Where Most Needed

Child & Family Services of New Bedford operates with practically no public contributions.

Reporter Stephanie Strom goes to great lengths to give voice to Red Cross critics. 

In the realities of nonprofit financing, differences of mission, program, and scale outweigh the similarities.

Sen. Grassley finds limits of persuasion with AU board after its huge severance agreement with deposed president Benjamin Ladner, despite its Congressional charter.

Hurricane Katrina may have undermined the foundation of the Reagan Revolution.

In a remarkably low-key way, the Bush Clinton Katrina Fund has finally gotten around to helping the churches in the affected area.  The Washington Post reported in early March that churches were still waiting for a promised $20 million of the $114 million fund proceeds, quoting Bishop T.D. Jakes of the funds advisory panel: "I am annoyed. I am frustrated. I am angry."  But it was only last Friday that the New Orleans Times Picayune announced that the process had begun.  The first grant applicant workshop was held Saturday, April 22.  This molasses-slow process has gotten none of the media attention that his been lavished on complaints about the American Red Cross. 

The Times Picayune report says that the Bush Clinton fund will end up distributing $40 million to state-based funds, $30 million to colleges & universities, $20 million to churches and "the balance" (which I calculate as $24 million) in "discretionary grants," like the recently publicized restricted donation by Barbara Bush for her son Neil's software firm. 

The application form indicates that grants will be for a maximum of $35,000, of which up to $4,000 can be for temporary relocation of the congregation and up to $5,000 an administrative stipend for the clergy leader.  The grant process will be open until the end of July and all funds are expected to be disbursed by the end of October.  The church must own the property to be built on and (an interesting requirement) the church must have a bank account in its own name. 

An organization called Public Private Venture (EIN 23-2048721 Form 990) will handle the processing of the grants.  P/PV, based in Philadelphia, looks like a nonprofit think-tank with a focus on urban issues (former Philadelphia mayor Wilson Goode is listed as a senior advisor).  Its current head is Rev. Fred Davie, who has had experience with faith-based initiatives in New York City government and with the Ford Foundation. 

P/PV is one of those charities that shows $11 million in contributions, $19 million in government contributions (grants) and no fund raising expense.  It is also unusual in that it includes in the list of "officers, directors and key employees" five vice presidents with incomes in the low six figures.  There is compensation of a few thousand dollars for nearly every director.  This might cause arched eyebrows among the charity press and self-appointed charity watchdogs, but it is likely that all of the contributions of the organization come from foundations who are not really interested in fund raising ratio analysis or whether board members are reimbursed for their time. 

A lighthouse can be a powerful metaphor.  Here, it's a metaphor for the relationship between charities and government.  The county commissioners of Currituck County, North Carolina, have come to an agreement with Outer Bank Conservationists (EIN 58-1424689 Form 990) over the operation of the Currituck Beach lighthouse after taking them to court. 

The OBC had restored the lighthouse and keeper's house under a 20-year lease from the Federal government it received in 1991.  But in 2000, Congress changed the law to allow the government to turn over lighthouses outright.  OBC competed for the title against the county and won in 2003.  At that point, the county sued to require the nonprofit to meet county codes about parking and restrooms. Both of these were on adjacent land, owned by the county, but managed by a different charity, the Whalehead Preservation Trust  (EIN 56-6424298 Form 990). 

The difference between the two charities is this:  the OBC receives about a half million dollars a year in fee income (admissions from 80,000 annual visitors and rentals for weddings and the like).  The form 990 shows that about half was used for operating expenses last year, leaving the organization with a hefty surplus.  The Whalehead organization gets over a million a year, but that is almost exclusively government funding.  So this appears to be the classic case where a nonprofit organization is getting the cream while the government is expected to provide the infrastructure (at its most basic: restroom maintenance). 

Under the agrement, OBC will start paying 17% of its gross income to the Whalehead group, to be put in trust for maintenance of the parking lot and restrooms.  Pure poetry. 

The Wall Street Journal is providing public access to the results of a Harris Interactive DonorPulse survey telephone survey about attitudes toward giving.  The report suggests that older people volunteer more and are more likely to give, but that they are more skeptical about charity performance and trustworthiness. 

On the other hand, the report also shows that 85% of the respondents did not have strong feelings about charity performance one way or the other, with adults from 30-64 just slightly more likely (17% vs 15%) to have strong feelings than older or younger folks.  What many people in the charity and fund raising business tend to forget is that most donors are not strongly interested in what charities do and how they do it. 

Another interesting survey result shows how the popularity of giving to different charity causes varies by age group.  The oldest donors favor churches, disaster relief, community organizations, groups that serve the aging, and hospitals. 

The youngest donors 18-24 favor human service organizations, avoid culture, environment, and groups that serve the aging. 

The 25-29 year olds turn strongly to other healthcare and environmental organizations to the relative exclusion of most other causes. 

Those in their thirties favor arts & culture and educational institutions and are least inclined to give to church. 

In the forties, youth groups become popular, but not to the exclusion of other causes. 

People in their fifties give widely, having no area that they can call their own, but none they avoid, either. 

Many communities want to give small nonprofits technical and infrastructure support, but there's no agreement on how best to do it or pay for it.  So each locality has its own solution.  The Pueblo Business Journal reports that the Colorado Springs Center for Nonprofit Excellence (CEO Lynn Telford) (No EIN found, just a web site) is merging into the Pikes Peak United Way (CEO Jerry Smith)(EIN 84-0511799 Form 990). 

The article quotes a representative of the Alliance for Nonprofit Management (EIN 52-2089750 Form 990), an association of nonprofit support organizations, that about 63% of their 600 members are independent, the rest affiliated with another organization like United Way. 

This group seems to have tried different strategies, starting as a program of the Chamber of Commerce, then going it alone, now trying the affiliation with the United Way.  For a small group like this, merger has the benefit of eliminating the need for additional administrative support and perhaps fund raising. 

It's Bloomberg News, but you can imagine the complaint coming from NYC mayor Michael Bloomberg himself: there are too many charity events in the Big Apple.  The article cites an astounding statistic (without attribution) that there are 130,000 "events" every year.  That's a gala starting every 4 minutes.  A Wall Street banker explains that he may get 100 invitations in the spring season, he'll donate to 10 and may actually attend 5 of them. 

Of course, not all galas are equal.  A private Rolling Stones concert at Radio City Music Hall brought in 5,600 guests and raised $11.4 million for the Robin Hood Foundation (EIN 13-3441066 Form 990), a group which, despite its name, was founded by two commodities traders back in 1988. 

Lesser events from popular causes may have tables filled up by junior staff.  Other groups are trying more family-oriented alternatives to the black-tie standards, like a Sunday matinee benefit for the Children's Museum of Manhattan (EIN 13-2761376  Form 990), which featured actors from "The Lion King" with a top ticket of $50,000 for a birthday party of 40. 

Depite the glut, more events than ever are on tap, since Wall Street had a good year last year.  The bonus pool for 2005 was $21.5 billion, enough to fuel an additional fund raiser or two. 

The UK National Lottery will have competition staring Monday from (lower case) monday, a new lottery that lets punters pick one of five charities to benefit.  The charities will rotate every  week from a list of 70.  The charities receive 30p out of every pound, unrestricted, while 55p goes for the prize pool. 

The National Lottery, by contrast, gives 28p out of every pound in grants to "good causes" that include charities but others can apply as well (50p goes to prizes).  Criticism is leveled that the causes seem trivial or unwarranted, such as a recent grant of £30,000 to Manchester United football (soccer) club to provide fitness and yoga training to its staff.  Others complain that the application process is burdensome. 

The new lottery is possible due to British law that allows national "society lotteries" limited to payouts of £200,000 but monday has devised a work-arounds to achieve  effective £1,000,000 drawings.  Since only the National Lottery is licensed for paper lotteries, monday will operate only through the Internet. 

A national charity lottery is probably not possible in the US under current laws, with each state having its own gambling regulations (and often a state lottery).  But that is not to say that it could not be achieved if there were the will. 

In March we talked about the staggering debt accumulated by the Baltimore Symphony (EIN 52-0629696 Form 990).  Shortly later, we missed the Baltimore Sun report that the symphony board decided to liquidate 30% of the organization's $90 million endowment to cover the shortfall.  (The cached version is here and nowhere else.)   

As part of the arrangement, the balance of the endowment will be transferred to a new, independent body that will in the future be prohibited from further raids on the principal (or corpus).  Apparently this resembles part of a proposal floated a year and a half ago (ArtsJournal: "Saving Or Selling Out Their Future In Baltimore?", September 29, 2004). 

Other symphonies have converted endowment to cover operating deficits, but the case cited of the Cleveland Orchestra involved a transfer of $6 million from a $120 million endowment. 

Board chair Philip D. English sounded a note of optimism, while the new interim president and CEO W. Gar Richlin committed to a balanced budget.  Jane Marvine of the BSO Players Committee, whose contract with the symphony is up for renewal in September, indicated that the key will be increased fundraising. 

On the donor side, the symphony says that the amount being transferred represents unrestricted investment earning, not the restricted principal (or corpus).  Nevertheless, they are seeking approval of the transfer from both the IRS and state officials. 

Donors quoted in the article have mixed views; one indicates that it probably is not smart, but it does give the organization a fresh start; besides, she is less inclined to give to a "sinking ship" organization that shows huge and increasing amounts of debt. 

Texas Southern University regents have voted to terminate president Priscilla Slade "for cause" (i.e. without severance) after an audit confirmed that she had used university money to furnish and landscape her home.  It looks like the spending came to light sometime in January, and proceeded like this, mostly told in the Houston Chronicle by Matthew Tresaugue.  (The coverage is thorough, the only major disappointment being that the audit report of attorneys Bracewell & Giuliani was not made public.)   

This completes this week's unintentional trilogy of charity misadventures in the US South (previous posts dealt with a ministry in Georgia & a college in Alabama.)

TSU regents investigating Slade expenditures (January 30, 2006)

TSU head returns $138,000 to school, president hopes to ease concerns about expenses as regents prepare to discuss her future (February 2, 2006)

Spending decisions cloud the tenure of TSU president credited for school's booming growth: case of checks and balances (February 20, 2006)

Slade spent nearly twice credit limit set by TSU. Details emerge of $94,000 charged by school president. (February 27, 2006)

Editorial: TSU has a good and bad story; we must report both (countering charges of bias against historically black college) (March 20, 2006)

TSU board to divide duties of president.  Interim chief won't be named during probe of Slade's spending. (March 20, 2006)

Slade audit "doesn't look good."  Internal report says $647,949 in TSU funds spent were not allowed under her contract.  (April 7, 2006)

Slade defies TSU board by going public. Embattled president talks to media after being told to keep silent.  (April 13, 2006)

TSU board votes to ax Slade over spending. Hearing likely for president before her firing becomes official.  (April 18, 2006)

Editorial (naturally): TSU regents' decision to fire President Priscilla Slade was fair, decisive and best for the university. (April 18, 2006)

DA eyes Slade's spending at TSU, grand jury to see evidence next month; meanwhile, she fights her firing.  (April 19, 2006)

It's a mystery why financial missteps at large human service charities get the attention in the mainstream and philanthropic press.  Here's one you are not likely to see reported in the Washington Post or the Chronicle of Philanthropy:  The Birmingham News reports that the Alabama Fire College Foundation received $300,000 that was supposed to go to the college itself.  Around that time the foundation built a home for its executive director, W.L. Langston, who also happened to be president of the college and one of five board members of the foundation.

The foundation returned the money a year later and sold the house after FBI agents raided the college and carried off accounting files of the college and the foundation, according to the report. 

The funds had been intended for "critical first responder training," but a state employee typed in the wrong account number, according to a spokesperson for Roy Johnson, head of the Alabama two-year college system. 

The transactions are easy to follow in the foundation's Form 990s (EIN 63-1188496), the donation, the return of the donation, and the appearance of the house as an investment.  Here are the 2003 and 2004 returns.  The college is a state entity and does not have a Form 990, but here is its most recent state budget, showing it with operating expenses of about $5.7 million.

The fire college is under the oversight of the Alabama Fire College and Personnel Standards Commission, not the college system.  Mr. Johnson pressed the legislature this year to put the Fire College under the college system, but the legislature did not agree. 

Mr. Langston, for his part, has announced plans for retirement this year, and on departure will receive $190,000 split evenly between college and foundation funds.  His annual salary was $156,000.

The commissioners have promised to coodinate their efforts to recruit a replacement with the college system. 

Not often do we see an organzation willing to take stock publicly.  But the trustees of the mission board of the Southern Baptist convention took the unusual step of self-auditing and responding in detail to a report that questioned the management of the organization.  And, as reported in the Atlanta Journal Constitution, the head of the organzation has now resigned. 

The Southern Baptists created North American Mission Board in 1997 by merging three older entities (EIN 58-2379481, No Form 990 because it is a church agency).  Initially under the leadership of Rev. Robert Reccord the organization consolidated operations and achieved significant savings of $40 million (the current budget is $124 million).  But in February of this year, The Christian Index, a publication for Georgia Baptists, ran a long, rambling article ("North America: Hanging in the balance") outlining a number of missteps, failed campaigns, and questionable management practices.  The accusations were quite wide ranging, from the serious (layoffs, outsourcing, large contracts let to friends) to the technical (accounting for missionaries who raise their own funds) to the trivial (complaints about  the message on the organization's 800 number) and could have been easily dismissed.

Instead, the trustees immediately authorized an audit and scheduled a special meeting for a month later.  At that meeting, they presented a 19 page report that addressed the criticism in detail; accepting some, rejecting others.  They agreed that the management had not kept the state conventions informed of developments and that the contracting practices, including a lack of competitive bidding and failure to disclose prior dealings, opened the organization up to accusations of conflict of interest and mismanagement (though they did find the outsourcing contracts economically advantageous).  Evident in the report is an effort to expose and deal with all rumors and speculation about the organization, whether or not it was mentioned in the Christian Index article. 

The trustees chose to institute some "executive level controls" to restore the credibility of the organization.  A few high level staff left immediately before the special meeting of the trustees, and Rev. Reccord left about a month later.  Whether this was the intent of the trustees is not clear, and the statements about the departure have been conventionally upbeat. 

So we can admire the transparency with which the trustees addressed these membership concerns.  The hard work starts now—to select a new executive willing to manage this huge organization with increased board involvement and member scrutiny. 

Major fundraising plans were based on the 1999 study by John Havens and Paul Schervish, "Millionaires and the Millennium," with subtitle that promised a "Golden Age of Philanthropy."  That study forecast a massive transfer of wealth from the WWII and baby boomer generations that would convert to incredible increases in bequests to charitable institutions.  But now fundraisers are questioning where the money went, because bequests have not shown anything like the expected uptick in the last eight years.  A story about the shortfall in a recent Chronicle of Philanthropy (subscription required) has been republished on the site of the Association of Baltimore Area Grantmakers.

At this point, to reach the projections for the first twenty years of the weath transfer, bequests would have to immediately increase to six times the largest level ever seen.  In fact, bequests as reported by Giving USA peaked in 2002 and have declined slightly since. 

The researchers are sticking to their guns, just as they did after 9/11 and the dot com bust.  (Their 2003 report:  "Why the $41 Trillion Wealth Transfer Estimate is Still Valid.")  They suggest that the projected fund transfer is merely delayed.  However, they also acknowledged that household wealth fell by approximately 5 percent from 1999 to 2002, much different than the study's estimate of 2 percent to 4 percent growth annually. 

Another factor may be larger gifts given while people are still alive, through family foundations, charitable trusts, and donor-advised funds. 

Others note that the long-term projections are suspect as well, as the model probably has not adequately addressed the rising cost of long-term health care for the baby boomers. 

Fundraisers who were planning to sit back and let the money flow in probably will be disappointed. 

Here are the original estimates from "Millionaires and the Millenium:"

Lower Level Estimate
20 years: $12 trillion total transfer; $1.7 trillion in charitable bequests
55 years: $41 trillion total transfer; $6 trillion in charitable bequests

Middle Level Estimate
20 years: $14 trillion total transfer; $2.2 trillion in charitable bequests
55 years: $73 trillion total transfer; $12 trillion in charitable bequests

Upper Level Estimate
20 years: $18 trillion total transfer; $2.7 trillion in charitable bequests
55 years: $136 trillion total transfer; $25 trillion in charitable bequests

TechSoup is offering a two-day event focusing on what they are calling "online social networking."  These are networks where the whole point of social interaction is: social interaction.  What implications do these groups have for nonprofit organizations?  The initial post offers a "comprehensive" list of the online social networks (below). 

The nonprofit connection with these groups will certainly be worth ongoing attention.  The "Care2" group, for example, appears to be a privately held organization that nevertheless "partners" with various nonprofit organizations.  Their management team has a history of involvement with various ventures that straddle the for-profit/non-profit divide (e.g. health & fitness, health newsletters, environmental engineerings, public television). 

PROFESSIONAL NETWORKING
www.linkedin.com
www.ryze.com

GENERAL SOCIAL NETWORKS
www.tribe.net
www.friendster.com
www.orkut.com

PRIMARILY YOUTH AUDIENCE
www.myspace.com
www.tagged.com ;
www.tagworld.com

COMMUNITIES FOCUSED AROUND IMAGES
www.flickr.com
www.textamerica.com
www.yafro.com

VALUES ORIENTED
www.care2connect.com - Progressive-value and activist focused.
www.gather.com - Public Radio and social issue focused.
www.xianz.com – Christian focused

OTHER
www.last.fm - Music-oriented OSN
www.facebook.com – College-oriented OSN
www.everyonesconnected.com – British-based OSN

While preparing a recent post about fund diversion at the United Way, I ran across some stories about serious internal fraud cases at the Salvation Army in Toronto and Honolulu (and possibly New York) that for some reason did not receive much press notice. 

Toronto's was an alleged phony-invoice scheme that diverted $2.3 million (Canadian) from the organization's Canada headquarters in Toronto.  It was reported in January by the Toronto Globe & Mail and by CTV.  The full Globe & Mail article may still be available here.  I don't recall seeing it anywhere else. 

Apparently Ming Wa, an accountant for the SA earning $41,000 a year, had first attempted a settlement that would have allowed him to keep most of what he had taken.  In December, an attorney had informed the Salvation Army about the misappropriation on behalf of a client who offered to return 40% of the money in return for a confidentiality agreement.  Acting on the information that it was an inside job, the chief financial officer eventually focused on the computer files of an accountant who had resigned suddenly in early December.  He found spreadsheets documenting 34 deposits with amounts that corresponded to payments made to two companies, which were then investigated and found to be fictitious.  A call to the bank confirmed that Mr. Ming was signer on accounts in the companies' names.  The Salvation Army spokeperson said that controls were in place, but the Globe and Mail pointedly noted that in this case the perpetrator had foolishly outed himself, at which point the spokesperson said that he could not comment further due to the ongoing criminal investigation. 

This week, there is a story out of Hawaii about a prison escapee who landed a position as planned giving director at Salvation Army Hawaii.  Timothy Peter Janusz was caught after an anonymous tip that he was defrauding seniors.  He had deposited at least $150,000 in checks to account he controlled and received deeds to properties valued at over $200,000.  Both Janusz and his wife Susan had criminal records, yet the Salvation Army only did background checks of staff working with children, and the schools where Mrs. Janusz worked had not found anything amiss. 

The possible third story appears in an odd publicaton called the "North Country Gazette."  It reports an indictment of an accountant in the Manhattan office of Salvation Army named Wilfred Keaton.  Allegedly he deposited 51 checks totalling $166,914 into an account he controlled.  The story is very specific, almost as if it were written directly from an indictment.  However, the story is corroborated nowhere else.  North Country Gazette appears to be published by June Maxam, who bills herself as an "investigative journalist" and was very active in blogging circles during in the Terri Schaivo case. 

So here are two, possible three, cases that reflect serious lapses in very basic accounting controls at the Salvation Army units—not in small, out of the way offices, but in the large metropolitan centers.  The question remains why there has not been more attention given to these stores at a time when much smaller alleged frauds against the Red Cross get headline treatment.  It does charitable organizations no favor when the press looks the other way: it just ensures that abuses will continue. 
 

In its April issue Fast Company magazine offers a glowing report that compares a $15 million growth campaign by an organization called College Summit to a "private placement," and compares the 10 "investors" to the venture capitalists that funded the Palm Pilot.  While the piece acknowledges that there is no equity or monetary return involved, the funders at least have the opportunity to build a nonprofit brand name. 

Is there anything to this extended metaphor of venture capitalism? 

College Summit (EIN 52-2007028 Form 990) has a program to help low income students in the mid-tier (EPA 2.85) get into college through intensive summer workshops and a year-long senior curriculum.  The workshop program has been around since its founding by Jacob B. Schramm in 1993 and the senior curriculum was added in 1999.  The BridgeSpan group prepared a report about the organization with the hopeful title, "College Summit: Balancing aggressive national expansion with centralized control."  As the report says, written in 2004: 

A Congressional commission estimates that there are 200,000 “college-capable” low-income high school graduates who fail to enroll in college each year. [College Summit]  has reached 5,000 of them since the organization started in 1993.

College Summit has been able to attract significant private funds in the past, such as a $3 million, five year matching grant from the Samberg Family Foundation.  In 2004 alone, it received $3 million from the Department of Education due to a Congressional earmark (less politely known as a pork barrel project).  The current funding is to expand the program to 14 cities by 2009. 

Though the idea has some plausibility and the organization's ability to inspire fund raising is impressive, there is still a mismatch between its fund raising to date and the target 200,000 students per year who need its help.  It reminds me of the scene in Chicken Run where the engineer identifies the problem with chickens flying: they need more thrust. 

The BridgeSpan report indicates that the program has had only one year of doubling in size.  Of late, the growth rate has declined to around 50% per year.  This would be incredibly impressive for most nonprofits, but not for one with national ambitions that has yet to reach $10 million a year. 

The BridgeSpan report identifies several factors that may be connected to the stalling. 

• The organization retains strong direct control over its programs, and unlike most national charities has opted for a direct branch system rather than a chapter structure.  While this improves quality control, it makes it more difficult to expand at an exponential rate.   
• The organization has also chosen to base its ongoing operations on fees for service from local schools districts.  Again, this is a trade off: it decreases reliance on grants, but it also means that school districts need to be sold on the program.
• The organization is also in direct competition with for-profit college prep programs like Kaplan and Princeton Review, who have the means to offer wide-scale programs without worrying about the next year's funding. 

All in all, the venture capital metaphor is probably too apt, for this organization did not receive enough funding and or develop the management team in its first decade to achieve the national scale it sought (for comparison, see Teach for America), and it still seems to lack a plausible strategy and funding on a scale to achieve that goal. 

With this weekend's dual focus on things relating to church and taxes, the Washington Post gives us a report on tithing, particularly in the predominantly African American suburban communities of Maryland's Prince George's country.  The Post finds that the county has 14 of the 20 top zip codes in the Washington area for charitable deductions as a percentage of income. 

Coincidentally, George Barna recently released his annual "State of the Church" report, which also includes results of a survey question on church tithing.  The Barna Group is a marketing organization with an exclusive focus on research relating to church growth and outreach.  (It's not free, but WMN spent the $15 to bring the information to you.)

The Post interviews a number of individuals and churchmen (yes, all the ministers interviewed are men and most of the tithing congregants interviewed are women).  The one-tenth tithing requirement comes from the Bible, but the Post cites instances of so-called prosperity ministries where the expectation is made of even higher rates of giving.  They also mention Rev. Jonathan Weaver of Greater Mount Nebo African Methodist Episcopal Church, who has grown his congregation to more than 2,000, with 75% tithing. 

By contrast, George Barna finds four out of five adults make charitable contributions, two out of three give to churches, but only 5% of adults overall tithe.  Even among those with the views Mr. Barna describes as "evangelical," only 11% tithe.  Only one in fifty of non-evangelical, non-born-again Christians tithe, compared with one in twenty-five non-Christians. 

Mr. Barna reports average church giving of all adults as $851, with a median of $101, which means that a few very large gifts strongly influence the average.  Evangelicals give $2,131 per person, protestants overall average $1,219, Catholics $534. 

While the Barna results are said to be per person, multiplying his average by the 220 million adults in the US yields $187 million, far higher than the $88 million in giving to religious causes reported by Giving USA.  It could be that the Barna results would be more indicative of household giving. 

If FEMA can wait until the holiday weekend to release bad news, it's hard to fault the United Way of New York City for waiting until now to reveal its own:  Former chief Ralph Dickerson, Jr. has agreed to reimburse the organization $227,000 for personal expenses he charged to the organization before his resignation in 2003.   The strategy seems to work: the New York Times carried the story on Friday, but a Google search on Saturday shows no other news outlet with the story. 

The largest portion was for $190,000 in donated hotel points.  Mr. Dickerson's office had administered the points program off the regular books.  So the revelation of the diversion coincided with the departure of his long-term assistant earlier this year. 

As explained in an articles in the Times travel section last year, hotel points, unlike airline miles, can be converted into a wide variety of other benefits and are in many ways equivalent to cash.  (Donation of miles and points to charities is significant but not large in comparison to the total miles and points, because such donations are not deductible.) 

The Times story recalls the sudden, unexplained resignation of Mr. Dickerson in 2003 after 33 years in the United Way system.  Not noted at the time, but significant in retrospect, is the scandal at the United Way of the National Capital Area in 2002.  The former head of the UWNCA, Oral Suer, was eventually convicted of fraud and the then head, Norman Taylor, was forced to resign for diversion of resources for personal use.  Both were long time associates of William Aramony, who served prison time for his own abuses at the United Way of America in the eighties and early nineties. 

Aramony, Suer, and Dickerson had presided over tremendous growth in United Way during their careers.  However, the standards of one era of United Way fundraising proved to be unacceptable to the next generation.  Not coincidently, rules were changed in the mid-nineties to clear the way for significantly higher direct compensation of charity executives and discouragement of self-authorized perks.  Mr. Dickerson has one foot in both eras, however, as he was by far the highest paid United Way executive at the time of his resignation. 

Lessons for charity internal controls:

• pay special attention to the accounting of in-kind donations, especially intangibles like airline miles, and
• be very concerned when executive tenure spans generations.

Coinciding with the holidays, the Department of Homeland Security has released an unflattering performance review of the FEMA response to Katrina by its own Inspector General (internal auditor).  The news is carried in the usual sources, like the Washington Post, New York Times, and AP.  It looks like AP scooped with a story based on the executive summary of the report on Thursday. 

There are several lessons for and about charities in the report.  The biggest one is that the report criticizes FEMA for the apparent waste of $1 billion or more on mobile home and trailer parks (Femavilles) which have not been popular with evacuees.  Rental assistance has proven much more efficient and effective.  The important note here is that the entire intervention of the Red Cross was about $2 billion, putting in perspective the alleged fraud that has captured headlines over the last few weeks. 

Speaking of fraud, there is one mention of fraud in the report, a table on page 180 (187 of the pdf) that lists referrals from FEMA to other assistance providers.  Out of  4,033,449 total referrals, there were 2,593 for "fraud detection."  That's six hundreths of one percent.  The rate of fraud referral was identical in Louisiana and Mississippi (slightly higher in Alabama).  More evidence that "widespread fraud" at the grassroots level is an exaggeration. 

On page 44 of the report (50 of the pdf) there is a discussion of coordination with voluntary organizations.  The report notes the improvement in coordination due to the implementation of a Coordinated Assistance Network among agencies in 2003.  (The network was itself a response to the criticisms leveled after 9/11.)   Participants in the network are American National Red Cross, Salvation Army, Alliance of Information and Referral Systems, United Way of America, United Services Group, National VOAD, and Safe Horizon.

And the report reminds us of National VOAD, Voluntary Organizations Active in Disasters.  This group of charity organizations provides essential services during any large disaster, and needs to be better known.  It is simply incorrect that American Red Cross is the only agency involved in disasters, though of course it is the lead.  Members of the VOAD group are typically on the scene as well, some with very specific roles.  The list is long, found on page 166 (173 of the pdf):

On the CBS News web site, Prof. Arthur C. Brooks, director of nonprofit studies program at the Maxwell School of Syracuse University, offers the opinion that liberal youth lack heart.  His evidence comes from the General Social Survey, the every-other-year telephone survey conducted by the National Opinion Research Center of the University of Chicago. 

Brooks claims that young self-described liberals in 2004 belong to one-third fewer community organizations, 12 percent less likely to give money to charities, and one-third less likely to give blood.  Young self-described conservatives donate nearly $400 more per year to charity than young liberals.

Except for the blood thing, this doesn't seem terribly surprising, if church attendance and giving (more common among self-described conservatives) is factored in.  Brooks points out that the liberal is more likely to have a college or graduate degree, explaining the difference even more (paying off student loans probably cuts into charity giving and working as a medical intern cuts into volunteering time).   

It would be interesting to see whether more liberals work for charities (rather than volunteer a few hours). 

Tom Noe is at the center of Ohio's Coingate scandal, accused of stealing money from a $50 million fund he was supposedly investing in rare coins for the Ohio Bureau of Workers Compensation.  The Toledo Blade reports that a number of local charities are afraid that the state will want them to return the generous gifts Mr. Noe has given out since he began managing the fund in 1998.  The chronology of the alleged fraud is distressingly familiar, with auditors questioning the operation of the fund as early as 2000, but no indictments coming down until late 2005. 

The quotes from the charities and the coin fund liquidator William Bodoh provide another fascinating insight into the relationship between charity and power.  The head of the chamber of commerce says that Noe had a big heart and that in the late 90s, Noe was at nearly every charity fundraising event. 

Mr. Bodoh makes the interesting comment that it might be hard for the Bureau of Workers Comp to ask for money back from "the Little Sisters of the Poor."  It's an interesting comment:  would the Sisters really want to keep money they knew was stolen? 

But it is a moot point, because the actual list of known beneficiaries omits the Sisters (and humans in acute need generally).  The list of charities concentrates on education, youth, and sports (with a nod to dogs).  It include the University of Toledo & Bowling Green State, Make-a-Wish of Northwest Ohio, Assistance Dogs of America, Junior Achievement, and a number of Catholic schools and youth groups including the CYO, to whom he gave $50,000 for a 35-acre sports complex that bears his name.  Of those, the spokesman for the Make-a-Wish groups says that they would be willing to return the money if it proved to be stolen, but it would be difficult. 

The question often arises about whether groups should vet their donors to determine the source of donated funds.  It is probably not practical in most cases, but this is a case that shows why for large donations it may be worth the cost and discomfort of qualifying the donor first. 

Buzz words like "venture philanthropy," "social entrepreneur," and "social enterprise" have been the basis for many nonprofit conference sessions and even a journal.  The idea is to employ the techniques of capitalism to achieve a social mission.  Often this involves rather small scale community development ventures. 

But now the Chicago Tribune lays out the story of the connection between the Unification Church of Rev. Myung Sun Moon and the sushi industry.  Rev. Moon set out his plan in a 1980 sermon "The Way of Tuna," which is more of a strategic plan than a traditional sermon.  The story explains how it all then came to pass. 

True World Foods in Elk Grove Village now handles the distribution of 70% of the sushi fish in the United States.  Master Marine, an associated boat building venture, constructed the fleet (and does repairs for US Coast Guard and Navy ships).  The mass weddings made the Japanese members American citizens so they could fish in US waters.  Gloucester, Massachusetts has long settled into its life as a "Moonie town" (though few would use that term, now considered derogatory).

The story shows that "social enterprise" does work, but the current academic proponents of the idea are mere pikers.  To make a difference, entrepreneurial charities may have to think on a bigger scale, maybe even on a messianic scale. 

Bullying behavior is not limited to school playgrounds.  The Chronicle of Higher Education reports (with free access) on "mobbing," specifically in the context of university faculties.  The question is raised whether the recent resignation of Lawrence Summers at Harvard is a case of faculty mobbing.

Kenneth Westhues, professor of sociology at the University of Waterloo (Ontario), is the ranking expert in the field, collecting and publishing regular case studies of mobbing in academia, over 150 to date.  He builds on the work of Heinz Leymann, who gave the phenomenon the name "workplace mobbing" back in the 1980s. 

Prof. Westhues describes the stages of mobbing as social isolation, petty harassment, a "critical incident," adjudication, and removal.  Removal can be through dismissal or resignation, but sometimes can involve illness and even suicide. 

The solution advocated by Prof. Westhues is to encourage administrators to identify and properly discourage mobbing behavior.  He is perhaps surprisingly opposed to legislative remedies, which can have the effect of escalating and expanding the conflict situation. 

There seems to be a direct application of these concepts to the world of the Internet, where mobbing behavior can take place in email discussions and chat rooms.  Prof. Westhues proposed solution in the workplace points to the proper role of the moderator in such cases is to diffuse the conflict rather than remove the mobbing target.  In light of recent discussions on the CyberVPM list about "banning" in the context of email discussion lists, this seems to be a topic of relevance to the "social" Internet. 

While the Red Cross announces detailed plans for improving its infrastructure during the 2006 hurricane season, the Washington Post and New York Times seem stuck on their own pet issues.  The Post continues to give voice to anecdotes from disaffected volunteers, more revealing about the volunteers' unrealistic expectations than about the Red Cross.  One even complains that there was no email, "everything was being done over the phone."  (Current infrastucture plans are to pre-deploy cell phones & satellite phones, not computers.  Of course, if there's no power, phones still don't work well.) 

The New York Times concentrates on the diversity issue: involving more minorities in disaster response.  The Red Cross plans to work more closely with community and faith-based groups, including training in specific protocols for disaster response operations and accoutability.  This is no doubt an excellent idea, but there is little notice (yet) that this involves yet another massive expansion of the Red Cross mission, this time into the oversight of hundreds or thousands of small charities. 

In the meantime, a significant development that has gone largely unacknowledged:  the Red Cross board has set up an advisory panel on governance, consisting of:

• Charles Elson (University of Delaware)
• Margaret M. Foran (Pfizer, Inc.)
• Jay W. Lorsch (Harvard Business School)
• Patricia McGee (Trinity University, Washington, DC)
• Paul Neuhauser (University of Iowa School of Law, emeritus)
• Karen Hastie Williams (Crowell & Mooring LLP, retired)

The state of Illinois has made life tough for the charities in its tax check-off program.  The check-off gives taxpayers the opportunity to direct a portion of their refund to any of a list of charities.  In order to keep the number of charities manageable, it has set a threshold of $100,000 for organizations to continue participation in the program, reports the Chicago Sun Times.  Revenue department spokeman Mike Klemas is quoted saying, "There are far more that have fallen off than stayed on." 

It's a sobering thought to the charities who believe that all they need to increase fund raising is some exposure.  Those near the bottom are considering additional promotion to keep their place on the list. 

In New York State, where the breast cancer check off, license plate proceeds, and a state match yields over $1 million per year, the state runs a $150,000 radio and billboard campaign to increase participation.  So it's not free fundraising. 

In Illinois, only 1% of taxpayers participate in the check-off, but the ones that give average about $11 and typically check off two or more.  Here is the tally for the last two fiscal years:
 

The Joy McCann Foundation (formerly known as the Culverhouse Family Foundation) in Tampa is likely to go though more changes as Joy McCann Daugherty has filed for divorce after five years with Robert Daugherty, Jr., former dean of the University of South Florida Medical School and trustee of the foundation.   

This represents the next act in a long-running soap opera. 

Act I belonged to Hugh Culverhouse, Sr., a lawyer whose skill at investments led to ownership of lots of things, the Tampa Bay Buccaneers among them.  In 1993, he obtained Joy's signature on a post-nuptual agreement that deprived her of effective control of the foundation he started, which was put in the hands of his friends. 

Act II belonged to Joy.  After Mr. Culverhouse died in 1994, it came to light that he had numerous affairs which his cronies on the foundation board were well aware of.  Mrs. Culverhouse sued in 1996 to regain control of the estate, and prevailed in a settlement that removed the trustees.  It did, however, specify that the trust would be limited in its spending to 38 local Tampa charities. 

Act III: in 2000, Joy met Dr. Robert Daugherty, newly appointed dean of the University of South Florida College of Medicine.   Within a year they were engaged, she 80, he 66.  Shortly thereafter, foundation checks started going to University of South Florida.  But all was not well there, and Dr. Daugherty was eventually asked to resign. 

In the meantime, he had joined the board of the foundation and wanted to change its direction, which required getting permission of the 38 local charities for a by-law change.  Most (but not all) signed a waiver, the by-laws were changed and funds began to flow to other institutions, many of which happened to be consulting clients of Dr. Daugherty. 

Act IV:  Last year, the 38 charities had grown restive and some even retracted their consent, since the promised judicial review of the by-law change had never taken place and many were receiving only a tiny fraction of the grants they once enjoyed.  Florida Attorney General Charlie Crist started investigating the foundation, to determine whether it had violated the settlement agreement that removed the former trustees, and whether the trustees had violated their fiduciary duty through conflict of interest.

Which brings us back to Act V, the divorce.  No matter what happens to this foundation, the legal fees seem to keep flowing. 

After claiming that the relationship between Johns Hopkins Medicine and Cosmedicine™ skin care products was not an endorsement, Johns Hopkins president William Brody and Johns Hopkins Medicine CEO Edward D. Miller have released a statement announcing alterations in the agreement with Kinger Advanced Aesthetics, manufacturer of the Cosmedicine line.  The alterations include no Hopkins seat on the board and limits on mentions of the Johns Hopkins name (the ad at right, from the Sephora web site, is pre-agreement). 

A copy of the Johns Hopkins non-endorsement statement as it appeared in on the Sephora web site is available as a PDF file (313 Kb). 

An article last week in the Wall Street Journal (reprinted here by the Pittsburgh Post-Gazette) stirred up a storm of adverse reaction reported by the Baltimore Sun, including one quote characterizing the deal as "the weapon of mass promotion." 

The Sun also revealed that the Japanese cosmetic maker Shiseido has for sixteen year maintained an agreement with Massachusetts General Hospital*/Harvard Cutaneous Biology Research Center (CBRC) that allows it to license** promising research results for use in skin care products.   

*Massachusetts General Hospital (EIN 04-1564655 Form 990) is just one of a large number of related organizations and is not the operating hospital. 

**Licensing of research is a multi-billion activity that involves over 10,000 products and generates hundreds of start-up companies every year.  A huge "summary" report about this industry is available from the Association of University Technology Managers.  (PDF, 1.4 Mb). 

But what is/was different about the Hopkins deal was that no Hopkins research was involved, just consultation by faculty members and a statement (that everyone else described as an endorsement) in exchange for consulting fees, company stock, and a board seat.

Hopkins is also undertaking a review of its policies relating to its institutional relationships, headed up by Stephen D. Potts, former director of the U.S. Office of Government Ethics and chairman of the Ethics Resource Center in Washington, D.C (EIN 13-1671026 Form 990).

Another myth about charities is that they form an "independent sector," different from government or profit making firms (there is even an organization of nonprofit foundations called Independent Sector).  The New York Times reports on a group of organizations in West Virginia that belie the independence of charities. 

All the organizations were started by Rep. Alan Mollohan (D-WV) and have flourished with funding that Rep. Mollohan has written into appropriations bills through a process called earmarking (also known colloquially as pork barrel projects).  The process is not illegal, in fact, the Congressman announces it in press releases.  Here are the organizations:

• Vandalia Heritage Foundation (EIN 55-0768996 Form 990) shows government grant support of $8.2 million out of total income of $8.5 million.
• West Virginia High Technology Consortium Foundation (EIN 55-0727658 Form 990), a roughly $10 million, likewise owes most of its funding to government grants & contracts.
• Institute for Scientific Research (EIN 55-0765913 Form 990)
• Canaan Valley Institute (EIN 55-0747132 Form 990)
• MountainMade Foundation (EIN 55-0783199 Form 990) 

The groups have numerous cross connections, and the executives, who typically receive well into six figure incomes, support the Congressman's election campaigns.  Obviously the situation is one that is at risk for self-dealing and other abuses. 

In this economically distressed area, these nonprofits become the modern vehicle for old-fashioned patronage.  Independent Sector?  Not in this case. 

Jessica Alba's unauthorized appearance on the March, 2006 cover of Playboy generated letters from lawyers of Ms. Alba and Columbia Pictures that found their way to The Smoking Gun.  The letters claimed that after Ms. Alba refused an offer to appear on the cover, Playboy obtained from Sony rights to a promotional photo from the picture Into the Blue and converted it into the cover image, Photshopping in an ultra-subtle bunny logo, found by the lawyers and highlighted by the blog Defamer.

That's the set up.  This past week Ms. Alba settled with Playboy and Hugh Hefner in exchange for an apology and a donation (amount undisclosed by rep Brad Cafarelli) to two charities:  Keep a Child Alive and Until There's a Cure Foundation.  Besides having phrases for names (much like "Where Most Needed"), what can we find out about these projects of celebrity interest?

Keep a Child Alive began in 2003 as a project sponsored by Global AIDS Alliance (EIN 52-2310555), the advocacy group founded by Dr. Paul Zeitz.  It started its own life as a 501(c)(3) organization (EIN 73-1682844) in 2005 and so does not yet have a Form 990 available.  Its model appears to be a variant of child sponsorship in which donors provide children with AIDS medicines via regular donations, though it is difficult to determine exactly what its specific operation entails.  It does enjoy high profile celebrity support, including a star-studded web site and this video by Bono and Alicia Keys with photos by Kristen Ashburn.

Until There's a Cure Foundation (EIN 94-3181306; Form 990) is an unusual charity whose main source of income is sales of The Bracelet, a symbol of AIDS concern that the organization has sold since 1994. The Form 990 shows an organization that put into investments far more than it spent in grants in the year ended May, 2005; it also appears to treat the sale of the bracelets incorrectly, reporting them on line 2 and identifying cost of goods as a "program expense," rather than reporting sales and CGS on lines 10a and 10b.  Overall, the organization appears to consist mostly of efforts to promote the sales of the bracelets, coincidentally increasing awareness of the fact that there is no cure yet for AIDS. 

Amazing what you can find out behind Playboy covers.

Several decades ago on a trip to Europe, I was amused that the Europeans were consuming bottled water.  I thought at the time, "it will never happen in the US."  I misjudged.   

Now, a European firm is bringing its concept of face-to-face fundraising to the US, as told in this AP story picked up by the Washington Post.  The company DialogDirect pioneered the concept in Austria and it found success in the UK, where its mostly young, infectiously enthusiastic solicitors have come to be known as "chuggers" for charity muggers.  A tantalizing fragment from The Times (London) here suggests that about 100 charities raised £240 million in cash & pledges from some 700,000 donors in 2003, using solicitors paid as much as £100 per day.  Numbers like that ensure that US charities will take serious notice.   

Of course there is going to be push back.  The arguments in the UK pro and con are reported in the Guardian UK   ("charities thinking twice" and a follow up to a report in The Times "'Charity Muggers' face tough new curbs").  They resemble those about telemarketing, another fundraising technique that is quite successful for certain charities despite being extremely annoying to many people.  They promise some interesting regulatory and legal battles ahead. 

Our gut-level admiration of take charge people can result in people being entrusted with more responsibility than they can handle.  Now comes the story of Chris Burke and the charity, Tuesday's Children, that he founded after his brother died in the World Trade Center.  Mr. Burke has resigned from the organization and his parents have paid $500,000 in stock after the discovery that he had diverted funds to his own use. 

Board chair Jonathan Barnett, who assumed the role last December,  said that Mr. Burke admitted to diversion of $311,000 to a secret bank account.  Employees noted a discrepancy in funds raised from a gala attended by former Mayor Rudy Giuliani and called to the attention of the new chair.

Mr. Burke explained to the Times how he came to open additional accounts at the bank where Tuesday's Children kept its accounts, at first so that he could help other people not directly affected by 9/11.  Eventually, he deposited a $250,000 unsolicited check that came in a Christmas card.  He justified it to himself as a way to help others without the constraints of the increasingly established charity he created.  But then he started using the secret funds for his own use as well. 

By all appearances, this was a highly successful organization, moving from  early wish-granting activities to a range of training and counselling activities for the children and families of those who died on 9/11.  Its Form 990 (EIN 52-2347446) shows public support of over $2.3 million in 2004, three years after 9/11.  The organization had successful fund raising events and received annual grants like $150,000 from the Robin Hood Foundation (EIN 13-3441066).  Mr. Burke's compensation was a relatively modest $176,000.  The only cautionary note is in the absence of any financial staff earning more than $50,000. 

These developments again call into question the wisdom of charities founded out of grief, which WMN noted a short while back ("In Lieu of Flowers, Start a Charity").  It also shows the need for financial controls, but also why they may not be implemented by charismatic founders. 

The Washington Post and New York Times are reporting on the release of two mission reports prepared last September by international observers of the Katrina relief operations.  The reports are certainly critical of certain Red Cross operations, but the nature of the criticism is not made sufficiently clear in published reports in the Post or the Times. 

What they criticize most are two practices that have a lot of favor in the US:  the widespread use of in-kind donations and the use of spontaneous volunteers in critical positions.   In-kind donations, the report notes, frequently produced goods of the wrong kind, in the wrong amounts, and with the wrong packaging for distribution.   They clog up supply lines with nonpriority deliveries. 

The report also criticizes the use of new volunteers in critical management positions, which led to widespread disregard for standard control and record-keeping practices in warehouses.  The professional logisticians on the team seem particularly miffed by the attitude of the untrained volunteers and refusal to make use of their expertise, which the report describes as "a dangerous combination of ignorance and arrogance." 

Links to the reports are here, and also available in a sidebar to the New York Times article. 

Download IRC_arc_missionreport.pdf

Download British_redcross_document.pdf

One constant theme at WMN is the vulnerability of small nonprofits.  The Northwest Chamber Orchestra in Seattle recently went out of business when several factors combined to sink the boat, with a disappointing fund raising event (Bachanalia, "the most senior wine auction in the state") as the culmination.  There were a number of stories in both the Seattle Post-Intelligencer and Seattle Times marking points in the orchestra's last months. 

A post-mortem article, "Surviving chamber groups are aware of the risks" provides a thumbnail sketch of the budget and prospects of the Northwest Sinfonietta and the Seattle Baroque Orchestra, and also notes that the Seattle Symphony offers more concert options featuring smaller orchestras. 

As one of the area's first ensembles to feature music of the baroque back in the early seventies, the NWCO faced increasing competition over the years as music of that period gained popularity, particularly with the advent of orchestras playing in period style on period instruments. 

Leading to the end, though, were personnel decisions.  After the fact, music critics Melinda Bargreen and R.M. Cambell cited the artistic leadership of Ralf Gothóni, who was considered to rigid in his tastes and too busy in his schedule.  Leadership turnover ensued, including the departure of recently hired executive director David Pocock. 

Yet before that, some board members and key musicians had engineered a coup to depose the previous director Louise Kincaid, who had pulled the organization back from the brink a few years earlier. 

The organization's budgeting was always tight.  How close to the bone is shown by the most recent posted Form 990 of the NWCO (EIN 23-7282768) from June, 2004.  The organization had an operating income of about $560,000 (plus $100,000 more to stage the annual gala.  The executive director made $61,000 that year, certainly modest by executive director standards but still more than 10% of the organization's expenses.  Assets at year end amounted to less than $200,000 in cash and short term investments, with liabilities of $50,000 from a line of credit. 

The orchestra members were represented by a union and received $127 per "service" (including rehearsals and concerts).  Some were covered by medical insurance through NWCO, others through the Pacific Northwest Ballet Orchestra, to which about two-thirds of the orchestra members also belonged. 

The competing Seattle Baroque Orchestra (EIN 91-1785410) and Northwest Sinfonietta (EIN 91-1590964) have even smaller budgets and compensate their leadership even less.   In contrast, the Pacific Northwest Ballet Association (EIN 91-1590964) has an operating income of nearly $17 million and three senior staff earning in the $170,000 range.  Its budget deficit for the year ending June, 2004 was about as large as the entire budget of these smaller ensembles. 

Any board member, staff, or volunteers of an organization who has had to endure an organizational brainstorming session may find it rewarding to read or hear via podcast "The Problem with Brainstorming," by Wired columnist iMomus (who in other guises is also Nick Currie and trickster-pop-music artist Momus).  In it, iMomus recounts the history of this ubiquitous problem-solving genre (it came out of WWII and the advertising industry of the 1950s). 

He recounts his own experience at a recent brainstorming session, very accuately capturing (for me) the general ambience of these sessions and their frequent banality of results. 

It is still used to a very great extent in nonprofit organizations.  I suspect that one of the reasons for its continuing popularity is that it allows participation by all in the organization and it is not very costly to execute. 

What iMomus offers as an alternative is the use of masks and avatars—expressing creativity by acting as someone else would.  The technique is employed to a very great extent throughout the Internet, whether in chat rooms, email discussions or blogs.

As discussions continue about the successor organization to the recently defunct Association for Volunteer Administration, it might be well to pursue a different model than the freewheeling whiteboards and self-stick easel pads and instead ask the question, "what would Momus do?" 

The biggest scandal to emerge at the American Red Cross has so far gone little reported and acknowledged outside the nonprofit press.  The Chronicle of Philanthropy reports that seven of the eight presidential appointees to the Red Cross board of governors have been chronic no-shows at board meetings.  Six failed to show at a single meeting and the other attended only once. 

What is especially striking is the failure of the Washington Post to call attention to this huge lapse in oversight.  The article by Jacqueline Salmon "Senate Panel Faults Red Cross Board" (Feb 27) mentions lack of attendance, but does not draw the connection that among the worst offenders were the presidential appointees.  Since the article does mention the dominance of the larger local chapters on the board, the continual vountary absence of the obvious counterbalancing force certainly seem relevant. 

Even though the details were pointedly missing* from the materials he released to the Internet, Sen. Charles Grassley noted and criticized the absence of the presidential appointees, noting that it was a "bipartisan" problem carried over from previous administrations.  That analysis overlooks the extreme change in the Red Cross working environment since 9/11.  Even if board attendance was not common before, and certainly unacceptable, it became outrageous and inexcusable in the wake of the huge operating and leadership issues the organization has faced in the last five years. 

*In Sen. Grassley's press release on February 27, 2006, he reproduces a letter from the Red Cross in resopnse to his earlier questions accompanied by eight large pdf files of information.  However, a chart that the Red Cross supplied showing board member attendance (and mentioned in its response) is missing from the back up materials.

Despite its central, Congressionally mandated role in disasters (it was FEMA before there was FEMA), Sen. Grassley and others still treat Red Cross like an errant charity rather than a public instrumentality.  This is nothing new:  now available on the Internet is an article from The Nation in 1996 describing the politicization at the Red Cross under Elizabeth Dole (Linda Heller, "The Red Cross: A Question of Competence.")  The issues were different then, blood supply rather than disaster response, but the skewed priorities in Red Cross oversight ring true today.

Here is the list of presidential appointees to the American Red Cross board of governors.  Unless otherwise indicated, all are appointed April, 2005 with a term expiring in 2008.  Of these, only the Chair attends board meetings regularly. 

• Bonnie McElveen-Hunter (P) (Chairman), CEO, Pace Communications, Appointed: June 2004, Term expires: 2007
• Hon. Michael O. Leavitt (P), Secretary, US Department of Health and Human Services
• Hon. Michael Chertoff (P), Secregary, US Department of Homeland Security
• Hon. R. James Nicholson (P), Secretary, US Department of Veterans Affairs
• Gen. Peter Pace (P), Chairman, Joint Chiefs of Staff, Serving second term
• Hon. Condoleezza Rice (P), Secretary, US Department of State
• Hon. Carlos M. Gutierrez (P), Secretary, US Department of Commerce
• Hon. Margaret Spellings (P), Secretary, US Department of Education

In the spirit of the day, a little college humor.  This week the Wall Street Jounal brought us up to date on the heartwarming story of Boone Pickens' huge ($165 million) donation to Oklahoma State University to expand OSU's athletic village into a formerly residential area of Stillwater.  The story is behind WSJ's subscriber-only walls (hence the name), but there are other, more entertaining sources. 

You might even find the WSJ article here. 

Earlier, WMS reported on the special tax treatment of Mr. Pickens' original gift due to legislation designed to promote charity giving in the wake of hurricane Katrina.  The extra twist was that the donation was immediately given back to a hedge fund controlled by Mr. Pickens.  As we have seen since, these hedge funds earn big returns for colleges with big bucks to invest, but the hedge fund managers also make out handsomely by taking 20% of the profits they earn by rolling around these the huge blocks of cash (a la Katamari Damacy).  Though Mr. Pickens waives the fee on his gift, having the money at his discretion keeps him in the game. 

New details emerge about the relationship between Mr. Pickens, OSU athletic director Mike Holder, OSU president David Schmidly, and football coach Mike Gundy.  The college newspaper O'Collegian reported that Mr. Holder's friendship with Mr. Pickens (they hunt quail together) was key to the gift, and the WSJ implies that Mr. Holder's continued tenure as AD may have been a condition of the deal.  Of course, Holder is the one who decided to place the donation with the hedge fund.

Then, the story turned to the plans to use the gift to expand the athletic facilities north of the current stadium into a residential area of Stillwater.  Again, the O'Collegian provides some glimpse of the process, with president Schmidly explaining the master plan to the student government, especially why the plan entails removing a neighborhood that currently houses 580 students (among other residents).   The university master plan map (10 Mb file) shows an extensive area of new buildings and parking facilities. 

The WSJ provides additional details of neighborhood residents being offered buy outs of 70% of the assessed valuation of their homes, with the threat behind it of the university exercising its power of eminent domain.  But to the students, the president says, “That’s Boone Pickens’ money, not Dave Schmidly’s money" driving the decision to expand north, rather than find an out of town location.  (In Stillwater, out of town is a short drive.) 

All of these goings on were lampooned in a comic strip, Boone State, assembled in the clip art style by Chris Stellman (whose house is in line for demolition) and Garrett Hellman.  Stellman and Hellman received a lot of hate mail for their efforts.

Success in charity ventures is not just possible, it's easy.  Here's ten simple step that everyone from novices to seasoned veterans can use to help their venture reach its greatest potential:

1. Raise money—lots and lots of it—from all sorts of donors
2. Empower your staff to accomplish more with less resources and with less oversight
3. Constantly rethink all your processes for maximum effectiveness and implement change with spontaneous exuberance—remember that the fun is in the details!
4. Engender reality-based visionary thinking on the part of your board and enlist their enthusiastic development support to implement your ideas
5. Be there first when the next big thing breaks loose
6. Hire the best and the brightest of all cultures and backgrounds—working more for love than for money
7. Devise metrics that track your impact on the community intuitively and transparently, without incurring significant cost, and integrate these measures effortlessly into every aspect of fund raising, program delivery, management, marketing, recruitment, strategic planning, acccountability, governance, staff development, volunteer management, performance evaluations, outreach, and budgeting, using appropriately rigorous yet non-threatening 360° degree feedback techniques
8. Make alliances with the most successful partners and humbly share the credit
9. Creatively improve on everything you, your staff, and your board think, say, and do
10. Raise tons and tons of money from everybody

Now you know what to do:  all there is left is to do it!