Funding Incompetence
posted on: Wednesday, May 13, 2009
By Gary Snyder
Much has been said about the bailout of the banks and other final institutions. It gave the American people an in-depth view and most didn’t like it.
Americans have short memories and are very forgiving. They believe that people make mistakes and are sometimes short sighted. But greed, selfishness and unfairness at America’s expense are personal attributes that that seem to have gotten much attention. The taxpayer wanted remedies. They elevated their voices and demanded that Congress address the avarice that the financial CEOs exhibited. Congress responded with a vengeance.
Unfortunately that has not been the case in the charitable world. Little has been said about unconscionable greed and poor judgment by it leaders at stalwart agencies as well as thousands of others. American Red Cross and the Smithsonian Institution have a history of bad behavior. Other than some Congressional spats, we have not seen outrage. Like the for-profit sector these two former leader deficit organizations have been rewarded.
American Red Cross and the Smithsonian Institution are two, of many, examples of tarnished charitable organizations. Both are designated as congressionally chartered organizations and should, at minimum, be accountable and transparent. Instead boards of both organizations have failed to govern in the most elementary manner.
American Red Cross
Just prior to bringing on the current CEO, ARC hired an executive from the Internal Revenue Service that was largely ineffective at regulating charities. His first acts were to surround himself with confidantes that did not do their job at the IRS. The newly hired CEO soon left as a result of a red-hot sex scandal. This is the latest in a series of former American Red Cross CEOs over a decade that were forced to leave---taking hundreds of thousands of dollars of severance pay.
Where was the board? The bulky and weak 50 trustees did little to govern. One example is the 8 presidential appointees attendance. Over a 5-year period six trustees never attended 23 meetings that were held. One showed up one time. The other didn’t show up because she felt it was a conflict-of-interest and failed to notify anyone about the reason for her absence.
Until there was a congressional investigation, no one in the history of the organization forthrightly addressed board competency and decision-making deficits. In spite of virtually no governance, poor leadership, mounting a quarter-billion shortfall, and hundreds of millions of dollars in fines, watchdog agencies failed to address this spectacular ineptitude.
Smithsonian Institution
Bloated salaries, financial and administrative improprieties seemingly were not an issue to the board of the Smithsonian. No one was held accountable for any of the misdeeds that plagued the charity until Congress made a spectacle of the board’s incompetence. One example illustrates the problem. There was a $1.15 million housing allowance paid to the Secretary for a $3 million mansion that didn’t have a mortgage. This is in spite of board approval and later excuses that they knew nothing of such a provision. Another oversight was the huge backlog of $2.5 billion in deferred maintenance.
In spite of the forced resignation of the lavish spending Secretary of the Smithsonian and poor policies and implementation with no accountability, the figurehead board recently elected one of its own members as chairperson.
Rewards for incompetence?
In late 2008, Congress awarded $100 million to the American Red Cross in spite of having lost four executives in the 8 or so years. It also lost its coveted designation as the first responder, the federal go-to agency, to FEMA because of its feeble performance. Many local and regional Red Cross executives have been distressed in dealing with the national organization.
Hopefully the future forebodes better times with a revised charter that clarifies the roles of the executive and board and eliminates over half of the board seats. So far executive Gail McGovern has been able to keep the organization out of the previously dreadful headlines.
With 70 percent of its budget coming from the federal budget Congress rewarded the Smithsonian by increasing its funding by 7 per cent. It also received an additional $25 million from the economic stimulus bill. The Smithsonian governors need to make certain that they make the necessary changes, including accountability and transparency and those affecting governance. Some have been made, while others need to emerge. The continuous drip of bad news from one of the America’s great icons is inexcusable and must end.
These two charities are representative of a diminished sector that needs to replenish its cherished place with America’s trust. Unfortunately, they parallel AIG, Merrill Lynch and the rest of the large financial institutions that are apparently too big to close or sanction. The taxpayers have become the guarantors of their survival.
With decades of decay, these large charities maybe starting to tidy up their act. Let us hope that the thousands of other agencies that didn’t get the taxpayers largess will follow suite.
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: www.garyrsnyder.com, phone: 248.324.3700.
Much has been said about the bailout of the banks and other final institutions. It gave the American people an in-depth view and most didn’t like it.
Americans have short memories and are very forgiving. They believe that people make mistakes and are sometimes short sighted. But greed, selfishness and unfairness at America’s expense are personal attributes that that seem to have gotten much attention. The taxpayer wanted remedies. They elevated their voices and demanded that Congress address the avarice that the financial CEOs exhibited. Congress responded with a vengeance.
Unfortunately that has not been the case in the charitable world. Little has been said about unconscionable greed and poor judgment by it leaders at stalwart agencies as well as thousands of others. American Red Cross and the Smithsonian Institution have a history of bad behavior. Other than some Congressional spats, we have not seen outrage. Like the for-profit sector these two former leader deficit organizations have been rewarded.
American Red Cross and the Smithsonian Institution are two, of many, examples of tarnished charitable organizations. Both are designated as congressionally chartered organizations and should, at minimum, be accountable and transparent. Instead boards of both organizations have failed to govern in the most elementary manner.
American Red Cross
Just prior to bringing on the current CEO, ARC hired an executive from the Internal Revenue Service that was largely ineffective at regulating charities. His first acts were to surround himself with confidantes that did not do their job at the IRS. The newly hired CEO soon left as a result of a red-hot sex scandal. This is the latest in a series of former American Red Cross CEOs over a decade that were forced to leave---taking hundreds of thousands of dollars of severance pay.
Where was the board? The bulky and weak 50 trustees did little to govern. One example is the 8 presidential appointees attendance. Over a 5-year period six trustees never attended 23 meetings that were held. One showed up one time. The other didn’t show up because she felt it was a conflict-of-interest and failed to notify anyone about the reason for her absence.
Until there was a congressional investigation, no one in the history of the organization forthrightly addressed board competency and decision-making deficits. In spite of virtually no governance, poor leadership, mounting a quarter-billion shortfall, and hundreds of millions of dollars in fines, watchdog agencies failed to address this spectacular ineptitude.
Smithsonian Institution
Bloated salaries, financial and administrative improprieties seemingly were not an issue to the board of the Smithsonian. No one was held accountable for any of the misdeeds that plagued the charity until Congress made a spectacle of the board’s incompetence. One example illustrates the problem. There was a $1.15 million housing allowance paid to the Secretary for a $3 million mansion that didn’t have a mortgage. This is in spite of board approval and later excuses that they knew nothing of such a provision. Another oversight was the huge backlog of $2.5 billion in deferred maintenance.
In spite of the forced resignation of the lavish spending Secretary of the Smithsonian and poor policies and implementation with no accountability, the figurehead board recently elected one of its own members as chairperson.
Rewards for incompetence?
In late 2008, Congress awarded $100 million to the American Red Cross in spite of having lost four executives in the 8 or so years. It also lost its coveted designation as the first responder, the federal go-to agency, to FEMA because of its feeble performance. Many local and regional Red Cross executives have been distressed in dealing with the national organization.
Hopefully the future forebodes better times with a revised charter that clarifies the roles of the executive and board and eliminates over half of the board seats. So far executive Gail McGovern has been able to keep the organization out of the previously dreadful headlines.
With 70 percent of its budget coming from the federal budget Congress rewarded the Smithsonian by increasing its funding by 7 per cent. It also received an additional $25 million from the economic stimulus bill. The Smithsonian governors need to make certain that they make the necessary changes, including accountability and transparency and those affecting governance. Some have been made, while others need to emerge. The continuous drip of bad news from one of the America’s great icons is inexcusable and must end.
These two charities are representative of a diminished sector that needs to replenish its cherished place with America’s trust. Unfortunately, they parallel AIG, Merrill Lynch and the rest of the large financial institutions that are apparently too big to close or sanction. The taxpayers have become the guarantors of their survival.
With decades of decay, these large charities maybe starting to tidy up their act. Let us hope that the thousands of other agencies that didn’t get the taxpayers largess will follow suite.
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: www.garyrsnyder.com, phone: 248.324.3700.
posted by Gary at
10:03 AM
0 Comments:
Post a Comment
Links to this post:
Create a Link
<< Blog Home