbying from politics".

I can't help but agree with Mr. Edwards on all these counts although I might argue further that the pure democratic-capitalist market is just not designed to respond as Mr. Edwards proposes.  Hence a resounding reason for something more along the lines of democratic socialism.  Ah, but I stray.

One last point for all of our thinking.  Mr. Edwards suggests that business should tackle symptoms rather than causes of problems which is a long-term process.  I believe that it really is on nonprofits to take the long-term view and indeed, address causes -- that is, change the systems that create the inequalities, suffering and the like.  Of course this is not the job of business which some might argue create the inequities of wealth that results in inequities among the remaining population.

But, in today's environment, are the majority of nonprofits truly focused on the long-term and addressing causes?  Do funders seriously support this approach?  And if the nonprofit sector is not taking this approach and business has no incentive and the government has no mandate perhaps not to mention, the resources, then who?

Nonprofit vs. Taxman

In the end, the women of Maplewood (NY) were able to stave off action, but the future remains uncertain.  That's the latest on the Maplewood Village Special Improvement District's efforts to have a 90 year-old Women's Club building declared not tax-exempt so it can, of course, reap the annual benefits of some $85,000 in taxes.

The current members of the club fought hard to keep their building tax exempt with the argument that all the money they raise by renting out the building for just about any kind of event is used to benefit those in need.  Effectively, the women are arguing that they have in their "clubhouse" a social enterprise -- a proven and I'm guessing, cost effective way to raise some cash for the causes the members believe in.

Tax exempt or not: that is the question.  Do the good works of the women actually equal or exceed $85,000 a year?  That might be one determinant.  Might there be others?  However, in these days of tight times for municipalities, every dollar counts and maybe the good deeds of some citizens are not enough to offset the needs of the wider citizenry.  That of course is the question and all those with tax exempt properties are wise to begin building their arguments as the tax-man cometh.

For the story on the plight of the Maplewood Women's Club, see the New York Times.