posted on: Wednesday, December 26, 2007
Watching the Watchdogs
Gary R. Snyder
I was struck by the 50% plummeting in confidence in the financial rating service agencies. I then thought about the confidence in the charity rating services of the nonprofit sector.
It is a generally accepted belief that the nonprofit rating services, such as Charity Navigator, BBB Wise Giving Alliance and American Institute of Philanthropy, are monitoring most nonprofits. Unfortunately, there is no third party source watching the activities of the multi-billion dollar philanthropic community.
To put donor’s confidence in perspective we need only to look at the Brookings Institution study where only 11% of the public thinks charities do a very good job of spending money wisely and only 19% feels that charities do a very good job of running their programs and services.
The criterion that is used by watchdog groups is wanting. Two of the aforementioned focus only on financial standards and the third sells its seal of approval on a sliding scale. Because of different criteria, the rating agencies recommendations often conflict. Moreover, all fail to address in any substantive manner many of the issues that have gotten the nonprofit sector in trouble—scandals and inadequate governance. Furthermore, the charity evaluators, by their own admission, believe that the reporting from the nonprofits is often inconsistent, unclear and incorrect.
Because the watchdogs have no teeth in their recommendations, the Senate Finance Committee and other regulatory bodies have been working on legislation that guides philanthropy in making their decisions. The Senate Finance Committee and the Internal Revenue Service have become surrogate boards for the sector. They have given guidance to the American Red Cross, Smithsonian Institution, Natures Conservancy, universities, as well as hospitals.
Even in the face of billions of dollars of nonprofit malfeasance in just the last year, the watchdog agencies as well as the sector leadership does not see the need for more transparency. It has only been the efforts of Congress and the IRS that have made some incremental changes.
Despite the government’s efforts there has more of the same. Misconduct is still rampant with little response from those that lead the sector. In spite of protestations of wanting self-regulation, all indications from the sector’s leadership are that it wants to relinquish its authority to regulators and establish a partnership with government.
With watchdogs being only marginally effective and the leadership in total denial, who has the credibility to lead and enforce? Without transparency, accountability, credibility and confidence, how much farther can the contributor’s confidence sink?
FORTUNE, December 24, 2007.
Gary Snyder is the author of Nonprofits: On the Brink (iUniverse, February, 2006) and articles in numerous publications. He can be reached at gary.r.snyder@gmail.com or 248.324.3700Labels: accountability
Gary R. Snyder
I was struck by the 50% plummeting in confidence in the financial rating service agencies. I then thought about the confidence in the charity rating services of the nonprofit sector.
It is a generally accepted belief that the nonprofit rating services, such as Charity Navigator, BBB Wise Giving Alliance and American Institute of Philanthropy, are monitoring most nonprofits. Unfortunately, there is no third party source watching the activities of the multi-billion dollar philanthropic community.
To put donor’s confidence in perspective we need only to look at the Brookings Institution study where only 11% of the public thinks charities do a very good job of spending money wisely and only 19% feels that charities do a very good job of running their programs and services.
The criterion that is used by watchdog groups is wanting. Two of the aforementioned focus only on financial standards and the third sells its seal of approval on a sliding scale. Because of different criteria, the rating agencies recommendations often conflict. Moreover, all fail to address in any substantive manner many of the issues that have gotten the nonprofit sector in trouble—scandals and inadequate governance. Furthermore, the charity evaluators, by their own admission, believe that the reporting from the nonprofits is often inconsistent, unclear and incorrect.
Because the watchdogs have no teeth in their recommendations, the Senate Finance Committee and other regulatory bodies have been working on legislation that guides philanthropy in making their decisions. The Senate Finance Committee and the Internal Revenue Service have become surrogate boards for the sector. They have given guidance to the American Red Cross, Smithsonian Institution, Natures Conservancy, universities, as well as hospitals.
Even in the face of billions of dollars of nonprofit malfeasance in just the last year, the watchdog agencies as well as the sector leadership does not see the need for more transparency. It has only been the efforts of Congress and the IRS that have made some incremental changes.
Despite the government’s efforts there has more of the same. Misconduct is still rampant with little response from those that lead the sector. In spite of protestations of wanting self-regulation, all indications from the sector’s leadership are that it wants to relinquish its authority to regulators and establish a partnership with government.
With watchdogs being only marginally effective and the leadership in total denial, who has the credibility to lead and enforce? Without transparency, accountability, credibility and confidence, how much farther can the contributor’s confidence sink?
FORTUNE, December 24, 2007.
Gary Snyder is the author of Nonprofits: On the Brink (iUniverse, February, 2006) and articles in numerous publications. He can be reached at gary.r.snyder@gmail.com or 248.324.3700
Labels: accountability
posted by Gary at
3:30 PM
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Individualism: The Answer to Our Ailing Public Schools?
posted on: Tuesday, December 11, 2007
William Schambra, of the Hudson Institute’s Bradley Center
It is believed by a large number of conservative foundations that the current public education system is broken. In NCRP’s Strategic Grantmaking: Foundations and the School Privatization Movement, several of these foundations state that the greatest victims of today’s struggling system are children of lower income families.
Former board member of the Bradley Foundation, Pete DuPont, says of low-income people, “If you give them the opportunity to go to a school of their choice and opened the market up to creating those schools, there’s a practical thing you could do that would help the lower-income and disadvantaged people in this country, and it would be individualism as opposed to the collectivism of the education system.”
Labels: School Privatization
William Schambra, of the Hudson Institute’s
It is believed by a large number of conservative foundations that the current public education system is broken. In NCRP’s Strategic Grantmaking: Foundations and the School Privatization Movement, several of these foundations state that the greatest victims of today’s struggling system are children of lower income families.
Former board member of the Bradley Foundation, Pete DuPont, says of low-income people, “If you give them the opportunity to go to a school of their choice and opened the market up to creating those schools, there’s a practical thing you could do that would help the lower-income and disadvantaged people in this country, and it would be individualism as opposed to the collectivism of the education system.”
Labels: School Privatization
posted by NCRP at
11:07 AM
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Principles May Have a Dangerous Journey
posted on: Monday, December 10, 2007
The Independent Sector has issued its “Principles for Good Governance and Ethical Practice: A Guide for Charities and Foundations”. These principles were largely an outgrowth of pressure from the chairman and ranking member of the Senate Finance Committee who identified some critical issues in the charitable sector.
There has been surprisingly little written about the guide outside of the charitable literature. I have been an ardent critic of the document. I wrote about my concerns that self-regulation of the industry failed to address the multitude of issues that currently compromise the nonprofit sector. I shared my distress that it took the government (Congress and the IRS) to raise the issues to the level that the document needed to be written. I have raised concerns if an expenditure of nearly $3.5 million to develop the document is an appropriate us of charitable dollars. I’ve expressed concern that the sector basically rolled over to quiet the outsiders. But my biggest disappointment was that the nonprofit leadership failed to even attempt self-regulation and ultimately found itself partnering with government. It took the most expedient solution.
Except for few other lone soldiers, I felt alone in my criticism. Others, however, are seemingly coming to the fore with similar conclusions.
The well-respected organization, The Philanthropy Roundtable, has indicated its displeasure with several aspects of the IS Principles. It notes that it does “not recommend the Independent Sector document as a whole as a guide to improving governance and accountability among foundations”. The organization has a multitude of reasons for their decision.
First, The Philanthropy Roundtable believes that the principles take an “arbitrary and one-size fits all approach”. To that point, I have written that the IS guidelines are going to be onerous for small and medium agencies---about 70% of the sector. Those are the agencies that are not typically members of IS and therefore not represented at the negotiating table. Small and medium nonprofits are already taxed to the max and these additional burdens may exacerbate the already accelerated exodus of staff leaving the sector.
The Roundtable secondly felt the “principles imply improperly that foundations act unethically or practice misgovernance unless their boards include members from diverse backgrounds”.
And third, the Philanthropic Roundtable has concerns that the “principles represent ‘standards of practice that organizations are encouraged, but not required to meet’”. The encouragement by of IS has turned into a first step toward regulation. The Roundtable’s apprehension has already been borne out in testimony of the IS President. She requested, in testimony, that the equivalent of the federal Small Business Administration be created for the charitable sector. This would, in fact, become a regulatory apparatus to implement new stipulations that are put on the sector.
Several other reforms offered by IS will strengthen the government-charitable sector relationship. One IS’ request is for government assistance for board members and professional leaders because they are incapable of understanding that what is expected of them.
The IS report suggests more involvement by the Internal Revenue Service particularly in the areas of improper self-dealing and excessive compensation whether the board knew or “should have known” that it was improper. They may have gotten their wish. In a recent speech, the IRS’ commissioner of the agency’s tax-exempt and government-entities division told a group of foundation officials that the IRS is readying itself to make sure “that a contribution to an organization is put to good use and not squandered.”
IS indicates that a couple of hundred organizations have signed off on the principles. This is far fewer than the 600 charities, foundations and corporate philanthropic programs that make up the IS coalition and is a small fraction of the 1.6 million nonprofits in the U.S.
Those agencies and individuals that did give approval are many of the same people who helped develop the Guide. Even those that did sign off on the Principles face no financial or regulatory repercussions by not implementing them. A guide without teeth. A plan that is a subterfuge to keep the regulators at bay?
Independent Sector says it is the leadership forum for charities, foundations, and corporate giving programs committed to advancing the common good in America. With so few on board with the Principles, whom are they leading? IS says it serves as the premier meeting ground for the leaders of America's charitable and philanthropic sector. Others apparently disagree.
Gary Snyder is the author of Nonprofits on the Brink. He can be reached at gary.r.snyder@gmail.com or 248.324.3700.
Labels: accountability
The Independent Sector has issued its “Principles for Good Governance and Ethical Practice: A Guide for Charities and Foundations”. These principles were largely an outgrowth of pressure from the chairman and ranking member of the Senate Finance Committee who identified some critical issues in the charitable sector.
There has been surprisingly little written about the guide outside of the charitable literature. I have been an ardent critic of the document. I wrote about my concerns that self-regulation of the industry failed to address the multitude of issues that currently compromise the nonprofit sector. I shared my distress that it took the government (Congress and the IRS) to raise the issues to the level that the document needed to be written. I have raised concerns if an expenditure of nearly $3.5 million to develop the document is an appropriate us of charitable dollars. I’ve expressed concern that the sector basically rolled over to quiet the outsiders. But my biggest disappointment was that the nonprofit leadership failed to even attempt self-regulation and ultimately found itself partnering with government. It took the most expedient solution.
Except for few other lone soldiers, I felt alone in my criticism. Others, however, are seemingly coming to the fore with similar conclusions.
The well-respected organization, The Philanthropy Roundtable, has indicated its displeasure with several aspects of the IS Principles. It notes that it does “not recommend the Independent Sector document as a whole as a guide to improving governance and accountability among foundations”. The organization has a multitude of reasons for their decision.
First, The Philanthropy Roundtable believes that the principles take an “arbitrary and one-size fits all approach”. To that point, I have written that the IS guidelines are going to be onerous for small and medium agencies---about 70% of the sector. Those are the agencies that are not typically members of IS and therefore not represented at the negotiating table. Small and medium nonprofits are already taxed to the max and these additional burdens may exacerbate the already accelerated exodus of staff leaving the sector.
The Roundtable secondly felt the “principles imply improperly that foundations act unethically or practice misgovernance unless their boards include members from diverse backgrounds”.
And third, the Philanthropic Roundtable has concerns that the “principles represent ‘standards of practice that organizations are encouraged, but not required to meet’”. The encouragement by of IS has turned into a first step toward regulation. The Roundtable’s apprehension has already been borne out in testimony of the IS President. She requested, in testimony, that the equivalent of the federal Small Business Administration be created for the charitable sector. This would, in fact, become a regulatory apparatus to implement new stipulations that are put on the sector.
Several other reforms offered by IS will strengthen the government-charitable sector relationship. One IS’ request is for government assistance for board members and professional leaders because they are incapable of understanding that what is expected of them.
The IS report suggests more involvement by the Internal Revenue Service particularly in the areas of improper self-dealing and excessive compensation whether the board knew or “should have known” that it was improper. They may have gotten their wish. In a recent speech, the IRS’ commissioner of the agency’s tax-exempt and government-entities division told a group of foundation officials that the IRS is readying itself to make sure “that a contribution to an organization is put to good use and not squandered.”
IS indicates that a couple of hundred organizations have signed off on the principles. This is far fewer than the 600 charities, foundations and corporate philanthropic programs that make up the IS coalition and is a small fraction of the 1.6 million nonprofits in the U.S.
Those agencies and individuals that did give approval are many of the same people who helped develop the Guide. Even those that did sign off on the Principles face no financial or regulatory repercussions by not implementing them. A guide without teeth. A plan that is a subterfuge to keep the regulators at bay?
Independent Sector says it is the leadership forum for charities, foundations, and corporate giving programs committed to advancing the common good in America. With so few on board with the Principles, whom are they leading? IS says it serves as the premier meeting ground for the leaders of America's charitable and philanthropic sector. Others apparently disagree.
Gary Snyder is the author of Nonprofits on the Brink. He can be reached at gary.r.snyder@gmail.com or 248.324.3700.
Labels: accountability
posted by Gary at
3:12 PM
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