Archive for September, 2013

September 27, 2013

Do You Want a 43% Pay Raise?

How would you like your employer to increase your compensation package by 43 percent? 

If you would, just follow these two steps:

1. Become the President of the University of Pennsylvania.

2. Negotiate the deal with the Board of Trustees

That’s exactly what Amy Gutmann did.

The University of Pennsylvania increased Gutmann’s compensation package from $1,462,742 in 2010 to $2,091,764 in 2011, according to a recent report in The Daily Pennsylvanian.

Penn President Amy Gutmann by University of Pennsylvania

Amy Gutmann, President, University of Pennsylvania

The report is based on the University’s most recent tax filing. Gutmann’s 2011 compensation package marks more than a 170 percent increase since 2005, the year Gutmann became President.

Let’s put Gutmann’s compensation into perspective.

The New York Times reported in 2011 that, “in the decade from 1999-2000 to 2009-10, the average presidential pay at the 50 wealthiest universities increased by 75 percent.”

Among Ivy League university Presidents, Gutmann has consistently ranked third in recent years, behind Columbia University and Yale University. However, in 2010, Gutmann was the 12th-highest-paid private university president in the nation, according to a report in The Chronicle of Higher Education. That was not good enough according to David Cohen, Penn’s Board Chair and Chair of the Compensation Committee. Here’s what The Daily Pennsylvanian reported:

After seeing that report, Cohen said, the compensation committee was struck that Gutmann had not placed in the top 10. Given the scale and complexity of Penn, as well as Gutmann’s performance, he said, the compensation committee believed it needed to adjust Gutmann’s compensation to bring it more in line with her peers.”

For whatever reasons the Penn Board did not believe that being ranked 12th in presidential compensation was good enough. Penn needed to be ranked among the top 10.

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September 20, 2013

I’m Sorry

Eventually, we will all do something for which we need to apologize. So, it’s essential that we all know the right way to do it.

Unfortunately, one of my readers reminded me recently that many people find it extremely difficult to say simply, “I’m sorry.” She told me about a secular charity that had scheduled an event to be held during Yom Kippur, the holiest holiday for the Jewish people.

Sorry by butupa via FlickrIf the nonprofit organization with the bad scheduling sense was based in North Dakota, there might not have been much of a problem. However, the charity is based in Philadelphia, home to a large and philanthropic Jewish community.

Ironically, the organization’s mission honors an individual who pioneered religious and ethnic tolerance in America.

My reader emailed the charity to alert it to the conflict, to let it know she would not be attending this year despite having attended in the past, and to express her displeasure with the organization’s scheduling decision.

Here is the response my reader received via email:

The choice of this date was not meant to offend anyone or exclude anybody. This event has been held on this weekend since its inception. . . .

[We] apologize for any offense you may take from us scheduling these events on Friday and Saturday.”

Let’s closely examine the message.

Regardless of whether or not the organization intended to cause offense, it did. The scheduling mistake was either a result of outright intent or oblivious carelessness. By excluding an important part of its donor base for this once-a-year event, the charity caused offense.

The nonprofit organization further offended my reader by lying to her in the email response. The charity claims the event has been “held on this weekend since its inception.” However, as someone who has attended the event in the past, my reader knows otherwise. She documented for me that, in recent years, the organization has hosted the event on a variety of different weekends. Even if the organization’s statement were true, it’s still no excuse for failing to consider a different date.

The person who responded to my reader then concluded by apologizing “for any offense you may take.” That’s not an apology! It’s a deflection. With this statement, the organization has not taken responsibility for its actions. Instead, of taking responsibility for causing offense, the charity put the blame on the donor who took offense.

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September 13, 2013

$250 Million Gift to a Nonprofit is Withdrawn … Sort of

The news headlines were stunning:

Centre College Loses $250-Million Gift — Chronicle of Higher Education 

Centre College Loses $250 Million Gift After “Market Event” — Bloomberg 

Kentucky College Loses $250 Million Gift from Charitable Trust — Reuters 

There’s only one problem with the headlines: There never was a $250 million “gift” to Centre College!

Here are four lessons you can learn from this amazing public relations fiasco:

1. Do NOT mislead the public.

Perhaps the news media can be forgiven for getting the story wrong. After all, Centre College proudly announced on July 30, 2013: “Centre College receives historic gift to establish Brockman Scholars Program.” The official announcement began:

Centre College has received a gift of $250 million in the form of stock in Universal Computer Systems Holding, Inc. (Reynolds and Reynolds) from the A. Eugene Brockman Charitable Trust to establish the Brockman Scholars Program in Leadership and Entrepreneurship.”

Unfortunately, as recent events have demonstrated, the announcement was not just premature it was not true. The fact is that Centre College did not receive a $250 million gift. Peter Lattman, writing for Deal Book/ New York Times, quoted Centre College President John Roush as saying:

In retrospect, we might have put a big asterisk on this thing, but no one had any inkling that this would come about.”

The historic gift was a contingent pledge based on a complex recapitalization deal Centre College - Old Centregoing through. Regrettably, the financial deal blew up and, therefore, the gift never materialized, according to the College.

If the College had simply delayed announcing the gift until it actually materialized, it could have avoided enormous embarrassment. Alternatively, if the College had simply characterized the $250 million as a “pledge” or “potential gift” rather than a “gift,” it still could have avoided significant embarrassment.

2. Recognize the difference between a “pledge” and a “gift.”

Centre College had a contingent pledge for a $250 million gift. They never had the gift. It’s not a gift until you have the cash, stock, property, or irrevocable gift agreement in-hand.

Because the College never had a $250 million gift, it did not lose $250 million. That’s about the best that can be said of this situation. This is really just a case of a nonprofit organization publicly counting its chickens before they hatched. Don’t make the same mistake.

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September 6, 2013

Only Business Can End Poverty

Approximately 2.7 billion people around the world live in poverty. Despite the fact that the global economy has grown 17-fold over the past six decades, about three of every eight people in the world exist on $2 per day or less.

The United Nations has not solved the problem of global poverty. Foreign aid from wealthy governments has not solved the problem. Charities have not solved the problem.

Certainly, millions of people have been helped by traditional assistance efforts. However, a new book suggests that traditional methods and institutions, while not completely useless, have achieved only modest results, at best. And, in some cases, those results have not always been positive or sustainable.

Adobe Photoshop PDFMal Warwick, the legendary direct-response fundraising expert and entrepreneur, and Paul Polak, a leading social entrepreneur, have written the new book The Business Solution to Poverty, to be released on September 9, 2013.

The provocative book has been described by Bill Clinton, former US President, as, “One  of the most helpful propositions to come along in a long time … original, ambitious, and practical.”

In their book, the authors define the nature of poverty. They review what has been done, citing what has worked and what has not. When reviewing what has worked, they also point out the huge limitations of the positive results achieved by traditional institutions using traditional methods. Finally, the authors outline their ideas for dramatically reducing global poverty and the suffering of billions of people.

As citizens of the world and as nonprofit professionals, we should all pay particular attention to what Polak and Warwick suggest. If you’re interested in learning more about the book, you can visit the authors’ website. To get a copy of the book and help ensure a successful book launch, you can purchase your copy at The Nonprofit Bookstore, powered by Amazon, on Monday, September 9, the day it is released.

One of the assertions that the authors make in the book is: “Only Business Can End Poverty.” It’s a thought that many, particularly those in the charity sector, will find provocative. After all, the authors are critical of the nonprofit sector.

I’m honored that the authors have allowed me to share some excerpts from their book with you. Let me know what you think of what Polak and Warwick have to say:

 

Poor people themselves tell us that the main reason they are poor is that they don’t have enough money. We agree with them. At first blush, this seems simple and obvious, but conventional approaches seem to focus on everything but helping poor people improve their livelihoods as the most important first step to ending poverty.

TAKEAWAY #3:

The most obvious, direct, and effective way to combat poverty is to enable poor people to earn more money.

However, instead of this obvious approach, efforts to eradicate poverty have tried just about everything else.

 

More than five million citizen-based organizations around the world have joined official and multilateral efforts to combat poverty. The biggest, typically called INGOs (international nongovernmental organizations), work in scores of countries, often have operating budgets upward of $500 million, and sometimes possess widely recognizable brands. Among the most powerful few are World Vision, CARE, Save the Children, and Catholic Relief Services (all based in the United States); Oxfam (UK); Médecins sans Frontiéres (Doctors without Borders, France); and BRAC (Bangladesh). At the other end of the spectrum are organizations at the village or community level typically referred to as community-based organizations, or CBOs. They number in the millions and normally operate without paid staff and with little or no money.

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