Ethics… Not Again

Posted by Laura Otten, Ph.D., Director on October 2nd, 2015 in Thoughts & Commentary

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When a colleague asked me what my blog was going to be about this week, I replied “ethics.”  She then asked, “Aren’t all your blogs about ethics?”  Hmmm, is that really true, I wondered.

So what does it say about the state of ethics in our sector?  That question came back to mind in reading about an interesting struggle in New York City’s City Council.  Early in 2014, a series of articles revealed some eyebrow raising activities on the part of the CEO of the Queens Borough Public Library and other senior executives at the library.  Apparently his just under $392,000 salary (which included a $12,000 raise), more than what the Mayor received, wasn’t enough.  He spent $140,000 renovating his office; $27,000 on a private smoking deck off of his office; $110,000 on two, new “executive” conference rooms; and he painted his private bathroom and shower.  (Excuse me; why does the CEO of a public library need a private bath and shower in the first place.)

As bad as this is (and it got worse, as the New York City’s Comptroller documented—read below), the worst part is that all of this happened despite the fact that the rank and file employees of the library—at least those who remained after the CEO reduced their numbers by 130 over five years–hadn’t received raises in four years!

In December 2014, the Board of Trustees, which is appointed by New York City’s Mayor and the Queens Borough President, finally got around to firing the CEO.  In its infinite wisdom, and adding to both the horror and the absurdity of this situation, the Board appointed the library’s then number two, and one of the media-outed executives, to be the Interim CEO, where she remains today.  Seriously!

The Comptroller for the City of New York conducted his own investigation into the goings-on at the Library and, in his report released this past summer, noted that his auditors “observed the absence of key financial controls and identified questionable expenditures and practices engaged in by the Library’s senior management that put the Library’s finances at risk of abuse.”  Credit card expenses for the CEO and the COO (yup, the one now serving as the Interim CEO) for 2012-2014 had charges for “prohibited expenses” of over $310,000 “in circumstances suggesting a significant likelihood of fraud and/or embezzlement.”  They found more:  the CEO worked as a consultant for another city agency all on library time, failed to disclose his connections to several other businesses, and more.  In fact, the comptroller concludes his report by saying he will share his findings with appropriate law enforcement agencies and the library’s board of trustees.

The sad part in that last statement is that it should be the other way around:  a board of trustees should be the ones sharing findings with law enforcement agencies and the City Comptroller.  One of the key responsibilities of a governing board is to provide oversight:  oversight of the finances, as well as the financial health and well-being of the organization; oversight of the chief executive; oversight of the organization’s commitment to and fulfillment of its mission.  So, let’s be clear here that as bad and as offensive as the behavior of the CEO and his number two were, the board’s behavior is equally bad.  It, too, failed at its job, and as a result, great harm resulted.

One of the things that happens when a group fails—or is perceived to have failed—to police its own is a door opens through which others pass to do it for them.  And that is what happened in New York City in late April 2014.  Queen’s Councilwoman Elizabeth Crowley, not happy with what was going on at the public library in her borough, introduced legislation to the New York City Council to require CEOs, other senior executives and board members at nonprofits receiving at least 50% of their funding from City government to file conflict of interest disclosures forms with each City agency providing them with funds.  It’s what elected and wanna-be elected officials have to do, so why not nonprofits that are receiving a big chunk of their operating budget from the taxpayers?

The bill languished for over a year in the Committee on Contracts, and just last week came out for its first hearing.  Not surprising, not everyone is a fan of this bill.  Mayor DiBlasio announced he won’t be supporting the bill saying, through a spokesperson, that it is not the right path for achieving transparency.

While some nonprofits are aligned with the bill, many are not.  A strong believer in transparency, but not of outsiders budding in to oversee another’s business, I’m still hard pressed to understand why any energy would be expended fighting this bill.

But then I found my explanation in a New York Nonprofit Media article:  “Michelle Jackson, associate director and general counsel of the Human Services Council, called the amendment ‘an unfunded, unworkable mandate that would compound the already high administrative and financial burdens on nonprofit organizations.’”  Seriously?

How much money does it cost and how much of a burden is it to design (read download),  sign and collect annual disclosure statements from all board members and senior executives?  (And let’s not forget, that it has always been a best practice, long before the IRS started asking about it on the 990, to have every board member sign an annual disclosure statement; adding a few senior executives won’t complicate the task that much).

The absurdity in this tale should not obscure its invaluable lesson.  What happened at the Queens Borough Public Library is, sadly, repeated somewhere in this country on far too regular a basis, as are the whines of members of the sector complaining of too much work, too little money, being just volunteers.  When we don’t stand up and take control of our own pollution, we offer the silver platter to outsiders—such as attorneys general, legislators, judges—to come do it for us.  Do we, as a sector, want to be or be perceived as that weak?  We have enough other issues over which we have no control for which we need to save our energy and resources to redress; here we have total control, and yet, time after time, we fail to take it.


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