Archive for the ‘legal services’ Category

Lawyers As Nonprofit Directors – Maximizing Opportunities, Mitigating Risks

March 17, 2013
By Guest Poster Lesley Rosenthal
Note:  This article is a recap of Lesley Rosenthal’s presentation at Proskauer’s 17th Annual Trick or Treat Tax Exempt Seminar, November 29, 2012Attorneys can reap enormous rewards by serving on nonprofit boards.  Lawyers derive tremendous personal satisfaction in governing an organization that is meaningful to them.  They can do the public good by participating in a charity that feeds the poor, heals the sick, enlightens through culture and education, or preserves the environment.

Nonprofit board service is prestigious, and invaluable for professional networking.  It is also a great remedy for the ennui that sometimes sets in when lawyers work inside big law firms, corporate departments or government agencies, and a cure for the isolation of solo or small-firm practice.  A lawyer who serves as a nonprofit trustee is likely to quickly become a trusted and valued member of the team, whose individual contributions markedly enhance a worthwhile enterprise.

Board service may lead to (or in some locales even qualify as) pro bono work.  Suitable pro bono opportunities are sometimes hard to find, particularly for corporate or transactional lawyers.  Most important is the opportunity to serve the public interest in a meaningful way, to bring professional skills to bear in a collegial context that is different from an otherwise adversarial professional realm.

Why Nonprofit Boards Want Attorneys

For their part, organizations wish to recruit lawyers to their boards for a variety of reasons:  legal expertise and perspectives, stature, good judgment, negotiating skills, and of course financial contributions.  The fiduciary duty of care requires that board members attend meetings and pay attention to the governance of the organization, overseeing management in fulfillment of mission. In addition, most nonprofit board memberships come with a (stated or tacit) expectation that each member will donate or solicit funds on behalf of the organization.  Some organizations have a stated amount, others simply ask that each board member give an amount that is meaningful to him or her.

In addition to governing and personal giving, board members may be expected to serve in an external relations role, advocating for the organization and introducing it to new sources of funding such as private philanthropists, donor advised funds, government funders, corporations and foundations.

Apt Roles for Lawyers on Boards

By their training and professional expertise, lawyers may be particularly suited to fulfill certain roles on boards, for example:

  • Legal Committee
  • Governance committee
  • Audit committee
  • Public affairs/government relations committee
  • Corporate secretary role
  • Ad hoc committee to review and update by-laws
  • Development (fundraising) committee
  • Grants committee (for grantmaking organizations)

In many nonprofits, particularly those with larger boards, much of the work of the board is carried out through committees, whose activities and recommendations are memorialized in minutes and regularly reported out to the board for discussion, refinement and ratification. Attorneys may be particularly well-suited for the minute-taking role as well as for keeping track of the organization’s adherence to its policies and by-laws.

Some Cautionary Notes

Lawyers joining nonprofit boards would do well to observe some cautions.  Many nonprofits, particularly smaller or less-sophisticated organizations, may erroneously believe that having a lawyer on the board is the same thing as having a lawyer.  They may not recognize that the establishment of an attorney-client relationship is a formal matter, with an engagement letter (legally required in some states) and stated professional understandings as to scope of the representation, fees/fee waivers, and expenses.  For their part, the lawyers may not be in a position to deliver legal services to the client for any number of reasons: core competency, time and availability, conflict of interest, lack of malpractice insurance, lack of bar admission in that state, or otherwise.

When attorneys do agree to represent the organization as well as serve on its board, they should be mindful of the following risks:

  • Document the inception, scope and terms of the attorney/client relationship.  Some states’ professional responsibility rules require a written engagement letter setting forth these matters.
  • Avoid private inurement – nonprofit resources being used improperly to enrich the attorney or the law firm.  The actuality or appearance of a prohibited private inurement relationship between the organization and the attorney can avoided by providing services pro bono.  If the engagement is on a fee-bearing basis, the attorney should be sure to follow the organization’s conflict-of-interest policies and, once the relationship is cleared by independent directors, the attorney should be sure to follow requirements for ongoing disclosure of fees.
  • Privilege waiver can occur if the attorney/director fails to flag when she is taking off her director hat in the board room and commencing the rendering of legal advice as counsel.  See, e.g., Deutsch v. Cogan, 580 A.2d 100 (Del. Ch. 1990) (holding that lawyer’s communications with other board members or management were while she was wearing her “director hat” and not her “lawyer hat,” and that the communications are discoverable in litigation); see generally Model Rule of Professional Conduct 1.6.
  • Conflicts of interest can arise, for example, if the lawyer is asked to give a legal opinion on board actions in which the lawyer participated.  Another example: if the organization is party to a litigation, the lawyer may be unable to try the case on behalf of the client, especially where he may be a witness.
  • Gaps in liability coverage: Some legal malpractice insurance underwriters will not cover either the lawyer or her firm if one of its lawyers serves on the board of the client; other policies will provide coverage only where the lawyer was acting as a lawyer but not as a director.  This can lead to disputes between the D&O carrier and the malpractice carrier about whether the lawyer was acting as a lawyer or as a director, and ultimately can lead to a lack of adequate coverage altogether.
  • Higher standard/greater liability:  will a director who is also a lawyer be held to a higher standard in what they know or should know about company matters?  This question has been litigated and answered in the affirmative in a number of states in the for-profit context.  Query whether courts would apply a heightened standard to a lawyer acting as a director of a charity.

The opportunities and pleasures of serving on a nonprofit board are manifold.  Lawyers should embrace the chance to lead, learn and grow.  At the same time they should be mindful of the potential pitfalls of undertaking a dual role, and take appropriate steps to mitigate the risks.

To locate board member opportunities in New York City visit BoardServeNYC.

Lesley Rosenthal is Vice President, General Counsel and Secretary, Lincoln Center for the Performing Arts and author of the bestselling Good Counsel:  Meeting the Legal Needs of Nonprofits (John Wiley & Sons 2012)

From Law Students to Nonprofit Trustees

November 26, 2012
And now a word from the Nonprofiteer’s favorite guest poster, Lesley Rosenthal of Lincoln Center in New York:

Making the rounds at law schools for Good Counsel: Meeting the Legal Needs of Nonprofits, I’m heartened to meet so many students interested in serving on charities boards in their communities.  My recent talk at Harvard Law School about how law students and young lawyers can start preparing for the trustee role is available here.

Dear Nonprofiteer, Does an alumni association chapter have to file tax returns?

January 5, 2012

Dear Nonprofiteer,

I am the president of my local alumni chapter for a large university located in another state. The National Alumni Association is a 501(c)(3) organization with by-laws that state it can create various chapters around the country.   When our local chapter was created, the founding president filed the paperwork for an EIN so we could open a checking account. That is all he did; we are not incorporated as a 501-anything.   When he filled out the EIN paperwork, for “type of entity,” he clicked the “other” box and wrote “social club” in the blank. Our little chapter brings in less than $10,000 per year. We then funnel most of that back to the university’s scholarship fund.

My question is: are we supposed to be paying federal income taxes? State of Illinois income taxes?

My university is being remarkably unhelpful.   They did definitively say that they strongly advise their chapters against incorporating as their own 501(c)(3).

I have done some research and seen that other universities structure their alumni associations so that the national association is a 501(c)(3) and the local chapters are 501(c)(4)s. The local chapters then file what is called a “IRS-990 postcard.” This seems a reasonable solution, but it also requires that my chapter incorporate as a 501(c)(4), and I am hesitant to do that without official word from my university. I have a fellow board member who is breathing down my neck, convinced we are breaking all kinds of laws.  What should I do?

Signed, Clueless in Chicago

Dear Clueless:

The Nonprofiteer knows even less about tax law than you do, so she turned to her Association of Consultants to Nonprofits colleague Kathryn Vanden Berk, whose nonprofit law practice makes the Internal Revenue Code her constant companion.  Kathryn characterized your question as “easy but in multiple parts,” and her answer appears below.  Many thanks to her for her guidance, and for demonstrating that the author of Good Counsel isn’t the only nonprofit lawyer the Nonprofiteer knows!

There are four ways to handle this.  (1) ask the national association to take you on as a fiscal agent, (2) ask the national to file as a group exemption so that each chapter may get its exemption from the central organization of the group; (3) incorporate and go through the exemption application; and (4) do nothing.

Of these, the easiest is to be sponsored by the national (or any other already-existing) 501(c)(3).  The exempt entity confers the local chapter with its exempt status automatically and no paperwork needs to be filed.  However, the fiscal agent must report to the IRS on what happens within the local chapter.

The easiest for the locals, but harder for the national, is for the national to seek a group exemption.  It can then manage each of the local chapters as subsidiaries.  As above, the national is responsible for reporting to the IRS.

If the local decides to incorporate and seek its own exemption, it should identify its purpose as “educational and charitable”.  Generally, a scholarship organization must file a Schedule H with its exemption application, but it appears that this local forwards its funds to the national, and the national makes the selection.  In that case, it is not necessary for the local to go through the scholarship preparation.

An organization that identifies itself as a “social club” is exempt under 501(c)(6) of the Code.  However, I would not suggest that in this case.  The money collected is used for scholarships, and that is clearly a charitable purpose.  Since the national was able to get a 501(c)(3) ruling, it would be foolish for the locals to seek a different, less valuable exemption.  If the IRS balks at the (c)(3) classification, I would suggest that the national seek a group exemption.

Doing nothing is maybe not a crazy approach, but it risks exposure and the protections of the IRS Code and IL law are not available to the chapter leadership and members.  The reason I say it’s not crazy is the small amount of $$ that flows through the organization.  No one is going to come after them unless (and this is the big risk) something happens.  Then I can predict that there will be a great deal of embarrassment and perhaps even personal liability.

Bottom line: if you have not filed for a tax exemption, you must file as if you are a for-profit business, using Form 1120.  If you give your funds to the national at year’s end, then it is unlikely you will have to pay taxes.  However, your members cannot take deductions for the gifts they make to the local, even if they go to the national’s scholarship fund.  Same with Illinois: if the chapter is not tax exempt, then it is taxable and must file as such.

I should note that if you collect charitable funds in Illinois, you really need to be registered with the IL Attorney General, even if you are not exempt via the IRS.  The AG’s office is very strict about this.  You will have to pay a late filing penalty because you have been soliciting without being registered.  You might be exempt if you can convince the AG that $$ was raised only from members, but they are not as flexible on this as they once were.

I don’t know why the university advises against incorporation.  It’s a fairly inexpensive thing to do, and it gives liability protection to every member.  It’s a small price to pay for the protection it gives.  You need to have someone agree to be your Registered Agent, and to have his/her office or residence registered as the Registered Office.  You need to file annual reports (in Illinois and most states) to stay in good standing.  In Illinois, this costs $10.00 per year.

I don’t know why the (c)(3) and (c)(4) approach is used.  You would want every part of the organization to be classified as 501(c)(3) so that all gifts, grants and contributions are tax exempt and deductible to the donor.  I’d want to explore this further before acting.

So, Clueless, the answer is that no good deed goes unpunished.  Having investigated the question, you’ve now unearthed a series of obligations, decisions and tasks which I’m sure you’d rather not have known about.  You’re not about to go to jail but to protect yourselves it seems that getting your university to agree to serve as your fiscal agent, and then registering to raise funds in the state of Illinois, is the bare minimum you should do.

Guest post: One Book, Three Challenges

January 1, 2012
by Lesley Rosenthal

Good Counsel: Meeting the Legal Needs of Nonprofits
by Lesley Rosenthal
(John Wiley & Sons 2012)

As I embarked on writing Good Counsel: Meeting the Legal Needs of Nonprofits, well-meaning and concerned folks cited at least three reasons why no one had written such a book before, and (implicitly) why I shouldn’t try: it’s too dangerous, too hard, too scary.

The “too-dangerous” crowd, personified by some of the most successful leaders of nonprofit turnarounds on several continents, worried that legal information in non-lawyers’ hands would result in the unlicensed practice of law by a bunch of irresponsible, budget-strapped do-it-yourself nonprofiteers. Who knows what kinds of mission mischief non-lawyers would make with their newfound knowledge – the legal equivalent of sewing your own sutures! Fortunately my own boss, the President of Lincoln Center, and several of my other mentors before him, including a former Bar Association president and a federal judge, helped forge my conviction that the law belongs to the people. They encouraged my desire to put it into plain English for all to know.

The “too-hard” folks, also well meaning, recognized the enormous variety of laws that commonly arise in nonprofits and thought it impossible to provide a general overview in one volume. I know what they meant: the tangle of specialized state and federal laws that make our sector one of the most highly regulated in the whole economy, such as state nonprofit corporations laws, Section 501(c) of the internal revenue code, IRS rules, regulations and expectations surrounding the tax exemption and good governance, multi-level filing and disclosure requirements, pension, endowment and investment laws, lobbying restrictions, and a web of 50 different states’ fundraising laws. Many fine books have been written on each of these subjects, but rare is the legal resource that touches upon them all. Then, the skeptics continued, there are also general business laws that apply to these organizations – contract law, labor and employment laws, intellectual property laws, consumer regulatory laws, real estate laws, building codes and more. And business laws apply to the nonprofit sector in weird ways not necessarily intended by lawmakers, forcing volunteer-driven organizations, for example, to think long and hard about how to structure their activities to comply with minimum wage and hours laws. Pile on top of all of those layers the additional specialized laws that apply to the wide world of nonprofits, such as FDA regs for blood banks, student privacy laws for higher ed, permitting and accreditation for hospitals and mental health facilities and so on, and the whole enterprise of writing a book about the legal context of nonprofits threatens to die under its own weight.

The “too-scary” people are the most sympathetic people of all. They are the good-hearted lawyers who are already serving as counsel, as board members – or as both simultaneously – to nonprofit organizations. Their values may line up perfectly with the mission of the organization they serve – an elder care lawyer, for example, serving on the board of a community-based senior center, a real estate lawyer counseling a neighborhood development organization, a sports and entertainment lawyer doing board duty on her town’s local Little League or scout troop – but their legal expertise may be far afield of the legal issues facing the organization. It scares them to no end when a legal question arises in the boardroom and all eyes turn toward them. UBIT – what’s that? Conflict of interest policy pertaining to co-investment interests? Ugh. Section 501(h) election for lobbying activities? Isn’t this meeting almost over? They could have just begged off answering these questions – that’s not my area of law, you see, you wouldn’t ask a dermatologist about your chest pains, would you? – if only Good Counsel didn’t exist to connect the dots between the law they do know and the law they need to know to better serve their favorite charity.

Good Counsel is intended – charitably – to defy all three objections. In 300 pages it places the law of nonprofits in the hands of board members that oversee and executives that actually run the organizations – CEOs, CFOs, program managers and staff, fundraisers, personnel directors, communications professionals, operations and facilities managers and more. Does it answer every question? No. Does it sensitize non-lawyers to common legal issues in the highly regulated context in which they operate? I sure hope so.

Lawyers who make their living practicing in this field needn’t worry that this one volume will displace them; to the contrary, placed in the right hands, the book will generate more sophisticated questions and ultimately more and better client relationships. Corporate and transactional lawyers who have not yet found an outlet for their volunteer yearnings – because it seems that most pro bono projects are more aligned with the skills of litigators, not business lawyers – may feel empowered to see how readily they can translate what they know to the legal needs of prospective nonprofit corporate clients.

Law school deans concerned about the criticism being leveled at the entire enterprise of legal education may find a path forward in Good Counsel. With case studies, work plans and focus questions following each chapter, the book lays out a path for law students supervised by clinical professors to engage with a particular nonprofit organization and assess its legal needs – growing the students’ legal skills and stretching their capacities as counselors in ways that will serve them well even if they do end up in private practice after graduation, as most do.

And the legal profession, which despite the canon of lawyer jokes is as public-spirited as any I know, may find that Good Counsel can be used to foster and strengthen more pro bono relationships between lawyers and organizations. There is a great deal of goodwill for nonprofit organizations among public-spirited lawyers. I know, because I have been both a purveyor and voracious consumer of pro bono legal services, that there is more time and willingness to serve among the legal profession than has been fully tapped to date. A pilot program of the New York State Bar Association and the New York Attorney General’s Office Charities Bureau has adopted Good Counsel as a training resource for that very purpose: to help launch up to 50 new pro bono relationships between lawyers and charities in the initial pilot year of a program called Charity Corps: Lawyers Helping Nonprofits.

Far too many of our nation’s one million public charities lack regular access to counsel. At the same time, good-hearted lawyers are floundering in their efforts to help their favorite nonprofits, or are afraid to try because they think the field is so distant from subject matter they know. Law students graduate in debt up to their ears but lacking the practical skills they need to begin servicing clients after law school. Good Counsel is a playbook, intended for all three audiences.

And while I admit it was a little hard, scary and dangerous, ultimately there were far more supporters than skeptics for this project. I invite readers – lawyers, nonprofit leaders, and academics – to take a look and let me know if it works.

Lesley Rosenthal
www.goodcounselbook.com

goodcounselbook@gmail.com

Schedule of upcoming Good Counsel events in NYC, LA, Detroit, Miami, Philadelphia, Boston, DC and Buffalo, NY available on www.facebook.com/GoodCounselBook or at the book’s website, www.goodcounselbook.com.

Available for purchase at http://www.amazon.com/dp/1118084047/ref=rdr_ext_tmb

Review copies for academics, media, upon request to tbatanchie@wiley.com

Staying out of jail and up to technological speed while running a nonprofit

December 21, 2011

Some days the Nonprofiteer is happy to serve just as a pass-through for the good work other people are doing. This is one of those days.

On January 11, look out for the publication of Good Counsel: Meeting the Legal Needs of Nonprofits, Lesley Rosenthal’s guide to every possible legal issue in nonprofits. (The Nonprofiteer urged Lesley, who is Lincoln Center’s general counsel, to call the book “How to stay out of jail while running a nonprofit,” but for some reason she demurred!) Having had a chance to review the book in manuscript, the Nonprofiteer is happy to give Good Counsel her strongest possible endorsement, and not only—not even primarily—for big agencies with their own general counsels.  The lawyers on your Board who are forever being expected to know everything legal that might affect your agency (and who are secretly wetting their pants from anxiety because they don’t actually know all those things) will be particularly grateful for this brief, well-written and comprehensive guide to, well, staying out of jail. And—how moderne!–it’s also available for Kindle and I-Pad.  Publisher John Wiley & Sons/Lincoln Center.

And, in other useful news, elevationweb.org announces that it’s prepared once again to provide free Web development services to nonprofits which can match Elevation Web’s contribution.  Last year this “socially conscious Web design and media company” donated $400K in services to 95-plus nonprofits.  So if you (like most of the Nonprofiteer’s clients) think that upgrading your Website and making it easier to use (i.e. donate from) is of critical importance in the coming year, check out the group and complete the application at http://www.elevationweb.org/one_for_one.php.

Dear Nonprofiteer, How can I restructure to be the nonprofit I was supposed to be to begin with?

April 16, 2009

Dear Nonprofiteer,

You’ve helped me in the past and your blog is invaluable. Thank you!

Here’s my question: In analyzing requirements for a recent grant application, I’ve determined that our music group was founded on a corporate rather than a nonprofit model. I assumed that the lawyer who helped us form the corporation (our first board chair) knew what he was doing since he was also chair of a successful major nonprofit in our area. Of course, when we started, I had no clue.

The articles of incorporation set up a board with a president and vice-president who manage the corporation. They are also voting members of the board. We had a huge upheaval last fall when my co-founder (the president) resigned without explanation, taking much of the original board with him. We ended up with a president who has (on paper) the qualifications we need but is only a figurehead. So the board made me CEO and created a COO, both voting board members.  At this point, I receive no salary and the COO is paid by contract for his teaching only.   As our funding increases, this will change.

Grantmakers don’t like paid staff on the board. We need to switch to a model with an executive director not on the board. How do we do that and what are the ramifications?  Thanks!

Signed, Wearing Too Many Hats

Dear Hats,

You’ve outlined not one but a cluster of difficulties:

  • You’re not properly formed as a nonprofit, which could jeopardize your status as a recipient of tax-deductible donations;
  • You’re not properly organized so the Board can decide what needs to be done and the staff can do it;
  • You have the wrong configuration of personnel to accomplish your goals; and
  • You don’t have any money.

A veritable quadri-fecta, if there can be such a thing.  For the moment, at least, the fact that “grantmakers don’t like paid staff on the Board” is the least of your problems.  Let’s take it one step at a time: first correct your bylaws, which involves reshaping the staff as well as the Board; then expand and strengthen your Board; then put the Board to work raising the money you need.

(You’ve demonstrated, by the way, the wisdom of one of the Nonprofiteer’s least-heeded pieces of advice: don’t put a lawyer on your Board with the idea that s/he’ll be able to handle your legal needs.  Law practice is so specialized now that the chances s/he’ll have the expertise for the particular problem you’re facing are very small.  Put lawyers on your Board if you want them for other reasons–we’re smart, we have money, we work hard–but take your legal problems to a lawyer whom you actually pay, or who will serve as your lawyer pro bono without expecting to be compensated in governing power.)

You need to rewrite your bylaws, and if you can’t at this moment pay a lawyer, try to get free or low-cost legal services from someone who’s NOT on your Board.  In some cities (Chicago is one) there are organizations of lawyers who provide such services to arts groups and other nonprofits.  If there’s no such organization near you, call the local bar association and explain your problem–they certainly have a lawyer-referral system and may have a committee that connects nonprofits with the pro-bono or low-cost legal help they need.

If all else fails, search “model nonprofit bylaws” on Google and you’ll find half a dozen examples from which you can pick and choose appropriate provisions.  The only essential provisions, in the Nonprofiteer’s judgment, are that the boilerplate tax language be included; that the Board be self-perpetuating with staggered terms; and that the organization be operated by an Executive Director who sits on the Board purely ex officio (that is, in his/her official capacity only and without a vote); but you may find other provisions essential to your particular circumstances.

(You should, for instance, sit down with your COO and figure out what his job actually is.  Is he the Artistic Director, responsible for music programming, while you’re the Managing Director, responsible for all non-musical aspects of the agency’s operations?  If so, you’ll report jointly to the Board.  Or is he the Program Director, responsible for music programming, while you’re the Executive Director, responsible for leading the entire agency?  If so, he’ll report to you and you’ll report to the Board.  Incorporate whatever decision you make into the bylaws you’re drafting.)

Take a proposed revision of the bylaws to your Board and explain that the original bylaws don’t actually conform to what the Internal Revenue Code requires to enable you to keep your 501(c)(3) designation, and that loss of that designation would cost you all your donated revenue.   That should produce instant obedience.  Explain further to the Board that it’s not considered good practice for staff to serve on the Board: it blurs the lines between governors and managers.  The Board has to be able to see the good of the whole agency, while inevitably a staff member will see the good of the agency through his/her personal lens.

Based on these arguments, get the Board to adopt a new set of bylaws for the agency (and have the Board Secretary find out what State office has to be notified of this fact).  Then resign from the Board along with your erstwhile COO, asking that the Board make one or both of you welcome at Board meetings in your official capacities.

Ramifications: as soon as you’re off the Board, you can be excluded from Board meetings if someone decides they should take place “in executive session;” but I doubt your current figurehead  Board president would be able, let alone willing, to operate without you.

Step 2, as aforementioned, is to look at your current Board (now that it’s been reduced by you and the COO) and figure out what’s missing: energetic fundraisers, people who know about human resources, people who know about marketing the arts, people who are connected to the wider music and educational communities.  Any model set of bylaws will require the Board to have a Nominating Committee, so urge the President to appoint three Board members to this new committee and to instruct them to identify and recruit at least two new Board members immediately, to take your place, and as many others as you think you need.  (Make sure the new bylaws call for a Board significantly bigger than you have now, to give yourselves room to grow.)

Once the new Board members are in place, conduct an orientation session with all Board members–new and veteran alike–with heavy emphasis on asking for individual gifts.  (Remind Board members: they don’t have to ask their own friends for money.  They just have to ask each other’s friends for money!)  Soon you’ll have the money to pay lawyers when you need them–and to pay yourself and the Artistic/Program Director the salaries you deserve, or at least a small fraction thereof.

Ramifications: again, you’re creating a strong Board.  That always produces the risk of conflict, and even the risk that your Executive Directorial decisions will be overruled.  But trust me: it’s a price worth paying to have a properly organized agency with a functioning Board and staff.

More “useless” volunteers

April 8, 2009

All these lawyers in Chicago are doing is providing legal services to people who can’t afford them; how useful is that?

One of the less-noticed consequences of reduced investment in news coverage (usually shorthanded as “the decline of newspapers,” but actually the decline of original reporting) is that it exacerbates the media’s preexisting tendency to copycat.  If the New York Times reports a story on Monday, you can be sure that by Friday a version of the story–with a dollop of local or original material–will have shown up in a dozen other outlets, and suddenly it’s conventional wisdom.

One of the stories du jour, unfortunately, is that nonprofits can’t use and don’t know what to do with the volunteers who are flocking to their doors.  The Nonprofiteer has already written about the Times piece on this subject, but it was followed in short order by a complementary story on Chicago Public Radio in which a labor economist bemoaned the high cost of using volunteers.  Between them, those two media outlets probably dominate mind-share among well-educated people with leisure in the Chicago area–as a result of which, those people are probably just getting around to deciding that they won’t bother with volunteering after all, because nobody wants them anyway.

While there’s no question that volunteer management is a challenge, and while the Nonprofiteer was always among the first to point out that volunteerism couldn’t replace adequate funding of social services provided by professionals, it’s simply false to keep repeating that nonprofits have no use for volunteers.  And repeating that falsehood gives prospective volunteers (that would be our fellow citizens) the equally false notion that they’re worthless and that the outcome of responding to the President’s call for service will only be disappointment and disillusionment.  The Nonprofiteer doesn’t know who profits from this version of the story–who, in other words, wants the President and the rest of us to fail–but she does know that it’s essentially dishonest.

But what to do?  Well, as our colleagues at the Community Media Workshop remind us all the time, it’s up to nonprofits to tell their/our own stories to members of the press.  It’s up to all of us, in other words, to change that story du jour from “Volunteers are useless” to “Look what volunteers can accomplish.”  Kudos to CARPLS, and to the ChiTown Daily News, for helping to do that.

The disappearance of yet another painless way to give

January 28, 2009

One painful side-effect of a shrinking consumer economy is a reduction in the money remitted to charity through buy-this-and-we’ll-donate-that schemes.  If people stop buying jewelry, that will inevitably include the diamond-crusted pink ribbon pin (proceeds to breast cancer research).  If people figure out that most tap water is just as good as bottled water, and that drinking it saves them money while using fewer petroleum and landfill resources, that’s great unless you’re the charity expecting a corporate penny from every bottle bought.

And here’s another no-cost giving scheme whose underpinnings are collapsing along with interest rates: the system by which the interest in lawyers’ trust accounts goes to underwrite legal services for the poor. As interest rates decline, these contributions are shrinking, just at the time more poor people need legal assistance (to try to keep their homes out of foreclosure, for instance).

As the Nonprofiteer’s intolerably smug University of Chicago economics professors used to say, “There ain’t no such thing as a free lunch.” Eventually someone has to pay.  Here’s hoping our new President is inspiring enough to carry people past the shock of discovering that if they really want to give to charity, merely going shopping or passing along the interest on someone else’s money isn’t going to be enough.


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