Altruism Today

Nonprofit culture is not a “soft” component of an organization; it is the final word, the informer of action or inaction. When it has been left victim to inattention, it can wreak havoc by creating doubt and suspicion, by enabling laxness, dishonesty and a deadly lack of accountability. You can feel it palpably when disagreements surface. How are they dealt with? Is the organizational dance in the face of challenge a sidestep, or an aggressive implied or real threat? In the worst of situations, these attitudes and habits build on one another until the result is nothing less than bizarre.

A negative culture almost always organizes itself around secrets that must not be revealed. And, when that culture is deeply entrenched, trying to reveal the hidden can be like taking your professional life—or even your physical life—in your hands.

A series of recent stories in the New York Times and other media chronicled the closing of the Healing Arts Initiative (HAI), a New York City nonprofit which began as Hospital Audiences, Inc., and made the arts accessible to millions of isolated and marginalized people. Moreover, HAI spawned a number of organizations with similar missions, including one called Artreach, which I helped to create and served as executive director in Milwaukee, Wisconsin—so this is a tragedy that especially hits home for me.

If you haven’t seen the stories, HAI hired a new executive director, D. Alexandra Dyer, in 2015. She uncovered what prosecutors say was at least a $750,000 embezzlement scheme carried out by one of its employees over nearly three years. After questioning the employee about missing funds, Ms. Dyer was viciously attacked by an associate of the employee who threw liquid drain cleaner in her face.

The employee has since been charged with multiple crimes, including first-degree assault, conspiracy, grand larceny, weapons possession, falsifying business records, and forty-eight counts of identity theft. She’s being held without bail and faces up to twenty-five years in prison. A friend, who prosecutors say received over $100,000 of the stolen funds, has been charged with grand larceny and conspiracy and faces up to fifteen years in prison.

Though Ms. Dyer survived the attack, her face was described in the Times as a “pinkened map of scar tissue.” After resuming her duties as HAI’s executive director, she filed a lawsuit against the board of directors, seeking their removal on behalf of the charity because board members let the thefts happen on their watch.

However, on May 6^th, the board fired Ms. Dyer and the financial officer she hired who helped uncover the embezzlement scheme. Then, in what could be the final act of an organization that brought the joy and healing power of the arts to millions of marginalized and isolated people over forty-five years, HAI shut down on May 11^th and is expected to declare bankruptcy.

“If the board thinks that by firing Alexandra Dyer, who uncovered the thefts, and by putting HAI into bankruptcy, they will thwart the investigation into their incompetence, they are sadly mistaken,” Ms. Dyer’s attorney said in response.

The sequence of events culminating in shutting down the Healing Arts Initiative suggests a culture where basic concepts of oversight, accountability, and responsibility were not exercised by either the professional or volunteer leadership. Although some elements of culture are in an organization’s DNA, other aspects of culture are developed consciously, and both types have to be reinforced over time.

One of the ways to reinforce a culture of accountability is, of course, to build systems of accountability at board and staff levels. But unless you want a mere compliance culture, which holds its own dangers, those have to be backed up by something larger: a collective longing for integrity that welcomes challenges and is in constant improvement mode. This gets reflected in staff accountability measures and the board’s oversight of finances and leadership, two measures that seemed to have been largely missing from the HAI scenario.

My hope is that the tragedy at HAI will motivate every nonprofit board member and executive to take a good look at their organization’s culture and ask whether the right systems and procedures are in place to reinforce and restate principles of practice with enough frequency and from enough participants (staff, board, constituents) that they become a positive informant of action. This is what ensures integrity and trustworthiness, and we should expect nothing less of ourselves.

Kathleen Meese is still paying off credit card debt she ran up in 2009, to pay for classes at Trump University. She was told the classes would make her a real estate millionaire.

When Meese balked at the $25,000 and travel time needed to take the university’s Gold Elite Program, worried it would strain her finances and could hinder her care for her son, who has Down’s syndrome, a Trump instructor told her she “had to sign up” to help her family, court documents show.

“They said: ‘You are just nervous. It’s going to be fine,’” Meese told the Guardian this week. “We’re going to work with you, help you.

“I maxed out my credit card,” she said.

Meese is now one of 5,000 consumers on whose behalf the New York attorney general, Eric Schneiderman, is suing the Republican nominee’s past venture. Schneiderman slams the for-profit online educational provider as an illegal scam.

Separately, in California, two class action lawsuits are also under way. If the cases go to trial, none will begin before the presidential election. But as details accumulate, the controversy surrounding the now-defunct Trump University will dog Donald Trump all the way.

“You were supposed to write yourself a check for $1m and tape it to your mirror, and in three years you would be able to cash it,” Meese said. “I didn’t have three cents from them. I didn’t make a penny.”

Meese, 57, lives in the village of Schoharie, near Albany in upstate New York, with her husband, who works for the local highway agency, and their adult son. Now that her dream of buying and selling houses has died, she is a stay-at-home wife.

“I wasn’t aiming to get godly rich like Donald Trump,” she said, “but rich enough to help my family. My aunts and uncles and cousins and my sister, we’re all very close … and I’m the one people normally come to in my family, the rock.”

In 2009, after receiving an invitation in the mail to attend a free Trump University seminar, she went to the Palace Theater in Schenectady. According to the affidavit detailing Meese’s case: “We were told if we signed up for Trump’s three-day seminar we would learn everything we needed to know about … how to buy and sell real estate using other people’s money.”

Meese paid $1,495 for a three-day seminar at a Hyatt hotel in the region. During that event, the affidavit shows, she was told about the $25,000 advanced program.

When she expressed worries about money and her son, according to the affidavit, Trump University instructor Stephen Goff “said he had a son so he knew that family meant everything to me … he promised to personally work with me and guaranteed I would make my $25,000 back within 60 days”.

She discussed potential real estate deals with the purported experts. None of them ever worked out. Read on here: http://www.theguardian.com/us-news/2016/jun/05/donald-trump-university-graduates-speak-out

Sources; The Journal News and the New York Times

NPQ has been covering the controversial role of nonprofit watchdog agencies for years. Among other things, we’ve looked at the confusing picture they present to donors, as each has its own methods of measurement. Rick Cohen took this on in 2013 in an article that looked at how the top three rated the embattled Wounded Warrior Project very differently.

One of these watchdogs, Charity Navigator, announced changes to its rating system thatwent into effect yesterday, and we would love to hear what our readers think of the changes.

Charity Navigator looks at two broad performance metrics: financial health and accountability and transparency. In this update, called CN 2.1, only the financial health rating system was changed, which includes seven metrics. To summarize:

·       Program Expenses, Administration Expenses, Fundraising Expenses, Fundraising Efficiency, and Working Capital Ratio went from being calculated based solely on the previous fiscal year to an average of the last three fiscal years.

·       Primary Revenue Growth, which measures growth in income from the work that a charity does (e.g., grants, donations, program fees) was removed from the rating system. Charity Navigator decided this metric did not truly represent the financial health of an organization, as a nonprofit might recognize a large gift one year yet actually receive the funds over several years.

·       Program Expense Growth, conversely, measures the growth in expenses incurred from doing the work of the nonprofit measured over the last three to five fiscal years. There was no change to this metric.

·       A new metric that was added to the rating system is the Liabilities to Assets Ratio, based on the most recently completed fiscal year. The intent of including this ratio in the assessment is to call attention to excessive debt.

An important change that is not reflected in the metrics themselves is how Charity Navigator is now looking at overhead costs. Previously, an organization could not get a perfect score if it had any administrative expenses. This isn’t a realistic standard to hold nonprofits to, as Charity Navigator’s former CEO Ken Berger said in a 2013 letter he co-signed addressing the “overhead myth.” Under CN 2.1, as long as an organization’s overhead expenditure falls within a given range depending on the type of nonprofit, they can receive a perfect score.

Overall, the new system seems fair and offers a more accurate picture of the health of an organization, which is exactly what Charity Navigator was aiming for. Elizabeth Searing, a nonprofit expert and member of the task force charged with updating the rating system, said, “All of the changes they made are definitely improvements.”

For instance, looking at expenses over time as opposed to just one year allows for consideration of outlier years, such as anniversary years, when organizations tend to spend more on fundraising and promotion.

Even with the new system, only about 25 percent of the organizations rated by Charity Navigator had a rating that changed. However, donors and other individuals involved with nonprofit organizations are encouraged to take these ratings with a grain of salt. According to Sandra Miniutti, vice president of marketing for Charity Navigator, “We don’t advocate that a donor jump ship if a rating changes. Rather, a change suggests that donors should seek more information from the charity and see if it offers a good explanation. In that way, donors can education themselves about the charity and decide over time if they want to continue supporting it.”

One thing that Charity Navigator did not change in the update is its stance on Joint Program Allocations, which has been controversial in some instances (like WWP) but in our opinion is justified. Here is what they say about that:

Consistent with Generally Accepted Accounting Principles (GAAP), some organizations that follow SOP 98-2 or ASC 958-720-45 report a portion of their specific joint costs from combined educational campaigns and fundraising solicitations as program costs. The IRS requires that these organizations disclose the allocation on the Form 990. In most cases, charities utilizing this technique allocate a small percentage of their solicitation costs to program expenses from fundraising expenses. However, we believe that donors are not generally aware of this accounting technique and that they would not embrace it if they knew a charity was employing it, nor does Charity Navigator. Therefore, as an advisor and advocate for donors, when we see charities using this technique we factor out the joint costs allocated to program expenses and add them to fundraising. The exceptions to this policy are determined based on a review of the 990 and the charity’s website (in some cases we review data provided to us from the charity directly). We analyze these items to see if the organization’s mission includes a significant education/advocacy program or other type of program that would directly be associated with joint costs. If that is the case, we inspect in further detail the charity’s expenses in regards to those specific programs. Finally, we review the charity’s website to confirm that there is clarity for a potential donor that the organization in question employs the types of programs that entail joint cost activity.

Where we may not agree on the direction Charity Navigator is taking, its intent—not yet come to fruition—is to try to reflect programmatic outcomes on its platform. Michael Thatcher, president and CEO of Charity Navigator, says that the long-term goal of the organization is to include a “results reporting” metric that would take into account how effective nonprofits are at achieving their mission. However, as each organization is different and may use different criteria to assess mission progress, creating such a standardized rating system has been difficult. NPQ’s opinion is that if the watchdogs have taken this long to understand the problems in emphasizing overhead, their efficacy in being able to measure the more complex picture of outcomes may be nearly nil.

Source, Crain’s Chicago Business

Phillip Jackson of the Black Star Project began his Crain’s op-ed, “MacArthur Foundation is ducking on Chicago’s most crucial issues,” with this terse rebuke:

The heads of foundations think they’re gods. And they can never understand why people, who are economically subjugated by their grant making, would complain about their treatment by the Foundation Gods.

Jackson goes on to suggest that MacArthur’s grantmaking for Chicago should reflect the face of Chicago: 33% should go to the black community and 29% to the Latino community. Instead, Jackson argues, “Over 70 percent of its (Chicago) 2015 grantees were arts, culture, and research organizations.” Unimpressed, Jackson calls MacArthur’s newBenefit Chicago collaborative the “Benefit White Chicago” initiative. Jackson estimates that only one-tenth of one percent of MacArthur’s giving reaches Chicago’s black-led organizations. He calls this form of segregation redlining.

Jackson, a “History Maker,” is anything but naïve. In 1999, Jackson, as Mayor Daley’s“handpicked choice to run the CHA,” Chicago’s current mayor, Rahm Emanuel, as CHA’svice chairman, and MacArthur’s current president, Julia Stasch, as Mayor Daley’s chief of staff, were working together in a dustup with HUD.

The timing of Jackson’s op-ed shows shrewd calculation. With the homicide rate in Chicago up 62 percent since last year, with 216 people killed so far in 2016, Jackson charges that MacArthur should be “at the forefront of reducing Chicago’s violence and murders”; however, “it is not even at the table.” More than 50 people were shot this past weekend. The Chicago Tribune maintained a live blog that tracked Chicago’s Memorial Day weekend violence. Last November, a video showed a white officer shooting a black teenager, Laquan McDonald, 16 times. That led to protests and to this blistering report, exposing the nation’s second-largest municipal police force as being plagued by systemic racism and a lack of accountability.

MacArthur’s answer is the recent soiree, “America’s Original Sin: Racism, White Privilege and the Bridge to a New America,” and expensive studies that offer what Jackson could likely share over a cup of coffee. Jackson writes, “The black community does not want to fight with MacArthur Foundation, but we don’t want to be treated as fools.”

“Foundation redlining” is not a new allegation, and proposing grantmaking based on population percentages is not overly simplistic: “With payouts to rural America so ridiculously small, shouldn’t the current rural capacity and safety net crisis warrant a percentage payout increase, as a good faith gesture from America’s largest foundations to rural America?” Redlining, the practice of denying services based on race, extends toeducation, supermarkets, and healthcare as well as to banking and real estate. The Greenlighting Institute documents startling gaps in foundation support of communities of color and nonprofits led by people of color. Research abounds on the challenges that particularly Black-led organizations face. Jackson is in smart company.

“Foundation gods?” At least “the nakedness of this autocratic and insistent emperor” called strategic philanthropy calls for atonement. Except for the requirement to give away at least 5 percent of investment income including administrative expenses, MacArthur operates with few limitations. MacArthur is a cathedral surrounded by postulants. Its1894 sanctuary consists of wrought-iron stairways, Tiffany glass mosaics, bronze-gilt reliefs, and a terra cotta molding that crowns the building. With assets of nearly $6.5 billion and global influence and presence, the MacArthur Foundation is adored and all-powerful.

A MacArthur evangelist afire to help steward humanity, all smile and poise but with no name or contact information, made this April 2016 “On the Ground in Chicago”announcement:

The Chicago Commitment team is now working in earnest to develop and refine our priorities for Chicago. We know that we will retain our historic focus on the vibrant Arts and Culture sector. In addition, we will consider how the Foundation can contribute to peace, prosperity, and opportunity for the city’s residents, and the vitality of the communities where they live.

Here’s how Crain’s editorial board began its April 2016 announcement:

Not to sound hyperbolic, but there’s blood in the streets of Chicago this year. More than 775 people have been shot in the city so far in 2016—80 percent more than at this time last year and by far the most in the first quarter of any year this decade…and the hot summer months, when shootings typically rise, are still ahead of us.

If foundations are the font of new ideas that pools around obedience and a society that rewards its leaders with power, the world’s fifth-wealthiest foundation may be the first to break from orthodoxy. By exclusively addressing inequality, the Ford Foundation is showing that we need reminders of whose lives matter.

Jackson offers valid solutions to systemic racial inequality that are admittedly slow leavens of a better order. Jackson’s 2014 Black Star Project salary of $46,520 does not compare to the MacArthur president’s 2014 salary of $2,202,509, but Jackson’s personal knowledge of places, names, and memories that MacArthur-sponsored studies are machine-tooled to erase and that lead to the death of trust is worth more than MacArthur’s endowment.