Photo by Salerie

What tangle web of abuses humans are prone to commit.  What is a Board to do?  Stay above it by providing the clear light that is afforded by the protection of clarity.

Today’s Wall Street Journal’s article on page D3 titled “Scam Highlights Abuses In Charitable Write-Offs” I found having similar themes to my focus on Conflict of Interest.  Conflict of Interest can be between a donor and the organization if there is personal gain by the donor. For more details on the article click here.

* No arranging kickbacks
* No disguising payments for services as a charitable donation
* No over valuing non cash donations.

The Conflict of Interest holds true in contracting or hiring individuals to do professional fundraising.  According to the Association of Fundraising Professionals (AFP) Code of Ethics. www.afpnet.org.  Those involved in fundraising, who are members of AFP, and thus sign the Code of Ethics; compensation as a percentage of funds raised is prohibited (#21), however, bonuses are allowed (#22).   So if the development office performance bonuses are based on something other than percentage of funds raised, it is allowed.  This is a good standard to follow regardless whether the person is part of AFP.

Compensation and Contracts

21.  Members shall not accept compensation or enter into a contract that is based on a percentage of contributions; nor shall members accept finder’s fees or contingent fees.  Business members must refrain from receiving compensation from third parties derived from products or services for a client without disclosing that third-party compensation to the client (for example, volume rebates from vendors to business members).

22.  Members may accept performance-based compensation, such as bonuses, provided such bonuses are in accord with prevailing practices within the members’ own organizations and are not based on a percentage of contributions.

Photo by C-Eight

Accountability and disclosure should not have to be debated on whether it is done.  Self dealing, fraud and inappropriate actions a board and management must deal with openly.  This New York Times article conveys very different approaches by two nonprofits.

If someone stole a million dollars from you would you keep them on the payroll?  Acorn did just that.  I guess the employee needed the money more than Acorn because there was no prosecution and they never got there money back.  Oh, $200,000 was paid but was that with his payroll deduction for money earned by working at Acorn.  Nothing like Acorn paying itself back for another persons crime.  To what effect the stolen funds effected Acorns  ability to meet its goals and outcomes has not been disclosed.

I would blacklist the nonprofit Acorn since I feel that the board has not taken enough action against those of management and the small set of board members whom deceived the organization.  Donating to Acorn should be done only after such action is taken.

I support New York City Mayor’s poverty gauge.  It is a more accurate measure of the costs necessary to live.  The Federal governments standard is outdated.  The New York measures are a better gauge for what should be included in the calculation of the Living Wage of a geographic area.  The Washington Post reports the National Academy of Sciences proposed the new method to Congress in 1995.

This is a really great article. It comments on the many different ways teens from the Silicon Valley region of California are helping people all over the world. It’s true that 9/11 helped the youth of today to realize that there is more going on in the world than their high school and MTV.

Youthful offenders are learning skills to use for employment when they get released by restoring old Diners.  This is a great example of how to take two needs and create a better outcome for both.  This New York Times article reviews the youthful offenders program in Rhode Island.

Photo by Shyald

The game of chess is not only a board game but the constant movement of strategically placed decisions.

The Boston Globe reported that three Board Members of Boston Public Library with business ties to City vote to support the Mayors wishes to oust Executive Director.  Do these Board Members meet the Conflict of Interest test or the trust test? Regardless of whether anyone agrees or not that the city had influenced over the vote, these three members should have abstained to assure the public that there was no conflict.  The fact that they held city contracts and the city was advocating the Executive Directors removal meant that the board member had an interest in the business of the city and keeping that relationship.

It is up to a court to decide whether the vote was tarnished sufficiently to give the former Executive Director legal recourse.  It is up to the former Executive Director whether to take legal action against the organization to nullify the vote base on nondisclosure by the board members to the full board.

The IRS Conflict of interest disclosure is the best one to follow because there is no latitude for disclosing to your follow members what might or might not be consider a conflict.  It is not the individual members right to choose when to disclose or what is a conflict.  Up front at the time of selection as board member ties to the city should have been disclosed.  If there was a change in status while on the Board that should have been disclosed.

For your ease below is information from the IRS web site.

“Form 1023: Purpose of Conflict of Interest Policy
What is the purpose of the conflict of interest policy?Charitable organizations are frequently subject to intense public scrutiny, especially where they appear to have inappropriately benefited their officers, directors, or trustees.  The IRS also has an oversight role with respect to charitable organizations.  An important part of this oversight is providing organizations with strategies that will help avoid the appearance or actuality of private benefit to individuals who are in a position of substantial authority.  The recommended conflict of interest policy is a strategy we encourage organizations to adopt as a means to establish procedures that will offer protection against charges of impropriety involving officers, directors, or trustees.A conflict of interest occurs where individuals’ obligation to further the organization’s charitable purposes is at odds with their own financial interests.  For example, a conflict of interest would occur where an officer, director, or trustee votes on a contract between the organization and a business that is owned by the officer, director or trustee.  Conflicts of interest frequently arise when setting compensation or benefits for officers, directors, or trustees.  A conflict of interest policy is intended to help ensure that when actual or potential conflicts of interest arise, the organization has a process in place under which the affected individual will advise the governing body about all the relevant facts concerning the situation.  A conflict of interest policy is also intended to establish procedures under which individuals who have a conflict of interest will be excused from voting on such matters.Apart from any appearance of impropriety, organizations will lose their tax exempt status unless they operate in a manner consistent with their charitable purposes. Serving private interests more than insubstantially is inconsistent with accomplishing charitable purposes.  For example, paying an individual who is in a position of substantial authority excessive compensation serves a private interest.  Providing facilities, goods, or services to an individual who is in a position of substantial authority also serves a private interest unless the benefits are part of a reasonable compensation arrangement or they are available to the public on equal terms and conditions.”

Due to the nature of the vote and what I find as a conflict of interest by these 3 board members I recommend that donors withhold giving to the Boston Public Library until the Board adequately deals with this issue of disclosure, takes appropriate action and announces to the public that action they have taken.

I do not know whether to laugh, cry or be scared by the upcoming calendar of Lawyers.

The Boston Business Journal reported lawyers decided to raise cash for charities by creating a calendar.   You can find out more about Beautiful Lawyers by calling 781-249-7803.  For the article click here.

There are many ways for a nonprofit to communicate to their to network.  A few suggestions are below.  Which ones are you using?

1. Facebook
2. YouTube
3. Blog
4. Newsletter
5. Email
6. Twitter
7. Digg
8. Buzz
9. Postal Service
10. Stumble Upon
11. Reddit

Networking should not be limited to one means of communication.  Due to the nature of individual taste you should use an individual’s preference of communication to maximize your efforts.

The Boston Business Journal reported that the Boys and Girls Club of Boston finished it’s 100 million five year fund raising campaign 8 million ahead of its goal.  Hats off to the nonprofit for building a great network of 5,500 donors. 

This is a cool article that describes a website started by Microsoft to help NGOs (Non Governmental Organizations, or Non Profits) get connected with resources and other non profits. Click here to read more.