Posts tagged ‘accountability’

August 14, 2020

Will Move to Dissolve the NRA Hurt Your Nonprofit?

This post is about the attempt of New York’s Attorney General to dissolve the National Rifle Association. However, this is NOT a political post. Whether or not you support the NRA, the legal fight over its future has potential implications for your nonprofit organization. Let’s take a closer look.

Doug White, a philanthropy advisor, author, and teacher, writes:

In a 169-page document made public earlier today (you can read the entire lawsuit here), [New York Attorney General] Letitia James alleges that NRA insiders have violated New York’s nonprofit laws by illegally diverting tens of millions of dollars from the group through excessive expenses and contracts that benefited relatives or close associates. The suit alleges that longtime CEO Wayne LaPierre and three other top officials ‘instituted a culture of self-dealing, mismanagement, and negligent oversight at the NRA,’ failed to properly manage the organization’s money and violated numerous state and federal laws.

The lawsuit asks for a dozen measures to be taken. The first one: ‘Dissolving the NRA and directing that its remaining assets and any future assets be applied to charitable uses consistent with the mission set forth in the NRA’s certificate of incorporation.’”

White further notes that the legal action has been filed against the 501 (c)(4) organization, and not against any 501 (c)(3) organizations related to the NRA.

So, how could the case of the NRA affect your nonprofit organization?

Erosion of Public Trust: The mere accusations against the NRA, whether or not they are ultimately proven in court, have the power to not only erode confidence in the NRA, they have the potential to erode trust in all nonprofit organizations. If that happens, it could make fundraising more difficult. A special report in 2018 from the Better Business Bureau’s Give.org found:

While the majority of respondents (73 percent) say it is very important to trust a charity before giving, only a small portion of respondents (19 percent) say they highly trust charities and an even smaller portion (10 percent) are optimistic about the sector becoming more trustworthy over time.”

Enhancement of the Public Trust: On the other hand, New York’s action could enhance the level of trust people have in the nonprofit sector. If the Attorney General can prove her case, it would show the public that government officials are exercising appropriate oversight of the nonprofit sector which could elevate the public’s confidence that their donations to any nonprofit will be used appropriately. We know there is a correlation between the level of trust people have and the likelihood they will give as well as the amount of their giving.

Impact on Support to Controversial Organizations: If New York succeeds in liquidating the NRA, it will have the power to disburse the organization’s assets as it sees fit. How will this affect support to other controversial nonprofits if donors know that their donations could be redistributed by the state? It’s possible that this could result in more cautious behavior by donors.

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January 11, 2019

Was the Trump Foundation the Only Funder on Santa’s Naughty List?

As you struggled to raise more money at the close of 2018 while carving out holiday time with loved ones, you might have missed an important news story.

On Dec. 18, news reports announced that the New York Attorney General’s Office and the Trump Foundation had reached an agreement to dissolve the Foundation. Under the terms of the deal, the NY Attorney General will distribute the Foundation’s remaining assets to charities.

Donald Trump

However, the closing of the Trump Foundation does not end the matter. Barbara Underwood, the NY Attorney General, says the state still seeks $2.8 million in restitution, plus additional penalties.

Furthermore, the Attorney General is asking the court to bar Donald Trump from serving with nonprofit organizations in New York for 10 years. The state’s lawsuit also calls for a one-year ban for three of Trump’s children — Don Jr., Ivanka, and Eric — all of whom were Trump Foundation board members.

The State of New York “lawsuit says that Trump’s charitable organization, which he founded in 1987, engaged in ‘persistently illegal conduct’ and that Trump basically used the Foundation as a slush fund to promote his business and political campaign,” according to a report in Vox.

This news item is inherently important. It involves a charitable foundation with significant assets that appears to have acted far less than charitably. It also involves the President of the United States. However, the significance of this story does not end there.

If the NY Attorney General is correct about the alleged misdeeds of the Trump Foundation, dissolution of the Foundation and a temporary prohibition of Trump family members from serving with NY charities for a limited time seem like an insignificant punishment. Unless serious penalties are levied against Donald Trump and his family members who were involved, the Trumps alleged criminal behavior will go unpunished. Furthermore, they will remain free to create and/or serve with nonprofit organizations outside of the State of New York. Other than a bit of bad press, the Trumps will pay little for their behavior.

The problem does not end there. Failure to hold the Trumps personally liable not only fails to punish the Trump family, it sends a signal to anyone interested in using a charitable foundation for personal benefit. That signal is that there is little downside for misbehavior. In other words, there will be little to no deterrent effect unless severe penalties are imposed by the court, assuming the allegations are proven true.

The other thing we need to understand about the Trump Foundation story is that it is not an isolated situation. A decade into my fundraising career, the nonprofit sector was rocked by the scandal surrounding the Foundation for New Era Philanthropy. Operating from 1989 to 1995, the Foundation raised over $500 million in an elaborate Ponzi Scheme that defrauded well known charities and experienced philanthropists out of millions.

That wasn’t the first funder scandal, and it certainly wasn’t the last. Let’s face it. The Trump Foundation is not the only funder on Santa’s naughty list.

As another report in Vox observed, “There are some 86,000 foundations in the United States, with total assets of around $890 billion. And the vast majority of them never face this kind of scrutiny.”

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May 4, 2018

The Dark Side of the Fundraising Profession

People join the fundraising profession because they are good folks who want to do good. They want to make the world a better place. That’s why I entered the profession. It’s probably why you did, also. Unfortunately, not all fundraisers are good people. Unfortunately, even good people occasionally do bad things.

Our professional organizations have created ethical codes and standards of professional practice to guide our behavior and to help earn public trust. We even have mechanisms to hold fundraising professionals accountable to those standards.

Now, a local organization has attracted national attention, but not in a good way. It’s a story that tests the integrity of the Association of Fundraising Professionals, CFRE International, and the entire fundraising profession. It’s a story that will ultimately reveal whether or not we are willing to hold fundraisers accountable. It’s a test of whether our ethics codes and professional standards are merely nice words on paper or whether they truly help define fundraising as a profession.

The story I am referring to involves the Silicon Valley Community Foundation. I won’t repeat the entire story here. The Chronicle of Philanthropy has already done some excellent reporting on the matter, and I’ll provide links at the end. For now, I’ll just take a moment to summarize the reports.

Former employees of the Foundation “accuse Mari Ellen Loijens, the Foundation’s top fundraiser, of engaging in emotionally abusive and sexually inappropriate behavior.” The Chronicle further states:

The Chronicle article, based on several months of interviews with 19 former employees, raised questions about the leadership of Loijens, who oversaw fundraising at the community foundation. While many say she deserves credit for helping raise significant sums at Silicon Valley — which at $13.5 billion in assets is larger than Ford or Rockefeller — former employees said she demeaned and bullied her staff, made lewd comments in the workplace, and on at least one occasion sought to kiss a woman working for her.”

Two days before The Chronicle published its findings, Emmett Carson, Chief Executive Officer of the Foundation, announced that an internal investigation of the allegations is being “conducted by Sarah Hall, a Washington, DC, based senior counsel at Thompson Hine and a former federal prosecutor.” According to The Chronicle, “The Foundation said in a statement that the ‘investigation into alleged incidents of misconduct will continue, and at the conclusion of that investigation SVCF will take whatever action is necessary to preserve the integrity of our organization.’”

On April 19, 2018, a day after The Chronicle published its report, the Foundation confirmed that Loijens had resigned.

On April 26, 2018, The Chronicle reported that the Foundation’s Board placed Carson on indefinite, paid administrative leave. Greg Avis, a founding Board member and former Board Chair, has been appointed interim CEO. The investigation continues and has been expanded.

On May 2, 2018, Silicon Valley Business Journal reported that Daiva Natochy, the Foundation’s Vice President for Talent, Recruitment and Culture, has resigned.

The Silicon Valley Community Foundation has many issues. The allegations of bullying and sexual harassment leveled against Loijens are just part of the problem. However, Loijens alleged behavior is not just a problem for the Foundation; it is a challenge for the fundraising profession as well.

Loijens behavior, if true, could be construed as a violation of the AFP Code of Ethical Standards. Specifically, Loijens alleged behavior appears to be in conflict with the following provisions, at a minimum:

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