Sunday, September 29, 2013
Here is another education story, this one from the New York Times Sunday Review...
We've heard the stories; we know they are true: dedicated principals work endless, exhausting hours. "Along the way, they struggle with budgets, staffing problems, disengaged parents, gang violence, holes in the roof and finding clean clothing for impoverished children who arrive disheveled and unwahsed."
Clarice Berry, president of the Chicago Principals and Administrators Association, recently described the public school principal's life in her city as "near impossible." According to Berry, "It is impossible to come to the end of the day and say you finished that day's work. That just doesn't happen."
The principals of Chicago now have more to do since the city introduced a new teacher evaluation system that produced its first teacher ratings this month. The evaluation system requires school principals to oversee the installation of a rigorous new Common Core standards with ambitious learning goals intended to move schools away from rote learning and memorization and toward intensive writing and high-level reasoning skills.
Traditionally, principals reviewed teachers by making brief class visits, and then declared almost every teacher excellent or at least competent. Struggling teachers did not get the help they needed and disastrous ones stayed on the job.
The new evaluation regimes taking hold across the country call for administrators to perform more frequent observations, during which they focus closely on things like the classroom environment, how well lessons are planned, and whether or not the teacher engages students and conveys information effectively.
This approach — and the mentoring that is supposed to support the teachers — will require a great deal of training for principals and an enormous investment of time, something school administrators don’t have. Beyond that, for the new system to work, administrators need the trust of teachers, who often view the evaluations as part of a plan to dislodge them from their jobs.
Yet, according to a study by the University of Chicago Consortium on Chicago School Research, teachers have responded to the new system in generally favorable terms:
Eighty-seven percent reported that the evaluator had provided fair and unbiased assessments of their work. Ninety-four percent of school administrators said the classroom observations and the conversations with teachers that followed had deepened the discussion about teaching. And principals said they had seen instructional improvements that seemed to flow from those conversations.
Meanwhile, principals are feeling somewhat pressured:
The study also suggests that principals desperately need better training in how to help teachers improve. One administrator said of struggling teachers: “There’s 15 things they need to get better at, and so all 15 of them are important, where do I begin?” Another spoke of struggling to find the right ways to reach teachers with markedly different sensibilities. Some do well with the direct approach, he said, but the phrase “this is what you should do” turns others right off.
Lack of time is a huge challenge. The average elementary school administrator in Chicago, for example, spent over two weeks solely on teacher observations. The workload will increase for all principals next year, when tenured as well as nontenured teachers will be evaluated. For a high school principal, the study says, that could take six and a half weeks. Principals at all levels say they are already sacrificing other important duties, like working directly with students and parents.
The new system may or may not be a good thing. It might succeed; it might fail. Whatever happens, it appears that Chicago is trying to do the best for its students.
According to the Digest,
The gift will enable the university to recruit two of the four chemists for its new Center of Excellence in Polymer Chemistry and will support the center's efforts to develop new polymer products and technologies that can be used to make products for the fiber, communication, packaging, and other industries. According to the university, chemists at the center will emphasize fundamental chemistry research but will also work with Houston-area petrochemical companies seeking to convert natural gas feedstock into advanced materials.
Reacting to the receipt of the grant, David Hoffman, who chairs the university's department of chemistry, said: "The foundation's grant will help the university more rapidly expand and enhance its research on polymers, an area of research important to Texas and, in particular, Houston because of its close proximity and ties to the petrochemical industry."
Congratulations to the University of Houston.
Saturday, September 28, 2013
It's a new day, a new week. But let's begin it with an age-old story -- a story about law, education and religion.
The New York Times is reporting that as Texas gears up to select biology textbooks for use by high school students over the next decade, the panel responsible for reviewing submissions from publishers has stirred controversy because a number of its members do not accept evolution and climate change as scientific truth.
According to the Times,
One is a nutiritonist who believes "creation science" based on biblical principles should be taught in the classroom. Another is a chemical engineer who is listed as a "Darwin Skeptic" on the Web site of the Creation Science Hall of Fame. a third is a trained biologist who also happens to be a fellow of the Discovery Institute, the Seattle-based center of the intelligent-design movement and a vice president at an evangelical ministry in Plano, Texas.
The Times continues:
In the state whose governor, Rick Perry, boasted as a candidate for president that his schools taught both creationism and evolution, the State Board of Education, which includes members who hold creationist views, helped nominate several members of the textbook review panel. Others were named by parents and educators. Prospective candidates could also nominate themselves. The state's education commissioner, Michael L. Williams, a Perry appointee and a conservative Republican, made the final appointments to the 28-member panel. Six of them are known to reject evolution.
Kathy Miller, president of the Texas Freedom Network, which monitors the activities of far-right organizations, lamented that "Utterly unqualified partisan politicians will look at what utterly unqualified citizens have said about a textbook and decide whether it meets the requirements of a textbook."
Miller's statement reflects the view of some Texans who worry that ideologically driven review panel members and state school board members are slowly eroding science education in the state. Some parents even worry that if the State Board of Education has its way, their children will not be able to compete for jobs that require scientific backgrounds.
Others -- especially teachers -- see nothing wrong in teaching creationism or its cousin, intelligent design, as valid scientific alternatives to Darwinian evolutionary theory. The Times concludes its story as follows:
In Texas, the debate has each side borrowing from the other to make its point. Those who challenge evolution invoke the scientists Carl Sagan and Richard Dawkins, while those who plead for the sanctity of science cite Genesis and the Book of Job.
At the public hearing this month, Michael Singer, a biology professor at the University of Texas who teaches courses to nonscience majors, said his students were often nervous about learning evolution. “I tell them that the Book of Job says that their faith will be tested,” he said. “You don’t need faith to believe what the evidence suggests. You need faith to believe what the evidence doesn’t suggest.”
Then he pulled out a £10 note from his native Britain to show the audience: on one side was a picture of Queen Elizabeth II, on the other, Charles Darwin.
Time will tell how this all ends. Have a great week ahead.
Grantseekers need the assurance that grantmaking foundations are good fits for their organizations. How can they ensure this good fit?
According to a tip from The NonProfit Times,
The information summarized in a funding database provides a glimpse of a private foundation's priorities and giving habits. But savvy grantseekers know they need the full picture before making contact or submitting a grant proposal.
Foundation websites can fill in the missing pieces, but many foundations don't have websites. What's the grantseeker to do?
Barbara Floresch, director of The Grantsmanship Center in Los Angeles, CA, has a proposal for grantseekers: "first, use a database to identify foundations that seem like a good fit for your organization. Then, if they don't have in-depth websites, go to Guidestar.org, set up a free account, and take a look at the foundation's recent tax returns (990-PFs)."
According to Floresch:
Foundation tax returns are public information and they’re invaluable to grantseekers. They provide not only information about assets and officers but also a complete list of grants awarded during the fiscal year – including the amount of each grant and the recipient’s name and location.
Examine each foundation’s 990-PFs to determine whether that foundation is truly a good fit with your organization’s work. For starters, look at several fiscal years to determine:
- The average amount of funding granted to organizations similar to yours;
- The average amount granted for the area in which you'll seek support (i.e., youth services, education, the arts, the environment);
- Geographic preferences in grantmaking; and
- Whether the foundation provides multi-year funding.
And what is the grantseeker to do with this information? Use it to construct a well-informed plan of action and a well-targeted request for support. While the 990-PF is not the place to start one's research, it can refine the grantseeker's understanding of a grantmaker. Says Floresch: "When it comes to winning grants, thorough information is essential. The 990-PF can help you fill in the blanks."
The Ninth Clinton Global Initiative Annual Meeting ended in New York City on Thursday with an emphasis on optimism and mobilizing for action to address the most pressing global challenges. Over the three days of the meeting, Clinton Global Initiative (CGI) members made over 160 new Commitments to Action, expected to impact nearly 22.2 million lives and valued at more than $10.8 billion when fully funded and implemented.
According to a press release issued shortly after the meeting ended,
Through the CGI commitments announced this year, nearly 27 million metric tons of CO2 will not be released into the atmosphere, more than 2 million girls will be reached by efforts specifically targeting female enrollment in schools, more than 11.6 million children will have a better education, nearly 4 million people will have increased access to health services, and more than $7 billion will be invested in or loaned to small- and medium-sized enterprises.
Former President Clinton noted that "this year’s commitments highlight the enthusiasm, creativity, and general characteristic of CGI members. They also reinforced our theme of ‘mobilizing for impact.’ So many partners have come together, to increase their impact by drawing upon each other’s strengths and creating new partnerships to truly put ideas into action: this is what CGI is all about. I am so grateful to everyone who joined us this year, whether in person or online, and who continue to work with us to create a better world.”
The CGI announced two major Commitments to Action focusing on health and on animal preservation. First, Former President Clinton, joined by Don Thompson, President and CEO of McDonald's, and Dr. Howell Wechsler, CEO, Alliance for a Healthier Generation, founded by the Clinton Foundation and American Heart Association, announced a partnership to increase customers' access to fruit and vegetables and help families and children to make informed choices in keeping with balanced lifestyles.
Former Secretary [Hillary] Clinton, Chelsea Clinton, and African government leaders including the Presidents of Burkina Faso, Cote D'Ivoire, Gabon, Malawi, Tanzania, Uganda, and Ministers from Botswana and Zambia made an announcement with leaders of the Wildlife Conservation Society, the African Wildlife Foundation, the World Wildlife Fund, Conservation International, the International Fund for Animal Welfare, Save the Elephants, the Howard G. Buffett Foundation, and the Jane Goodall Institute regarding Partnership to Save Africa's Elephants, a new Commitment to Action aiming to end poaching by addressing poaching, trafficking, and international demand.
These are good plans. I wish the CGI all the success possible.
Friday, September 27, 2013
Based on how certain fundraisers are being compensated, nonprofits appear to be banking that a click of the mouse will help fill organizational coffers more reliably than special events.
A study of the past three Nonprofit Organizations Survey and Benefits Surveys sponsored by The NonProfit Times indicates that a relatively new position, online giving manager, is becoming more established while the position of major events manager/specialist has stalled or declined in compensation.
In a report published today, The Times maintains that
Analysts who stay abreast of nonprofit trends say the surveys show a shift in fundraising brought about by a number of factors, such as the economic downturn of 2008-09, which led to staff cutbacks and fewer fundraising events. There has also been a shift in fundraisers’ target donors toward Millenniums, who grew up with computers and social media.
The shift does not spell an end to fundraising events but the need for a more strategic approach to them.
The number of online giving managers is small but the position had a base salary of just above $65,000 in 2010 and 2012, substantially more than the slightly less than $50,000 average cost per employee in the fundraising family of jobs for those years. The base salary for special events manager/specialist dropped from $48,556 in 2010 to $46,196 in 2012. The position fell from slightly above the average cost per employee for the fundraising family of jobs in 2010 to more than $3,000 below that average in 2012.
According to Matt Di Lauri, managing director of People & Systems Solutionsin New York City, higher salaries for online giving managers suggest that the position is an emerging field for nonprofits. Di Lauri further stated: “When supply is low and demand is high, the cost is going to increase. You’re probably going to have to take [online giving managers] from the for-profit area where the income is higher.”
The Times warns, however, that
Bringing candidates from the for-profit online world might limit the number of nonprofits that can afford an online giving manager. No organization with an operating budget of less than $2.5 million reported having an online giving manager in any of the past three surveys. Special events managers/specialists, on the other hand, were reported among all sizes of nonprofits.
Di Lauri notes that the online giving manager is a “relatively new position,” one that grew since “the world really did change.” Nurys Harrigan, president of Careers in Nonprofits in Chicago, IL, opines that shifting demographics have led nonprofits to embrace the Internet and social media. According to Harrigan, the donors the nonprofits are trying to attract -- the Millenniums, the generation now generally in their 20s -- give online.
And so, the office of online giving manager is here to stay. We turn to The Times for the final word:
The job description for online giving manager as stated in the survey [indicates that the] manager is “responsible for the organization’s online fundraising activities including both donor acquisition and relationship development; leads the development and implementation of online fundraising strategies including online stories, email campaigns and other e-commerce activities; [and] works to increase donor giving via the organization’s website and other online initiatives in collaboration with other income development activities throughout the organization.”
Indeed, times have changed. Although I am not a member of the Millenniums, I do what little giving I do online. I guess online giving managers have to appeal to people like me also! My former student, Ibukun Adepoju, who has been helping me so much this week, spotted this story and urged me to blog about it. I'm not surprised; she is a member of the Millenniums, the generation really being targeted by the ever-increasing number of online giving managers.
Here's a story that warms my heart:
The National Law Journal is reporting that one student in 10 in the University of Chicago Law School’s next three incoming classes will graduate without the burden of education loans because of a serially generous donor. David Ruberstein, co-founder of private equity firm The Carlyle Group and a University of Chicago trustee, has given $10 million to his alma mater to support as many as 60 full-ride scholarships during the next three years (equal to approximately 10 percent of each class).
This is the second time in three years that Ruberstein has given $10 million to the school. In 2010, he gave $10 million to establish the Rubenstein Scholars Program, which offered merit-based, full-tuition scholarships to students for the past three years. At the time, it was the largest donation in the law school’s history. This new gift renews that program.
Commenting on the gift, Chicago Law dean, Michael Schill, said: "David’s generosity is absolutely extraordinary, and his gift has been transformative. Three years ago, when David proposed this idea, we all hoped that it would enable us to attract the top law school applicants in the nation to Chicago. With three years of experience under our belt, I can say without hesitation that it has succeeded magnificently.”
According to the National Law Journal, "Rubenstein graduated from the law school in 1973, the beneficiary of a full scholarship that he said allowed him to leave a law firm practice after two years to pursue his interest in politics."
Thursday, September 26, 2013
We have some times blogged about misconduct by leaders of various charities. The New York Times reported on another such heist earlier this week.
According to the Times, prosecutors allege that shortly after William E. Rapfogel became the leader of one of New York City’s most influential social service organizations in 1992, he began to steal.
A criminal complaint filed on Tuesday maintains that Rapfogel received envelope after envelope, stuffed with skimmed cash kickbacks. Also cited in the complaint were a $27,000 check written to a contractor working on Rapfogel's apartment, roughly $100,000 to help his son buy a home, and a campaign finance scheme that manipulated the city’s matching-funds formula, fraudulently increasing campaign contributions to favored city politicians who provided government grants to his organization.
Over two decades at the nonprofit Metropolitan New York Council on Jewish Poverty, Mr. Rapfogel and two confederates stole more than $5 million, much of it taxpayer money, said the complaint, which detailed the schemes and charged Mr. Rapfogel with grand larceny, money laundering and other crimes. The Times continues:
Rapfogel, who was compensated more than $400,000 a year as the organization’s chief executive, surrendered early on Tuesday morning at the First Precinct station house in Lower Manhattan, where he was fingerprinted and photographed. He was charged with one count each of first-degree grand larceny, first- and second-degree money laundering and fourth-degree conspiracy; four counts of third-degree criminal tax fraud; five counts of first-degree falsifying business records; and three first-degree counts of offering a false instrument for filing.
The Washington Post is reporting that two private universities in the District of Columbia have announced landmark donations. Trinity Washington University will receive $10 million for a new academic building, and Georgetown University will receive $100 million for a new school of public policy. The gifts set records for each school.
Speaking about records, the Post is also reporting that among private institutions, the largest gift on the Washington Post’s list is $350 million to Johns Hopkins University. In the public sector, the largest is $100 million to the University of Virginia. The largest gift to a single U.S. college or university was $600 million pledged in 2001 to the California Institute of Technology (Caltech).
The Post's article leads me to wonder about donations to colleges and universities. Why do people -- ordinary citizens -- donate to education? Why are some institutions consistently able to raise more funds than others? The Post addreses these questions as regards Georgetown and Trinity Washington:
Georgetown, the nation’s oldest Catholic university, is highly selective and draws students from across the country. Its alumni can tap significant pools of wealth. Trinity Washington, a Catholic women’s school, is less selective and serves a large number of students from low-income neighborhoods in the District. But Trinity has some powerful alumnae, including House Minority Leader Nancy Pelosi (D-Calif.) and Health and Human Services Secretary Kathleen Sebelius.
Of course, some institutions are able to raise significant amounts because their alumni are pleased with the education they received.
A Financial Accounting Standards Board (FASB) update will soon require nonprofits that receive management and other services without charge from affiliated organizations to recognize the value of the activities.
The NonProfit Times shares this about the development:
The pronouncement, Services Received from Personnel of an Affiliate, was issued in an effort to establish uniform reporting procedures, according to FASB, which noted in the pronouncement that “the amendments will reduce diversity in practice and provide transparency about the extent of the program services, supporting activities and asset creation or enhancement costs incurred by the recipient not for profit entity.”
The amendment plugs a loophole that had existed under Topic 958, Not-for-Profit Entities, Section 605, Revenue Recognition. The existing guidance required nonprofits to recognize contributed services when they create or enhance nonfinancial assets or when they require specialized skills that the recipient nonprofit would otherwise need to purchase. The update, however, clarifies that a recipient nonprofit must recognize all contributed services it receives from an affiliate.
The update to the accounting standard will be effective for fiscal years that begin after June 15, 2014, and for interim and annual periods after that.
Christine Klimek, FASB's senior manager, media relations, opines that the enhanced reporting that is expected to result from the update should benefit donors, creditors, investors and other capital market participants. Klimek believes that the benefits of the new reporting regime should outweigh any increased costs of compliance.
I gues we'll wait to see what really happens...
Wednesday, September 25, 2013
I find myself again indebted to my former student, Ibukun Adepoju, JD, for this story. Me, I'm happy that a former student is taking the time to read our blog and to suggest stories worth blogging. I wonder how many current students are reading what we write...
In any event, this story is of interest to students and recent graduates. Monday's National Law Journal reported that one hundred Georgetown University Law Center students assembled last month in a sprawling lecture hall to kick off a brand new class on finance and accounting now offered at that law school. Dubbed the "Demystifying Finance Boot Camp," the class was the first in what dean William Treanor hopes will be a series of new courses focused on skills typically taught in business school but neglected in the legal curriculum.
So how did this course come into existence? The Journal explains:
Georgetown administrators spent two years querying alumni, faculty and legal employers about how the school should prepare students. The consensus? New graduates need a broader set of capabilities. Basic finance and accounting skills came up most often, so administrators started there. "We've always focused on teaching them legal analysis, but in order for them to succeed as a lawyer they have to be able to communicate effectively," Treanor said. "They've got be able to manage. They've got to be able to do strategic planning and understand finances."
Georgetown developed an intense, five-day course that would cover the basics — understanding the present and future value of money; bond and stock valuation; reading an annual report; understanding the relationship between an income statement and a balance sheet. The law faculty worked with professors from Georgetown's McDonough School of Business to identify the areas most relevant to lawyers and the best ways teach those skills to law students. Although in the pilot phase, Treanor expects to offer the course twice a year and add courses in management and strategic thinking.
In terms of enrollment, the new course was quite successful. Georgetown administrators had hoped to get 80 2Ls and 3Ls to sign up; 220 attempted to enroll; only 100 got in. Speaking for herself, my source told me she wishes her alma mater had developed such a course while she was a law student. I believe her thinking is spot on. I hope Georgetown does not mind if other schools take note and develop similar courses of their own. The words of Georgetown alumnus and financier of the boot camp, Jules Kroll, are instructive: "I find that the amount of financial literacy that is necessary to practice law is really lacking. People really are, for the most part, financially illiterate. You need context, which I think in the real world is something that's really missing. [The boot camp] introduces them to a whole new vocabulary."
The John D. and Catherine T. MacArthur Foundation today announced the winners of the 2013 "Genius" grants. The 24 winners will each receive a five-year, $625,000 no-strings-attached stipend, giving each recipient what the San Jose Mercury News calls "unfettered freedom to pursue creativity."
According to the Mercury News,
This year's MacArthur recipients are a mix of the little known and world renowned, representing a broad cross section of the arts, economics and science. They range in age from 32 to 60 and work in settings as different as rural Alaska and inner-city Manhattan.
The 24 award recipients are:
- Kyle Abraham, Choreographer and Dancer, New York, NY
- Donald Atrim, Writer, New York, NY
- Phil Baran, Organic Chemist, La Jolla, CA
- C. Kevin Boyce, Paleobotanist, Stanford, CA
- Jeffrey Brenner, Primary Care Physician, Camden, NJ
- Colin Camerer, Behavioral Economist, Pasadena, CA
- Jeremy Denk, Pianist and Writer, New York, NY
- Angela Duckworth, Research Psychologist, Philadelphia, PA
- Craig Fennie, Materials Scientist, Ithaca, NY
- Robin Fleming, Medieval Historian, Chestnut Hill, MA
- Carl Haber, Audio Preservationist, Berkeley, CA
- Vijay Iyer, Jazz Pianist and Composer, New York, NY
- Dina Katabi, Computer Scientist, Cambridge, MA
- Julie Livingston, Public Health Historian and Anthropologist, New Brunswick, NJ
- David Lobell, Agricultural Ecologist, Stanford, CA
- Tarell McCraney, Playwright, Chicago, IL
- Susan Murphy, Statistician, Ann Arbor, MI
- Sheila Nirenberg, Neuroscientist, New York, NY
- Alexei Ratmansky, Choreographer, New York, NY
- Ana Maria Rey, Atomic Physicist, Boulder, CO
- Karen Russell, Fiction Writer, New York, NY
- Sara Seager, Astrophysicist, Cambridge, MA
- Margaret Stock, Immigration Lawyer, Anchorage, AK, and
- Carrie Mae Weems, Photgrapher and Video Artist, Syracuse, NY.
Congratulations to the award winners.
Tuesday, September 24, 2013
Are you ready for some football? I may not have any football to share or play, but I bring some news of the sport...
The U.S. Court of Appeals for the Eighth Circuit on Monday threw out a class action filed by National Football League retirees who claimed they were squeezed out of a deal negotiated amid the 2011 player lockout. The court affirmed a lower court's dismissal, finding that the retirees failed to show they could have negotiated a deal better than the $900 million in additional retiree benefits the agreement utimately yielded.
The National Law Journal provides some details about the suit:
The plaintiffs, a group of 28 retired players led by former Minnesota Viking Carl Eller, sued the National Football League Players Association in 2011. The lawsuit also named players union members including New England Patriots quarterback Tom Brady.
Filed in Minnesota district court, the class action claimed that the union, in reaching a collective bargaining agreement with the NFL two years ago, intentionally interfered with the retirees’ ability to negotiate with the NFL, which led to fewer retirement benefits than they could have gotten had they bargained separately.
In March 2011, the inability of the NFL and the union to reach an agreement on pay caps and other issues resulted in a lockout, which was lifted on July 25 of that year when the parties reached a 10-year deal.
Writing for the appeals panel, Judge James Loken wrote that "the retired players had no reasonable expectation of a separate, prospective contractual relation with the NFL that would provide them greater player benefits than the NFL agreed to provide in the new CBA."
According to dean Bruce Smith, the school will use some of the money to send graduates into yearlong fellowships at county public defender offices around the state. Said Smith: “In looking at this gift and thinking about where students could gain practical training while giving back to the state, we think public defenders’ offices are an area where both come together.” The school already sends recent graduates into fellowships at county prosecutor offices and at Illinois' Legal Services Corp.-funded organizations.
The law school plans to use the rest of the money to expand its advocacy programs, adding classes in negotiation, mediation, small-group dynamics and electronic discovery.
So who is (or was) this Jerome Mirza whose foundation is making the $2 million gift? The National Journal has this to say:
Jerome Mirza graduated from Illinois Law in 1963 and became a highly successful personal-injury attorney before his death in 2007. He served as the president of the Illinois State Bar Association and the Illinois Trial Lawyers Association. He remained active with his alma mater, hosting an advocacy program at the law school each year.
I congratulate the University of Illinois College of Law for receiving the gift, and the Mirza Foundation for making it. I wish more foundations and other nonprofits would make such worthwhile donations.
Monday, September 23, 2013
Today's Washington Post features an op-ed by Sally Quinn titled "The Pope Francis Miracle." Quinn joins many around the world who are marveling about the things the pope said in his lengthy interview released over the weekend. Quinn puts it this way:
Pope Francis stunned Catholics last week with his lengthy interview in which he talked about how the church should no longer be “obsessed” with issues like abortion, gay marriage and contraception. “We have to find a new balance,” Francis said. “Otherwise even the moral edifice of the church is likely to fall like a house of cards, losing the freshness and fragrance of the Gospel.”
Quinn reveals the contents of her interview with father Jim Martin, editor-at-large of America, the Jesuit magazine, who is apparently elated by what the relatively new pope is saying. Yet, Martin maintains that the pope's words do not signal a change in the church's teaching. Rather, he says, “There has been a shift in emphasis. His comments on those things have a different tone and language. He is moving us away from some of the issues that have bedeviled the church back to God, Jesus, love, forgiveness and mercy. It’s very beautiful. It’s like Jesus.”
Indeed, we do not know where things are headed for one of the world's largest religious organizations and one of America's largest nonprofits. We must wait for the future to unfold itself. As Father Jim Martin puts it, "Who knows? The Holy Spirit blows where it will."
Speaking at the AICPA Not-for-Profit Industry Conference earlier this year, Nancy Young, who is part of the Business Assurance Services Group of Moss Adams, outlined the behavioral red flags of fraud perpetrators' lifestyles, as listed by the Association of Certified Fraud Examiners (ACFE). The Nonprofit Times today reproduced the list:
- Living beyond their means: 43.0 percent
- Financial difficulties: 36.4 percent
- Control issues: 22.6 percent
- Unusually close with vendors/customers: 22.1 percent
- Wheeler-dealer attitude: 19.2 percent
- Divorce or family problems: 17.6 percent
- Irritability, suspiciousness/defensiveness: 14.1 percent
- Addiction problems: 11.9 percent
- Refusal to take vacations: 10.2 percent
According to the Times, Young also said that white-collar criminals share certain characteristics, some of which I find pretty interesting:
- Likely to be married.
- Member of a church.
- Educated beyond high school.
- No arrest record.
- Age range from teens to older than 60 (although 31-50 is the largest group).
- Socially conforming.
- Employment tenure from one to 20 years.
- Acts alone 70 percent of the time.
- Males tend to steal larger amounts than females.
This leads me to wonder: in dealing with nonprofits, whom can we trust?
The Chronicle of Philanthrophy is reporting that acoording to the Chronicle's annual compensation survery, chief executives of the nation's biggest charities and foundations received a median salary increase of 3.1 percent in 2012. The report contains some interesting facts:
- The median compensation in 2012 for CEOs at all organizations was $417,989. It was higher—$497,513—at operating and private foundations.
- Seven nonprofits paid their chief executives more than $1-million last year, as did 27 groups that provided 2011 figures. That’s a larger number than the 23 executives who made $1-million or more in last year’s study.
- Twenty-two groups in 2012 reported that someone other than the CEO—typically the chief investment officer—made more money than the chief executive.
- Only two women cracked the top 20 of the highest-paid executives in 2012: Donna Shalala, who received $869,520 as president of the University of Miami, and Lori Slutsky, who received $762,824 as chief executive of the New York Community Trust.
I was curious as to whether these figures were excessive. Hence, I called the Executive Director of a small nonprofit operating in Waldorf, Maryland, to ask her about it. She found the 3.1 percent raise to be reasonable, and educated me about the fact that executive compensation at nonprofits is related to the size of each organization's budget. While her own compensation is nowehere close to that earned by Shalalal and Slutsky, she was quite satisifed with her compensation and was rather pleased that she was helping people.
I guess she reminds me of Kyle Zimmer, "head of First Book, a Washington group that last year raised $101-million from private sources. She makes $180,000 and says that when her board members tell her they have done studies showing she is underpaid compared with other groups of that size in metropolitan areas, she tells them she doesn’t want an increase." Now isn't that nice?
What is your take on executive compenastion for heads of nonprofits?
Tuesday, August 27, 2013
For at least three decades, one of the central theoretical and practical debates about tax-exemption has revolved around nonprofit hospitals - in particular, whether they are "charities" that deserve exemption, either under federal law, or under state property tax exemption provisions. I make no secret about where I fall on that debate: my view is that many (maybe most, but not all) private nonprofit hospitals are simply big businesses selling health care services for a fee. They have about as much in common with traditional notions of charity as Apple Computer or Ford Motor Corporation, and deserve exemption as much as those companies.
Now it appears that the focus may be shifting to universities. We have blogged in the past about the lawsuit against Princeton, essentially claiming that at least certain buildings should not be exempt from property taxes because of their commercial uses. Then a few days ago, James Piereson and Naomi Schaefer Riley penned an opinion piece in the Wall Street Journal (may be paywall protected) about Princeton and other universities' commercialization and how it might affect exemption. Another such piece appeared yesterday in The Norman Transcript by independent columnist Taylor Armerding.
Armerding's article is notable mostly for its histrionics, but it is interesting that the piece pushes the same buttons that have been pushed in the hospital industry for years: high salaries for executives (university presidents) and some faculty; ever-increasing costs for "customers" (students in this case, instead of patients). So far we haven't seen muckraking stories about universities using collection agencies and "body attachments" to collect on student loans, but one wonders whether that is not far off given the debt loads at today's most prestigious institutions (and even some less-prestigious ones). Add this to the almost-weekly calls for college athletic program reforms, and you have something of at least a small storm on the "charitable-ness" of universities.
I don't (yet) have the same view of universities as I have of hospitals. Yes, universities "sell" education and big-time athletic programs are nothing more than minor leagues for the NBA and NFL, where money rules the roost. But they also are engaged in important public research (though the "public-ness" of research may be under attack as universities enter into sweetheart deals with private corporations to fund research projects and "research parks" such as the one I drive by on my way home from the University of Illinois every day) and other "knowledge-enhancing" work (presentation of artistic performances, for example) that I think is still deserving of exemption. Nonprofit hospitals largely don't do any such "public-regarding" activities (teaching hospitals excepted, but they would qualify for exemption as educational institutions anyway).
But I've got some advice for university presidents: take a look at the history of nonprofit hospitals and learn a lesson about how commercialization and lack of attention to one's public persona changes perceptions. I doubt that Princeton is going to lose it's tax exempt status in my lifetime, but assuming exemption is forever, like a diamond, might not be the best PR move. Adminsitrators at Provena-Covenant hospital in Urbana, IL, probably never thought they would lose exemption, either, and the resulting inattention to anything resembling a charitable mission is a large part of the reason that they did.
Thursday, August 22, 2013
The Washington Post reports that Chris Van Hollen (D-MD) is planning on filing suit against the IRS regarding the Section 501(c)(4) regulations that have been the spotlight as of late. Van Hollen, the ranking member of the House Budget Committee, will be the lead plaintiff in the suit, along with Democracy 21, The Campaign Legal Center, and Public Citizen. According to the Post, CREW has a similar suit pending.
If I understand the Post's article correctly**, the suit will focus on the validity of the IRS regulations under Section 501(c)(4). As we all probably know (ad nauseum) at this point, Section 501(c)(4) provides that an organization exempt under that section must be "operated exclusively for the promotion of social welfare" (emphasis added).
Treas. Reg. Section 1.501(c)(4)-1(a)(2) provides, "[a]n organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the people of the community" (emphasis added). As the promotion of social welfare does not include political campaign activity, it follows that an organization that is organized primarily for political campaign intervention purposes cannot meet the "exclusively" test of the statute.
I'm assuming that the lawsuit will take the position that it was an abuse of IRS discretion to issue regulations interpreting "exclusively" to mean "primarily" in the context of the amount of allowable non-social welfare activities. That raises a number of interesting issues:
For my civil procedure and con law friends, it's been a very long time since I've looked at standing issues. In the exemption context, of course, there is no taxpayer standing - but this isn't an exemption case. Is Van Hollen a plaintff because he is asserting that he personally has been injured by the enforcement of this rule (for example, because of the ability of opponents to get Crossroads funding or something?) Is there some other basis for standing?
For my admin law friends, what is our standard of review? Is this still straight up Chevron as a agency interpretation of statute with the force of law? Has any of that changed given recent Supreme Court action in this area (I am rapidly getting to the outer edge of my knowledge here). Does the fact that the IRS has recently come out with new 501(c)(4) review guidelines matter in the least?
Are we worried about collateral damage? The statutory language of Section 501(c)(3) also contains the word "exclusively." Treas. Reg. Section 1.501(c)(3)-1(c)(1) states, "[a]n organization will be regarded as 'operated exclusively' for one or more exempt purposes only if it engages primarily in activities which accomplish" one or more exempt purposes (emphasis added). It's always been interesting to me that in the Section 501(c)(4) context, some are willing to take the position that primarily means 51% , so you can push your political activities to 49% (of... something). In the Section 501(c)(3) context, I personally would be unwilling to tell a client that they can do that much non-exempt activity. Heck, I get queasy if a charity is in double digits percentage (of... anything) of non-exempt activity. But, technically, it is the same issue of statutory/regulatory construction.
This Section 501(c)(4) ambiguity could all be fixed by legislation, of course. Too bad none of the litigants has the ear of a Congressm.... um... wait....
(h/t Jonathan Adler via The Volokh Conspiracy Daily for pointing to this article)
** The Post article states, "Current law says the organizations must engage 'exclusively' in social welfare activities, but IRS tax code requires only that they are 'primarily engaged' in such purposes." Of course, the tax code is current law, the tax code does not belong to the IRS, and the primarily engaged test is in the Regs. So I'm assuming that's what the Post meant.
Wednesday, August 21, 2013
In the August 20th New York Times Online, Bruce Bartlett weighed in on the future of the chartiable deduction. For those of you not familiar with the name, Bruce Bartlett was a member of the administration for both Reagan and the elder Bush. He was known at one time as a strong supply-sider but has broken ranks with Republicans more recently on this issue. See his Wikipedia entry here.
In summary, his point is that the charitable deduction needs to be re-thought as it is generally provides a disproportionate benefit to higher income taxpayers. Higher income taxpayers have more disposable income to make signficant charitable gifts. In addition, the majority of low income taxpayers cannot itemize, and therefore cannot benefit directly from the deduction. Finally, the value of the deduction rises as the taxpayer's marginal tax rate goes toward the top of the scale. He appears to favor a capped credit in lieu of a deduction as a way to continue to reward and encourage generosity while making the benefit more equitable among taxapayers. He also posits that the cap on the credit could be "done in a way that raised net revenue to pay for rate reductions."
The credit idea has always been intriguing to me - it is what we have here in West Virginia on the state level, although it is somewhat unique in its structure. A few thoughts:
A credit does nothing for those that do not have a tax liability to offset. I wonder if he would support using the credit to offset the payroll tax liability, which is often more of a burden for lower income taxpayers than the income tax.
I am curious to know how the cap on the credit would be done in a way that raises revenue for rate deductions - and what rate deductions? Wouldn't the high income taxpayer benefit from such a re-shuffling, as they have their overall rate lowered and there overall tax burden reduced, while not having to giving anything to charity?
How would that compare to, for example, a $500 above-the-line deduction? We know that would be expensive, which is why it's been talked about but not enacted. If we reduced the availability of the below-the-line charitable deduction to pay for it, would that promote the fairness that Bartlett professes to want without the back door benefit of financing low overall marginal rates?
Bartlett seems to be unimpressed by the charitable sector's argument regarding the effect of cuts in the deduction on funding for the sector. If we think that part of the rationale for the deduction in the first place is to not just reward giving but to encourage it, we need to think seriously about that issue. Otherwise, we are again reducing marginal rates on the backs of folks who may be able to least afford it - in this case, our charities.