posted on: Tuesday, September 15, 2009

Gary Snyder

As the confidence in the charitable sector sinks, where are its leaders with lifeboats? Are the leaders indifferent or just out of synch? Who is going to lead us out of this precarious path of mistrust and disengagement?

There is no silver bullet to guide us out of the quagmire that philanthropy faces. However, all roads lead to the need for change. Our donors don’t trust us, the regulators don’t believe us, and our stakeholders doubt we are delivering the goods. All believe that beneficence, forethought, and self-discipline of our forefathers have gone by the wayside. The sector must take a hard turn and reflect on the way it is conducting its business.

Some believe that the entrenched incumbency has become a major obstacle to a better course. We have seen several examples of a head-in-sand mentality.

We saw one example of it when the National Committee for Responsive Philanthropy (NCRP) report, “Philanthropy at Its Best,” suggesting, yes suggesting, that the sector look at another approach to grant makers. No mandates, just consideration. Those with deep-rooted aversion to change obviously saw it as a threat and started to attack. The attacks came from those seeking to maintain the status quo, one of which was the Wall Street Journal, whose opinion was published without even seeing the final recommendations.

Gara LaMarche of Atlantic Philanthropies noted that the NCRP suggestions were merely aspirational and nothing more. It was intended to be a basis for discussions, but some apparently thought that it was an assault on their privileged positions.

Whether or not if you liked their positions, one must respect those that at least defended their positions. Some leaders didn’t even comment on the NCRP document. Being silent must have been a surprise to many of the 120 funders that backed the NCRP principles and supported the leaders organizations.

Sitting on the sidelines on critical issues is no way to direct the sector’s destiny. Such denial has led to excesses in government intervention as well as abuse.

We have seen this silence in the past and at the expense of a large part of the charitable sector. In negotiations with the Senate Finance Committee, charity representatives quietly rolled over and asked for vigorous oversight and increased resources for oversight and education “for the many nonprofits that have no idea that there are a set of expectations.” This was done without ever taking the lead and addressing the problems themselves.

Many small and medium agencies, as a consequence, which were not represented at the table, have been subjected to government fiats. They believe that the standard-bearers’ priorities do not comport with the calling of good leadership. Many think that keeping their jobs seemed to be more important than finding tough solutions.

This lack of action is in stark contrast to the Council on Foundations approach. When it was challenged as philanthropic resources were down 40%, the Council of Foundations didn’t duck the problem and became proactive. That activist approach should be at the top of any leader’s job description.

Moreover, nonprofit leaders failed to take a position on President Obama’s proposal to limit charitable deductions…a most important piece of legislation facing the charitable sector. It failed to do so because it was “Solomon’s choice” between benefits to charities or healthcare.

Another essential trait of leaders is to have the courage to call things as they truly are, with no sugarcoating. Unfortunately, despite all evidence to the contrary, philanthropic leaders seem to believe that the annual multi-billion dollar nonprofit fraud is limited to ‘a few bad apples.” That position contradicts all other indicators in which nonprofit fraud, as a percentage, exceeds that of the for-profit and government sectors by considerable measure. Such dismissive mischaracterizations do not serve the sector well.

Nonprofit fraud is one matter that has failed to be adequately addressed. As a result, many believe that trust indicators in the sector are moving in the wrong direction. Some blame the decline in contributions and confidence on the economy. That is too easy. The trend line was established at the height of the economy.

Many believe that the sector would be stronger had it been more proactive. All of the aforementioned point to the need of charity leaders to critically look at the need for change. Reform may make a real difference, but the change metric must be first acknowledged; then addressed. Doing nothing will not stop the smoldering of the charitable sectors fate. Leaders must be sensitive and attentive to the needs that they serve. With outside pressures and new realities mounting, the current status quo, wait-and see leadership is unacceptable.

So, who is going to step up and take the mantle?

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 http://gary.r.snyder@gmail.com; website: www.garyrsnyder.com, phone: 248.324.3700. He is a member of the board of the National Committee for Responsive Philanthropy.

posted on: Tuesday, April 15, 2008

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.