keeping a close eye...

Does Generosity Have Its Limits?

2008-07-22T15:52:00.002-04:00

By Gary Snyder

This is an article that may have consequences…bad ones. In many instances the donation that results from that telephone call that you receive from a professional fundraiser is not going to the organization to which you intended.

It seems that for-profit fundraisers can take your money with impunity. Its all legal and the Supreme Court has limited lawmakers from interfering by upholding the free-speech rights of fundraisers and charities.

Recently, public confidence has been stunned by news that for-profit fundraisers used by police ad firefighters have been little more that shells that enriched themselves and executives.

The little confidence that is left will be further shaken by an investigative story in the Los Angeles Times that found that only 54 cents of every dollar raised ended up in the charities coffers. Further, of the 5800 campaigns studied, commercial fundraisers, in many instances, do not even file the required reports. Why not? The law is not aggressively enforced because of limited staffing by California’s attorney general.

As one would expect, the fundraising business is growing. More than 300 fundraisers are registered in California alone.

Among The Times findings:

• “More than 100 charities raised $1 million or more from commercial appeals but netted less than 25 cents per dollar. Fundraisers got the rest.
• In 430 campaigns, charities got nothing: All $44 million donated went to fundraisers. In 337 of those cases, charities actually lost money, paying fees to fundraisers that exceeded the amount raised.
• In hundreds of other campaigns, charities apparently entered into contracts that limited their share of donations to less than 20%, no matter how successful the campaign.

• Groups with strong emotional or patriotic appeal---those supporting animals, children, veterans and public safety workers---often fared worse. Missing children charities received less than 15% of more than $28 million raised on their behalf.”

The questionable behavior of fundraisers is not limited to the nonprofit world. Dr. Ada Fisher doesn't have much good to say about BMW Direct, the Washington political firm that raised money on behalf of her 2006 bid for a North Carolina House seat. BMW Direct raised more than $400,000 for Fisher during the last election cycle, but only about $30,000 made it back to her to use in her campaign. That same firm raised about $731,000 for Massachusetts Republican Charles Morse. The only problem? Morse wasn't even on the ballot, and his campaign only saw 4 percent of that haul, the Boston Globe recently reported.

One charity fundraising campaign reflects the magnitude of the problem. Over a three-year period, the American Breast Cancer Foundation raised $5.8 million from its donors. It netted only $700,000. In 2006, just 2.5% of its budget went to research and 10.5% to mammograms or other services unrelated to fundraising. In all of its promotional material it listed research as a priority. An interesting twist: the charity founder’s son and two of his friends were paid an average of almost $3 million annually for the fundraising. That’s not illegal but violates conflict of interest policies used by many large agencies. The agency was rated poorly by two watchdog agencies.

With the pervasiveness of these fundraising firms and with all the big charity money on the charitable table, one would hope that board members and executives would stop giving hard-earned dollars to these shady scoundrels and stop compromising the charity’s hard-won reputations.

Gary Snyder is managing partner of Nonprofit Imperative and author of Nonprofits: On the Brink and Nonprofit Imperative. He can be reached at http://gary.r.snyder@gmail.com. His website is: www.garyrsnyder.com.

ACORN in Hot Waters

2008-07-21T10:54:00.004-04:00

By Aaron Dorfman

A couple of weeks ago, the New York Times revealed in a piece by Stephanie Strom that the Association of Community Organizations for Reform Now (ACORN) kept secret for eight years the embezzlement of nearly $1 million .The embezzler was Dale Rathke, the brother of ACORN founder Wade Rathke.

As an outrageous breach of the public’s trust, ACORN’s case is a textbook example of horrendously weak governance combined with extremely poor judgment. While the National Committee for Responsive Philanthropy (NCRP) serves primarily as a watchdog of foundations and other grantmaking institutions (not of all nonprofits), this case is certainly worthy of comment due to the scope of the issues involved.

In the interest of full disclosure, I should point out that ACORN is a member of NCRP, that I worked for the organization from 1992 to 1997, that a senior ACORN executive served previously on NCRP’s Board of Directors, and that current NCRP board members are executives with foundations that fund extensively ACORN and its affiliates. Additionally, NCRP is currently working on new research that documents the positive impact of policy advocacy, community organizing, and civic engagement, and ACORN’s work will be included in that research.

Despite these connections between ACORN and NCRP, it is important to stress that no organization should be arrogantly allowed to take the public’s trust for granted.

ACORN’s first mistake in weak governance and poor judgment came in allowing the brother of the organization’s founder to be in charge of finances for so many years. What were they thinking? The board should never have allowed that kind of arrangement to go on for so long. Nepotism never serves nonprofits well. In spite of the fact that dozens of staff members regularly objected to the arrangement, Wade Rathke insisted on keeping his brother running the finances for decades and the board never forced him to do otherwise.

The second mistake, related to the first, was the board’s consistent failure to exercise its fiduciary responsibility and engage in sufficiently rigorous oversight. From my understanding, the board did not have an audit committee and the auditors were answering to Wade Rathke, not to the organization’s board. This is absolutely inexcusable for a nonprofit whose annual budget, when combined with its affiliate organizations, was more than $40 million in 2000.

Once the theft was uncovered, there were several acts that were clearly unethical and just plain boneheaded. First, the auditors followed Wade’s instruction to record the theft as a “loan,” which may make them criminally negligent in this matter. The staff who allowed Wade to keep the matter a secret bears a significant amount of blame too. These are people who show a tremendous amount of backbone everyday in their campaigns against injustice but who lacked spinal fortitude at precisely the moment when it was needed the most to protect the long-term interests of their organization and its constituency. As difficult as it would have been to stand up to the organization’s founder, they should have insisted on full transparency and accountability eight years ago.

While Wade’s argument for protecting the organization from those that would like to harm it has some merit, no organization should think it can operate outside of the basic principles of integrity and transparency. Every time a nonprofit is involved in this kind of wrongdoing, it hurts the entire sector; we cannot take the public’s trust for granted.

ACORN’s funders have made it clear they are willing to continue supporting the organization if ACORN overhauls its management and governance structures. In fact, some funders were pushing ACORN to address these internal issues long before news of the embezzlement leaked. While a foundation should not be in the business of telling nonprofits how to run their organization, it’s proper and necessary for funders to push the issue when basic accountability and governance are lacking.

ACORN does some fantastic work locally and nationally. [For a full description of that work, along with some insightful analysis of the current crisis, please read Peter Dreier’s recent piece in the Huffington Post.] But the fact that they do some great work doesn’t excuse how they handled this situation. All nonprofits need to function with the highest standards of integrity. To their credit, ACORN’s board acted quickly and decisively in removing both Rathkes from their posts once the story became known to them. Additionally, Bertha Lewis has now been named interim chief organizer and seems absolutely dedicated to fixing the underlying governance issues, not just in glossing over the public relations nightmare it has caused.

Out of this crisis comes an opportunity for ACORN to improve its operations. If they get it right, I expect that the organization will thrive in the coming years, that donors will maintain or increase their support of ACORN and its affiliates, and that the public will benefit as a result. If they don’t take this opportunity to improve their operations, I expect that their fundraising will suffer. Other nonprofits should use this case to examine their own commitment to accountability and transparency. Proper governance goes a long way to preventing abuses in our sector.

Aaron Dorfman is the executive director of the National Committee for Responsive Philanthropy (NCRP).

Looking Beyond United Way

2008-07-15T14:29:00.003-04:00

By Lisa Ranghelli

In late June Charlotte’s WCNC-TV and The Charlotte Observer broke a story that the board of directors of United Way of Central Carolinas (UWCC) approved a compensation package for its president that topped $1.2 million in fiscal year 2007. This represented a jump of more than $800,000 to the executive’s employee pension plan, reportedly to retroactively provide increases promised since 2001.

NCRP’s executive director, Aaron Dorfman, commented in The Charlotte Observer, “Nonprofit executives deserve fair compensation packages, but this is outrageous. Why do people believe that we can retain the trust of the public when we pay people at outrageous levels like this?”

The Charlotte news outlets subsequently reported that many local United Way donors were outraged and pledged to stop supporting the organization.

In a message to NCRP, Charlotte resident Steve Hofstatter urged continued attention to this issue. “Charlotte is a caring community where conformance and group think is overwhelming, particularly when it comes to workplace giving and accepting the foibles of a routinely reckless United Way agency,” he wrote. “I wish there was something more I could do beyond writing letters to the editor and consoling my many corporate-employed friends who are coerced to pledge more and more by their overzealous employers.”

Whether or not the compensation package given to the UWCC president was justified, Steve raises an important point—many people who give through the workplace have no alternative to the United Way.

Luckily, this is not always the case. A Columbus Dispatch article by Rita Price, which was published only a few days after the UWCC scandal broke the news, reported on the alternative workplace giving options available in Central Ohio. A handful of federations in Central Ohio are competing with the United Way for charitable donations and are experiencing growth, while United Way donations are down. These include Earth Share and Community Shares. Earth Share donations go to environmental causes, and Community Shares typically distributes funds to organizing, advocacy, and activist groups. These regional federations help increase resources for charities that are often denied the opportunity to become a United Way partner agency or are underrepresented in United Way because they are not traditional social service agencies.

As NCRP recounted in its 2007 report, Charitable Fundraising in the Workplace:

“Many of the early workplace funds were set up in a time of movement building
when the groups that were going to benefit from the funds raised were not as
easily marketable as most mainstream social service organizations. These pioneer
funds were created to raise money for specific communities of color, for civil
and human rights work, for environmental causes, for women’s rights and
pro-choice organizations, for gay/lesbian/bisexual/transgender
populations, and for groups promoting social justice, community organizing
or advocacy.”

These types of organizations continue to suffer from underfunding. Despite the growth of alternative workplace giving options, these funds raise less than 10% of the total raised by United Way affiliates. And foundation support for social justice causes accounts for only 11% of all grants.

As the Charlotte story suggests, having a monopoly on workplace charitable giving may be bad for governance, but it is also bad for society – locking out many important constituencies and causes from needed resources.

So if you’re looking to support nonprofits through payroll contributions but would like an alternative to United Way, you might want to visit Our Giving Community, which lists various alternative workplace giving funds. Encourage your employer to consider partnering with OGC and ask your friends to do the same.

Lisa Ranghelli is a senior research associate at the National Committee for Responsive Philanthropy (NCRP).

Nonprofit Executive Compensation – Who Decides What is Fair and How?

2008-07-03T12:35:00.003-04:00

By Niki Jagpal

The issue of appropriate levels of compensation for nonprofit executives and CEOs is making headlines once again after investigative reports by WCNC-TV and The Charlotte Observer. The United Way of Central Carolinas’ (UWCC) president and CEO Gloria Pace King will receive more than $1.2 million, following the addition of $822,507 to her retirement plan. As the two media outlets have noted, the increase in Pace King’s benefits package places her level of compensation above that of many other United Way executives in different parts of the country.

UWCC board chair Graham Denton defended Ms. Pace King’s compensation, saying she deserved the package given to her.

The Chronicle of Philanthropy’s 2007 survey of executive compensation, however, shows that among the various chapters of the United Way, Pace King’s compensation relative to her organization’s fundraising is significantly higher than that of her counterparts in similar-sized United Way chapters. The Charlotte Observer provides the following examples of other United Way CEO salaries compared to their annual fundraising in FY 2007:

UWCC raised a record $44 million and Pace King’s salary was $365,000 (excluding benefits).
In metropolitan Atlanta, the United Way chapter raised nearly $79 million; their outgoing CEO was paid a lump sum of nearly $1.6 million when he retired, on top of a salary of $352,611.[1]
The United Way of Greater St. Louis raised close to $69 million; the CEO was paid $254,487.

The Observer also highlights a 2002 study it conducted in which the newspaper’s investigations revealed that Pace King was the fifth-highest paid executive of the 50 chapters they analyzed. Her current compensation package places her third among the nation’s 42 United Way chapters as noted by WCNC. These figures raise many questions, including to what extent should the level of fundraising be tied to CEO compensation? And if Denton defends Pace King’s salary on the basis of her fundraising, why is there no consistency in the pay rates of other UW CEOs who out-fundraised her?

So, what are the appropriate ratios to determine a ‘fair’ level of compensation for nonprofit executives? NCRP received a note defending UWCC, highlighting the small percentage of the UWCC budget that comprises Pace King’s compensation. Based on the organization’s 2006 990 form, according to the note, Pace King’s salary was 1.25 percent of her organization’s total operating budget. The writer compared this figure to NCRP’s 2006 990, which showed its executive director’s salary at 15.47 percent.

S/he raised a valid point for consideration in the discussion of what constitutes an appropriate level of compensation and what factors are considered to determine it. For example, while a CEO’s salary may only account for a fraction of an organization’s total budget, is there an absolute figure after which this statistic becomes irrelevant? What of the nonprofit operating with a very small budget that employs only one person who has the title of ‘CEO’? Surely this person’s compensation would comprise a significant proportion of her or his budget, perhaps even 50 percent, give the “multiple hats” the CEO wears in this scenario. In short, is the CEO’s salary as a percentage of the overall budget a valid measure to determine appropriate levels of compensation?

The author of the comment also pointed out that NCRP’s overhead costs in 2006 (17.1 percent) were higher than UWCC’s (13.6 percent). The rate and what constitutes overhead or administrative costs[2] that keep an organization functional vary from organization to organization. It can cover not just staff salaries and benefits but also other costs that enable an organization to work and thrive, such as rent, technology infrastructure, staff training and unplanned program expenses. Moreover, the transaction costs of conducting business in different parts of the country make the local context far too important to ignore. Keeping a small nonprofit in the greater DC metropolitan area functional, paying employees competitive wages based on the local market and cost of living will affect a nonprofit’s overhead.

Finally, the comparison of NCRP with the UWCC assumes that a nonprofit that depends largely on foundation grants should have the same metrics for reasonable compensation as an organization that receives majority of its income from individual donors through workplace giving programs. If this is the case, then what about private foundations, which receive minimal, if any, contributions from individuals?

So how do we select the criteria that ought to determine appropriate levels of executive compensation? Is it realistic to expect foundations to account for local and regional variability in the costs of living when determining how much money to allocate for compensation? Is it fair for a nonprofit executive of an organization funded largely by individual as opposed to institutional grantmakers to disclose how much of the public’s contribution will go toward compensation versus the actual business of the nonprofit? The answers to all the above questions will certainly vary by organization, mission, strategy and personal values. If nothing else, the UWCC case highlights the need to discuss these difficult issues to ensure philanthropy serves the public good and not private interests.

[1] The salary figure was taken from the Chronicle of Philanthropy's 2007 survey.
[2] NCRP recognizes the importance of providing nonprofits with adequate general operating dollars to be truly effective in achieving their organizational missions. It has been urging foundations to increase funding general operations and provide more funding for administrative overhead costs in programmatic grants.

Niki Jagpal is research director at the National Committee for Responsive Philanthropy (NCRP).

Finally, Some Leadership

2008-06-25T15:26:00.002-04:00

by Gary Snyder

Kudos to The Robert Wood Johnson Foundation joining the Center for Creative Leadership by launched a national program to train the next generation of nonprofit leaders. Its focus is to boost the skills and capabilities of early-to mid-level professionals working in health and health-related organizations in nine U.S. communities.

Health care is one of the largest segments in the nonprofit world. Based on Nonprofit Imperative, my monthly e-newsletter, it is certainly one sector that needs attention. As a former hospital administrator, I can attest that there are substantial weaknesses in the staffing skills, but more importantly, its governance. Healthcare institutions are very complex organizations. Reimbursement and other financial matters are very unique and require a skill set on the part of staff and board that is atypical to any other nonprofit.

Because of the heavy involvement of government in regulating the institutions, another set of unique skills is needed. Depending upon the size of the institution and the staffing complement, financial and regulatory issues could easily consume an inordinate amount staff.

Unknown to most of the general public, healthcare has a small margin in which to work. With recent changes, the revenues over expenses are increasingly narrowing. This presents problems relating to acquiring capital and maintaining cutting edge technology. It’s a tough challenge!

This new program is, hopefully, a thoughtful response to a critical need within the overall charitable world. A lack of leadership in the nonprofit sector has resulted in a growing number of abuses and poor practices.

A study reported in the New York Times showed that an estimated cost of fraud was $40 billion or 13 percent of the $300 billion donated. Other studies have similar results.

With these egregious offenders getting growing press coverage, the public’s confidence in our charitable organizations is diminishing. Harris Interactive Polls, for 2005 and 2006, have indicated that barely one-tenth of those surveyed believe that charities do a very good job spending money wisely.

There is a growing perception that all nonprofits lack accountability. Without trust, the backbone of our charitable organizations cannot be preserved, therefore compromising contributions.

In most instances, healthcare organizations have minimal standards to which they must adhere. If other nonprofits do not subscribe to a set of principles and practices that are generally acceptable to the public, the Internal Revenue Service, Congress, and state attorneys’ general will force adherence to a new regulatory code.

While I applaud the RWJ Foundation/Center for Creative Leaderships plans, the linchpin for success is going to be the content of the program and the degree to which it will change current practice.

I wish them well.

Gary Snyder is the author of Nonprofits: On the Brink (iUniverse, February, 2006) and articles in numerous publications. He is also a board member of NCRP. His email: gary.r.snyder@gmail.com; website: www.garyrsnyder.com; phone: 248.324.3700.

Is the Close Relationship Between the Charitable Sector and the Government Healthy?

2008-06-17T15:36:00.002-04:00

by Gary Snyder

In a rare pleading, the American Red Cross has asked the U.S. Congress for $7 million to fulfill its obligations to main staff to coordinate state and federal disaster resources. While I am not sure of the merits of such a request, I find it chilling that the nonprofit sector is getting tight…. maybe too tight, with the government as its banker.

This request is made in the face of a similar request from the Smithsonian Institution for a $34 million bailout. Both have similar issues.

Both are well known for having poor governance. This has lead to on-going scandals, turnover in leadership and a total lack of transparency. The Red Cross has had 10 CEOs in just 12 years…several of which have left with significant golden parachutes. At the Smithsonian, nearly half dozen secretaries or deputy secretaries (CEOs of museums) have terminated employment in just the last year.

Both groups are noted for poor fiscal management with the American Red Cross admitting recently to a $200 million deficit. They are laying off (35%) staff and reevaluating office space. The Smithsonian, according to the Inspector General, failed to report expenditures and underreported millions of dollars income to favorable employees. For example, the director spent $1.15 million of donor and government money on housekeeping services. Despite paying excessive benefits and salaries, they are still in need of $2.5 billion to fix its facilities.

Both have been under the scrutiny of congress with many investigations. Because of the close relationship with the federal government (the Smithsonian gets 70% of it budget from the federal government and the Red Cross was stripped of its national first responder status and is a congressionally chartered organization), I wonder if the Congress has the wherewithal to punish these two stalwart organizations by not acquiescing to their funding requests.

Seventy percent of the charitable world is made up of small, struggling organizations. Is it good practice to indulge the two formidable organizations when they have evidenced decades of misdeeds and when the others are unable to tap similar resources to meet their important missions?

Gary Snyder is the author of Nonprofits: On the Brink (iUniverse, February, 2006) and articles in numerous publications. He is also a member of NCRP's board of directors. His email: gary.r.snyder@gmail.com; website: www.garyrsnyder.com; phone: 248.324.3700.

Abramoff Back in the Limelight

2008-06-13T11:34:00.005-04:00

by Yna Moore

Links between Jack Abramoff and the White House makes the news once again.

According to an Associated Press story by Peter Yost , a new report compiled by the House Oversight and Government Reform Committee, chaird by Rep. Henry A. Waxman (D-Calif.), noted that:

"The White House conducted an inadequate and incomplete internal review of its
involvement with convicted influence peddler Jack Abramoff and his lobbying
team. ... that President Bush had personal contact with Abramoff, that White
House officials solicited Abramoff's recommendations on policy matters and that
Abramoff's lobbying team offered White House officials expensive tickets and
meals, at least some of which were accepted."

Abramoff is serving time after pleading guilty to several felony counts in two separate federal court cases related to corruption of public officials and defrauding Native America tribes.

In many instances, Abramoff inappropriately used his Capital Athletic Foundation to channel bribe money into the hands of politicians like Rep. Bob Ney. Other politicians who allegedly had inappropriate ties with Abramoff include former Texas congressman Tom DeLay (here and here)and Rep. John Doolittle (R-Calif.)

The Abramoff scandal is a classic example of foundations being abused for personal and political gain. Since then, there have been efforts at better government oversight of charities by the Senate Finance Committee, the House Oversight and Government Reform Committee, and the IRS but more needs to be done. For a fully accountable charitable sector, we'll need to provide the IRS and our state attorneys general with adequate budgets and staffing to carry out their functions of overseeing charitable organizations. We will also need to close regulatory loopholes, and encourage substantive self-regulation by foundations and nonprofit institutions such as setting up and implementing conflict of interest and disclosure policies to prevent insider dealing. Click here for more on accountability in the philanthropic sector.

Kristina ("Yna") Moore is communications director at the National Committee for Responsive Philanthropy.

Reports on ROI for Supporting Community Organizing; Katrina's Impact on Lower-income and African-American Families

2008-06-12T14:50:00.006-04:00

by NCRP

Two new reports highlight important work undertaken by research director Niki Jagpal and senior research associate Lisa Ranghelli prior to joining NCRP's research team. The methods and results of these research efforts will inform NCRP's own work to promote philanthropy at its best.

The Solidago Fund recently released a report quantifying the community benefits achieved by its grantees and the return on investment of its funding for community organizing. Lisa Ranghelli worked with Jeff Rosen and other Solidago staff to develop the methodology and gather and analyze data for the report. She had previously worked with the Needmor fund to do a similar analysis of its community organizing grantmaking (see below). In calculating community benefits, the Solidago methodology allowed for differentiation between shared and full credit for grantee accomplishments. It also determined the foundation’s contribution to these accomplishments by calculating each grant as a proportion of the group’s budget. The report concluded that collaborative strategies yielded the greatest impact and found a return on investment for Solidago of $1 to $59. [Link]

In 2003, Lisa worked with the Needmor Fund, a small family foundation focused on social justice, to collect grantee data on organizational development. Lisa’s work found that the 18 surveyed grantees had collectively grown their membership by more than 30% and their leadership by 53% over four years. The most striking thing she found was that the aggregate dollar amount of their accomplishments during the four year time horizon was more than $1.37 billion. This meant that Needmor’s investment of $2,688,500 effectively generated a return of $1 to $512. [Link]

These two reports, which were preceded by independent research from the Jewish Funds for Justice, provide some of the framework for NCRP’s impact of advocacy and organizing work. For foundations seeking to maximize impact, NCRP wants to show the social and monetary value of investing in community organizing as a way to achieve lasting social change.

Meanwhile, research director Niki Jagpal did extensive post-Katrina research with Jim Carr, former Senior Vice President for Financial Innovation, Planning, and Research for the Fannie Mae Foundation who currently serves as Chief Operating Officer at the National Community Reinvestment Coalition. Her work focused on the disparate impact on lower-income and African American communities in New Orleans both immediately after the storm and following the one-year anniversary. The Joint Center for Political and Economic Studies recently announced the publication of a series of reports calling for a new model of disaster response, one that considers “historic patterns of discrimination and inequality.” Niki’s work is featured in one of the reports, “In the Wake of Katrina: The Continuing Saga of Housing and Rebuilding in New Orleans.” [Link]

Niki’s previous work addressing the distinct impact of Katrina and the subsequent recovery efforts on traditionally marginalized communities sets the backdrop for NCRP’s work on developing criteria for Philanthropy at its Best (PAIB). Promoting philanthropy that explicitly identifies and seeks to remedy structural barriers to equality are integral components of PAIB

It Takes a Collaborative Approach With Business And Neighborhood Leaders to Address Poverty in the South

2008-05-23T13:52:00.004-04:00

by Suzanne Donovan

Editor's Note: Numerous grassroots organizations are at the forefront of anti-poverty initiatives across the country. Many of these organizations are dependent on private and public support, including foundation grants. An example of a successful and innovative anti-poverty organization is Step Up Savannah. We asked Step Up’s Suzanne Donovan to share their unique approach to fighting poverty in the city of Savannah. Step Up is a member of NCRP.

Savannah is known for its for beauty and quintessential Southern charm. It’s also a city proud of its history that has enjoyed significant economic development and improvements in the last few decades. But peel back a layer and you find there’s not been a corresponding reduction in the city’s poverty level. In fact, a persistent, high rate of poverty has plagued Savannah for generations.

Four years ago, the City of Savannah convened an Anti-poverty Task Force inviting participants from various sectors of the city—business, government, social service agencies, neighborhood organizations and others. The group reviewed research that not only described the depth of poverty, concentrated in five census tracts, but also studies that indicated a link between poverty and economic growth. This group called for the creation of a new initiative. They called it Step Up Savannah’s Poverty Reduction Initiative.

Step Up Savannah is now a collaboration among the City of Savannah, Chatham County, the Savannah Area Chamber of Commerce, Georgia Power, the United Way of the Coastal Empire and some 70+ businesses, agencies and organizations throughout the area.

What distinguishes Step Up is its acknowledgement that reducing poverty will take a combination of personal motivation, the private sector’s commitment to poverty reduction as integral to economic development, and advocating for institutional change.

The Step Up staff team is small; it includes a director, communications director and part-time administrator. Staff serve coordinating and leadership functions, but much of the work is conducted through specialized teams with volunteers from agencies, businesses and neighborhood groups. Step Up’s Action Teams focus on seven strategic goals: Workforce Development, Education, Asset Building, Dependent Care, Transportation, Healthcare, and Affordable Housing.

Contributing to Step Up’s success has been its use of poverty simulations to engage business leaders in experiencing and understanding the issues that keep families living poverty, and to establish a common frame of reference.

This is the first time in Savannah that this breadth of participants has come together to address poverty. The results are not yet easily quantifiable but a powerful private-public partnership has emerged which is focused on setting measurable outcomes and holding themselves accountable.

Suzanne Donovan is communications director of Step Up Savannah.

The American City Agenda: Bottom-Up or Top-Down?

2008-05-22T16:58:00.007-04:00

by Aaron Dorfman

Yesterday, I attended a briefing at the National Press Club announcing the “The American City Agenda,” an ambitious new initiative by Living Cities to reform policies affecting urban communities. The mayor of Cleveland, the Lieutenant Governor and the Governor of Ohio were all on hand here in Washington, D.C. to announce the initiative’s launch in Cleveland.

Nine of the nation’s largest foundations and several large banks are among the partners of Living Cities. Collectively, they have invested over $543 million in 23 urban communities since 1991 and have pledged to reach $750 million by 2011. This new initiative is part of that effort.

The press release states, “Beginning with Cleveland, The American City Agenda will consider where policy is blocking needed reform, work to overcome outmoded and siloed systems, and develop the approaches needed to solve today’s challenges.”

That sounds great to me. NCRP has long advocated that foundations should invest in efforts to change public policy if they want to have a real and lasting impact on the issues that affect lower income communities.

I do, however, have one major concern. Nowhere in the printed materials or in any of the speeches did anyone mention if or how low-income residents themselves will be involved in shaping the policy agenda that will impact them and their families. No one spoke about community organizing or about reaching out to engage grassroots leaders in this ambitious effort. Will Living Cities be investing only in top-down reform efforts, or will they be investing also in community organizing groups and other grassroots organizations as part of this great effort to influence urban policy?

Ben Hecht is the relatively new CEO of Living Cities. He seems extremely talented. I’m sure he’ll figure out that part of the investment needs to go to bottom-up reform efforts if the results are going to have lasting impact on our nation’s cities.

Aaron Dorfman is executive director of the National Committee for Responsive Philanthropy.

New Foundation Center Head A Reason for Optimism

2008-05-22T10:35:00.003-04:00

by Yna Moore

The appointment of Bradford K. Smith as the Foundation Center’s new president beginning in October is welcome news (view press release here). He was strongly supportive of social justice grantmaking when he led the Ford Foundation’s Peace and Social Justice Program. There is much reason for optimism that under his leadership, the Foundation Center will continue its efforts to shed light on the amount of foundation dollars that go toward meeting the needs of the many marginalized groups in the country.

Kristina ("Yna") Moore is communications director at the National Committee for Responsive Philanthropy (NCRP).

Giving Fundraising (and charities) a Bad Name

2008-05-14T14:39:00.004-04:00

by Gary Snyder

In my spare time, I occasionally check out the agencies that I contribute to on the Charity Navigator website. I find the site to be extremely well organized. If I need further information, I sometimes go to the GuideStar website to delve deeply into the latest financials. Since I love financial analysis, the time goes by fast-frequently killing 3 hours.

In my exploration the other day I noticed some agencies that further the need for self-regulation or self-regulation of the charitable sector. The matter of regulation has become a hot topic recently. The Internal Revenue Service, the Congress and a few attorneys general have focused in on abhorrent practices at charities.

A few caught my eye as I scrutinized the charitable listings. The issue was fundraising expenses. There are a number of charities that spend more than 50% of their budget paying for-profit fundraising professionals to solicit.

Many of us have heard that the ‘badge’ charities use these fundraising techniques. I was surprised to see that The Committee for Missing Children headed the list of charities that overpay for fundraising. That agency spent over 86% of its income in fundraising fees. They were only able to commit 11.2% to programming. Others were only able to use small amounts for their mission: 3.7% (Junior Police Academy); 6.6% (Coalition of Police and Sheriffs) and 6.4% (American Veteran Relief Foundation) and 10% for the Children’s Charity Fund and the Foundation for Children with Cancer.

The National Children’s Leukemia Foundation spends almost 80% for fundraising and only about 15% for the children. The agency isn’t small with an annual budget of over $2.2 million. Needless to say, the National Children’s Leukemia Foundation received the Charity Navigator’s lowest rating.

The Youth Development Fund is a $3.3 million agency. Its fundraising amounts to 83% of its expenses with only 13% going to children’s education. The Youth Development Fund also received the Charity Navigator’s lowest rating.

Granted, these are just a few organizations that make it incredibly hard to defend that the charitable world that it doesn’t need some intervention. Yes, these are just a few, but as charitable donors get wind of these it only supports the notion that the nonprofit sector can’t or won’t reign in its own.

Gary R. Snyder is the author of "Nonprofits: On the Brink" and a member of NCRP's board of directors. He is a frequent lecturer and author of articles in numerous publications and blogs. His email is http://gary.r.snyder@gmail.com; website: www.garyrsnyder.com, phone: 248.324.3700.

A Challenge to the Next Generation Leaders

2008-05-06T15:21:00.009-04:00

by Yna Moore

There's been a good amount of talk revolving around the future of the nonprofit sector and the next generation leaders.

Rosetta Thurman interviewed NCRP's field director Melissa Johnson for her blog Perspectives from the Pipeline on issues faced by emerging leaders in the nonprofit sector.

Asked about what she'd like to see changed in the nonprofit sector, she replies:

"I would like to see the nonprofit sector define itself and behave in ways that is rooted in the values of the work that we carry out. Why are we in this sector? What is the ultimate goal of our work as a whole? While we have failed and hopefully will not succeed in trying to run our organizations like corporate America, nonprofits exist to serve the public good, to be the connector between government service delivery mandates and the race for the have not’s this creates on the ground. We are the sector that can and should represent those most in need. I think we should all keep this at the forefront
as we truck along day-to-day in this imbalanced and unfair race. We should all
recognize that we have to work together to deflect this imbalance. And, most
importantly, we should remove our personal self-interest from the equation."

You can view the complete interview here.

This week, the staff from the country's foundations and nonprofits are gathered in the DC-area for the Council on Foundation's annual conference. With this year's event titled "Philanthropy's Vision: A Leadership Summit," one can hope that the next generation leaders in philanthropy see their role in making the sector more accountable, transparent and responsive to the needs of the diverse communities it serves.

Yna Moore in the communications director at the National Committee for Responsive Philanthropy.

New report on foundation support of families impacted by economic downturn raises more questions than insights

2008-05-02T10:23:00.001-04:00

by Niki Jagpal

On May 1, 2008, the Council on Foundations (COF) released the first in a series of reports “looking at the interaction between philanthropy and the economy.” Foundations Support Families Hit by Economic Downturn: Results of a Survey by the Council on Foundations (available for download on the COF website) states that “the vast majority of foundations (86 percent) support grantmaking that either directly or indirectly aids families, provides human services, assists lower income populations or supports economic development.” Indeed, the Foundation Center’s 2008 edition of Foundation Giving Trends notes that “[…] for the period 2003-2006, the economically disadvantaged registered the second fastest growth rate among all the major population groups (up 28.3 percent annually)” [Foundation Center, 2008, p. 42]. Highlights of this report are available for free download here.

At first glance, this is certainly welcome news, particularly the long-term trend data provided by the Foundation Center. However, the COF report is based entirely on self-reporting by their members. Moreover, of the total 1,841 COF members, 320 responded to a web-based survey, representing a 17.38 percent response rate. Further, while community foundations comprise 27 percent of COF membership, they comprised 41 percent of survey respondents. In other words, community foundations are disproportionately overrepresented in the COF survey sample.

In its discussion of foundation support to families impacted by the subprime mortgage crisis, the COF report states that community, corporate and independent foundations were more likely than family foundations to engage in grantmaking that supports such activities (16-17 percent compared to 12 percent). Indeed, the COF report concludes that over half (51 percent) of community foundations would decrease grantmaking over the coming year; only 46 percent would sustain their current levels of grantmaking for the economically disadvantaged.

Taken together, the two reports suggest a reduction in foundation giving aimed at benefiting the economically disadvantaged. Is that reflexive of foundations supporting families hard hit by the flagging US economy? One is left to wonder, especially when considering the COF report’s own cautionary note that “… while the majority of foundations say that the downturn in the economy will have no effect on their ability to maintain their grantmaking, this situations bears watching. In addition, the impacts of the subprime mortgage crisis are not fully known.”

Niki Jagpal is the research director at the National Committee for Responsive Philanthropy.

The Disconnect Between Fundraising and Movement-Building

2008-05-01T13:17:00.002-04:00

By Priscilla Hung

At GIFT (Grassroots Institute for Fundraising Training) and the Grassroots Fundraising Journal, we focus on fundraising, the flip side of philanthropy. Even with engaged and progressive funders and donors, recipient organizations must still build relationships with them, request funds appropriately, and demonstrate the impact of their work.

But it continues to be a struggle for most grassroots groups to engage in individual donor fundraising in an empowering and sustainable way. Why is that?

In early April at the Astraea Lesbian Foundation for Justice in New York, we hosted a discussion on this issue with a mix of fundraising staff members, progressive funders, nonprofit directors, and consultants. The conversation touched on a lot of different reasons why grassroots groups struggle with building a broad base of supporters – ranging from not having a clear message or way to communicate with our communities, to not using technology in our outreach efforts, to there being too many nonprofits and not enough money to support all of them, as middle-and working-class communities struggle to stay afloat and government funding decreases.

One person said that there’s a tension between organization-building and movement-building. Organizations often feel they have to compete for dollars and attention. They feel pressured to play up successes and take full credit for them while in donor and funder meetings, even when they know their efforts are only successful if lots of other organizations are also engaged in the work. They get the sense that fundraising should be done by highly-skilled people, but it’s okay if they’re not politically active. People come away from trainings thinking that they must create major donor programs that cater to people who aren’t part of their base.

And those who are fundraising staff often feel isolated, with the stress of a lot of responsibility but little authority. They often have no involvement in the programs of the organization and don’t know what other staff are doing, resulting in missed opportunities to use fundraising to organize, and to use organizing drives to fundraise. Or on the other extreme, they may have too much authority by determining which programs get funded and which ones don’t.

This is how too many groups operate. It doesn’t have to be that way. Step by step, groups around the country and around the world are changing the way fundraising and community-building look. Capacity-builders like GIFT are democratizing and demystifying fundraising. Groups are talking together about how to resource the social justice movement.

But where to go from these isolated efforts? Where are the settings that foster big ideas and bold new strategies in fundraising that match our progressive political values? Where is the community where people work together and support each other to try new resource development ideas and take risks – and have each other’s back if they don’t work?

There are incomplete conversations happening. Conversations of fundraisers that don’t involve organizers. And conversations of organizing that may touch on fundraising but don’t involve people who identify themselves as fundraisers. Fundraising is too often left out of the conversation because it’s often seen as a skill that some staff member just needs to learn and take care of. What will it take for groups to see that fundraising is political?

And what are the consequences if we continue to fundraise in isolation – in isolation within our own organizations, in isolation from each other, and in isolation from movement-building strategies and activities? Groups always scraping by, never able to have all the money they need to do something like change national policy? A public distrustful of and disconnected from nonprofits? Groups dependent on foundations and not reaching out to their communities?

GIFT is working toward creating a space where we can bridge the gaps between movement-building conversations and fundraising ones. When GIFT first started, we were excited to have twenty people of color in the room who wanted to fundraise. A decade later, at our first Raising Change: A Social Justice Fundraising Conference in 2006, we had 420 people in a room wanting to discuss fundraising, with almost 300 hundred of them being people of color.

Join us at the next Raising Change: A Social Justice Fundraising Conference, this July 25-26 in San Francisco, CA so we can keep the conversation going.

Priscilla Hung is Co-Director of GIFT. GIFT provides fundraising training, resources, and analysis to social justice organizations nationwide. It also publishes the Grassroots Fundraising Journal and hosts Raising Change: A Social Justice Fundraising Conference. Priscilla@grassrootsfundraising.org

Diversity Debate Rages On

2008-04-30T11:56:00.007-04:00

by Yna Moore

The debate over California's AB 624 legislation continues. The bill would require the state's largest foundations to disclose diversity information regarding their board, staff, grantees and vendors.

Many foundations and their trade associations have strongly opposed the bill, arguing that their decision to fund an organization is based solely on their likelihood of achieving the most impact.

However, “improving the societal impact of foundations and improving their support for diverse communities need not be mutually exclusive propositions,” said Aaron Dorfman in a recent posting on this issue. “In fact, there is growing evidence that diversity and effectiveness go hand in hand.”

In a recent commentary on the Chronicle of Philanthropy (Foundations Should Be Required to Disclose Data on Charity, May 1), Pablo Eisenberg[1] notes that despite being “poorly crafted,” the legislation’s purpose—to require foundations to disclose race and gender information of their boards and grantees—is fundamentally sound. The bill will “provide the public and the foundations, at least in California, with a more accurate picture of the extent of diversity at foundations and their grantees,” said Eisenberg. “Armed with this information, as well as their growing awareness of the problem, foundations hopefully will begin to take much more seriously their responsibility for adequately supporting what has now become the majority of Americans.”

In a separate article (California’s Legislation Won’t Achieve True Diversity At Foundations), Mark Rosenman argues for foundations to truly reflect on their missions and how they translate this into practice. Beyond the numbers, the issue of diversity is about redistribution of power among foundations and nonprofits.

In an earlier post on this blog, Pete Manzo suggests that we’ll need better information than what AB 624 mandates to improve how philanthropy responds to the needs of underserved communities. He proposes a system that allows us to view where foundation dollars are going, the demographic attributes of those places, and information on the subsets of people being served by those grants.

Do you think it’s necessary to have legislation like AB 624 requiring foundation disclosure of diversity information? Why or why not? Do you think AB 624 is an effective way to channel more foundation funding to nonprofits serving communities of color and other marginalized groups? If not, how might this legislation be improved (assuming that you think legislation is needed)? Are there other ways to go about measuring and disclosing more accurately and effectively the current state of diversity in foundation practices and grantmaking? Tell us what you think!

[1] Pablo Eisenberg is a co-founder and former board chair of the National Committee for Responsive Philanthropy.

Yna Moore is communications director at the National Committee for Responsive Philanthropy.

You Asked for It

2008-04-28T10:01:00.001-04:00

You Asked For It
Gary Snyder

For years, I have written that if the leadership of the nonprofit sector didn’t self-regulate, others would. Well hear it comes…and it’s coming from an unexpected player and on issues that are quite unexpected.

The Independent Sector has spent millions of dollars producing a document addressing governance and ethical problems facing charities. In doing so, they invited the government to assist them in resolving them. In spite of IS’s protestations that they wanted to self-regulate they have embraced the Internal Revenue Service inaugural efforts to regulate, educate and enforce new rules on charities.

On April 23, 2008, Steven Miller, Commissioner, Tax Exempt and Government Entities of the Internal Revenue Service in an address that the IRS “will educate, engage and, yes, irritate…” He noted that the IRS is going to go full bore on the issue of governance.

It starts with the revised Form 990 that virtually all nonprofits must fill out. The IRS wants to know about the composition and independence of the governing body, about policies and procedures and how and whether governance and financial information is available to the public. It has even developed a tutorial on its website. To date they have concentrated on board composition.

The rules are going to be a hit across the bow of the charitable sector. Accordingly, no agency is too small to not have an active, engaged board of directors overseeing the organization.

Miller further noted that the IRS, will focus on internal financial controls and large-scale decision-making.

Apparently, some have asked the IRS to prove the relationship between good governance and tax compliance. They “will be working on that”. In the enforcement area, Senate Finance Committee Tax Counsel, Theresa Pattara, said, “To ensure that filers answer Form 990’s governance questions, Congress might formulate stronger penalties for organizations that file incomplete Forms 990.”

He assured that all charities should look forward to a more broadly based program in the future.

While there is a compelling need for a broad and in-depth intervention into nonprofit governance, I am perplexed as to why the IRS is making such suggestions. I cannot understand why organizations such as Independent Sector, state associations, Board Source and others could not pick up the mantle and institute a program that meets the needs of the charitable sector.

The issues have been apparent for the past decade. All have seen stabilizing or diminishing contributions based on the cost of living, an increase in poor governance resulting in fraud and abuse at an astounding rate; a pounding on the charitable sector by the press; and, a consistent loss of confidence by donors.

The IRS was invited to the party. As a guest with little confidence that the sector has the capacity to resolve it’s own internal problems, the IRS, with the imprimatur of Congress, will gladly show charities the right road…by regulating them.

Best guess: the consequences will be profound.

Gary Snyder is managing partner of Nonprofit Imperative and author of Nonprofits: On the Brink and Nonprofit Imperative. He can be reached at gary.r.snyder@gmail.com. His website is: www.garyrsnyder.com.

Are grant application and reporting procedures impediments to efficiency and effectiveness?

2008-04-25T15:52:00.005-04:00

by Niki Jagpal

This week Project Streamline, a joint effort of grantmaking and receiving organizations to improve reporting and application procedures, released a new report Drowning in Paperwork, Distracted From Purpose. The report identifies ten ways that current application and reporting systems inhibit nonprofit effectiveness including insufficient net grants and lack of trust between nonprofits and funders. The report makes four recommendations for grantmakers based on the study’s findings.

Project Streamline’s report comes at an opportune time; a recent article in the Chronicle of Philanthropy (subscription required) highlights efforts by the Internal Revenue System (IRS) to increase the effectiveness and efficiency of charitable organizations. Steven T. Miller is the current commissioner of the IRS’s tax-exempt and government-entities division. As the Chronicle notes, he made a series of remarks at a conference on tax-exempt organizations convened by Georgetown University Law Center Continuing Legal Education Department this week. One strategy Miller suggests is for the IRS to “create and enforce a standard to ensure that organizations spend in line with their resources.” While monitoring is not currently the purview of the IRS, Miller said that the IRS would be “more aggressive” in keeping a watch over the “efficiency and effectiveness” of charitable organizations.

If nonprofits are to be truly empowered to achieve their missions by focusing on effectiveness and efficiency, it is clear that cumbersome application and reporting procedures have to be addressed. But the process of grant applications and reports is only part of the solution; as Miller states “[…] every charity should be make responsible and appropriate use of its resources to achieve its charitable purposes. That is what the tax-exempt subsidy is for.” [emphasis added]

Moreover, while the Chronicle article and Miller’s remarks discuss revisions to the IRS’s 990 form, the publicly available informational tax returns filed by nonprofit grant recipients, the same standard of effectiveness and efficiency ought to apply to the form 990-PF, the IRS’s tax form filed by private foundations. While efforts to include “efficiency indicators” in the revised 990 forms failed, the new forms will include questions about nonprofit governance and management policies. Miller sees the link between increased transparency and enforcement: “the question is no longer whether the IRS has a role to play in [governance] but rather what that role will be.”

Project Streamline’s work is commendable and adds value to sector-wide attempts to improve the grantmaker-grantee relationship. Now, imagine what the charitable sector would look like if we had simple criteria on the 990 PF forms for measuring philanthropic management and governance to support Miller’s vision of more effective and efficient charitable organizations?

Niki Jagpal is the research director at NCRP.

California Foundation Diversity Bill: Best Way to Boost Results for Low Income Communities of Color?

2008-04-17T02:23:00.013-04:00

A California Assembly bill is causing quite a stir in the philanthropic and nonprofit worlds. Spurred by a series of studies by the Greenlining Institute, the bill, AB 624, sponsored by 23^rd District Assembly Member Joseph Coto (D-San Jose), would require California foundations with assets over $250,000,000 to collect and make public information about:

the ethnicity, gender and sexual orientation of foundation board and staff members;
the number of grants and grant dollars awarded to organizations reporting that 50% or more of their board or staff members are ethnic minorities;
“the number of grants and grant dollars awarded to “organizations specifically serving African-American, Asian-American, Pacific Islander, Caucasian, Latino, Native American, and Alaskan Native communities, lesbian, gay, bisexual, and transgender communities and other underrepresented communities”
“the number of grants and grant dollars awarded to predominantly low-income communities"; and
"the number and percentage of business contracts awarded to African-Americans, Asian-Americans, Pacific Islanders, Caucasians, Latinos, Native Americans, and Alaskan Natives."

The current draft of the bill is available here.

The problem is, if the ultimate result sponsors hope to achieve is increased benefits from philanthropy flowing to either communities of color, or low income communities[1], compliance with the bill, as written, looks very unlikely to accomplish that.

First of all, complying with the bill would not be easy, both because of the fairly vague or uncertain definitions of the information to be collected, and also because of the amount of energy that would go into collecting that information, both at the foundations and on the part of their grantees. The bill is imperfectly drafted, so much so that the Nonprofit and Unincorporated Organizations Committee of the California Bar Association’s Business Law Section, a group of attorneys expert on exempt organization law, have issued a statement of opposition raising numerous objections, and concluding that the bill is “fatally flawed.”

The problem I see in the bill is that it does not require information be collected that would establish who is served by grant dollars (more on the feasibility, and wisdom, of trying to establish that below). Rather, it simply requires foundations to tally up the numbers, grant dollars and percentages and publish those. In its current form, a foundation could simply publish the aggregate figures (e.g., “300 grants, in the amount of $400 million, to organizations specifically serving communities of color”, or “250 grants, in the amount of $300 million, predominantly low income communities.” While it would be interesting to track whether those numbers go up or down, they are practically useless, otherwise, for advocates. The data likely wouldn’t provide any evidence that philanthropic support to low income people of color living in particular regions or geographic communities is rising or falling, or how the distribution of grant funds within those communities is shifting over time. (Also, the data likely would not be aggregated somewhere, so to get the bigger picture, advocates would have to cull information from dozens of foundation sites.)

As Aaron Dorfman, NCRP’s Executive Director, has pointed out in this space, if diversity in grantmaking is important, it should be measured. Opponents of the bill actually agree on this point, but object that the challenge will be how to measure it completely, and how to measure it in ways that are most useful to advocates for more responsive grantmaking. The leaders of The California Endowment, The William & Flora Hewlett Foundation and The James Irvine Foundation all have published op-eds or letters to the editor opposing the bill. Ironically, these three foundations are among the handful of large foundations with statewide reach most prominent in pushing policy advocacy and systems change to benefit low income communities of color. The controversy over AB 624 seems to be an example of what a friend of mine calls “heated agreement,” where people who basically agree and should be pulling in the same direction instead divide and argue over minor points.

As Dr. Ross of the Endowment observes, for all the debate about transparency, “the real issues are: poverty, equity and opportunity in communities of color and other underserved communities.” If the purpose is to improve the use of philanthropy to tackle those challenges, we’ll need better information than AB 624 mandates, and advocates for more responsive grantmaking and leaders of foundations like the Endowment, Hewlett and Irvine should be able to come up with much better solutions by working together.

A better place to start would be making visible the flow of grant dollars to specific places, the demographic and other attributes of those places, and even the specific subsets of people served in those places. (Another irony: the specific reach of grants for policy advocacy or systems change will be harder to define, but this challenge can be solved, as I will explore in a future post). To do so, we’ll need to make the grants data already disclosed by foundations more accessible to advocates, and supplement that with data about the geographic and demographic reach of those grant funds. This would mean bringing the grants databases out from behind the firewalls of services like the Foundation Center or Foundation Search, or paying the costs of providing free public access to that data. It also would entail beginning to map the reach of grants. With a modest investment of time and resources, we can determine which census tracts are served by which organizations, and show the amount of grant dollars relative to the numbers of people living in an area or, more specifically, the particular characteristics of people actually served. This is not a technological pipedream, it can definitely be done[2], and likely for far less cost and effort than compliance with AB 624 would entail. The design and development of such a system, however, is something that can’t very well be done in advance through legislation.

In the end, AB 624 is unlikely to become law anytime soon (It has a rough road ahead in the California Senate, and if it passes both houses, Governor Schwarzenegger is likely to veto it.) That should give all supporters of responsive philanthropy, within foundations and the broader community, plenty of time to develop approaches more targeted to improving results for low income communities of color.

Peter Manzo is an NCRP board member and the Director of Strategic Initiatives for the Advancement Project, a civil rights advocacy organization based in Los Angeles and Washington, D.C. His opinions are his own and do not necessarily reflect those of NCRP or the Advancement Project.

[1] 1) Oddly, there is no such straightforward statement on Greenlining Institute’s Web site that this is the purpose, as opposed to more generically making foundations more “effective and efficient.”
[2] 2) HealthyCity.org, a partnership of nonprofits in Los Angeles sponsored by the Advancement Project, already has built tools and methods for making the flow of grant dollars visible, for public agencies and private funders, to help them assess their grants in Los Angeles County and throughout California. (Full disclosure: I am a proud co-founder of HealthyCity.org.).

Structural Racism and Inequity Show Impact on Philanthropy

2008-04-16T12:20:00.005-04:00

by Yna Moore

Sherece West, new NCRP board member and president of the Winthrop Rockefeller Foundation, recently shared her thoughts on structural racism and inequity, and what this means for philanthropy in Diversity in Philanthropy's Executive Commentary. "An aspect of effective philanthropy is about undoing structural racism," said Ms. West.

Steve Mayer, director of Effective Communities LLC, also tackled this issue in a commentary in March.

The issue of diversity in foundations' leadership, grantmaking and business dealings has received tremendous attention during the bast few months, thanks to AB 624, a bill in the California legislation sponsored by Rep. Joe Coto. The bill, if passed, would require the state's largest foundations to disclose diversity information regarding their staff, board, grantees and vendors.

Do you think AB 624 is an effective way to channel more foundation funding to nonprofits serving communities of color and other marginalized groups? Tell us what you think!

Kristina ("Yna") Moore is communications director at NCRP.

A Compromised Charitable Sector

2008-04-15T10:40:00.001-04:00

A Compromised Charitable Sector
By Gary R. Snyder

If anyone thought that the bright light on nonprofit misdeeds was going to fade with the change in Senate Finance Committee leadership they are grossly underestimating the festering problem. Granted the loss of Dean A. Zerbe as a principal staff point person on this matter to Ranking Member Senator Charles Grassley is a significant blow. The direction may have changed but the intense interest in setting the nonprofit sector straight has not subsided.

The Senate Finance Committee’s ongoing concern in nonprofit ineptitude was joined by the House Oversight and Government Reform Committee, which held hearings. Among the embarrassing issues was how veterans’ charities gave small proportions of revenue to veterans and their families. An article in the Chronicle of Philanthropy stated that committee members used terms such as “immoral”, “fraud” and “sickening betrayal” with a promise to have additional hearings as the issues unfold.

These terms of endearment are consistent with the donor’s diminishing confidence in the charitable sector. Heightened scrutiny has resulted in increased stories in the media with the recent study on $30-40 billion annual nonprofit fraud (Greenlee, Gordon) being unveiled in an arresting New York Times (March 29, 2008, Report Sketches Crime Costing Billions: Theft From Charities) article. The cumulative effect of the focus of the public attention on charity malfeasance is still unknown, but certainly isn’t going to play well in Congress or at the local nonprofit agency.

The problems continue to center on the abuses by the board, executive and volunteers. All have failed to be diligent in exercising their fiduciary duties. As the Independent Sector notes, few know what their responsibilities are. Even if they did understand what their role is supposed to be, few have the skills to adequacy address the misdeeds.

This is underscored by the Independent Sector’s Panel on the Nonprofit Sector request for government assistance in educating board and professional leaders because both are not aware of the expectations and requirements imposed upon them.

While tens of billions of dollars are taken from those to which it is intended, sector leaders continue to say that it is a “few bad apples”. Last year, the General Accounting Office noted that nearly 55,000 tax-exempt organizations had almost $1 billion in unpaid taxes with some owing tens of millions of dollars.

The fallout in loss in the nation’s misdeeds from charities is profound. According to the National Priorities Project----a $20 billion loss is equivalent to any of the following:

• healthcare to 7.721 million people, or
• 438,768 public safety officials, or
• 1861 new elementary school, or
• 3.1 million Head Start places for children, or
• 290,081 elementary school teachers, or
• 299,496 port container inspectors
or, $54,794,520 per day

Leadership at the local, state, and national levels is virtually nonexistent. The use of words such as transparency and accountability have become jargon—buzzwords---that fail to be meaningful without substance behind them.

The sole of the charitable world is under scrutiny. Integrity, credibility and effectiveness are proxy measures of the soundness of any organization. Without those, the sector is severely compromised

Gary R. Snyder is the author of Nonprofits: On the Brink. He is a frequent lecturer and author of articles in numerous publications and blogs. His email is gary.r.snyder@gmail.com; website: http://garyrsnyder.com, phone: 248.324.3700.