Scaremongering for dollars? 'Tis the season...

Just to remind me the end of the tax year is nigh, my Facebook feed just produced a new report titled, "Europe Turns Blind Eye to Anti-Semitism". The content doesn't even back up that outrageous claim.

In the waning weeks of summer, before the Jewish High Holidays, numerous Jewish organizations send out "the sky is falling" alerts, with a donation card so we can avert yet another second Holocaust.

Now, we're just days away from the end of 2013, so this is our last chance to save the Jewish people and the State of Israel from imminent destruction and claim a juicy tax deduction. 

A win-win? No.

In this particular case, there may be no fundraising tie-in, just a byproduct of the general climate of sensationalism left behind.

These appeals and alerts not only trivialize and undermine the very real challenges and real successes of real people, including Jews. They not only eliminate all sense of proportion by crying wolf on cue. They insult our intelligence at best, and help turn otherwise well-meaning Jews into human echo chambers of fear and resentment at worst. 

Non-profits that need to resort to such outrageous and reckless messaging, just to fulfill their budget benchmarks, should consider whether their actual mission is worthy to begin with. 

What I saw, and didn't, at the #SocialGoodSummit

I was lucky enough to get to this year's Social Good Summit, sponsored by -- and also featuring -- some of the world's leading change agents. Overall, this was an incredible opportunity to hear and cross-tweet vision, goals and implementation strategies for moving our planet to where it needs to be. One cannot help but walk away feeling inspired and hopeful that there are thousands of social entrepreneurs creatively seizing opportunities and addressing problems in ways that can be shared and applied by others -- if we can do a better job of connecting. 

Ericsson CEO Hans Vestberg, Fast Company Editor
Robert Safian, and Hope North founder Okello Sam

Malala Yousefzai, Al Gore, Melinda Gates, Richard Branson, Anthony Lake, David Miliband and Swedish Foreign Minister Carl Bildt were among the well-known VIPs, but every speaker was on the mark and worthy of a million Facebook "likes". On the sidelines, I was also able to engage around a table with a top corporate leader and his partner on the ground, who are using mobile technology to bring stability and education to victims of a generation of conflict in Uganda. The lessons were numerous, and the incredible wealth of knowledge and spirit will take weeks to fully absorb.

My caveats lay in a few areas, mostly not the fault of the organizers. I list them here and now in the hope they might benefit next year's planning.

Jewish organizations face transition anxiety

The New York Jewish Week has a timely article about the untimely lack of succession planning in American Jewish organizations. Sure, Communist China has more organized and frequent turnover at the top than do most of our communal institutions over here. But to be fair, when success is measured by market shares and fundraising numbers, keeping a charismatic leader in place becomes imperative. And why rock the boat, since status quo is a close second to charisma as a guiding consideration. 

[Full disclosure here: I still have latent aspirations of my own...] 

It would be nice if success were primarily measured by transparent results against a clear mission ("ROI" evangelism notwithstanding). But our community is based on voluntary participation and support, so using familiar and brand-tested personalities can be very important to keeping the Jewish public engaged. 

Reportedly, some major organizations also prefer to wait on lining up a successor until after the chief executive announces retirement, so the search process can become an opportunity to reassess the organization's mission and structure. So, in many cases, the only opportunity for a top-down review and realignment is when the chief executive (or a Higher authority) chooses his own departure date, possibly three decades out? This seems a bit antiquated, and wouldn't meet the standards of the business leaders who fund the organizations or the taxpayers who subsidize their tax-deductible donations. 

If one individual is so popular and effective that only he (still very few she's at the top) can make the organization work, then he has not done such a great job building an institution. Despite all the consultants and Planning Professionals employed by Jewish nonprofits, it's not succession planning we're missing -- it's succession and planning. 

It is what it is. (It's certainly not changing anytime soon.)

So you really want a nonprofit to run like a business?

Business and philanthropic leaders have been known to openly encourage the nonprofits they support to operate more "like a business". The premise, that businesses are run so well, is itself debatable. But more than that, many of these volunteer leaders have themselves abandoned sound business practice in directing how their charities should be run. They also seem not to have noticed that many real-world businesses have gone under during the past few years, or that for-profit enterprises cannot succeed if they are under-capitalized.

Their behavior includes favoritism in putting friends and allies on the payroll; deference to their own whims and to the perquisites of charismatic professionals; and... Madoff. Few if any professionals were involved in decisions by boards and investment committees that swung hundreds of millions of dollars to funds managed by Bernie Madoff. The investment committees were peopled by too many big-money VIPs who didn't care about conflicts of interest, since in many cases Madoff or one of his cohorts was a member or the chair of the same committee (or they were Madoff investors themselves).

Decisions about program and strategy are often taken based upon a donor's own gut feelings and personal experience, rather than relying upon objective analysis of what may advance the organization's overall mission and goals.

As Government holds back, nonprofits must open up

Philanthropy: Love for mankind

America's social safety net is in real jeopardy, and philanthropists and the non-profit sector have an obligation to respond. Government support is diminishing, just when many families and seniors remain without jobs or savings. For the next couple of years, until the economy and government functionality get back on track, the philanthropic community needs to focus on immediate needs, even at the cost of abandoning some visionary initiatives.

Between President Obama's domestic spending freeze and some significant cuts in his proposed federal budget, and Republican calls for still deeper reductions and ever bigger tax cuts for those with means, the budget for the 2012 fiscal year will fall short on many essential services. The individual states, which actually deliver most of the social services, are getting even less back from Washington, and few have the luxury of running at a deficit the way the U.S. Government has become accustomed.

Many individual donors often have favorite causes, from the environment to cultural exchange, to capital projects (i.e., more buildings). I propose scaling back all these agendas, and retasking organizations as much as possible to ensure that children, elderly and the underprivileged are able to weather the coming storm. 

Call it a moratorium on non-essential services and campaigns.

The nonprofit and politics - how much is too much?

It's encouraging that so many current conversations are focused on the future of philanthropy, integration with social media, and non-profit horizons. In this last week of 2010, amid the postal flurry of end-year fundraising appeals, it's also worth remembering the little things that make us worthy of all those big thoughts.  (CONTINUED)

5. In our succession of election cycles and partisanship, philanthropists and nonprofit executives are frequently called upon to lend their own names to support candidates and causes. Are there limits or caveats to safeguard the charitable mission and avoid abuse?

Even distinguished leaders of organizations, whether volunteer or staff, should realize that (a) any fame derives partly or completely from their association with their organization, and/or that (b) they at least have a responsibility to protect the organization’s reputation. A 501(c)3 charity, especially one to which others are contributing time and funds, does not “belong” to any individual.

STAFF

To avoid the misuse of an organization’s good name, executives should refrain from publicly supporting political causes, foreign or domestic, even if they don’t mention their affiliation. If an organization decides institutionally to support such a cause, then listing an individual as the organization’s representative is perfectly appropriate and understood. 

BOARD MEMBERS

Lay leaders using their affiliation to sign public letters should emphasize when this is only for “identification purposes” – at the very least. Ideally, they should never list their affiliation for personal gain, political or financial. Anyone who needs to list such an affiliation is obviously not a public personality in his/her own right, and is understood to be trading on the privilege of public service. 

The signers of the U.S. Declaration of Independence concluded to “mutually pledge to each other our Lives, our Fortunes, and our sacred Honor.” That might be a reasonable test of what really drives someone to support any cause, political or charitable. Sacred honor is a rare asset, and possibly the most valuable resource anyone can bring to a nonprofit endeavor.

How independent will your 2010 "independent" audit be?

It's encouraging that so many current conversations are focused on the future of philanthropy, integration with social media, and non-profit horizons. In this last week of 2010, amid the postal flurry of end-year fundraising appeals, it's also worth remembering the little things that make us worthy of all those big thoughts.  (CONTINUED)

4. Here are more thoughts on conflict of interest, beyond the standard declarations that many staff and board members sign annually:

THE “INDEPENDENT” AUDIT FALLACY

Often, the same accounting firm handles both the IRS filings and the “independent” audits, using the same team of accountants, year after year. Such audits are not functionally independent and leave the organization vulnerable to wrongdoing and liable for eventual penalties. When the audit firm has no learning curve, no need to ask difficult or obvious questions – no stomach for alienating a valuable client by raising red flags – it is time to SWITCH AUDIT FIRMS. 

THE “AUDIT” COMMITTEE HANDICAP

Likewise, if the audit committee which REVIEWS the audit results is comprised of those indebted to the organization’s leadership, there can be no realistic expectation of due diligence or objective oversight. Serving on the audit committee should NOT be a path to promotion within the board, and ideally the chair and most members of the committee should have no further affiliation with the organization. For the system to work, there need to be built-in INCENTIVES – not barriers – to make waves. Volunteer treasurers and audit chairs should also have financial aptitude, relevant experience and sterling reputations, so they can hold their own with those more invested in a "clean" audit.

In nonprofits, conflicts of interest shouldn't pay dividends

It's encouraging that so many current conversations are focused on the future of philanthropy, integration with social media, and non-profit horizons. In this last week of 2010, amid the postal flurry of end-year fundraising appeals, it's also worth remembering the little things that make us worthy of all those big thoughts. (CONTINUED)

3. The integrity of staff and institutions cannot be guaranteed without clear and consistent policies. 

VOLUNTEER LEADERSHIP

If charitable institutions choose to compensate their trustees or reimburse them for expenses, this needs to be explicitly stated and detailed, not hidden in a footnote or run through a shady outside arrangement. With the exception of student activists, volunteer leadership should not be subsidized for travel and other expenses, nor should they have any business relationship with the organization they serve. Staff members should never treat lay leaders to meals. In the exceptional case of an individual leader with limited financial resources – but judged to be indispensable – the arrangement should be explained in detail to the full board, and possibly to the public at large.

PROFESSIONAL STAFF

Similarly, staff should be incentivized to do their jobs with maximum effort and integrity, along with the means to prove it. Organizations should clearly disclose any outside business relationships or financial arrangements between staff and leadership, to ensure that lay leaders are not distracted from exercising their fiduciary and oversight responsibilities – and so the public knows exactly how much communal servants are profiting from their professional service. Before receiving public awards and gifts of value, staff and leadership should get approval from the organization through which they earned these benefits. The same goes for accepting free travel, accommodations and other services from governments and businesses that may expect favors or contracts in exchange. There should be a clear, written policy that protects the reputation and credibility of the individual, the institution, and the cause; it should apply to senior management in particular, so employees don’t look upstairs to see a double standard.

Tax-deductible donations to 501(c)3 organizations render them a public trust by definition. Their budgets and prerogatives should never be seen or perceived as vehicles for anyone's personal gain. Following a strict and transparent code of conduct can help keep everyone focused on the charitable mission.

How many nonprofits get robbed blind, deaf, and dumb.

It's encouraging that so many current conversations are focused on the future of philanthropy, integration with social media, and non-profit horizons. In this last week of 2010, amid the postal flurry of end-year fundraising appeals, it's also worth remembering the little things that make us worthy of all those big thoughts. (CONTINUED)

2. Since non-profits are accountable for donor dollars, most of which are one-third subsidized by tax write-offs from the federal government (and therefore absorbed by all taxpayers), there need to be serious, results-oriented safeguards against theft by employees, officers, and grantees. Cash transactions and reimbursement for expenses are the easiest ways to steal charitable dollars. Where expenses cannot be pre-paid or billed directly to the sponsoring organization, ORIGINAL receipts and ticket stubs or boarding passes should be mandatory. Corporate credit cards sound glitzy, but they prevent anyone from walking away with unreported cash refunds. Instead of REIMBURSING for airfare, flights should be purchased either with the corporate card or through the organization’s own travel agent, so the money stays between the organization and the vendor.

Nonprofits have work to do RIGHT NOW.

It's encouraging that so many current conversations are focused on the future of philanthropy, integration with social media, and non-profit horizons. In this last week of 2010, amid the postal flurry of end-year fundraising appeals, it's also worth remembering the little things that make us worthy of all those big thoughts.

1. Non-profits have a responsibility to their donor base, and not only to ensure and assure that donations are properly spent and the mission carried out as promised. They should remove any stumbling block that might prevent a donor from following the law of the land. This means making clear to each supporter – in real time and again at the close of the tax year – the precise dollar amount that is tax-deductible. While this is gaining in popularity, it is not yet universally applied.