Dirty Money

Posted by Laura Otten, Ph.D., Director on August 7th, 2014 in Thoughts & Commentary

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When are people going to learn that politics and nonprofits just don’t go together?   It is messy; it even gets ugly.  It complicates things where, truthfully, additional layers of complication don’t need to be added.  Plus, it always raises eyebrows.  And that’s never a good thing.

Recently, The Philadelphia Inquirer did an article on the philanthropy of media and cable giant Comcast.  Dollar-wise, Comcast is a good philanthropist:  according to its own promotion materials, it has given $25 million to charity since its inception in 1977.  The Inquirer, however, did a little parsing of that giving and pointed out that $1.64 million of it went to nonprofits with political affiliations, meaning that politicians (which includes those elected to their positions and those highly placed appointed government employees) served on the boards, identify these charities as among their favorite causes, etc.  (Over this same timeframe, Comcast’s three main competitors–Verizon, AT&T and Time Warner Cable, the latter being the company Comcast wanted to takeover–gave a combined total of $1.35 million to similar charities.)

Giving to charities that have links to politicians and government employees is not bad in and of itself, as politicians and their family members are known to be involved with nonprofits simply because they believe in the mission and good work of the organizations.  But these weren’t nonprofits with ties to just random politicians.  No, these were organizations with ties to politicians on, or having great influence, over key telecommunications committees, the FCC and other loci of telecommunications decision making—the places where approval of Comcast’s acquisition of NBCUniversal was sought and where approval for its acquisition of Time Warner Cable currently is being sought.

And while Comcast says there is no relationship between the charities to which it gives and what it needs from Washington, I am, indeed a bit suspicious.  If Comcast’s assertions were true, why would federal officials have received letters of support from nonprofits urging Comcast’s takeover of NBCUniversal?  Why would 54 nonprofits that received donations from Comcast publically back this takeover?  What do most nonprofits know or care about what the largest telecommunications company in the world does?  (Unless, of course, they thought the bigger the company got the bigger their donation would be).

I’d still be surprised, but less so, if 54 nonprofits wrote to oppose the merger, worrying about possible loss of jobs, economic decline, etc.  But supporting it?  I am sure that Comcast’s donations did not come with an explicit quid pro quo:  you scratch my back, i’ll scratch yours.  But while today’s politicians seem especially inept when it comes to doing their jobs, they didn’t get as far as they have today without understanding that basic tenant of politics.  So, say all you want Comcast about there being no greater plan than supporting the community.  And politicians declare loudly that you didn’t know.  Hard not to raise eyebrows in skepticism.

Over the years, I’ve always counseled boards to think carefully about bringing politicians onto their boards as they just don’t make good board members.  They have their own agendas;  they can’t fundraise for you; they have poor records of attendance and participation.  But perhaps I’ve been wrong; they can bring in money.  Some company always wants a politician or two in its pocket, and the bigger the company, the more they want their pockets to bulge.  So, if you don’t care about ethics and perception, go for the politicians and hope you get rich.

But there is another way—and, truthfully, the more common way—where politicians and nonprofits shouldn’t mix.  And while there are so many examples from which I could chose, the current mess in which the Queens (NY) Library is embroiled tells the story just fine.  Long story short:  the President/CEO of the Library is excessively paid ($329,000), indulged in lavish office renovations ($140,000, including a $27,000 private smoking deck), drives a flashy car—a Nissan Z—on his $37,000 per year car allowance, and pulls in another $115,000 while working as a business consultant for a Long Island school district.

When all of this was revealed earlier this year, there was pressure on the board to fire him; it has refused, suggesting he take a leave of absence or that he resign and receive an $800,000 two-year consulting contract or …. But he remains in his position.  So, yes, let’s seriously question the oversight prowess of this board, its smarts, its knowledge of and assumption of all of its responsibilities, and the list goes on.   What is wrong with this board?  Fast forward to this week and we see the many members of the board being fired.  Yup, you read correctly—fired, not resigning, not being removed by peers.  Fired—by the Borough President of Queens and the Mayor of New York City.

Despite the fact that the Queens Library is, by its own description on its website, “… an autonomous library system, guided by a 19-member Board of Trustees,” the Library and its board are anything but autonomous.  The board is “appointed by the Mayor of the City of New York and the Queens Borough President. The Mayor, the Public Advocate, the Comptroller, the Speaker of the City Council, and the Borough President are ex officio members.”  Wow!  Eyebrows raised!  Not my definition of autonomous! And just to be sure I understood that word—because despite having multiple reference volumes at its fingertips, the Queens Library does not know what it means—I checked several dictionaries.  And they all have this funny phrase in it:  “self-governing” and the right, ability, etc. to do that thing.

When 100% of your board is political appointees and elected officials, there is no autonomy!  And when there is no autonomy, the big elephantine question in the room is:  to whom or what is a board member loyal?  To be a good board member, it is imperative that there be no split loyalties:  a board member is there to protect and steward the promises of the mission and only that; not to worry about staying in the good graces of his appointer, or doing her bidding, etc.  Further, while appointees may “like” the mission, i have rarely found appointees who are truly passionate about the mission and willing to do all of the work of being a committed board member.  Experience has also shown that the struggle to build a board strategically, to make sure that you have the right people on the bus for this particular point in an organization’s time, is made nigh impossible when membership is determined by political appointment.  And political appointees get the back scratching motto, too, making it unlikely that such a group will take any forceful stand for fear that will reduce the number of backs and hands to scratch going forward.

What is truly funny—no, anything but funny and actually really very sad–in this whole Library debacle was what people saw as the fix.  The fix, according the New York State legislature and the Queens Borough president was passing a law giving the Borough President the power to remove board members.  Prior to this new law, a board member could only be removed for cause by a 2/3 vote and mayoral approval.  Now, thanks to politics, if the Borough President or Mayor doesn’t like how a board member is behaving, poof!, they are gone.  Eyebrows raised!

And yes, this is my party line:  politics and nonprofits do not—and should not—mix if you want to avoid Groucho Marx eyebrows.

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