Thursday, March 21, 2013
As some of you may have heard, the charity set up by NJ first lady Mary Pat Christie to provide Hurricane Sandy relief is under fire from watchdog groups. It has raised around $32.0 million so far, but hasn't made any distributions in the four months from the date of the storm (as of the March 11 article). This article in the Asbury Park Press raises a number of questions about the fund:
- Why is it taking so long?
- Why are you running it when you have no charity background?
- Why did you hire your protocol assistant as ED?
- Why is she getting paid $160,000 a year?
- Why aren't you giving funds to individuals?
- Is this all just a political stunt for your husband?
The article compares the fund to other organizations that have moved more quickly to provide Sandy relief, such as the Robin Hood Foundation. In response to all of these questions, Mrs. Christie answers that, unlike the Robin Hood Foundation, her organization is new. They have a small administrative budget and small staff. In discussing the delay in distributing funds, she cites the learning curve in getting a charity up and functioning and the lessons learned from other disaster relief organizations. She also indicates that she plans to be around for at least two or three years while the clean up continues.
I will take it as a given that she is trying to doing something good for her state with only the best of intentions. I also think that many of these questions have legitimate answers - four months from start up isn't a long time at all in the grand scheme of the life cycle of a charity. Fair enough. But given these answers, why didn't the reporter ask the question that first jumped out to me:
- Why was it necessary to set up a new organization in the first place?
If the problem is that you have new people setting up a new charity and that's why you are slow - you had an option. That option would have been to utilize an existing charity with established procedures and experienced people? Were there really no existing charities in the state of New Jersey that would have been willing to work with the Governor and the First Lady to set up a structure to address the needs of the population after a disaster of epic proportions? Maybe someone who has more experience with the New Jersey charitable community can tell me otherwise, but a quick Google search brought me here, for example.
In practice, I lamented the proliferation of charities - in the best of circumstances, these new charities were the products of good intent, unbridled optimism, and poor planning. I often tried to talk clients out of setting up new charities by encouraging them to find a partner with whom to work (what lawyer tries to talk herself out of work!), but I was rarely successful. Now that I can think about the sector more holistically, it has caused me to wonder whether we should be making it more difficult to set up a new charity. In looking at the recent efforts of the IRS, it seems to me there has been a trend to making it less difficult - the Form 1023 online project, the removal of the advance ruling period, the increase in the filing limits for the various flavors of the Form 990, to think of a few items off the top of my head.
Of course, the benefit of a lower barrier to exemption access is that it encourages innovation and experimentation in the sector - a potentially inefficient but worthy outcome. The cost of raising the barrier of access would be the "conglomeration" of charities. Is that an acceptable price to pay to address the issue of duplicative administrative costs and the need efficient and timely operations - especially in a time when private charity plays an increasing role in the delivery of social services? Would it really be any better?
I don't know. Just throwing it out there. EWW