Archive for the ‘Mission’ Category

Really bad advice about year-end giving, and some really obvious responses

December 31, 2012

The Nonprofiteer just received an e-mail entitled “Five Things You Need to Know About Year-end Giving” which was distinguished primarily by the utter wrongness of each and every one of the items identified.  Names have been omitted to protect the guilty, but commentary appears in bold.

1. Background Check….[B]efore you reach for your wallet, take the time to look into how charities spend their money. It is important know how much of your money actually reaches those in need. A rule of thumb is around 7% to 9% for administrative costs, though some online outlets with low overhead structures are able dip below that.  First clue that this is wrong: the imaginary precision of “7% to 9%.”  Second clue: use of the term “overhead” without definition.  “Overhead” includes such profligate expenditures as electricity and health care for employees.  The last thing we need is for donors to make it a condition of their gifts that nonprofit employees live in poverty. Rather than spend time trying to divine a charity’s wastefulness, donors should work on ascertaining its effectiveness.

2. Beware of dogs….Check the IRS database of more than a million charitable organizations to make sure the one you’re giving to is legit. The IRS database will not tell you which organizations are legitimate, only which organizations have filed appropriate paperwork.  Yes, of course, don’t give your credit-card number to any random jerk who calls; but more important, don’t give money to any agency about which you know nothing but a name and a 501(c)(3) designation.

3. Target the Need. If you see a specific need you want to affect, specify where your donation should go by adding a note, writing an email or by designating it on your check…. Money is fungible: whatever you give to a nonprofit inevitably supports its entire range of purposes and activities.  All that happens if you “designate” a spot for your money is that the recipient nonprofit shifts preexisting funds to another program.  If you don’t trust the charity to use your money wisely, don’t give it money; if you do, get out of its way and let professionals do their jobs.  The Red Cross responds to all sorts of disasters; if it gets more money than it needs for the victims of Hurricane Sandy, it will use that money for the victims of Hurricane Tom, or the house fire around the corner from you.  If you object to that, you’re more concerned with being trendy than with helping, so don’t bother to support the Red Cross.

4. Get More Than a Good Feeling….Be sure to get receipts for large donations above $250. Many non-profits are now accepting direct deposits and can accept funds with the click of a button.  Be aware of the tax deductibility of your contribution as not all non-profits can give you a tax-deductible receipt.  It’s true that donations to the NFL or the American Bar Association are not tax-deductible though  those agencies are nonprofit; but gifts to virtually anything you think of as a charity ARE tax-deductible.  Ask about it if you’re concerned but this is the least of your worries.

5. Simplify and Centralize Your Giving. Simplify your giving by using a one-stop-shop that makes finding and giving to charities easier. [Our company's] users can give to any 501(c)(3) recognized by the IRS. [Our company] keeps a record of donations so you don’t have to and provides a year-end receipt for tax purposes.  Again, don’t be trolling around looking for charities in somebody’s data-base; give money to agencies in your community whose work you know, or to organizations active in the field (social services, the environment, the arts) with which you’re concerned.  It’s no easier to find the names of random charities in some commercial Website’s data-base than directly from the IRS (or from the phone book, for that matter), and if you’re worried about having a receipt you could always just write a check, which is perfectly adequate documentation for the Revenue agents.  Don’t be dazzled by announcements of great on-line services which can direct you to charity: there’s nothing difficult about making your own gift, and “research” in this field means nothing more than familiarity with an agency’s work. What’s being ballyhooed here is the equivalent of an offer to chew your food for you: sure, you could hire someone to do it, but that would eliminate not only all the fun but all the nourishment.

Don’t feel desperate about giving away your money before December 31: there will be plenty of need (and plenty of tax-deductibility) in the new year.  Take the time you need to find out about the mission, services and effectiveness of the organizations you want to support.  There’s no charitable fiscal cliff, so don’t bother searching for a charitable bungee cord; your personal sense of balance will be more than sufficient to support you.

Going where the action (and money) is

April 24, 2012

An excellent piece of news today: the National Council of Nonprofits and the Center for Lobbying in the Public Interest have merged.  Why is this such good news?  Because many nonprofits have let the fear of losing their 501(c)(3) status keep them from participating in the democratic process in appropriate and legal ways.  And now, with budgets squeezed at the state and local as well as the national level, whatever organizations fail to put themselves in lawmakers’ faces will end up without the resources they require.

Lawmakers, like most other people, pay attention to what grabs their attention, which during a legislative session is whatever gets brought up by the people literally standing around the lobby waiting to talk to them.  Human services agencies need to be in that cohort; so do arts groups and environmental groups.  (Hospitals and universities long since figured out that they can conduct advocacy and still maintain their tax-exempt status.)

Not only will this merger give the National Council of Nonprofits a louder voice in legislative decision-making; it will signal clearly to nonprofits around the nation that lobbying in the public interest is indeed part of their mission—so much so that they won’t be able to pursue their mission without such lobbying.

Nonprofit Corporate Governance: The Board’s Role

April 19, 2012
Editor’s Note: This article originally appeared on the Harvard Law School Forum on Corporate Governance and Financial Regulation; it is reposted to the Nonprofiteer by permission of the author Lesley Rosenthal.   Ms. Rosenthal is the general counsel of Lincoln Center for the Performing Arts and the author of Good Counsel: Meeting the Legal Needs of Nonprofits. Bart Friedman, senior partner at Cahill Gordon & Reindel LLP, contributed to this post.
——————————————-

Governing boards in the for-profit and nonprofit contexts share many legal precepts: the oversight role, the decision-making power, their place in the organizational structure, and their members’ fiduciary duties. But in the nonprofit setting, misconceptions about corporate governance abound. Are board members primarily fundraisers? Cheerleaders? A rubber stamp to legitimize the actions and decisions of the executives? Do they run the organization to the extent staff is unable? Are they window-dressing to spruce up the organization’s letterhead? If they are rich or famous, must they attend board meetings? How do they know whether they are doing a good job, or when it is time to go? Despite the common ancestry and legal underpinnings, nonprofit corporate governance places heightened demands on trustees: a larger mix of stakeholders, a more complex economic model, and a lack of external accountability. This post explores how substituting a charitable purpose for shareholders’ interests affects the board’s role.

In organizations of all kinds, good governance starts with the board of directors. The board’s role and legal obligation is to oversee the administration (management) of the organization and ensure that the organization fulfills its mission. Good board members monitor, guide, and enable good management; they do not do it themselves. The board generally has decision-making powers regarding matters of policy, direction, strategy, and governance of the organization.

The board of a well-governed nonprofit organization, like the board of a well-governed profit-making company, will do all of the following:

  • Formulate key corporate policies and strategic goals, focusing both on near-term and longer-term challenges and opportunities.
  • Authorize major transactions or other actions.
  • Oversee matters critical to the health of the organization— not decisions or approvals about specific matters, which is management’s role—but instead those involving fundamental matters such as the viability of its business model, the integrity of its internal systems and controls, and the accuracy of its financial statements.
  • Evaluate and help manage risk.
  • Steward the resources of the organization for the longer run, not just by carefully reviewing annual budgets and evaluating operations but also by encouraging foresight through several budget cycles, considering investments in light of future evolution, and planning for future capital needs.
  • Mentor senior management, provide resources, advice and introductions to help facilitate operations.

Similar to for-profit corporations, the power to control and oversee the management of the affairs and concerns of a nonprofit corporation is set forth in its corporate charter. Generally speaking, state law permits both kinds of corporations to self-direct significant allocations of power and responsibility, and then requires them to follow their own corporate governance and operational policies. The familiar fiduciary duties of care, loyalty, and – sometimes – obedience, undergird these requirements in both sectors.

In a well-governed organization of either the for-profit or nonprofit kind, the board does not permit executives to run and dominate board meetings, set agendas, or determine what information will be provided to board members. Under the leadership of an active and functioning board chair, there is adequate opportunity at board meetings for members to receive and discuss reports from not only the chief executive, but also, as appropriate, directly from other executives, in-house and outside professionals, and independent consultants if necessary. Time should be reserved for executive sessions, at which management should be excluded so that its performance may be fully and freely discussed.

Mission is what distinguishes nonprofits from their for-profit cousins: Nonprofits have missions instead of owners or shareholders. While the prime directive for board members of for-profit organizations is to ensure the highest possible value for owners, by contrast, nonprofit board members’ prime directive is mission fulfillment.

Board independence and board attention are of paramount importance in good nonprofit governance.  The independence of the board is key because of the non-distribution constraint – nonprofits exist to serve the public interest, not to benefit owners or other private parties.  Business or family relationships between the organization or its executives and a board member or her firm are frowned upon and should be strictly scrutinized under a conflict of interest policy administered by independent directors.  Even absent outright business or family relationships, a common shortcoming of nonprofit boards is that they are too small, too insular, or too deferential to the founder or chief executive.

Another frequent error of nonprofit boards is inviting new members because of their marquee name within a certain field of endeavor (e.g., a famous dancer on the board of a dance organization) or their means and inclination to donate, without due consideration to the person’s ability and availability to fulfill fiduciary duties, providing the critical oversight function. The governing body of a nonprofit must be made up entirely of people in a position to govern it—setting the strategic direction of the organization and overseeing management’s execution of the mission. Wealthy or prominent persons— donors, artists, scientists, public officials, and others—with an interest in the organization’s program but lacking the time, availability, or expertise to provide meaningful oversight may serve the organization in a non-fiduciary capacity, such as an honorary or advisory board, donors’ circle, or professional council.

Governance is more complex in charitable nonprofits for a number of reasons. Public charities (501(c)(3) organizations) are intended to serve a public purpose, and the board must bear in mind that broad interest.  Depending on its mission, history, and geographic reach, a nonprofit may also have specific stakeholders or different groups of stakeholders, some or all of whom may be represented by categories of board members under the organization’s by-laws. The interests of the organization’s ultimate clients, who may be indigent or otherwise disadvantaged, are another important consideration. The organization’s management and workforce may be paid less than their for-profit peers for similar work – if at all – further complicating the board’s oversight duties. In addition, nonprofit trustees may feel role-strain – or worse – because of real or perceived obligations to interact with, attract – or even be – charitable donors. These additional factors make nonprofit board decision-making arguably a much more complex process than the straightforward mandate of maximizing return.

Moreover, nonprofits’ economic models may be more complex than for-profits’ models, including a dynamic blend of earned revenue (ticket sales for a symphony, fee-for-service billings by a hospital, tuition payments to a university) and contributed income (annual fundraisers, “Friends of” membership groups, end-of-year solicitations, capital campaigns). Wealthier nonprofits with endowments can also count on a stream of revenues from investments. In harsh economic climates, however, there is a high correlation between reduced contributions and weaker investment returns. Compounding the difficulty, hard times on the revenue side often coincide with heightened demand for organizations’ services, particularly social services, increasing expenses and creating cash crunches, trouble balancing budgets, or even persistent deficits. Savvy nonprofits have added “third streams” of revenue to supplement and diversify traditional two sources. Entrepreneurial initiatives may include leveraging real estate or other assets, monetizing treasure troves of intellectual property know-how, or engaging in joint ventures with fellow nonprofits or even commercial entities. In envisioning and evaluating such enterprises, board and management must observe regulatory requirements and consider tax implications.  In lean years and in growth years, the board must be deeply engaged in overseeing the organization’s investments, its other sources of revenue and expense, and the planning of new initiatives.

What happens when board members fail?  In theory, the mechanism in a for-profit corporation for correcting errant board members is straightforward:  if the investors don’t like what the directors are doing, they vote them out of office. But in the absence of investors, nonprofit boards must be self-correcting. No one has ever made a tender offer because a nonprofit was inefficient. Moreover, governmental agencies regulating the sector tend to be small and under-resourced, making it highly unlikely that any but the most obvious misconduct will be detected and corrected from the outside. Unless board members are doing something illegal or are term-limited out of office, they may serve in perpetuity, giving them ultimate power over the organization. In this regard, nonprofit trusteeship is a unique and privileged role.

By a number of measures, nonprofit and for-profit board governance are similar: the board’s oversight role, its decision-making power, its structural place within the organization, and its members’ legal duties. The similarities end, however, where shareholder interest in maximizing returns gives way to mission fulfillment, a multiplicity of stakeholders, more complex business models, and self-accountability rather than external accountability.

Dear Nonprofiteer, Whose money is too filthy to take, and why?

April 6, 2012

Dear Nonprofiteer:

I’d be interested in your take on the Tucker Max/Planned Parenthood issue. That whole issue, which I’m sure you’ve touched on before, of NPOs making tough decisions about accepting donations is one that constantly comes up.

Signed, Hoping to Keep Clean Hands and Full Coffers

Dear Hoping:

So Tucker Max (a blogger the Nonprofiteer had never heard of until this letter) tries to give half a million dollars to Planned Parenthood, which has just lost funding from the Komen Foundation and is at risk of losing Federal funding, and PP turns the money down.

Under ordinary circumstances the Nonprofiteer would say, “WTF? So he’s a sexist piece of dog excrement! So he’s trying to whitewash his reputation! Why shouldn’t we help impoverish sexists by accepting their contributions? Why shouldn’t they pay restitution for their crimes and sins?”

But these aren’t ordinary circumstances, because the donor describes himself as follows:

My name is Tucker Max, and I am an asshole. I get excessively drunk at inappropriate times, disregard social norms, indulge every whim, ignore the consequences of my actions . . . sleep with more women than is safe or reasonable, and just generally act like a raging dickhead.

Years of public education about what Planned Parenthood actually does would go right down the drain if it permitted itself to be publicly tied to an advocate of reckless, consequence-free sex. The Republicans have clearly hit a responsive chord when they strive to outdo each other in demonizing PP, and that chord is that the very existence of Planned Parenthood represents an utter breakdown of sexual morals. Never mind that this isn’t true: Tucker Max actually DOES represent an utter breakdown of sexual morals, and Planned Parenthood can’t afford to be associated with him.

In general, though, the Nonprofiteer remains in favor of taking money from bad people: it’s not possible to eradicate them, and they ought to be good for something. If she still shudders (as she does) at entering the David H. Koch Theatre at Lincoln Center, she consoles herself that it represents millions of dollars the self-same Koch no longer has available to give to the Tea Party.

It’s fine if donating makes an evil donor look good. Just be sure that accepting doesn’t make you look bad.

Existing forever versus doing some good

March 28, 2012

An op-ed piece a few weeks ago in the Wall Street Journal (behind a paywall)  argued that donors should construct their foundations to spend down assets as rapidly as possible, lest the foundations end up supporting causes their donors would revile.  This familiar argument comes with a familiar whipping-boy: the Ford Foundation, whose enthusiasm for assisting the poor and marginalized was certainly not shared by its eponymous founder Henry.  The op-ed piece, like many of its kind, focuses on the question of donor intent, arguing that only a brief payout period can assure that the donor’s intent is served.

The Nonprofiteer has never cared particularly about the intent of dead donors.  First of all, they’re dead, and while death may not extinguish intent as a matter of law it certainly does as a matter of common sense.   Second, how much better off do we really think the world would be if Ford’s foundation had spent all its money on Ford’s enthusiasms, such as promoting publication of the scurrilous anti-Semitic tract The Learned Protocols of the Elders of Zion?   Third and most important, the  tax-free status of foundations is supposed to encourage philanthropy, not the accumulation of permanently idle tax-free money.

The Nonprofiteer has long argued that the minimum expenditure required of foundations is way too minimum, and that setting up a structure to give away 5% of income shouldn’t entitle a donor to a 100% tax shelter–whatever his/her intent.  Most likely that intent was to escape from taxation, without too much more thought than that.

So let’s think about the issue not from the standpoint of donor intent but from the standpoint of social good.  Which is more useful for a philanthropy: remaining around in perpetuity, to grapple with issues that may arise a generation or three from now, or spending down in the present and relatively short-term future on issues the donor understands and cares about and which in any case are currently urgent?  From the phrasing you can tell the Nonprofiteer’s position: spend it down.

Julius Rosenwald saw the wisdom of this approach when he created a program of fellowships for African-American artists for their professional development.  Rather than keep the fellowships around in perpetuity, he ordered that the principal be awarded completely within 5 years of his death.  As a result, virtually every mid-20th-Century African-American artist you’ve ever heard of received a Rosenwald Fellowship: Ralph Ellison and Romare Beardon and Katherine Dunham and Gordon Parks and many others.   The value of what Rosenwald did, giving artists enough money so they could work without fear or distraction, is literally incalculable.

But also as a result, virtually no one remembers Julius Rosenwald, or at least not his fellowship program.  So that presents the question: are we in the business of fostering greatness, or memorializing it?  Is remembering a donor as important as creating work through a donor’s generosity?  Again, to the Nonprofiteer the answer is self-evident.  She’d rather be grateful for Ralph Ellison than to Julius Rosenwald.

Look, here’s the deal: people will make money in every generation, and in every generation some people will make a lot of money.  If we tax them properly they’ll look for the opportunity to shelter their money in philanthropy.  Why shouldn’t we tax them so that they’re motivated to spend it philanthropically, too?  Like the proverbial Fifth Avenue bus, another chunk of  money will be along any minute.

Sure, there’s a risk of spending too rapidly and with insufficient research (or “due diligence,” as people are fond of saying when they want to pretend that the nonprofit sector is really just like a business).  But the greater risk is the situation in which we find ourselves now, where philanthropies give out amounts insufficient to make any significant change.  No, philanthropy isn’t supposed to be society’s primary source of support, but while people are busy starving government so they can drown it in the bathtub, private wealth can and should step into the breach.

Consider the contributions of the Gates Foundations to the Global Fund to Fight AIDS, TB and Malaria. Can anyone really argue it would be better to hold back on eradicating those diseases, in case there’s some bigger plague later on?  If there is, as AIDS itself demonstrates, we’ll mobilize and raise money for it.  Meanwhile, in case of every ailment, time is our enemy: the later we provide resources, the harder it will be for those resources to have impact.  Thus wasting money is a less significant risk than failing to spend enough to make a difference.

Two things need to happen: philanthropists themselves need to organize their giving so that it ends within a reasonable time after their death, and Congress needs to modify the tax code to require philanthropies to pay out more each year to retain their tax-favored status.  A 10% annual payout–double the current rate–may end up causing philanthropies to dip into principal, maybe even until they’re empty.  But remember the words of Citizen Kane as he contemplated the financial difficulties of his newspaper empire: ” I did lose a million dollars last year. I expect to lose a million dollars this year. I expect to lose a million dollars *next* year. You know, Mr. Thatcher, at the rate of a million dollars a year, I’ll have to close this place in… 60 years. ”  Let’s take a Kane-like risk of running out of money.

One more story: Some time in the ’90s Joan Kroc stood up at a Ronald McDonald House benefit to announce her annual gift.  Rumor had it she was actually going to make a five-year pledge, and the Nonprofiteer’s table indulged in the parlor game of trying to figure out just how much that would be.   We figured the previous year’s gift ($5M) plus a little bump (so $6M) for each of 5 years, and settled on $30 million.  And then she rose to speak, a little woman holding a torn-off piece of yellow legal paper in her hand.  And she said, “I was going to make a 5-year gift, but then I thought: ‘The need is now.’  So tonight I’m giving $50 million to Ronald McDonald Children’s Charities.”  Everyone at the table fell back in her seat, literally knocked over by her generosity, and also by her insight: The need is now.

Aside from Ronald McDonald, Mrs. Kroc mostly supported causes her late husband disapproved of.  If only he’d given more in the present, he wouldn’t have had to contemplate a future in which his money went to places he despised.  So the donor’s intention and the sector’s need are in sync:

Spend it now.

Dear Nonprofiteer, Why didn’t I stay a volunteer?

February 22, 2012

Dear Nonprofiteer,

I need some advice.   I have been a paid employee of a non-profit for the last eight months. Before this I was an unpaid volunteer for several years. There are three of us in the office—the ED, the founder, and myself.

The Executive Director

For the last eight months I have been doing most of her job, and my own. As a result I am easily working sixty or more hours each week. Attempts to change this environment have been met with hostility. Despite repeated requests I still have no job description. My working relationship with the ED is close to breaking point. Simply put, I do not want to go into work tomorrow. I have my concerns about her integrity. At the start of the month I was told we were 20K above budget. Last week I overheard her tell the founder we were 40k under budget. I have no proof of mis-, mal- or nonfeasance, and to find that information would be extremely difficult. I would like to prepare a fact laden letter to the Board, but have very little proof.

The Board

I believe the Board has lost confidence in her ability. Their relationship with her appears strained. I also believe they have lost focus on what is best for the organization. A majority of the board are employees or board members of another organization, a non-profit in the same field. We take on the debt. They profit. The cynic in me wonders if there is an element of tax avoidance occurring. Despite repeated requests I am not shown Board minutes. There are open spaces on the Board, but only people friendly to this other organization are accepted. I have nominated two extremely qualified candidates to open positions. Emails inviting them to meetings have been “lost”.

The Numbers

We are a forty year old 501c3. There are three full time employees. During our busy periods we employ around 100 seasonal workers. Our turnover is approximately 300k a year. We provide a service to approximately 1400 children, teenagers and adults. We are four weeks away from the busiest time of our year.

The mission of the non-profit is very important to me. I want to do whatever is best for the long term health of the organization.

I have considered handing in my notice and writing an open letter to the Board explaining my decision. I love this organization though and don’t want to leave it. I have also considered raising my concerns with the state AG, but fear that could spell the end of the organization. Unfortunately I do not have the ear of anyone on the Board that I can speak to in confidence about this.

I am really torn as to what to do. Please advise.  Signed,

Concerned in Carolina

Dear Concerned,

You’ve laid out the central aspects of the situation very clearly: the organization has trouble in the staff, trouble on the Board, and at least the potential for trouble in its finances, which will make it difficult to continue serving this large number of clients and paying this large number of seasonal workers.  As you describe your own position, you are essentially powerless: the Executive Director doesn’t listen to you, the Board is unaware of your concerns, and you don’t want to damage an institution that you care about by involving the authorities.

But that leaves the Nonprofiteer with a question: what, exactly, do you love about an institution with an inept and/or dishonest Executive Director and a Board whose independence may be compromised by its relationship with another organization?  If what you mean is that you love the group’s mission, that’s all very well; but that’s like the Nonprofiteer’s saying she would love her boyfriend if only he were 6’10.”  This is a phenomenon therapists refer to as, “It would be so great, if only it were different.”  It’s not different, and if you have no power to make it so, your only realistic choice is to find another agency to work for: one whose mission you can believe in AND whose governance and management support that mission.

You are best off to find that organization and secure that new job before you leave this one, and certainly before you write any kind of letter to anyone about what you believe and suspect is going on.

It’s rarely worthwhile to burn bridges with that kind of valedictory note—all you get is a reputation as an arsonist, while the people on the other side of the river continue to do what they’ve been doing all along.  But if you feel you need to, you must do some more research to confirm or refute your suspicions.  The Nonprofiteer doesn’t quite grasp the relationship between your agency and the other one for which you think it may serve as a form of tax dodge, so she can’t suggest exactly what you need to find out.  But it would have to be something as clear as your Board members’ being paid by the other organization, which then reduces its own account of taxable profit, for it to be worth taking to the state’s Attorney General.  The very “mis-, mal- or nonfeasance” for which you don’t have evidence is what would be required to cause the authorities to step in.

If you feel you must speak up but don’t have this level of proof, simply write a post-resignation letter to the Board president (with copies to the rest of the Board) laying out only those facts of which you’re certain: that the Executive Director is in the office only 3 hours a week, that she’s using members of the staff to run her personal errands, or whatever the case may be.  If the Board is compromised, though, this won’t make any difference; and if the Board is honest and diligent, it will discover all this about the Executive Director as soon as you leave, because there will be no one available to cover for her by doing all her work.

The Nonprofiteer’s best advice: find a new job, send a one-sentence letter of resignation to the Executive Director, and write an intemperate five-page screed blasting the entire agency, which screed you will then put in your desk drawer or the fireplace.  You’ll have the release of having said everything that needs saying without putting yourself at risk—one of life’s rarest pleasures!

Write again so we know what you do and how it goes.

The Nonprofiteer has been wondering what to write about . . .

February 1, 2012

but she’d really have preferred not to have this as an inspiration.  There is no excuse for the decision of Susan G. Komen for the Cure, until now a respected source of information and funding in the fight against breast cancer, to defund Planned Parenthood‘s program of providing breast exams to poor women.

In fact, the decision doesn’t even make sense–unless you consider that a recent addition to the Board of Komen is an anti-choice ex-politician from Georgia.  As another commentator has wisely noted, Planned Parenthood will survive this latest injury–the Nonprofiteer’s determination to support the agency has just been redoubled, and probably her gift will be, too–but Komen may not.

Please join the Nonprofiteer in notifying Komen of your distress at its decision to let irrelevant politics endanger the lives and health of poor women, and of your decision to redirect to Planned Parenthood any support you may have been giving to Komen.

At war with oneself over the charitable deduction

January 10, 2012

From an article in the New York Times whose date the Nonprofiteer neglected to notice:

“It’s admirable when people back their charitable impulses up with donations,” said Scott Klinger, tax policy director of the group Business for Shared Prosperity.  “But the tax code shouldn’t allow the wealthy the kind of loopholes that let them, essentially, force other taxpayers to underwrite donations to their pet causes.”

“The kind of loopholes . . . ”  Is there some other kind?  That is, can we have the tax code encourage individual generosity without delegating to private individuals decisions about what constitutes the public good?  The Nonprofiteer doesn’t see how.  Either you have a tax subsidy—which means by definition that other taxpayers bear a bigger burden—or you don’t. 

Without the subsidy, current donors might give less but the government would have more to give out to public causes (health, education, welfare) now privately supported.  And perhaps without the subsidy, current donors would be replaced by those less-burdened other taxpayers in a burst of their own generosity.  And maybe this would mean fewer snow-globe museums and more attention to human services in the nonprofit sector.

Or maybe it would just mean a reduction in charity and an increase in the government’s resources, which could then be used on public education and public housing.  Or missiles and drones.

This is why the Nonprofiteer remains at war with herself over the charitable deduction.  She wants a thousand flowers to bloom.  She believes any free society requires a counter-balance to whatever the current government has decided about anything.  And she believes this counter-balance requires money.  The whole point of the nonprofit sector is that it permits people to identify and respond to their own needs in their own communities, producing a closer fit between service and community than is possible with centralized programs.

But she also believes that society-wide priorities should be funded society-wide, which means limiting the number of pots of money exempted from inclusion in the public fisc.  And she doesn’t want society-wide priorities to be determined by people who have so much money they can buy entire public school systems and experiment on them.

To quote the great Yul Brenner: Is a puzzlement.

No good deed goes unpunished

November 22, 2011

Now here’s something that breaks the Nonprofiteer’s heart: the MacArthur Foundation is making grants to a dozen libraries and museums nationwide to establish youth computer learning centers modeled on YOUMedia, the Chicago Public Library’s innovative youth learning project.

Why does such good news evoke such profound sorrow?  Because the Nonprofiteer can remember when the notion was that the philanthropic sector would serve as a laboratory, trying out new approaches to solving social problems and then passing along the ones that worked to be funded by the government.  What we have here, however, is a model already vetted in the public sector whose future sustenance apparently will have to come from private charity.

This role-reversal is particularly galling here in Chicago, where the reward for the library’s pioneering work has been a substantial chop in the city’s library budget.

It’s hard to read a computer screen, or learn anything, when the world is upside-down.

“So many of the people who need charity don’t seem to deserve it” . . .

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.


Follow

Get every new post delivered to your Inbox.

Join 101 other followers