Nonprofit University Blog

Those of you who know me, know that I love the nonprofit sector.  Some might even go so far as to say I’m a missionary for the sector.  But that would be inaccurate, as I am not out to “win” anyone over or convert them to my way of seeing things.  But I have knowingly volunteered and worked in this sector since what we then called junior high school.  In the many decades since then, I’ve held one and only one job in the for-profit sector:  in high school, I sold the mobiles I made to retail establishments and worked one holiday season in a gift wrapping shop.

I have always had reason to be proud of the sector of which I am a part, despite the scandals that are periodically uncovered, recognizing that the for-profit sector has no shortage of scandals.   Despite the stupidity of leaders, as the for-profit sector has its share of those.  Despite the fact that we are not a perfect sector—which no one could accuse the for-profit world of being, either.  Despite all of this, I’ve always believed that the vast, vast majority of people in the sector—those who are paid as well as those who volunteer—want to do good and do it well.  They may suffer from ignorance or egos that blind them; they may think they know what they should do but do not really, but they listen when educated.  They may make mistakes, but they are not evil.

But today, someone in the sector, who I don’t even know, turned my stomach in a way that I have been spared up until now.

It’s been an especially trying day, rife with nonprofit horror stories:

• There was the executive director who failed to pay the organization’s withholding taxes, leaving the organization with an almost $500,000 bill owed the IRS—before penalties and interest.
• There was the consultant leading an organization through strategic planning without having helped (or should I say forced?) the group to focus on what its mission really is, so the planning was going forward with multiple views of the mission of the organization.
• Let’s not forget the board that allowed one board member to skewer plans to hire a consultant who the rest of the board and the executive director thought was awesome.
• And there was the executive director who told the development director to ask the program director what her strategic priorities are.

But none of these are the ones that caused the disgust.

The disgust came when a colleague told me about an email she had received from a  former colleague who was bringing her up to date on his life.  The former co-worker began talking about the holidays and the vacation he and his wife had taken right after the new year, noting that his boss—the executive director—forbids him from taking a vacation in the summer.  His boss also forbids him from hiring permanent help, but allows him to work 11 hour days, six days a week for the summer.    Quoting from the friend’s email, “[My boss] does let me get a temp for six weeks then sends his favorite around to urge me to get everything done in 3 weeks to save money.”  My stomach was still feeling quite fine at this point.

But then it began to churn, and as I continued reading, my stomach reached a crescendo.  In the words of the email’s author:

On Friday 29 January my boss called me into his office at 4 PM. …. Then he told me that my job was being outsourced to an accounting firm.

I asked when this would happen and he said they were coming in on Monday, February 1. I got no severance, no vacation pay and my benefits ended on Sunday, January 31. “Of course I will pay you for today,” he said. I had started that day at 7:30 AM, so by 4:00 PM I had a full day in at work. For once I was leaving before 6:30.

I was numb, mostly from my chronic tiredness. But I was also relieved to be out of there after almost 3 years of misery. The reality of it set in when I woke up on Saturday morning. I will miss the people I worked with and supervised, but I will not miss my boss at all.

I offered to email him my passwords for all the sites we use, but they had me locked out of the network while I was being let go. I have all my passwords in password-protected files and I was going to unprotect the files…

The charity is about to default on a $12,000,000 mortgage and turn a property over to HUD. Cash flow stinks and everyone was worried. [The Excutive Director] likes to confuse the Board (packed with relatives and in-laws) and blame everyone else when the entire mess is his fault. He can’t lead, he can’t manage, and no one likes him. He is vulgar and coarse. The people I worked with fear him because you never know what he will do next.

While I absolutely hold the executive director accountable for his own egregious behavior as a leader and manager, I hold the board accountable for its failure to do its job.  But where to begin on that one?  It was not providing oversight of the executive director, nor taking on the responsibility to strategically build itself as an independent body as opposed to being a stacked body of relatives.  It was not executing its financial responsiblities if it allowed the organization to default on a $12 million mortgage, and probably failed in this arena by taking on the mortgage in the first place.  And the board wasn’t doing very well in the governance arena, at least as far as personnel policies go, and I would only assume other ares as well.

I also hold the employees of the organization accountable as well for their failure to hold the organization to a fair and humane treatment of its employees.  I have no idea what organization this is and, therefore, what its mission is.  But nonprofits have a moral responsibility to treat their employees with as much care and compassion as they treat their clients, as their employees are their most valuable asset.

One of the things that makes the nonprofit sector so special is the recognition that the parts—the staff and volunteers, the executive director and the board—are all equally vital to the successful delivery of the mission.  When that lesson is forgotten, and one person is wrongly empowered to be above and beyond the others, we lose our specialness, and thus we lose our ability to do good.  For in that moment, we have violated the very parts that make us who and what we are.  And that turns my stomach big time.

Last week, the United States Supreme Court made a decision that could have huge implications for nonprofits across America, regardless of their missions.

In Citizens United v Federal Election Commission, No. 08-205, the Supreme Court relied on the First Amendment protection of free speech to say, according to Justice Kennedy who wrote the majority opinion, that Congress may not fine or jail “citizens, or associations of citizens (emphasis added), for simply engaging in political speech.”  In other words, with its 5-4 decision, corporations are no longer banned from spending money in political campaigns—whether it is taking out an ad explicitly endorsing a candidate or conducting a mail campaign praising a candidate’s particular position, for examples.  In fact, it would be outright unconstitutional to ban such activity.

What is particularly interesting in this case is that the plaintiff in the case is not a big oil company or a major Wall Street player or some other mega-billion dollar for-profit company; rather, the plaintiff is a nonprofit.  Citizens United had produced a 90-minute documentary that was apparently unfavorable to Hillary Clinton who was, at the time, running for President.  Citizens United lost its suit against the Federal Election Commission to allow it to show the documentary on an on-demand station and run TV ads for the showing.  Appeals brought it to the Supreme Court.

Many pundits are seeing the dark side of this decision:  corporations with their deep pockets will now have the ability to drown out the voices of the rest of us—the individual citizen and all of the rest of the groups that are “associations of individuals.”  And while I agree that is true, I am choosing to look at the bright potential of this decision.  Given that the decision is planted fully under the free speech protection of the First Amendment and extends it to groups of citizens (in addition to individuals), and the Fourteenth Amendment guarantees equal protection of the laws to all citizens—can we have one class of associations of citizens—corporations—receiving different treatment than another similarly situated class of associations of citizens—nonprofits?

As a non-lawyer, it seems to me that the question may hinge on whether these two classes of associations of citizens are truly similarly situated.  A huge question, I know.  But if corporations are going to be taking their unrestricted profit dollars and spending them, as they please, on endorsing political candidates, and without having to check with their shareholders to see if they approve of having a share of their dividends go to endorse specific candidates, shouldn’t nonprofit organizations be able to use their unrestricted dollars to do the same? And similarly, without restrictions from the government?  Or, are nonprofit associations of second-class citizens?

Does this Supreme Court ruling open wide the door to challenge the IRS’ ban on campaign activities by 501(c)(3) organizations? It would certainly seem so, and I doubt there will be a dearth of organizations willing to mount that challenge!

For more on this different perspective on the Supreme Court decision, check out OMB Watch.

This chart helps define what Citizens United means for nonprofits >

How do I say write this without sounding like an old fuddy duddy?  With great difficulty and a low likelihood of success!

I think it is absolutely marvelous that the Red Cross has collected over $100 million from around the globe for the victims of the Haitian earthquake, predominantly through the texting of pledges.  (Well, actually, I think it is marvelous that $100 million has been raised; I am a little dubious about the Red Cross receiving all of that money as their recent track record of using money collected for major disasters has not had the greatest integrity.

But I hope all of the changes they have made since Katrina have corrected all of that.)  But as Americans—I won’t speak for the rest of the world—we generally respond well to disasters.  And when we make responding to disasters easy—such as texting a donation on our phone, giving money at the cash register, etc.—we do even better.

Texting donations is great, as is dropping money in a bucket that is placed directly in front of us.  And responding to heart-wrenching photos of massive destruction and children bloodied and crying in the streets is a no-brainer.  But what about responding to the daily needs—food, clothing, shelter, education, health care–of people struggling to make it through the day without natural or man-made disasters?  What about responding to the need to preserve our open space, natural resources and cultural richness so that there are places to find solace from the storms all around us?  How are we going to ensure the on-going support our communities need to remain healthy, virbrant and humane?

Texting alone will not do it.  We must teach the value and importance of philanthropy And we must value it wherever and however it is found.  Peter Singer, in The Life You Can Save, makes the statement that Americans have norms against being “too charitable” and that we believe “that caring is in some ways deviant, the exception rather than the rule.” Is that really true?  Does, as he says, “selfless behavior makes us uncomfortable?”

Then let us hope that we get used to a lot of discomfort.  More and more elementary and secondary schools are building into their curricula the teaching of philanthropy.  Service-learning is well entrenched in institutions of higher learning; so now let’s add the teaching of philanthropy.  Civically-minded corporations encourage their employees to volunteer and may even match donations made to charities; some take it a step further and require that their future leaders serve on boards of nonprofits.  And some even take it a gigantic step yet further.  The former Bear Sterns (which would not win my praise in many other areas of performance) required more than a 1,000 of its senior managing directors to give 4% of their salary—and bonus—to charity.  And tax returns had to be produced to prove the giving!  Goldman Sachs recently announced, juxtaposed to the pending payment of large annual bonuses, that it is considering a mandatory charitable giving problem a la Bear Sterns model.

If that were to happen, and Goldman Sachs’ program hovered around the same mandatory 4%, estimates are that this program could produce hundreds of millions of dollars for charities.  (This giving program shouldn’t challenge our comfort level, however, as there is a clear suggestion that this program is being created to try and win public favor.)  Though not a fan of coerced behavior, there is enough literature out there to suggest that coerced behavior can lead, eventually, to similar volunteered behavior, so I’ll take it.

What is at stake here is the future quality of all of our lives.  We cannot rely on catastrophes or ease of giving to lead people to philanthropy.  There simply are too many needs and causes in our everyday lives that require on-going support.  We must engender in all an on-going sense of caring and appreciation for the power of philanthropy.  We need to get very uncomfortable.

Ever since my son got his drivers’ license, anytime he and his best friend from high school want to have a serious conversation, they get in the car and drive.  Long, long drives to no where.  Doesn’t matter what time of day or night, a conversation becomes a road trip.  Every once in a while, however, the road trip becomes the conversation.

I am not often privy to the content of these conversations, but every once in a while, I get lucky and get a text  that sheds some light on the conversation (fortunately the texter is the friend, who is the passenger).

Last Friday night, as they were driving to New York for a 21st birthday party, I got the following text:  did u learn in undergrad or from reading?  I needed to clarify if they were asking whether I had learned as a result of going to classes, hearing the professors’ lectures and the discussions of my professors and peers, or simply from doing the assigned readings.  Neither, was the response.  Did I learn more from my undergraduate education (they are both juniors in college) or from the reading that I have done throughout my life?

That was a much easier question to answer.  As a voracious reader, there is no question that throughout the many decades of my life, I’ve learned far more from reading that I ever could have possibly learned from four years of undergraduate education.  And this is no slight on my undergraduate education, which was superb.  It, unlike so many undergraduate educations, actually fostered learning from reading.

But the learning I’ve gained from reading has been intentional.  While I confess I do not read in every field and every discipline, I have a very varied reading repertoire.  I read that which I know will help me develop in my profession, and am frequently thrilled when something not on that intentional list does the same trick, as well as that which I know will simply give me a deeper and richer pool of examples, analogies and food-for-thought.   It seems that having spent so much time as an academic, however, I do segment my reading, assigning fiction to the summer and holidays, while non-fiction is for year ’round.  I’m trying to work on that.

And I read everything, from serious tomes to headlines to the inside of bottle caps; from the two page essay to the 52 chapter book.  And from all of it, I learn.  I get Google’s daily nonprofit alerts – must reads. .  Sometimes it is just the headline; other times, the full article.  And from there, I’ve gotten fodder for blogs and ideas for developing new classes for The Nonprofit Center.   I read and re-read books to see what I glean at time one that is different—because I’m different—at time two.  (I even date and color code my notes with each reading.  (Did I hear someone say nerd?)

When I first read Jim Collins’ seminal works, Good to Great and Built to Last, I read them as an academic, teaching traditional academic classes.  Years later when I reread them, I was the executive director of a nonprofit and part-time consultant, and I saw very different messages that needed to be conveyed.  I’ve told executive directors and board presidents who bemoan the state of their boards to buy every board member a copy of The Source:  Twelve Principles of Governance That Power Exceptional Boards, and have everyone read one principle in preparation for each board meeting and then discuss it.  A mini book club that can move a board—and therefore—an organization forward!

While reading should not be the sole source of professional development used by an individual or an organization, its power and value should not be undervalued, particularly in these tight financial times.

For a variety of reasons, many of us are happy 2009 is over. But that doesn’t mean 2010 will be our knight in shining armor.   As I’ve said before in this space, the economic fat lady hasn’t sung for any of us yet, least of all the nonprofit sector.  She’ll be singing for us years after she’s sung for others.

So, what’s a nonprofit to do?  Ask the tough question.

I don’t believe in this thing called “human nature.”  There are just too many discrepancies.  Let’s take survival, for instance.  People who believe in human nature will tell you that it is human nature to want to survive.  We hear of people going to great lengths—even intentionally inflicting harm to a portion of their bodies in order to save the whole—in order to survive.  And yet, at the same time, we hear of others who choose not to survive—those who choose suicide, ask that life-sustaining measures be stopped, engage in activities where the odds of not surviving—short or long term—are great.  The desire to survive is not wired into our nature; it is determined by the situation in which we find ourselves at a given point in time in our lives.  Thus, sometimes the right choice is survival, while sometimes it is not.

The same is true of organizations.   Sometimes, survival—particularly when it is mere survival—is not the right or best option.  Sometimes the best option is to close down.

That, I understand, is not a popular option.  But that doesn’t make it the wrong option.  I recently received questionnaires I’d sent to eight executive directors of venerable organizations, each of which was also doing good and important work in their communities.  But in answer to the question what are the five top issues facing your organization, funding came back loud and clear—sometimes repeated five times.  And it was said with exhaustion by battle-worn leaders.  Underlying these statements was the unspoken question of how long can I—this organization—continue to fight for every penny in a landscape where the pennies are fewer and further between?

So, in 2010, do yourself and your organization a favor and ask and answer that tough question:  should we survive?  At all?  in some version of our former self?  as we are?  And don’t do it in a half-assed way, based solely on emotion and history.  But do it based on data and reality, the needs of the community you serve, the competition, the ability to deliver quality services, the long-term availability of funds, etc.  Regardless of the outcome of your discussion, your clients, organization, staff, and board will be served better.

I know this goes against the tide of up-beat new year’s resolutions and I will accept any accusations of being a killjoy.  But if ever there were a time to be honest and look ourselves squarely in the eye, 2010 is it.

Trust.  It is such a huge word for the nonprofit sector yet one we spend little time talking about.  Our whole currency, if you will, is based on trust:  our clients, donors, collaborators, and others trust that we will do a good job, deliver a valuable product, protect and steward our dollars, fulfill our mission promises, etc.  If these stakeholders stop trusting us, we are doomed.

Yet, when was the last time the staff and board of your organization talked about trust? What does it means to be a trustworthy organization? How do we execute and demonstrate that trust to all of our various stakeholders, from ourselves to donors to clients to competitors?

The issue of trust is one that I think about a lot, but particularly this time of year when every nonprofit is asking for those end of year gifts and so many individuals are thinking about where to give their precious dollars.  But two events coincided with the time of year to raise this question even higher on my list of “internal dialogues.”  First, I recently had to visit the nuclear medicine department at my local hospital for a test.  I trusted that this injection of nuclear compound into my system was safe; I trusted the nurse’s response to my question of how long the compound would remain in my system.  Why?  Not simply because the hospital is ranked as one of the top 100 in the country (and has been there for a good number of years), but because I can look up the research that demonstrates the overall risk and addresses the ratio of risk of the injection to benefit of medical diagnoses and any consequent needed corrective action.  In other words, I can read for myself—the basis for the ranking, the research—and determine if the trust is warranted.  I am not taking anyone’s word, no slick advertisements, no leaps of faith.

Second, I receive daily Google alerts for nonprofits, which can include links to anywhere between five  and 25 headlines.  On an alert last week, 1/3 of the headlines had to do with an employee—executive director or chief financial officer—or board member “misappropriating” funds.  Not a behavior that instills trust in people, but a behavior that is, unfortunately, increasingly all too common in the sector.   Hope those organizations are talking about trust now!

But the time to talk about being a trustworthy organization, like so many other things, is not when the negative spotlight is focused on you.  The time to talk and, more importantly, the reason to talk about being a trustworthy organization is so that the negative light never shines on you.’

The new year is right around the corner.  People will make personal new year resolutions, most of which, statistics show, are short-lived.   You would serve your nonprofit well, however, if you make a new year resolution to make being a trustworthy organization front and center—and stick to it.  Have those discussions at the board and staff level of what it looks like for your organization to be trustworthy. Where is our evidence of that trustworthiness, from our own impact evaluation data to our testimonials to our board-developed policies that protect our money to our Form 990 that paints a truthful and positive picture?  What do we do to ensure that all individuals associated with us understand and value integrity? How do we demonstrate our commitment to honesty?

Trust is not something to which any nonprofit can afford to give lip service.  We must embrace it and demonstrate our constant commitment to it.

Last month, Newsweek printed excerpts of an interview with William Powers, current President of the University of Texas.

And while not belittling either the title or responsibilities of a president of a large university (as both are huge), what is important about Mr. Powers in the context of this blog is that prior to becoming university president, he was asked by the Board of Enron to head a special investigation into the company’s collapse in order to uncover what went wrong—and why.

The focus of Newsweek’s excerpted conversation is those “lasting lessons” that Powers believes we should take from the Enron collapse.  Enron was—or at least it should have been—a learning opportunity for every nonprofit, as well as every for-profit.

Nonprofits had the opportunity, especially with the passage of Sarbanes-Oxley that, with the exception of two provisions applied only to for-profits, to affirm what it was already doing very well and to take note of areas where they, too, needed to ensure independent oversight.  (And, as an aside, and kudos for the nonprofit sector, a good number of for-profits looked to the nonprofit sector to learn its best practices of board governance.)  And reading Powers’ conclusions, Enron’s collapse should continue to teach the nonprofit sector.  His identified lessons, eight years later, are equally applicable to nonprofits as they are for for-profits.

Here are some of his lessons that are equally applicable to nonprofits.

1. “The good times do end.”  Thus, nonprofits, instead of relaxing in those good times, we need to enjoy the good while simultaneously preparing for the bad times that are coming.
2. “You need to surround yourself with good people who are competent, honest—and are not going to take shortcuts.”  Which means that we must hire good, qualified, honest people and not hesitate to release those who are not.  And this applies equally to board members as it does to staff and other volunteers.  Powers adds that we must evaluate “…the people, not just their talent, but their culture—including how they conduct the rest of their lives.  Are they honest?  Are they trustworthy?”
3. He has several pertinent observations for boards.  In responding to the question of how he would be a different board member today than pre-Enron, he says that he would not succumb to the fear of making “…a fool of myself by asking a stupid question.”  He would ask that question and push to understand.  He observes that at Enron many of the board members has been there “for a long time.  They had grown up with the company; they had come to trust the company and had disengaged a bit.”
4. “…it is likely that each generation is going to forget its values.”
5. We must instill “in young people the idea that they should do honest, hard work for a fair return, whether that’s a financial return or the other kinds of returns we get.  ….  We can teach students that earning rewards fairly is the way to live your life, rather than a get-rich-quick mentality.”

The sad part about these lessons to which Mr. Powers rightfully points is that none is earth shattering; all seem to be basic common sense.  But apparently these days, we need to remind people just what common sense entails.

News Alert:  An estimated 111 million people plan to use the web to donate to nonprofits this holiday season (Nonprofit Times).

A Minnesota nonprofit fundraising campaign, GiveMN, raised a remarkable $14 million via the Internet with its 24-hour “Give to the Max Day” event on November 17. The money, donated by 39,000 people, will support 3,400 Minnesota nonprofits, reports the Foundation Center.

Between now and the end of the year, we will be asked by every charity we know—and many we don’t—for our gifts—or investments, as I prefer to think of them.  (After all, there is no quid pro quo with gifts; we send a thank you and nothing more is expected to the giver.  But with an investment, the giver expects to see a return and the charities should be expected to demonstrate that return.)

According to Convio, preliminary results from their research on people’s plans for holiday giving show that “61% of online consumers plan to give online this year, up from 51% last year—that’s more than 106 million Americans giving online in the last 4 weeks of the year.”  (Connection Café, Posted by Tad Druart)  To many nonprofits, this will sound like good news.  So, to put some parameters on that potential good news, Convio’s 2008 eNonprofits Benchmarks Study found that the average online donation in 2007 was $57.

I know this all sounds wonderful—and it is.  But I wonder and I worry about the influence of technology on what has always been a high-touch task for nonprofits.  Will technology advance philanthropy the way it has politics (think of the role texting, tweeting and photo sharing played in the days after the most recent Iranian election;  the Dean and Obama presidential campaigns;  and the most recent Afghan election where a candidate had James Carville as his political consultant and created an “Obama-like” website)?  And despite the proliferation of sites like boardnet.org and volunteermatch.org, being successful at finding and keeping good board members and other volunteers remains, in the end, a high-touch, face-to-face activity.  Technology can definitely make the introductions, but it cannot make the assessment of the match and it should not make the ask.

At this juncture, the same must be said of technology’s role in philanthropy:  it can make the introductions—as Give to the Max Day surely did for many—but it cannot do the cultivation, the relationship building or the big ask.  Nor should it.

So, let’s get excited about what the end-of-the year flurry of giving—on-line and off—might bring for many nonprofits.  But when the new year starts, let’s return to the basics and build those relationships that will perpetuate and sustain continued—and we would hope growing—investments in the important work of our nonprofits.

We’ll be back on 12/4/09.  (Guess we could have tweeted that. )