Well…it has, I admit, been a while since I’ve written in these pages; and for that I apologize. I plead two contributing factors.
The first is that I have been (thankfully) busy, mostly in Texas where Barry Silverberg, the president of the Texas Association of Nonprofit Organizations, has had me traveling to the Lone Star State to deliver a number of workshops to TANO members in Austin. Those sessions have been well received and have gone well; and I’ll be traveling back down there in a few weeks as we take the show on the road and present in San Antonio.
The second factor -more importantly- is that, while the body has been busy getting organized, collecting information from nonprofits, and gathering opinions from major players in the sector, there has been literally no substantial news coming out of New York State Governor Cuomo’s Nonprofit Task Force.
The sole insight into what is going on behind the scenes is that in his State of the State Address the Governor did announce that he would like to emulate the actions of New Jersey Governor Chris Christi and cap executive compensation at state-funded nonprofits. Cuomo set the bar at $199,000 annually. Going a bit farther, he added that he intends to require that at least 85 cents of each public dollar a nonprofit collects should go to services and not administration.
These proposals raise several questions.
The first is one of enforcement.
When one considers that a significant number (a majority???) of nonprofits in New York receive state dollars -either directly or indirectly- is the Governor’s initiative to be interpreted as meaning that no nonprofit whose head earns more than $199,000, or that spends more than 15¢ of each public dollar on administration, will be henceforth eligible for any state monies whatsoever?
The fallout from this could be considerable…as could the anticipated pushback.
Beyond this, however, the governor’s message is disappointing in that it seems that he is being strictly true to his word, and the Task Force, launched in direct response to revelations of large pay packages earned by executives of nonprofit entities (and some for-profit entities) that provide state services, is –at least for the moment- focusing solely on such pay packages.
Unaddressed, in anything publicly seen or heard, are larger and more troubling issues having to do with the connections between politicians and nonprofits, and the way certain publicly funded nonprofits seem to avoid any public scrutiny at all while they literally pilfer the public coffers.
By way of example, virtually at the same time as Cuomo delivered his address, it was revealed that the departing director of the politically connected social-services empire founded by Brooklyn Democratic leader Vito Lopez will be collecting up to $135,000 in unused sick time and vacation pay.
New York City –the pass-through agency by which this particular organization received its public funding- ordered the woman booted after the City’s Department of Investigation belatedly found she had collected questionable “retroactive” pay that boosted her compensation to $782,000 in Fiscal Year 2009 from the already outrageous level of $336,000 she collected in 2008.
As part of the deal, she was allowed to cash in unused sick time and vacation time, accumulated over a 38-year career, up to a maximum of $135,000.
Another organization executive, it was also learned, had his 2009 compensation quietly boosted by $68,000 to $190,000. In his defense, this individual told the Department of Investigation that he “believed” the organization’s Board had approved the hike…although he “had no proof” to substantiate that assumption. For their part, Board members told investigators that they had no idea how much Fisher was being paid.
On the one hand, all this could be seen as no more than a sadly typical Empire State scandal….Lord knows we have enough of them.
But on the other hand, the larger issue –and the one with nationwide implications- is what to do about this entire situation.
Politicians, we all have to admit, like to be seen as doing something about a problem that has gained public attention and infamy. If the politician is an executive –a mayor, a governor…or even a president- the usual response to this impulse is to announce an initiative, a reform, or a new administrative ruling. Legislators –at all levels…city, county, state, and congressional- like to announce new legislation or a new appropriation of funding to address the problem at hand. Cuomo, in this case an executive, is proposing essentially new rules. But a significant body of opinion within the sector is arguing that we don’t need more rules and regulations…or even stricter ones. Rather, they argue, we need more resources devoted to enforcing the rules we already have on the books.
One VERY WIRED sector insider (who probably would not want me to use his name…so I won’t) recently told me that new rules will only make it harder on the majority of nonprofits that are conducting themselves properly…those who are not connected to any politicians, those who don’t have any politicians’ girlfriends on the payroll, those that don’t have a Board of unaccountable puppets rubber-stamping questionable decisions. The last thing these completely above board groups need, he told me, are more regulations enforced by mindless bureaucrats, more hoops to jump through, more papers to fill out, just to get the funding they need and deserve. Instead, he said, government at all levels needs to police itself and enforce the already ample laws, rules, and regulations on the books.
“But,” he added, “that takes money…and is distinctly unglamorous…especially if the effort only nets relatively small fish.”
From the little that is discernible from the vantage point of those on the outside, the insiders are battling over whether more regulations or more enforcement muscle is needed.
Disappointing, however, is the fact that no one –neither those in the public nor those in the nonprofit sector- seems to be talking about finally building an unbreechable firewall between nonprofits –which exist to fulfill a public good- and politicians…who operate primarily for their own good. Until this is done, sad to say, stories like those coming out of New York will only continue…to the detriment of our entire sector.
Hey Dr. Bob,
The firewall you’re calling for would have to be an independent process that screens and evaluates on its merits ( i.e.does it serve a public good? ) every allocation of public finds targetted or earmarked to an ngo in the annual budget process.That may help curtail funding bridges to no-where, but it would open the door to assessing the operations, structure, compensation policies, and service outcomes of each ngo on the list.
How would you institutionalize such a process, and would its yes or no determinations be binding?
Nice exercize for someone.
The firewall I am thinking of would be stronger. Effectively, no nonprofit founded by an sitting public official, one that employs in any way such an official, or one that has the politician’s family members on its payroll should be eligible for public funds. I am much less concerned with bridges-to-nowhere than I am about the steady stream of examples, in NY and elsewhere, whereby politicians are setting up and/or using nonprofits to enrich or promote themselves, their families, and/or their girlfriends and campaign workers.
I like the Bob’s idea of an independent commission, and his criteria for excluding nonprofits from eligibility to receive public funding.
But I think it is essential to separate this discussion from the other one that has been tied to it, namely how much organizational overhead is reasonable. For example, I don’t know of a single high performing organization that has an overhead of only 15% – which is what Governor Cuomo seems to be advocating. In fact, insufficient overhead revenues hurt the ability of many if not most nonprofits to function well, perform at high levels of quality, and deliver effective programs and services reliably and sustainably.
For the record, the idea of the independent commission came from Dennis, not me. But I agree, David, that the 15% overhead limit seems arbitrary; and could,in certain circumstances, hurt more than it helps. Thanks to you both for weighing in.