Judging Nonprofits

Carol Lamberg

By Carol Lamberg, Director Emerita of Settlement Housing Fund and Co-Chair of the NY Housing Conference

As someone who was executive director of a successful nonprofit community development organization for 30 years, I would cringe when reading about a corrupt organization. I would also cringe when a good nonprofit group went out of business. It was partially a  “there but for the grace” reaction.  But, more important, I knew that the other groups’ failures would have repercussions for those of us who were effective, even pristine.

Each scandal means another fifty questions on disclosure forms required to participate in government programs. For example, every board member needs to disclose decades of real estate transactions and other information that seems opaque, especially for board members that support the organizational mission but do not want to reveal their personal or business life stories. Is this really necessary? Do the people who review the disclosures understand them?

When a nonprofit organization fails financially, pundits often cite “mismanagement,” in a scolding tone of voice. On the other hand, when private developers recover from bankruptcy and make billions, the same pundits applaud their resiliency.

It seems a shame to let some organizations go out of business, especially those with long track records of accomplishment. The Bedford Stuyvesant Restoration Corporation was resuscitated through philanthropic financial support and guidance; they could not have otherwise survived. That was a good outcome.

Several years ago I visited FEGS, and had the impression of a very competent operation. Why isn’t anyone stepping in to save them?  I also find it hard to believe that the New York City Opera could not be reorganized and rescued.

Finally, those who rate nonprofit performance should reconsider the tendency to disparage and even refuse to fund administrative expenses and activities. Financial auditors require nonprofit organizations to allocate the time and funds spent on program versus those spent on management and fundraising.  This can be a hard distinction because there is considerable overlap. Even worse, some grant makers provide funds only for program. Without fiscal and managerial oversight, how can one avoid mismanagement and similar sins? Management costs money. Nonprofits cannot survive on passion alone.

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