Twenty Most Important Charity Stories of 2006

They may not be the stories that gained the most attention, but in my opinion are the most important stories about the charity industry in this last year. 

It's been an exciting year for me.  I started Where Most Needed a few days before the beginning of 2006.  I knew there was going to be enough to talk in the charity business to sustain a blog, but I have been amazed at the wide variety of issues that came up just in the ordinary course.  Here's what I think are the most important issues covered in the blog so far:

1. Mitch Gold Charity Telemarketing Scams Keep Rolling (March 12)
The law enforcement team that put the ringleader behind bars (after he had been in business nearly 15 years) has been disbanded and is unlikely to reassemble due to changed priorities after 9/11.  Despite a lot of talk about charity accountability, the really bad operators still find it easy to elude apprehension, because the enforcement priorities are elsewhere. 

2. Preventing Perfidious Pledges (November 25)
Some large institutions are trying various ways to protect themselves from donors who don't take their pledges seriously.  Donor accountability hasn't received nearly the attention it needs. 

3. McDonalds Pull Tab Collection Perpetuates Charity Myths (May 28)
An old urban legend lives on and recyclable cans go to waste to make charity "convenient."  Our preoccupation with in-kind giving and easy charity isn't really helping people who need help. 

4. Incompetent Charities Frustrate Disaster Response (October 14)
Director of MSF/Doctors Without Borders in Belgium blasts the opportunistic charity response to major disasters.  Though the large-scale charities took the heat after the tsunami and Katrina, truth is that much of the chaos stemmed from numerous, well intentioned but clueless charity wannabes. 

5. New Jersey Priest Profits from Phony Power Ball Raffles (September 22)
Indictment claims that clergyman skimmed over $600,000 from 2001 to 2005, supposedly raising money for a parish school that has since been forced to close.  Several stories like this one revealed that the accountability problem in Catholic archdioceses is not limited to sexual misconduct.  Large gaps in internal controls can be expected to generate more stories like this in the future.

6. Red Cross Releases Governance Report (November 2)
It's a hefty read at 160 pages that exposes the cracks in Red Cross governance that have emerged in the sixty years since the current system was put in place and proposes a new structure in keeping with current governance theory and practice.  After years of inattention from Congressional overseers, the Red Cross took matters into its own hands to bring the Red Cross board up to date.  Congress still needs to implement the recommendations, though. 

7. Study: Lotteries & Good Looks Boost Fundraising Yield (May 31)
In an extensive test of door-to-door fund solicitation, researchers validate some fundraising secrets.  Donors, particularly men, respond to good-looking, cheerful fundraisers.  And everybody prefers lottery tickets to unvarnished charity. 

8. Study: Large Scale CFC Campaigns Have Lower Fundraising Cost (September 20)
A Where Most Needed exclusive: across all 300 local campaigns of the Combined Federal Campaign in 2005, average costs were significantly higher for small scale campaigns, although there were at least few low cost performers in all scale categories.  This counters the myth that small scale fundraising is more efficient. 

9. Lax Oversight in Disabilities Program Yields Major Abuses (March 10)
A program designed to help the disabled through preferences on Federal contracts serves very few who are genuinely disabled, but the non-disabled heads of the nonprofits reap huge salaries.  There was a major on-going investigation of abuses in the Javits-Wagner-O'Day program.

10. How Albert Ellis Got His Board Seat Back (February 1)
One of the giants of twentieth century psychology has been restored to a board seat on the organization that bears his name.  A judge rejected the founders syndrome argument and told the board that it had to follow its own by-laws. 

11. Salaries in Seattle are Drawn to Scale (October 18)
Despite what Charity Navigator says, it's expected that small scale organizations will spend a high percentage of resources on their top staff.  Scale has to be taken into account when evaluating charity organizations.  One size does not fit all. 

12. America's Most Generous: Boone Pickens (April 1)
A tax benefit enacted to help charities after Katrina leads to evacuations in Stillwater, Oklahoma for a new football stadium.  The impact of the 2005 KETRA legislation has been completely ignored by the press and researchers. 

13. Study: Women Lead in Charity Embezzlement (May 1)
A study in New Zealand and Australia determined that more women than men defraud their nonprofit employers.  The issue of fraud within charities needs more attention, especially with the increase in gambling addiction. 

14. IRS Data Shows Largest Nonprofits Have Biggest Economic Impact (Febrary 22)
There's a persistent belief that because small organizations are so numerous, they must have an economic impact in the aggregate.  But IRS data shows it just isn't so. 

15. California AG: Getty Trust Has Suffered Enough (October 5)
Improprieties are found, but no crimes, and no further penalties or reimbursements are proposed either for the trust or for ex-CEO Barry Munitz.  This was the culmination of a year of a high-profile governance crisis at the wealthiest museum in the US. 

16. Breaking Ranks with the Chronicle 400 (November 30)
The current methodology for ranking charities overemphasizes United Way and minimizes some other fundraising powerhouses.  Public universities are the largest charity in the US, and Harvard raises over a billion a year when its teaching hospitals are included. 

17. Governance and Gordon Gee (September 27)
Vanderbilt University reacts to a Wall Street Journal article about the expensive habits of its president and efforts by its Board of Trust to install controls on spending and outside board memberships.  The issue of executive compensation in the largest scale charities will continue to be a big story. 

18. Machismo and the Microfinanciers (October 27)
Muhammad Yunis won the Nobel peace prize for transforming the business of loan sharks into microcredit for poor women.  A new generation of (male) market-oriented investors could be reversing the process.  The social entrepreneurs are blurring the line between charity and for-profit endeavor, and the risk is that all of the charity is getting squeezed out. 

19. Seven Boardroom Innovations that Charities Need to Adopt (October 10)
The Wall Street Journal now has a special report section on corporate governance, with ideas that charities would do well to consider.  Public companies are running far ahead of where most charities have been willing to go. 

20. IRS: Down Payment Grants Not Charity If Funded by Seller (May 5)
IRS belatedly denies charity status to organizations that provide down payment assistance—funded by home builders and home sellers.  The IRS still seems to be far too ready to green light charity concepts closely intertwined with commercial interests. 

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