January 10, 2009
U.S. Criticizes New Ethiopian Law Restricting NGO Activities
On Tuesday, January 6th, the Ethiopian Parliament voted 327 to 79 to pass the Charities and Societies Proclamation (CSO law) that limits foreign funding for NGOs to less than 10% and bans lobby groups from campaigns against civil liberties.
The United States has expressed concern that the CSO law appears to restrict civil society activities and international partners' ability to support Ethiopia's own development efforts. The U.S. State Department said in a statement: "We recognize the importance of effective oversight of civil society organizations to ensure accountability, efficiency, transparency, and a clear set of operating procedures for NGOs. However, we are concerned this law may restrict U.S. government assistance to Ethiopia, particularly on promoting democracy and good governance, civic and human rights, conflict resolution, and advocacy for society's most vulnerable groups -- areas the Ethiopian government has defined as critical for development."
The New York-based Human Rights Watch (HRW) started a campaign in October last year, appealing to foreign governments with relations with the Ethiopian government to threaten aid cuts as a way of intimidating the government to drop the law. According to HRW, the Ethiopian government claims that the CSO law is mainly intended to ensure greater openness and financial probity on the part of NGOs. However, HRW asserts that the law places such severe restrictions on all human rights and governance-related work as to make most such work impossible, thus violating fundamental rights to freedom of association and expression provided for in the Ethiopian constitution and international human rights law. By considering any civil society group that receives more than 10% of its funding from abroad – even from Ethiopian citizens living outside of the country – to be “foreign,” these groups are forbidden from doing any work that touches on human rights, governance, or a variety of other issues. Because Ethiopia is one of the world’s poorest countries, with few opportunities for domestic fundraising, HRW claims these constraints are even more damaging than they would be elsewhere. Under the law, groups based outside the country, such as HRW and Amnesty International, are barred from doing human rights-related work in Ethiopia.
On December 25th, the Ethiopian parliamentary committee in charge of legal affairs held a public hearing for the new law, at which the civil society appealed to the government to agree to repeal the offending sections of the proposed law. Ethiopian Justice Minister Berhan Hailu told the campaigners against the law that the 10% agreed for the civil society was already "too poisonous" but the government had agreed to live with it and manage the consequences.
The violation of this law will carry some criminal charges and prison terms, according to the civil society organizations familiar with the law.
January 9, 2009
Nonprofits Continue to Be Hit by the Economic Downturn
There continue to be numerous news reports about nonprofits facing budget crises and reduced endowments. Here is a sampling of the more significant ones from just this week that I have not previously blogged:
- The Dallas Morning News detailed declines in endowments at numerous Texas universities of up to 27 percent, affecting both private institutions such as Southern Methodist University and Texas Christian University and public schools such as the University of Texas System. The universities are generally still considering how to adjust their budgets for the next academic year to reflect these declines.
- The Boston Globe reports that the much-publicized One Laptop Per Child Foundation of Cambridge has been forced to layoff half of its formerly 64-member staff and reduce the pay of the remaining 32 employees, primarily because of a sharp decline in donations.
- The New York Times reports that Princeton University's endowment has shrunk by 11 percent (since the July 1, 2008 start of the fiscal year), and is expected to contract by at least 25 percent when all asset values are calculated at the end of the University's current fiscal year. According to a letter from Princeton's President, this contraction has led to a $50 million reduction in the endowment's level of support for operating costs and so, among other steps, she plans to recommend to the Board of Trustees that salary increases for tenured faculty and the most highly paid staff be capped at $2,000. The endowment had been the fourth largest in the country, at $15.8 billion as of March 2008.
Looming Retirement Plan Changes for Nonprofits
The San Francisco Chronicle has published an Associated Press story highlighting the substantial changes that many nonprofits will have to make to their retirement plans during the current year. The new rules for section 403(b) plans - the governmental and nonprofit equivalent of section 401(k) plans used by for-profit entities - require the adoption of more detailed vendor guidelines, eligibility requirements, and financial procedures. Nonprofits must immediately comply with the new rules, which became effective as of the start of this year, but have until January 1, 2010 to bring their written plan documents into conformity. As the article notes, while this is a significant amount of time many of the affected organizations lack sophisticated benefits staff to make the necessary changes. More details about these new rules are available at the IRS Retirement Plans website, including a "Retirement News for Employers - Special Edition - December 2008" publication discussing the compliance deadlines.
January 8, 2009
Help for Charities Hit by Madoff Ponzi Scheme
The Washington Post reports that a number of large donors are stepping up to help charities caught in the wake of the Madoff scheme, including ones hurt indirectly when long-time supporters lost money. For example, while Human Rights Watch did not invest with Madoff, it received significant support from the JEHT Foundation that was in turn supported by the Betty and Norman F. Levy Foundation, which did invest with Madoff. The JEHT Foundation has announced it will close its doors at the end of this month because it received apparently all of its support from donors who invested with Madoff. The funders providing relief include The Atlantic Philanthropies, MoveOn.org, and the Open Society Institute.
AALS Panels on Nonprofit Topics
I am blogging from the American Association of Law Schools Annual Meeting in San Diego. Panels with topics of particular nonprofit interest include:
A panel on (shameless self-promotion, as I am moderating this panel) Pulpit Freedom?: On Taxes, Elections, and Religious Freedom is scheduled for this morning at 8:30 a.m. The starting point for this panel is the challenge by the Alliance Defense Fund to the federal tax law prohibition on churches and other houses of worship supporting or opposing candidates, even during in-service sermons. The panelists are Vaughn James (Texas Tech), Douglas Laycock (Michigan), Donald Tobin (Ohio State), and Robert Tuttle (George Washington) (two other panelists who were scheduled to attend could not make it to the conference at the last minute).
The Section on Nonprofit and Philanthropy Law is presenting New Research in Nonprofit Law on Saturday at 9 a.m. The panelists are Johnny Buckles (Houston), Richard Schmalbeck (Duke), Stephen Schwarz (Hastings), and Norman Silber (Hofstra), and James Fishman (Pace is moderating).
Finally, another panel that caught my eye is Community and Subsidiary in Domestic Relations on Friday at 1:30 p.m. It will explore among other topics, the extent to which government should seek to support, rather than supplant, institutions of civil society. Its panelists are Paolo Carozza (Notre Dame), Robert Cochran (Pepperdine), Amitai Etzioni (George Washington), Ronald Garet (USC), Ira Lupu (George Washington), and Robert Tuttle (George Washington), and the moderator is Linda McClain (Boston University).
January 7, 2009
Foundation Giving: Recession Resistant if Not Recession Proof?
The Economist reports on the recent public comments of Vartan Gregorian, president of the Carnegie Corporation of New York, and Paul Brest, president of the William and Flora Hewlett Foundation, about endowments, grantmaking, and other effects on the non-profit sector areas from the economic downturn. While they both acknowledged serious declines in their foundations' endowments - to levels last seen four or more years ago - they also stated that the foundations will stick to planned levels of giving in 2009. The foundations have, however, begun cutting management and administrative expenses, and, if asset values do not recover soon, their grantmaking will decline in 2010. Even so, the foundations do not expect to shift grantmaking away from funding long-term solutions for the larger problems that they already focus on. Mr. Brest also saw at least one possible silver lining in the current economic crisis - increasing pressure for non-profits to collaborate, share resources, and even merge, thereby reducing what he sees as excessive redundancy in the field. Both he and Mr. Gregorian were not completely confident that even this pressure would be enough to overcome the institutional inertia that prevents such steps, however.
Parishioners Keep Parishes Open in Defiance of Archdiocese
The New York Times reports that for more than four years the members of five Roman Catholic churches have defied Archdiocese of Boston orders to close through constant vigils. While some of the members pursue appeals within the Roman Catholic Church, all of the churches have managed to stay open by maintaining a 24/7 presence at each church. While the Archdiocese has refused to make certain repairs or provide priests, and has removed most sacred objects, it has continued to pay for heat and electricity. The Archdiocese's decision to close and sell these churches was driven in part by the financial pressures resulting from the clergy abuse scandal. The article notes that similar vigils have occurred in New York and New Orleans, supported in part by the lay-created Council of Parishes.
Nonprofit and Voluntary Sector Quarterly New Issue
- Arthur A. Stukas, Keilah A. Worth, E. Gil Clary, and Mark Snyder,
- Celine Chew and Stephen P. Osborne
- Ramya Ramanath
- Amornrat Apinunmahakul, Vicky Barham, and Rose Anne Devlin
- Michelle H. Yetman, Robert J. Yetman, and Brad Badertscher
- Kathy Babiak and Lucie Thibault
- David Mellor, Yoko Hayashi, Mark Stokes, Lucy Firth, Lucy Lake, Michael Staples, Sue Chambers, and Robert Cummins
- Bob Wineburg
- John Wilson
- Mary Ellen S. Capek
- Pier C. Rogers
- Carl Milofsky
- Lucy Woodliffe
January 6, 2009
Combining the Nonprofit and For-Profit Worlds
The Christian Science Monitor reports that around the world individuals seeking to do good are increasingly using a combination of nonprofit and for-profit entities to accomplish philanthropic goals and make some money at the same time. Often inspired by U.S. "philanthrocapitalists" who have established such entities as the Bill & Melinda Gates Foundation, Google.org and The Omidyar Network, a self-declared "philanthropic investment firm" founded by eBay's founder and his wife, many charitable efforts in other countries are exploring such combinations. For example, the article cites Industree Crafts, which is now split into Industree Crafts Foundation, a nonprofit that trains poor artisans in India, and Industree Crafts Private Limited, a for-profit company that apparently sells the goods produced by these artisans. Such combinations are not without their critics, however, particularly in the exploding area of microfinance, as the article notes
A Good Place to Work in a Recession?
As part of yesterday's weekend roundup, I noted that the Chronicle of Higher Education had published the results of a survey indicating that the vast majority of colleges are avoiding layoffs even during these tough economic times, at least so far. A short New York Times article, also from this past weekend, suggested more generally that working for a not-for-profit may be a particularly good option during a recession. While not citing any specific data, it listed the large number of not-for-profit organization jobs - especially in healthcare and education - and their relatively shelter from the storms sweeping through for-profit businesses. It will be interesting to see if this shelter begins to collapse as the economic downturn continues, but the Chronicle survey certainly indicates at least some resilience in the education sector.
Bush Presidential Library Donors to Remain Confidential
The Dallas Morning News reports that the George W. Bush Presidential Library Foundation recently confirmed that the names of donors to support the soon-to-be former President's library will remain confidential. The library will be located on the campus of Southern Methodist University and will be financially supported by the Foundation, which has already raised several million dollars. The article notes this non-disclosure position was consistent with the previous policy of the foundation that oversees the William J. Clinton Presidential Library, a policy the latter foundation only changed when disclosure became a condition for Senator Hillary Rodham Clinton to serve as secretary of state in President-elect Barack Obama's administration. The Bush Foundation's president noted that "We don't have those set of circumstances."
January 5, 2009
Charity Board & Charity Commission Collide Over Religious Mission and Governance
ThirdSector reports that a Charity Commission for England and Wales investigation into whether a Catholic hospital charity was complying with its governing documents has led to a wholesale change in the membership of the charity's board and other significant governance changes. The dispute with the SS John and Elizabeth Charity, that operates a hospital in London's St John's Wood, arose out of complaints from Catholics that the charity was planning to sublet part of its premises to general practitioners who prescribe contraceptives. According to its report, the Charity Commission initially blocked the sublet on the grounds that it violated a provision in the charity's governing documents requiring it to operate in accordance with Roman Catholic teaching and traditions. During the course of its initial investigation, the Charity Commission became particularly concerned with numerous apparent governance problems, including a lack of cooperation of board members with the investigation and serious disagreements between both board members and the board and senior managers. The Charity Commission eventually decided the sublet could proceed, but during the course of its investigation and inquiry ten board members resigned in protest or were not reappointed. The board is also now in the process of adopting a new code of ethics and a revised business plan.
Foundations and Healthcare Reform
The Los Angeles Times reports that several foundations and think tanks are ramping up efforts to influence healthcare reform at both the state and federal levels. Among the organizations cited in the article are The California Endowment, a multi-billion dollar health foundation created in 1996 as part of the conversion of Blue Cross of California to for-profit status, and the California HealthCare Foundation, a nearly $1 billion foundation that also came out of that conversion. They join what the Foundation Center estimates was more than $4 billion of funding for healthcare issues by foundations in 2006 alone, according to the article.
Weekend Roundup - Clinton Foundation Donor, Theater Companies & Colleges
With apologies for the blogging hiatus over the weekend, here are several interesting stories from Saturday and Sunday:
The New York Times reports that New York developer Robert J. Congel donated $100,000 to the William J. Clinton Foundation in November 2004 shortly after Senator Hillary Rodham Clinton helped enact legislation that gave one of the developer's projects access to tax-exempt bonds. In August 2005, Senator Clinton also successful obtained a legislative provision that set aside $5 million for roadway construction relating to the same project. Both the developer and a spokesman for Senator Clinton denied any connection between the donation and the Senator's efforts.
The Denver Post reports that the National Endowment for the Arts has issued its first ever study on nonprofit theaters, showing a doubling of groups with budgets of $75,000 or more from 1990 to 2005, from 991 to 1,981, even as attendance remained relatively flat. The study also showed an increased reliance on earned income as opposed to contributions, with the average ratio reaching 52 to 48 percent in 2005 as compared to 65 to 35 percent in 1990. The report does not reflect the impact of the recent economic troubles, although it notes that nonprofit theaters are particularly sensitive to financial downturns. The Washington Post previously reported on this study.
The Chronicle of Higher Education reports that a survey of chief business officers reveals that most colleges are avoiding layoffs but targeting other types of expenditures to deal with the economic downturn. The areas targeted include partial hiring freezes and postponing or canceling building projects. A Moody's analyst noted, however, that unlike most other sectors of the economy, colleges are unlikely to start to fell the full impact of the current economic troubles until enrollment for the fall 2009 term. It therefore remains to be seen whether more drastic steps will be required for many or most colleges to remain financially sound. The Chronicle conducted the survey in cooperation with Moody's Investors Service.