Archive for the ‘Coverage of nonprofits’ Category
January 13, 2012
The Nonprofiteer’s readers might enjoy this account of a pissing match between Warren Buffett and Mitch McConnell. The Senator from Kentucky has been urging the Sage of Omaha to make voluntary contributions to the Treasury if he felt he was undertaxed. Buffett has now responded that he’ll match any such contributions made by Republican Senators.
This dialogue makes in a different form Milton Friedman’s point as recounted by the Nonprofiteer yesterday. Voluntary contributions to reduce poverty (or do any of the other things we rely on the government to do) are insufficient, because everyone would be willing to pay his/her share only if s/he could be sure that everyone else would be willing to pay his/her share. Otherwise, no dice.
Doubtless McConnell will ignore Buffett’s challenge and continue his nonsensical bluster about Buffett’s freedom to pay extra if he feels “guilty” about his low tax rate. But the point isn’t, of course, how Buffett feels, or even what he does—it’s what everyone else does. And if McConnell and his buddies don’t donate to the Treasury, then they are poster children for the free-rider problem—thereby proving Buffett right: philanthropy is not sufficient and taxation is necessary.
H/T the indispensable Rick Cohen at The Nonprofit Quarterly.
Tags:501c3, charity, donors, IRS, nonprofit, not for profit, philanthropy, Poverty, social capital
Posted in Coverage of nonprofits, Current Affairs, Finances, Government grants, Nonprofits--General, Philanthropy and Taxation, Poverty, Private Philanthropy | Leave a Comment »
January 11, 2012
I am distressed by the sight of poverty; I am benefited by its alleviation; but I am benefited equally whether I or someone else pays for its alleviation; the benefits of other people’s charity therefore partly accrue to me. To put it differently, we might all of us be willing to contribute to the relief of poverty, provided everyone else did. We might not be willing to contribute the same amount without such assurance.
Therefore, this wild-eyed radical continues, the government must step in. If poverty is to be alleviated, everyone must be taxed so that no one gets a free ride to the benefits of poverty eradication.
How appalling! How socialistic! Of course, what else could one expect from an ivory-tower academic complete with Nobel prize?
No, not that one (or even that one): Milton Friedman.
When the man said “There ain’t no such thing as a free lunch,” he meant it.
H/t Allen R. Sanderson.
Tags:501c3, charity, donors, IRS, nonprofit, not for profit, philanthropy, Poverty, taxation
Posted in Coverage of nonprofits, Finances, Nonprofit management, Nonprofits--General, Philanthropy and Taxation, Poverty, Private Philanthropy | 1 Comment »
January 4, 2012
Here’s a chronic story (h/t The Nonprofit Quarterly), about how the United States is the most generous nation on earth. This annual survey measures how often people donate money to charity, how often they volunteer and how often they help strangers in need—the distinction between #1 and #3 being a little vague.
While the Nonprofiteer salutes all the donors among us, she feels constrained to point out that the United States leaves to private charity a whole range of activities provided elsewhere by the government. Are the citizens of France really less giving, or are they just willing to give free public higher education through their taxes rather than depend on the kindness of strangers? Are the Swedes, who provide paid parenthood leave while Americans think they’re generous to provide unpaid leave, really stingier than we are? And do the English really turn their backs on the needy, or do they instead provide health care for everyone?
The Nonprofiteer is proud to be an American, but she prefers to be proud of the things we really do well rather than the things we do to compensate for what we do poorly, namely, supply adequate social services to all our citizens.
Posted in Coverage of nonprofits, Finances, Government grants, Health care, Higher education, International, Nonprofits--General, Philanthropy and Taxation, Poverty, Private Philanthropy | 2 Comments »
December 20, 2011
The most powerful argument Jack Shakely makes in his LA Times op-ed piece opposing the charitable tax deduction is that it’s a poor trade-off. The retired foundation executive points out that charities have permitted themselves to be shorn of their ability to influence policy and politics in return for a mess of pottage. Of course the restrictions on charitable participation in the public arena aren’t as draconian as nonprofit executives (and especially Boards) think they are—but the point is that nonprofits understand themselves to be constrained, and rather than bothering with the details remain quiescent politically.
As strong a proponent as the Nonprofiteer is of the pursuit of individual gifts, in the real world virtually every social service agency needs seriously more government money if it’s going to make any dent in the social problems it faces. The more social service agencies feel free to advocate for this particular budget bill or that particular provision in a piece of legislation—both prohibited by the current tax-code provisions—the more likely it is that those bills and provisions will pass, which would serve way more of the agencies’ clients than the most blue-sky estimates of their potential for growth in individual giving.
And for someone with foundation cred to say this! All hail Jack Shakely.
h/t The Nonprofit Quarterly Newswire.
Tags:501c3, Advocacy, charitable tax deduction, charity, donors, Executive Director, Fundraising, IRS, nonprofit, not for profit, philanthropy, Relations with funders, social services
Posted in Advocacy, Coverage of nonprofits, Current Affairs, Fundraising, Government grants, Nonprofit management, Nonprofits--General, Philanthropy and Taxation, Private Philanthropy, Social Service Agencies | Leave a Comment »
November 18, 2011
While the Feds debate the future of the charitable deduction (among many other aspects of the tax code), some states are diving in with modifications to their own tax subsidies to charity. Michigan, for instance, will apparently permit a tax credit for donations (available for the past forty-plus years) to expire at year’s end.
Naturally, nonprofit leaders are distressed and are giving voice to their concerns. The Nonprofit Quarterly reports:
According to Michigan Radio, the credit allows Michigan taxpayers to essentially double their contribution when they give to community foundations, homeless shelters, food banks, and public institutions (such as Michigan universities, museums, public libraries, and public broadcasting stations).
The tax credit has been eliminated as part of the governor’s plan to pay for a business tax cut. According to the Detroit News, 250,000 made use of the credit in 2010, and it earned $100 million for Michigan charities and provided $40 million in write-offs.
You won’t find the Nonprofiteer cheering any endeavor designed to pay for a business tax cut, especially when it’s so well-documented that many businesses pay nothing like the nominal rate–or even pay nothing at all. But it’s too simple, and not exactly correct, to argue that the tax credit earned $100 million on a $40 million investment. First, we don’t know how many of those gifts to charities would have been made anyway. Second, as is the case with all tax subsidies, the money taken from the public fisc doesn’t support the same public purposes it would if the taxes were paid. If Michigan traded $40 million worth of public schools and police officers for $100 million worth of private schools and university police forces, is it really better off? The allocation of funds matters as much as, if not more than, the raw amounts.
NPQ further quotes a representative of the Community Foundation for Southeast Michigan:
Studies have shown that people give to charity because they care about the cause, but tax policy influences how much people are able to give . . . . We anticipate that with the loss of the tax credit, people will give to charities they’ve supported in the past, but they will give less because it costs them more.
She may be correct, but that’s actually less an argument for maintaining the credit than for raising the tax rate on individuals. The higher the tax, the greater the value of any tax subsidy, and therefore the more likely individuals are to make tax-subsidized gifts.
That’s the theory, anyway. We’ll all be interested to see how this turns out.
And meanwhile, the Cook County Assessor has begun the process of returning Northwestern Memorial Hospital buildings to the property tax rolls, after a court ruled they were not “charities” and therefore not entitled to continued exemption under the state Constitution. The Illinois situation is worth watching because it represents a modification to tax subsidies not by the legislature but by the courts–meaning something not subject to public pressure or comment.
The Nonprofiteer is NOT arguing against “activist judges,” or any nonsense of that kind. The Illinois Supreme Court’s rulings in this area have been (in her view) utterly within the four corners of the Illinois Constitution. She’s merely making the point that sector-wide outcry will have no impact on judicial changes to the tax environment–which means that one way or another we’ll all find out soon how important tax subsidies really are.
Tags:501c3, charity, Chicago, donors, nonprofit, not for profit, philanthropy
Posted in Coverage of nonprofits, Current Affairs, Finances, Nonprofit management, Nonprofits--General, Philanthropy and Taxation, Private Philanthropy, Public private partnerships | 1 Comment »
November 17, 2011
There could be worse ways to handle succession planning than the one chosen by the Miami City Ballet, but it would be hard to think of one. The Board of Directors, concerned that the ballet company would collapse when its famous artistic director Edward Villella retired, decided to test its own theory by forcing him out before he was ready to leave. Some Board members blame the outcome on Mr. Villella, who apparently refused to greet several of them at the company’s gala; but it’s hard to blame him when one of them called a meeting with him for the purpose of handing him a book on succession planning.
The Times article reaches for the classic suits-versus-artists narrative, saying that Villella’s ouster reflected the Board’s determination to place business stability above artistic product; but that’s unfair. The Board is responsible for the continued health of the company, and a failure to consider new leadership when the current leader is 75 would be a dereliction of duty. But what we’ve got here is failure to communicate.
As Chicago’s Victory Gardens Theatre Board learned back in 2000, you don’t call in the company’s artistic engine and hand him his walking papers–or even the sort of broad hint contained in the gift of a book about succession planning. You’re talking to someone about his life’s work and his passion, and you can’t talk to him as if he were a CEO who had been recompensed all these years in cash and expected to be recompensed the same way in retirement. An artistic director who is compelled to retire–and yes, indeed, some of them need to be–has to be offered a form of compensation congruent with what he’s been receiving up until now, something involving artistic control–even if it’s only the control inherent in leading the search for his own successor.
And even if the artistic director’s retirement creates the opportunity for the Board to step into its proper role of leadership–say, supervising the managing director instead of having the artistic director do so–that’s an opportunity to be pursued once the new artistic director begins. From the Board’s standpoint, having the managing and artistic directors report co-equally is a way to lighten the artistic director’s load while assuring that the Board itself receives comprehensive information. But from the standpoint of the incumbent artistic director, it’s a slap in the face, and suggests that the Board wants to interpose a business person (and a businessperson’s veto) between the artist and his vision.
Of course the Board IS the boss of the company, including the artistic director. But the most effective bosses wear their power lightly, in cooperation rather than conflict with the artists they mean to be serving. By this measure, the Board of the Miami City Ballet just fell on its face.
A word to wise arts Boards everywhere.
Tags:501c3, arts groups, ballet, Board of Directors, Edward Villella, Executive Director, governance, human resources, nonprofit, not for profit, personnel, succession planning. Miami City Ballet, theater, Victory Gardens Theatre
Posted in Arts Organizations, Boards of Directors, Coverage of nonprofits, Executive Directors, Management Advice Day tip, Nonprofit management, Nonprofits--General, Personnel Issues, Succession planning | Leave a Comment »
November 10, 2011
It will be interesting to see how things develop at the Washington Post’s new On Giving section. Self-described as a “conversation about philanthropy and social entrepreneurship,” it at least aspires to talk about the nonprofit sector in more depth than the conventional scandal-or-gala approach. (The Nonprofiteer has long complained about the mainstream media’s coverage of the sector, which manages to be both narrow and shallow; in fact, those shortcomings account for the launching of this blog.)
But is a focus on mammoth gifts and efforts to up-end the nonprofit model really any better? Maybe those are the dog-bites-man stories. Maybe the day-to-day struggles of the majority of good-deed-doing agencies simply don’t lend themselves to the conventions of daily journalism—but the Nonprofiteer would give a lot to see someone try to find out.
Tags:501c3, charity, corporate giving, nonprofit, not for profit, philanthrocapitalism, philanthropy, social entrepreneurship, Washington Post
Posted in Charity scandals, Coverage of nonprofits, Nonprofits--General, Private Philanthropy, Social enterprise | Leave a Comment »
November 8, 2011
. . . wrote Andy Rooney in this long-ago essay. This makes as much sense to the Nonprofiteer as anything else Andy Rooney ever said, which is to say, not much. What does it mean to “deserve” charity, beyond needing it? As George Bernard Shaw’s Alfred Doolittle memorably explained in Pygmalion,
If theres anything going, and I put in for a bit of it, it’s always the same story: “Youre undeserving; so you cant have it.” But my needs is as great as the most deserving widow’s that ever got money out of six different charities in one week for the death of the same husband. I dont need less than a deserving man: I need more. I dont eat less hearty than him; and I drink a lot more. I want a bit of amusement, cause I’m a thinking man. I want cheerfulness and a song and a band when I feel low. Well, they charge me just the same for everything as they charge the deserving. What is middle class morality? Just an excuse for never giving me anything.
Philosopher Matt Zwolinski made the same point in somewhat more formal terms.
T]he mere fact that there is a valid moral distinction to be made does not entail that we want our public policies to make it. It is, after all, difficult to discern between the deserving and the undeserving – maybe especially for governments, but for private charities too.
And Jewish folklore provides yet another version. The story is told of a rabbi who gave a beggar $100 and then faced the reproaches of his wife, who’d seen the beggar’s wife wearing fur. “He told me he needed it, and I had it, so I gave it to him,” replied the rabbi. “What he does with it after is none of my concern.” The point is that generosity is the process of separating yourself from your money, not the process of evaluating someone else’s virtues.
Does the Nonprofiteer tend to give her money to causes she judges worthwhile (and therefore deserving) and to agencies she believes are efficient (and therefore deserving)? Of course. But does she worry about whether the UN Population Fund is providing assistance only to women who became pregnant by an angel, or whether the ACLU vindicates the rights only of upright church-goers? Of course not. People who need help, deserve help. End of conversation.
Tags:501c3, ACLU, charity, deserving poor, donors, Fundraising, nonprofit, not for profit, philanthropy, Poverty, Relations with funders, UNFPA
Posted in Coverage of nonprofits, Fundraising, Mission, Nonprofit management, Nonprofits--General, Poverty, Private Philanthropy | Leave a Comment »
November 7, 2011
Alarms are sounding in the Nonprofiteer’s home town of Chicago today about the first budget proposed by Mayor Rahm Emanuel, which requires nonprofits to pay for water and sewer services they previously received free. A sector-wide outcry produced one modification—a phasing-in of the charges over three years at smaller nonprofits—but generally the Mayor is keeping a campaign promise to ask nonprofits to bear their “fair share” of municipal costs.
He also seems to be following the lead of the Illinois courts which, as previously noted, are re-examining the nonprofit status of several of the state’s hospitals. The Nonprofiteer’s colleagues at The Nonprofit Quarterly characterize Emanuel’s move as over-reaching, in that it affects nonprofits other than hospitals. But the Nonprofiteer has no difficulty identifying non-hospital nonprofits whose water and sewer bills she doesn’t feel like subsidizing: the YMCA of Metropolitan Chicago (which, notwithstanding the social services it provides, is mostly a very successful health club that uses a lot of water); the Art Institute of Chicago (which, notwithstanding the educational programs it provides, is a wealthy institution with very low personnel costs because every art-history major wants to work there); the University of Chicago (whose housing and athletic facilities use as much water as any suburban development and whose property tax exemption is secured by the Illinois Constitution). And let’s remember that the smallest nonprofits are renters, most of whom get water and sewer as part of their leases from for-profit landlords, and won’t be affected in the least. So a bit less howling, okay?
Especially as we contemplate this past weekend’s flood of accounts transferred to nonprofit credit unions in reaction to the obvious greed of the largest banks, particularly Bank of America. (Even a major philanthropist has moved his accounts to protest B of A’s failure or refusal to modify a reasonable number of mortgages). Maybe if the credit unions get wealthy enough they’ll be able to provide the rest of the sector with the working-capital loans it can rarely get from commercial banks. Maybe they’ll offer special water-and-sewer-bill loans.
And maybe a little taste of self-help will remind the sector that it’s supposed to be independent. Political trends come and go but the work we do must continue, and it’s our business to organize ourselves so it can.
Tags:501c3, arts groups, charity, Chicago, credit, nonprofit, not for profit, philanthropy, Real Estate, recession, Relations with funders, social services, taxation, water bills
Posted in Arts Organizations, Coverage of nonprofits, Current Affairs, Environmental, Finances, Government grants, Health care, Higher education, Nonprofit management, Nonprofits--General, Private Philanthropy, Public private partnerships, Real Estate, Relations with funders, Social Service Agencies | Leave a Comment »
November 4, 2011
The Nonprofiteer has never had much time for people who want to change the name of the sector to something non-”non”—something more positive, like “Civil Society Organization,” or less meaningful, like “independent.” But this article about the connection between Herman Cain’s campaign and a Tea Party front group funded by the Koch Brothers has her rethinking her position. Under the headline “Cain to Review Links to a Nonprofit” we learn that
An outside lawyer will review allegations that Herman Cain’s presidential campaign accepted tens of thousands of dollars in goods and services from a tax-exempt organization founded by his chief of staff . . .
The front group, “Americans for Prosperity,” is a Wisconsin nonprofit granted at least preliminary 501c3 recognition by the IRS. And if it were actually nothing more than a group of citizens banded together to advocate for policies they believe will lead to prosperity, there would be nothing wrong with that. But if instead it’s just a mouthpiece for the Koch brothers—an Astroturf, rather than a grassroots, organization—then there is something wrong.
The IRS requires 501c3s to raise a third of their money from the public precisely to prevent the creation of captive organizations of this kind. Use of a tax-exempt entity to promote the interests of a single individual or family is a violation of Federal tax law. Moreover, if the nonprofit paid some of the Cain campaign’s expenses, that’s a violation of Federal election law—perhaps one of the few activities left that is.
The Cain campaign may collapse under the weight of far more interesting allegations (sex beats money every time); but if in fact this nonprofit was nothing more than a campaign slush fund, its existence represents a taint on the “nonprofit” label. What a shame that “handmaiden to profit and to policies assuring that the profitable get more so and the rest of us get squat” is so unwieldy.
Maybe a new name for the sector wouldn’t come amiss; but let’s be realistic. The Iron Law of Euphemisms means that whatever name is adopted instead will soon become an epithet itself. This explains the “progress” in designating African-Americans, from “n****r” to “colored” to “Negro” to “black” to “Black” to “people of color”: as long as people using the term hate the people they’re describing, the term will be infected with their hatred and soon need to be abandoned.
And as long as the wealthiest people using the term “nonprofit” are determined to distort the form to support the worst excesses of the profit-driven world, it hardly matters what the rest of us call it.
Tags:501c3, Advocacy, Americans for Prosperity, Cain, campaign finance, charity, Conflict of Interest, IRS, Koch, nonprofit, not for profit, politics, Tea Party
Posted in Advocacy, Advocacy groups, Campaign finance, Charity scandals, Coverage of nonprofits, Finances, Mission, Nonprofit management, Nonprofits--General, Private Philanthropy, Relations with funders | 6 Comments »
