Nonprofit University Blog

I’ve been thinking a lot about vulnerability—the vulnerability of individuals, of organizations, of communities, of societies.  No surprise, I guess, given the current state of the economy.

And then this morning, two staff of The Nonprofit Center walked into the office to find that we had been burglarized during the night.  Tangible losses:  two laptops and a safe containing $120.  That could easily have been a lot worse.  Intangible loss:  immeasurable. Our feeling of physical safety has been compromised, and our vulnerability revealed.  Whereas in the past, members of our mostly female staff have felt comfortable being the lone staffer early in the morning or late in the evening, not so anymore.  Whereas before, the first person to arrive at the office would walk in confident and unafraid, not so anymore.  And it will take some time for each of us to regain that former state of equilibrium. 

Vulnerable, vincible, assailable.  These are not words that most of us would choose to describe ourselves or our position in life.  And yet truth be told, we would be fools to consider ourselves anything less.  Life’s small events—being burglarized—and life’s big events—the current economic situation—demonstrate this on a regular basis.  We should not get too cocky, see ourselves as too entitled, believe that we are beyond or above the fray.  We are not. 

But all is not lost.  Resilience, not invulnerability, is truly the opposite of vulnerability.  Humans are, for the most part, very, very resilient.  And this is where nonprofits come in.   For they, in so many ways, help all of us deal with the reality and perception of our own vulnerability.   They heal us—our bodies, our minds, our bad habits, our souls.  They allow our communities —the humans, the infrastructures, the environment, the relationships—to grapple, struggle and, eventually, flourish.  When vulnerability looms large, nonprofits are there to give us back our hope.

We need nonprofits now, more than ever.

As much as it pains me to admit this, there have been times in my life when I found it just didn’t pay to read a newspaper (add, in today’s world, use any means to keep abreast of the world affairs).  Today might just have to be the start of one of those periods. 

Did something major happen today?  No, I just started doing a little catch-up reading at lunch, and my reading started and ended with the March 12 edition of The Chronicle of Philanthropy.  Now, don’t get me wrong, there is no earth-shattering report or conclusion that The Chronicle revealed.  It is just that too much of the issue revealed a scary reality:  those outside of the sector have no understanding to guide their thinking and decision making when it comes to “helping” the nonprofit sector.

Here’s what I saw.  Many, many column inches on Obama’s proposal to limit federal tax breaks that “wealthy” people get for their donations to charities.  This, somehow, would help pay for what I agree is much needed health care reform.  But last time I checked, there still were many nonprofit health care systems operating in the United States, many of which receive very, very lovely donations from the wealthy.  Or at least they used to.  There was another article that bore the headline “Economists Try to Calculate the Impact of Tax Changes on Charitable Giving.”  Excuse me!  Shouldn’t we have done those calculations—and with certainty, not merely trying –before that proposal was released and caused the panic with which many in the nonprofit sector greeted it? 

But wait:  The Chronicle shared the results of the recent study by Bank of America and the Center for Philanthropy at Indiana University.  According to this study, 47 percent  of those surveyed ( 700 households with annual income of at least $200,000 or liquid assets of $1 million or more) said they would give less if they could not get a  tax deduction for their gift, but 37 percent  of the respondents said they’d give more if the estate tax were eliminated.  And, just so we are clear, this data was collected in July and August of 2008, and respondents were comparing donations made in 2007.  So, find the good and bad news in these data items and those in the rest of the study.

The topics mentioned above got inches upon inches, pages and pages of type.  But the following story got not even a full page of its own.  Surrogate’s Court in New York has decided that the trustees of the Leona M. and Harry B. Helmsley Charitable Trust are not bound by her wishes to spend the foundation’s money on the care and feeding of animals.  The trustees, according to the ruling, have “sole discretion” to give money to whatever charities they wish.  Oh, yea!  Now donors can earmark their gifts only to have their intentions ignored if—well, if what?  The establishment papers aren’t tight enough? Someone doesn’t like how the organization is currently using the dollars? Someone other than the designated nonprofit(s) wants a share of the billions for your charity? So many other possibilities?  Why would any donor want to risk having his/her gift go for purposes other that which was prescribed?

While seemingly unrelated, these stories, these realities, are very much related.  They are about the future of the nonprofit sector.  They are about how our society values—or doesn’t value—the contributions the nonprofit sector makes to society.  They are about how and on whose backs we are going to get out of the mess that the greedy and the wealthy got us into.

So, the question gets asked of some presidential economic advisor in some NPR interview (and, I’m sure, is repeated in many other interview settings), is $1 trillion going to take care of getting rid of all of the “toxic assets” banks are currently holding?  The response, in summary:  well, minimally, it should go a long a way. 

We are talking about sums of money that the vast, vast majority of nonprofits, let alone their clients, can’t even fathom.  It is a sum of money that suggests that whatever leftover monies the government has, it should be putting to really good use – use that will maximize the impact of the few dollars that remain.  Should some of those dollars be going to monitor the exorbitant salaries of nonprofit executives?  Well, it depends on how much bang for your buck you wish to receive.

I’ve yet to see a survey that shows how many nonprofit executive directors receive “exorbitant” salaries, but I can tell you based on decades of experience that they are absolutely the exception rather than the rule; they make up a very small minority.  Unfortunately,however,  they receive the bulk of the media and, therefore, the public’s attention.  The Wall Street Journal recently ran an article under the headline “Pay at Nonprofits Gets a Closer Look”  The article correctly starts by pointing out that nonprofit executive salary was being scrutinized even before AIG’s executives took over the headlines, but that in the post AIG bonus days, nonprofits should expect even greater scrutiny.

Why?  To what end?  Is the money in excess of “what is reasonable” going to be recovered?  No.  Will board practices at those organizations where executives were hired with excessive salaries change their ways?  Only if the board truly believes that it made a mistake in determining the salary.  And just as one example, the board of the beleaguered head of Philadelphia’s public radio station – beleaguered only because compensation is viewed by some as excessive and thus gets scrutinized in some media fairly regularly – believes that the compensation package is fair, just and – where have we heard this before – necessary, initially to woe, and now to retain the talent.  They are a strong candidate for taking on the IRS’ offer to rebut the presumption of reasonableness.  And they are far from alone.

And just how many nonprofit organizations will the IRS find with the perks (a word that so rarely surfaces in discussing nonprofit compensation) that the Journal article calls out:  first-class air travel, expense accounts, housing allowances and “the use of bodyguards, chauffeurs and lawyers.”  It is true that many college and university presidents get free housing.  A quick web search to find out the total number of colleges and universities in the United States produced a non-definitive answer, but suffice it to say the number appears to be somewhere between 4,000-4,100.  Even if 100 percent  of 4,100 institutions provided free housing to their presidents – which is so, so far from the reality – we are talking less than .01 percent  of the  1.4 million nonprofits in the United States.  I’ve yet to meet an executive director who has bodyguards, let alone free ones, but I’m willing to admit this is a possibility.  Then there are those executive directors who get to live for free in the half-way house or on the grounds of the rehabilitation hospital, etc. 

I made the mistake of reading the comments that attached to the on-line version of the Journal article.    The ignorance that some of the responses reveal is par for the course.  One suggested that officers of nonprofits are perpetrating a “national scam” because they benefit from “immunity from taxes.”  Excuse me, but my pay check does not reveal such immunity.  This same author suggests that employees of nonprofits who wish to earn a decent living do not understand what “non-profit”—his quotes, not mine– means.  Another author says, categorically, that most nonprofits spend only 10-20 percent of dollars raised on programs and the rest goes to salaries and the cost of fundraising.  Ah, the name of our sector and the ignorance of the average American about nonprofits.

Forget going after the 1 percent  of nonprofits who don’t play by the same ethical code as the rest of us; let’s use the dollars that would go to checking out executive salaries and go after the 95 percent of Americans who are so ignorant about nonprofits that they do not know how to judge the good from the bad.  For the reality is that the vast, vast majority of  nonprofits in this country are doing just what they are supposed to be doing—working hard , and ethically, on behalf of the public good.