Is the Close Relationship Between the Charitable Sector and the Government Healthy?
posted on: Tuesday, June 17, 2008
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.Labels: accountability, American Red Cross, Philanthropic Malpractice
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.
Labels: accountability, American Red Cross, Philanthropic Malpractice
posted by Gary at
3:36 PM
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