The nonprofit sector does not record statistics on many accountability indicators, but it should. One vital statistic to track would be the treatment of whistle-blowers and the disposition of their complaints. Without this information, we have to imagine the fate of nonprofit whistle-blowers extrapolated from weak government and corporate data.
The October 30 roundtable held by the minority (Republican) staff of the Senate Finance Committee (SFC) on nonprofit hospitals sparked some troubling memories.
It’s nice to see that Maurice “Hank” Greenberg hasn’t overlooked the latent powers of Securities and Exchange Commission (SEC) regulations. It was an SEC investigation, plus a look-see by then– New York State Attorney General Eliot Spitzer, that prompted American International Group (AIG) to ease Greenberg out of the firm’s top slot.
Our story about the Smithsonian’s hiring of a new director at the National Museum of the American Indian (NMAI) involved what might be an all-too-common practice in the sector. The Smithsonian hired a director without asking the museum’s advisory committee for its opinion on the candidates. In fact, the museum’s “board of trustees” was never informed of the selection of the candidate, and most board members found out about the choice only by reading about it in the press.
The Smithsonian Institution must specialize in irony. The interim secretary of the Smithsonian Cristian Samper who replaced the disgraced and disgraceful Larry Small, had a press conference at the National Press Club on September 21st titled, “Facts, Fiction and the Future of the Smithsonian.”
Fiction is the operative word. Having made a big pretense of cleaning up its act, behaving responsibly, committed to openness and transparency, charges are flying that once again, the Smithsonian’s leadership has been boorish, arrogant, and impenetrable.
Recently, the Washington Post revealed the multiple connections of one Linda Chavez; her husband, Christopher Gersten; and her sons, Pablo and David Gersten, in a number of 501(c)(3) nonprofits and political action committees (PACs). Chavez and the Gerstens drew multiple salaries for themselves and often delivered little in the way of program resources to constituents or, in the case of PACs, their intended political beneficiaries.[1] It is a story of the well-connected taking care of themselves, but hardly those they claim to serve.
A presidential candidate’s nonprofit history may serve as a mirror for the kinds of decisions he might make about philanthropy once he’s seated in the Oval Office. That history of nonprofit involvement by a candidate or his spouse may also shine a light on the political values of the future putative leader of the Western world.
Barack Obama has had no major reportable nonprofit connections show up on disclosure forms filed during his brief time in the U.S. Senate or during his run as a presidential candidate. In some previous years, his name appears as a former trustee of the Joyce Foundation and the Woods Fund in Chicago, both highly reputable foundations. Joyce is known for many areas of program grants, though its long-standing dedication to campaign finance issues is notable given the senator’s White House aspirations.[1]
It was slow-pitch baseball at the House of Representatives Ways and Means Subcommittee on Oversight’s Hearing on Tax-Exempt Charitable Organizations chaired by Democrat John Lewis of Georgia on July 23, and the witnesses in the heart of the batting order belted the ball around the infield. Steve Gunderson of the Council on Foundations and Diana Aviv of Independent Sector pitched, batted, and fielded easy grounders like the pros that they are.
New York State’s new attorney general, Andrew Cuomo, recently got the nation’s largest student-loan dispenser known, Sallie Mae, to pay a $2 million penalty for providing various incentives to nonprofit colleges for signing up their students as borrowers—Note: Like Fannie, Sallie was established as a GSE in 1972 to facilitate a secondary market in student loans, but it went fully private in 2004, unlike the sort of hybrid existence of for-profit GSEs such as Fannie Mae and Freddie Mac. In some cases uncovered by AG Cuomo, collegiate financial aid directors accepted personal loans, shares of stock, and compensated advisory board positions with other student loan providers; Sallie Mae however said that it only paid college advisory board members for “soda and cookies,” we kid you not.
Whatever one might have thought of the Fannie Mae Foundation, itself the subject of some critical scrutiny in the press for its astronomical executive salary levels (the Foundation’s CEO took home almost $650,000 in salary and compensation according to the foundation’s 2005 990PF filing), its absorption of much of the advertising budget of the corporation (per a deal that was struck by former president Bill Clinton allowing Fannie to consider its for-profit-related advertising a charitable activity), and intimations that the foundation slanted its grantmaking to curry political favor for the corporation.
It still takes the equivalent of Sam Spade to track corporate philanthropy, since so much of it occurs as “direct” corporate giving rather than publicly disclosed grantmaking through corporate foundations that have to file 990PFs. The nonprofit sector is still gunshy about asking corporate America for full corporate disclosure, despite lots of evidence of lots of perfidy in the purported charitiable activities of corporate scions. The latest revelations about corporate philanthropy come from Senators Baucus and Grassley at the Senate Finance Committee.
As, NPQ recently noted in two articles in its spring 2007 issue, nonprofit conflicts of interest come in many forms and they are not always easy to identify. Sometimes malfeasance tips right over into verifiable criminal behavior, but more often there is a accumulation of self interested behavior—stopping just short of the criminal, perhaps, but nevertheless enormously costly both in terms of philanthropic dollars and public trust.
This article identifies a number of interconnected concerns—the problems that can occur when philanthropic dollars are tied too closely to business and personal interests through interlocking directorates, and the gaps and shortcomings of current regulatory mechanisms when it comes to spotting and addressing these complex situations.
