Scrutiny of Nonprofits is Deserving, But Can Also Be Damaging


Cherise Charleswell | Society & Culture | Commentary | May 30th, 2019



[Pictured: A domestic violence shelter in Spokane, Washington]



The recent decision of New York Justice Saliann Scarpulla mandating the Dissolution of the Trump Foundation due to a "' pattern of illegality' , that includes Trump using the charity to pay off legal settlements within his business and even to buy a giant $10,000 painting of himself to hang at one of his golf courses, along with more infamous cases, such as the American Red Cross only building 6 permanent homes in Haiti following devastating earthquakes in 2010, despite raising $500 million in funding have all rightfully elicited a growing distrust in nonprofits. This lack of trust is best exemplified by the fact that many forego making donations, even in response to catastrophic disasters, because they are unsure if their money will ever "reach" the people in need. It is not uncommon to see social media posts for recommendations on organizations to donate to. The fact that some nonprofit executives receive hefty salaries also seems to make it more difficult for people, particularly working-class people whose salaries pale in comparison to these Executives, to want to open their wallets - and give.

I understand these reservations and mistrust and will address simple steps that we all can do to "vet" organizations, but I want to ensure you that most nonprofits, especially the smaller, community-based organizations that do not have affiliates and multiple chapters, are operating on a "tight budget," and this directly impacts the staff.

On average, those working in nonprofit or community-based organizations receive salaries significantly less than their counterparts working in government or the For-profit sector. More about what this looks like here. In some cases, many nonprofit workers are extremely underpaid. The tendency for nonprofit workers to be underemployed has led to Professional associations to have special membership tiers and rates for those who work at nonprofits or who have a lower annual income (as a result of working for a nonprofit). And in 2007, the Federal government weighed in on the issue, creating the Public Service Loan Forgiveness (PSLF) program under the College Cost Reduction and Access Act of 2007 . PSLF allows borrowers who work full-time for nonprofits and government agencies to have their outstanding debt forgiven tax-free on Federal Direct Loans, after making 120 qualifying monthly payments under a qualifying repayment plan . For underpaid nonprofit workers, the PSLF seems like a great gesture that recognizes their sacrifice. However, the program apparently has a number of problems - including the lack of actual loans that are being forgiven .

Now back to those "tight" budgets that I mentioned. Beyond being underemployed, nonprofit staff have to cope with the fact that there is often no room in the budget to add additional and much-needed staff. Thus, it is not uncommon for nonprofit employees to have to wear "many hats" and work long hours, with ever-fluctuating schedules. A Financial Officer can become the event planner and bartender. When the team is small, having one member out on vacation, or taking a sick day, greatly impacts everyone. So, it is not uncommon for nonprofit workers to feel guilty about taking time off work, and this is compounded by their passion for their mission and the work that they carry out. If they are not there to answer that crisis call, what would become of that person in need?


DESERVE HIGHER PAY: I am going to make the assertion that most nonprofit employees do not deserve further scrutiny, and instead deserve higher pay. And it is not just because they are working those longer hours and carrying the workload of 2-5 people; or the fact that every worker deserves a living wage. Many who work in this field have years of experience, are highly educated, including at the graduate level, have multiple certifications, and are expected to participate in ongoing professional development. I would also make the argument that they are more productive and efficient than workers in other fields because of these various points.


GENDER PAY GAP : 73% of nonprofit sector employees are women, according to a White House Project study , and this should help to understand the prevailing gender pay gap between women workers and men. And the problem of underemployment that affects women working in the nonprofit industry is tied to the stigma that nonprofit work is " women's work " and thus can be readily dismissed , as well as the problem of public opinion and scrutiny over staff salaries. This scrutiny leads to Board decisions that result in full-time, educated, experienced, and dedicated employees being offered salaries of $35,000 to $40,000 in States like California, where those incomes are classified as "low income" because they do not meet the costs of basic living. So, we can consider the irony that the people who are working in a field that is dedicated to others, most likely are going to require some aid and assistance themselves. All of this because of past transgressions by larger nonprofits and the broad skepticism that has followed.

Gender inequality is also a major issue in the nonprofit sector at the leadership level. For the field to be female-dominated, men are still paid higher salaries than their female counterparts. According to GuideStar , at organizations with annual budgets of $2.5 to $5 million - a cut of organizations that represents a large percentage of nonprofits, women chief executives make, on average, 23 percent less than men in the same role.


CONSIDER THE ROLE OF NONPROFITS : It is easy to complain about nonprofits and community-based organizations and all of "this money" that they receive (which for many of the smaller organizations is NOT coming from your tax dollars), if you do not understand their role or purpose. Nonprofits carry out a very valuable role in that they fill in the gaps for people who have unmet needs. They fill in the gaps when government fails to provide a service. They respond to societal failures by providing aid to the most vulnerable. Their work provides great social benefit and is impactful.

Nonprofit work is diverse and includes providing support services and aid to mothers & children, disaster relief and assistance, providing housing to the homeless, operating food backs and feeding the food insecure, assisting families following homicide, helping a victim of domestic abuse flee their abuser & begin to rebuilt their lives, assisting with gang intervention and prevention efforts, helping young people acquire skills to obtain jobs, providing medical care (including access to vaccinations) to those who have difficulty accessing these services, meeting the needs of veterans, supporting victims of commercial sexual exploitation, and so much more.

Because of their diversity in services, programs, and resources - most people will benefit from the assistance of nonprofits.


STILL WORRIED ABOUT THOSE THAT ARE PROBLEMATIC ? You should be, because they do exist, particularly with the larger organization, as well as all organizations that lack accountability and transparency. For example, great ethical problems can arise when Board of Directors fail to carry out oversight, and that includes: annual evaluations of Executive Directors where they actually make periodic visits to the site(s), and not only take the Executive Director's comments about their performance and the organization's operations as the "word of God". Instead, the evaluation process should include speaking to staff, and having a whistleblower policy (more about this later).

Another problem is when the Board of Directors, organizational leadership, or core staff do not reflect the community or population that they primarily serve. In other words, they lack diversity in terms of race/ethnicity, gender, and even sexual orientation. And this problem easily leads to the "white savior" scenarios, where organizations that operate in minority communities, or overwhelmingly serve people from underrepresented populations, are led by white leader "saviors", instead of people from those communities. What happens is that we get these gatekeepers who get their positions through privilege, status quo, systemic racism (which often explains how I've come across executive leaders less education and/or experience than their staff), who are assumed to be the experts on social conditions and minorities. They get to design programs and make decisions for "those people,"


WHAT STEPS CAN YOU TAKE TO VET A NONPROFIT IF YOU HAVE CONCERNS ABOUT DONATING TO THEM? There are a variety of steps that you can take to learn more about an organization that you would like to donate to. Here are a few to consider:

· Go to their website, subscribe to their newsletter, e-blasts, etc., and follow them on social media. This should give you great insight into the organization's mission, who they serve, and just how active they truly are.

· Does it seem like a singular "face" rather than the Mission is the driving factor behind the organization? While every organization has leadership, it must be clear that those leaders are NOT the organization, and that what remains of upmost importance is the Mission. So, photos, updates, interviews, stories, etc. that are shared with the public should include clients, and/or staff and volunteers who actually carry out the work. For-profit industries understand this quite well. Many do not know the name of corporate CEOs or what they even look like, but they do know the brand, and memorable advertisements that focus on the product and customers - not the Face.

· Drop in or schedule a site visit if the nonprofit has a site that is somewhat nearby. Most nonprofits welcome potential donors who are interested in learning more about them and supporting their work. For this reason, having a request to visit a site and/or meet with staff declined should be viewed as a red flag.

· Ask meaningful questions. If there is something about an organization that you are not sure of, feel free to reach out to them, whether via email, phone, or in person and ask them for clarification. Meaningful questions can include the number of staff that they employ, or an even more important question; what percentage of their funding goes to programming vs. administrative costs? The preferable response would of course have a larger percentage of funding going to programming. An allocation of 60-70% for program allocations and 40-30% for administrative costs, is deemed favorable. While considering this rule, do keep in mind that programming includes salaries of all of the people who directly carry out work that is directly related to the mission, and that they should be paid a fair living wage. These staff members hold titles as diverse as: case manager, therapist, class instructor, community navigator, etc.

· Take a look at the nonprofits 990. All organizations operating in the United States that receive a tax exemption from the Internal Revenue Service and take in a minimum of $50,000 annually must file Form 990, which is a financial annual report. The 990 is a public record that can offer you great insight into how a nonprofit operates and what their programs are. Even the salaries of top-ranking employees are listed.

· You can also verify whether a nonprofit has a dissolution clause and whistleblower policy in place. The dissolution clause basically provides a detail explanation about what that organization would do, in the event that they have to cease operations. By law, they are required to redistribute any of the donated funding that they have, to other nonprofits. These clauses are put in place, as a means of assuring that the Finance officer, Executive Director, Board of Directors, etc. do not simply just run off with the money, once the organization closes its doors. A Whistleblower policy is essential for ethical operations and business practices, and it put in place to protect employees or volunteers who would like to come forth to report unethical behavior or conflicts of interests. And this may include: misuse of funds, poor financial decisions that may jeopardize the sustainability of the organization, executive level incompetence or accountability, labor law violations. A good whistleblower policy will also explain the actions that would be taken once these reports are receive: how the investigating will be carried out, what to do in the case that the offender is the Executive Director or another executive (including a Board Member), what repercussions would take place - including legal action or criminal prosecution, and how the matter will be reported to the public, donors, etc. Ultimately, the whistleblower policy signals that the organization will not tolerate employee intimidation and will support them in bringing light to any unethical behavior and conflicts of interest.

The article , How to Vet Nonprofits Before You Give: Using ProPublica's Nonprofit Explorer and a charity's own documents, you can make a more informed giving decision , has even more tips on what you can do to vet a nonprofit. Additionally, Charity Navigator has a frequently updated Advisory on charities that raise their concerns.