Nonprofit University Blog

In the mid-1970s, Senator William Proxmire, a Democrat from Wisconsin, created the Golden Fleece Award.  He would give this award to the organization which he felt did the best job of wasting government money studying and explaining the obvious. Among the winners were the U.S. Army for its 1981 study on how to buy Worcester sauce, the Justice Department for conducting a study on why prisoners wanted to get out of jail, and the Federal Aviation Administration for studying the physical measurements of 432 airline stewardesses, paying special attention to the ‘length of the buttocks.”

When Proxmire left office, so did the award.  But I understand that Taxpayers for Common Sense has resurrected it.   My use of the Golden Fleece Award, which most frequently occurs in my internal dialogues, is not , however, limited to those who spend government money on proving the obvious, but anyone who wastes money and  time to prove the obvious.

And so I give this award to the Center on Philanthropy for its latest research that shows that nonprofits are “somewhat” less optimistic about the present and future climate for fundraising.  Duh!  According to the Center on Philanthropy, their Philanthropic Giving Index is down!  Surprise?  What gave it away?  The tanking economy?  The repeated references in every form of media imaginable to people taking staycations because they couldn’t afford a vacation?  The collapsing of the American auto industry? The mortgage crisis? The rise in inflation and the increase in unemployment? 

But here is the surprise:  according to its research, 83% of fundraisers today are saying the economy is having an adverse effect on their fundraising success, compared to only 48% who said that six months ago.  Now, here is the story.  What were the other 35% of those fundraisers thinking? What indicators were they following, what news were they reading/watching, what were they thinking?  And, most importantly, what messages weren’t they delivering to their more than likely already complacent board?

And what, pray tell, are the steps and measures that organizations are taking now for the next time—and there will be a next time, as there always is where fundraising is concerned—the Center for Philanthropy affirms the obvious and tells us that the world of fundraising is pretty bleak?

According to a new report from the Government Accountability Office, two-thirds of U.S. corporations paid no federal taxes between 1998 and 2005. And a whopping 68% of foreign companies doing business in the United States also paid no federal taxes during that same period. All while doing “trillions of dollars in sales.”

I must say, I am inclined to agree with Senator Byron Dorgan (D.,N.Dakota), who observed in response to the report, “It’s shameful that so many corporations make big profits and pay nothing to support our country.”

This failure to pay income taxes by for-profits making serious dollars is all the more offensive when juxtaposed to the current trend of more and more jurisdictions, from local governments to the feds, questioning the tax-exempt (both in property and income taxes) status of nonprofits. These are organizations that Senator Dorgan should like, as by the nature of their very work they are doing much to support our country.

According to a recent The New York Times article (5/26/08), apparently nonprofits look more and more like businesses and people are getting confused as to what really constitutes a charity. (Has anyone bothered to read the IRS Code? It makes it pretty clear.) Part of the confusion, according to the Times article and conversations with many others, seems to stem from the fact that nonprofits increasingly earn income, not relying solely on raised income.

And the problem with that? To be honest, earned income—and social enterprise in particular—is extremely hot right now, being seen by many as the silver bullet for nonprofit sustainability. After all, isn’t that how for-profit businesses survive—charging for their products and services? Further confounding people’s thinking on what makes a nonprofit a nonprofit is that they see some of the same services being offered by both for-profit and non-profit organizations. A private health club and a YWCA or YMCA. The public zoo and a private safari land or sea world. A for-profit addiction treatment center and Gaudenzia. Each might appear to engage in the same activity, but each has different goals, measures of success, funding options, etc.

Should governments decide to tax nonprofits on their property and/or income—how should those taxes be paid? I can just see it now: an annual appeal to pay the tax bill! How many takers will that get? Earning more money to pay the tax bill will only increase the income tax bill, so how good an option is that?

Tax exemption for nonprofits, as it was originally designed, was offered as a quid pro quo for providing services that lighten the government’s load. The vast, vast majority of nonprofits, regardless of whether they are charging fees or raising dollars, are still doing that. Regardless of whether there is a for-profit look-alike down the street, nonprofits are still doing that. They are upholding their end of the bargain.

The ones who aren’t are the for-profit companies eluding their tax responsibilities, which is their quid pro quo for not relieving the government of anything. It would appear, though, that government wishes to relieve for-profit companies while reneging on its deal with nonprofits. Let’s dig into the right pockets.

Dear Executive Directors:

I am writing to you from summer camp and want to share with you the joys and benefits of vacations. Something all too many of you feel that you can’t possibly take. Why is that? There really is nothing better for the mind and the soul to take breaks, remove yourself from the hustle and bustle of everyday life, allow the gray matter to breathe, the nerves to be released from the tight ball in which they normally find themselves, the blood pressure to drop, and the list goes on. So, why don’t you do it?

• You aren’t indispensable. Honestly! And you shouldn’t want to be. You should want the organization that you theoretically love to be able to survive and flourish without you. It is a greater testimony to your leadership and management that the organization functions well in your absence.
• The board isn’t going to decide that you are dispensable. Trust me! The board doesn’t want your job. But maybe, just maybe, the board will come to realize that it does need to know a bit more about the organization it stewards, just in case you decide not to come back. (That is a joke—sort of—the part about not coming back.)
• Heads of organizations who say they went on vacation and never thought about work are lying. Truly. In fact, they just may do some of their best thinking about the organization while sitting on the beach, strolling through a foreign city, hiking in the mountains. I doubt that many of us go into our daily showers planning on thinking about work. But how often do people say something to the effect of, “When I was in the shower this morning, I had this idea.” When we let our minds go free we often have the best insights.
• Even the strictest personal coach doesn’t keep a person on the treadmill the whole time. You get off, do different activities, use different groups of muscles, etc. You might return to the treadmill at other times in the workout, but you are not on it constantly. You need to work the other muscles and tone the other body parts of the mind and soul.
• And yes, you can afford it, even in this economy. Summer camp is where ever and however you want it to be. You can get there via train, plane, car, or sitting in your favorite reading spot in your home with the pile of books you’ve been promising yourself to read. It can be walks in your neighborhood or any other locale. It can be going to La Scala or listening to your ipod. You get my point.

I am changing my tune! I’ve been wrong all these decades when I’ve been saying that in deciding about board service—and in recruiting individuals for board service—the most important thing is real passion for the mission of the organization. A board member has to truly believe in the goals and means of the organization.

Wrong! If I hear one more executive director say to me, in speaking about her/his board, “They are all such nice people, and they all mean well,” I think I am going to scream. Because I know the next thing I am going to hear, or the litany that I’ve just heard, is that these really nice, well-intentioned people who care deeply about the mission apparently don’t really mean that well or care that much that they will actually do real work! So, what good are they?

So, here is the correct message: forget about passion for the mission, worry only about the ability of prospective candidates to understand the full complement of their responsibilities (which, for the uninitiated, is more than simply attending board meetings once a month or every other month) and deliver. Make sure they have the time, the energy, the mindset to implement that full complement of duties.

I was at a meeting last night of the strategic planning committee of an organization with which I am working, a committee of board members that has worked tirelessly before, during and after the planning retreat to move the plan and their fellow board members forward. The discussion turned to the monitoring process and how the committee was going to ensure that the board, unlike in the past, really followed through with the plan. And a board member said, so matter-of-factly that there wasn’t any other possibility: “We are all professionals in our careers. We know what it means to be a professional. Naturally, we will do the same as board members.” I confess that I laughed out loud. (And those of you who know me know I have a rather deep and heartfelt laugh. Not a laugh that can be missed or overlooked.) Once recovered, I simply said, “On, would that were the case.”

So, individuals seeking board service and boards seeking board members: look for that professional who understands the need to be professional in all that s/he does, and not just that for which s/he is accepting money. Being a board member is a job, albeit a volunteer job.

And as for loving the mission: I give you a line from Fiddler on the Roof: “After 25 years, why talk about love right now?”