Strategy Girl

Economy as Scapegoat for Nonprofit Leaders Behaving Badly

The paragraphs below are excerpted from this NYTimes article about charities filing for bankruptcy due to the economy:

http://www.nytimes.com/2009/02/20/us/20bankrupt.html?_r=1&scp=1&sq=nonprofit%20bankrupt&st=cse

Glass Youth and Family Services had been living off its credit cards for several months. “The Internet was down for two days last week because we couldn’t pay the bill, and a repo man showed up for one of the vans we use to transport the kids around,” Ms. DeCrescenzo said.
The reasons for Glass’s financial woes are similar to those causing other nonprofits to go bankrupt. Ms. DeCrescenzo said the state of California, which accounts for almost 70 percent of the organization’s revenues, had not raised the rates it pays for services in nine years, while expenses had increased.
Aggravating those problems was a decision Glass made some time ago to allow only six beds in its group homes.
“We have held out for more than a decade against moving to a group home model with 12 beds or more because we thought smaller homes create a family environment that was better for the kids,” Ms. DeCrescenzo said. “That was a mistake.”
American Express has been calling her repeatedly, she said, seeking payment of $100,000 that has been charged to the corporate credit card for hotel rooms for teenagers who had aged out of group homes; the company is also threatening to seek a lien against Ms. DeCrescenzo’s house.
The I.R.S. also wants her house because Glass has failed to pay its payroll taxes.
“The one thing I have is my home,” Ms. DeCrescenzo said, “and now I lay awake at night thinking someone is going to take it away from me.”

EXCUSE ME - THIS GROUP IS NOT BANKRUPT BECAUSE OF A BAD ECONOMY!  THEY ARE BANKRUPT BECAUSE THEY ARE EXCEPTIONALLY INEPT!

This article really put a crease in StrategyGirl's cape.  Let's review:

• This organization has been in a 9-year decline.  
• They fully recognized that their expenses were outpacing their income 
• They intentionally chose a business model that is not sustainable; nor, apparently, one they are capable of subsidizing by convincing donors their approach is more effective  
• They have racked up $100K in debt on credit cards 
• They have not paid their payroll taxes  

Hmmmm, seems to me that over the past 9 years when the economy was hopping along they were still in a (somewhat slower, but no less certain) death spiral.  The fact that they are blaming this failure on the economy is insulting and does a grave disservice to the sector and, most importantly, to their clients.  How does egregiously mismanaging this nonprofit into the ground help their clients?  And, WHERE WERE YOU, BOARD MEMBERS?  I hope the Attorney General has some very serious conversations with those charged with exercising "duty of care" of this organization.  Shame on you, NYTimes, for getting suckered into this sob story - please, check your crocodile tears at the door.  Let's focus our attention and energies on those organizations that are doing great work, in a responsible way, and who need a bit of assistance to get through a particularly rough time.

People care but don't take action

Be sure to check out this very brief but compelling survey: http://www.porternovelli.com/sites/default/files/casestudy-pdfs/PNSnapshots_Jan%2009_0.pdf

The survey quantifies the difference between Americans' strong commitment to causes, and their actual participation in the solutions.  70% said health research, the environment, and improving schools and education are "personally important to me;" but as few as 6% actually donated time toward those issues in the past 12 months.  What does this tell us?  As my mentor loves to say, "First of all, we don't have enough information."  Are they giving in other ways? Are they actually taking action toward the issues, but don't perceive it as "volunteering time?"  Maybe they have cut back on water usage, bought an energy efficient water heater, forwarded an email from a friend raising money for a walk-a-thon, etc.?

Regardless, Strategy Girl sees a world of opportunities here.  At least according to this study, people actually DO CARE about these issues.  How can we help them feel good about acting on them?  Groups like Kiva http://www.kiva.orghave made it easy, quick, and very cool to take action - what can your nonprofit do?  Try some of these:

• ASK!  It's amazing how many people would do something if simply asked - especially if you make it easy for them.  The other day a colleague invited me to an event he really cared about - he bought my ticket and told my why it was personally meaningful to him.  He also invited many others in our network and made it a group affair.  It worked - I attended, had fun, learned something new, wrote a check, visited the website, and registered for the nonprofit's email updates.
• Increase the "cool" factor - tap into existing membership groups, associations, social networks and challenge teams to volunteer together - be sure to recommend a local brew pub or the latest cafe for group refreshments afterwards.  Free beer for those teams with the most volunteer hours - who can resist?
• Get to the kids. Parents will do nearly anything if their kids apply pressure. Trust me.
• Work together with organizations from different mission areas.  Did you hear KQED's latest pitch during their appeal?  If you donate to this public radio station you get lots of thank-you gifts - or, forgo the swag and they'll donate what they would have spent on canvas bags and logo hats to the local food bank.
• Use guilt. It works wonders.  At your next dinner party, casually mention "You know, I saw this survey the other day . . . it said 73% of Americans care deeply about health research, but only 6% actually donate any time for it.  We humans are so pathetic!  I've decided to get off my duff and do the AIDS walk this year.  But I'm sure you are much better at actually doing something about the things you care about - what are you volunteering for these days?"