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Posted By Bob Ottenhoff on February 8th, 2012, in these categories: Public PolicyI have believed for a while that the feedback of real people is an important source of data when evaluating the work of a nonprofit organization.
 Several years ago, we formed a partnership with GreatNonprofits to encourage the comments of donors, volunteers and program recipients about their interactions with a nonprofit in the form of “personal reviews.” In 2011, nonprofits received 16,903 reviews through our site alone, and you can learn more about writing reviews here: http://www2.guidestar.org/rxg/give-to-charity/review-a-charity.aspx.
Last year, we acquired Philanthropedia which has developed an innovative way to capture the wisdom of program officers and content experts: http://www.myphilanthropedia.org/.
Our pioneering work has been slower than I would have liked in developing a critical mass of user reviews, but sometimes slow and steady wins the race. Change often comes slowly in the nonprofit sector.
However, last week I watched a truly remarkable event unfold online before my very eyes: the people came together and through the power of user reviews, changed the way the public looked at a nonprofit.
Let me take a step back and give you the background first.
Last week, I woke up to the news that the Susan G. Komen Breast Cancer Foundation, also known as Susan G. Komen for the Cure, had barred grants to organizations that are under investigation by local, state or federal authorities. That affected Planned Parenthood, because, as the Washington Post wrote, “… it’s the focus of an inquiry launched by Rep. Cliff Stearns, R-Fla., seeking to determine whether public money was improperly spent on abortions.”
Shortly after, our PR Manager brought a Daily Kos article to my attention that pointed out how many nonprofits were using the personal reviews on our site to sound off about their disappointment with that decision. As a result, the previously five-star Komen Foundation fell to a three-star rating.
Shortly thereafter, I saw Kivi Leroux Miller’s blog about the impact that these negative reviews had on the Komen Foundation’s overall brand. Kivi’s blog, in turn, was talked about in plenty of places – including Beth Kanter’s blog. By this point the media storm had turned into a frenzy, and I was impressed by the power of the people to turn a debate into action.
The Consumerist piece about GuideStar’s role dialogue paints a pretty accurate picture: http://consumerist.com/2012/02/angry-reviewers-sink-komen-foundations-guidestar-rating.html.
And as a result of all of the backlash, the Komen Foundation now has a GreatNonprofits user review rating of one-star on our site. They have received 623 personal reviews, and I’m hard pressed to find a positive one in the recent past.
Social media has played a critical role in this issue – just look at a search on Twitter for GuideStar and Komen and you’ll see hundreds of results pop up: https://twitter.com/#!/search/GuideStar%20Komen
Whenever I’m questioned about the inclusion of user reviews from GreatNonprofits and Philanthropedia on GuideStar, I always respond that it would be inappropriate to use personal reviews as the only way of measuring a nonprofit.
And by the way, it would also be inappropriate to use only one Form 990 or any other single data point (most emphatically the dreaded overhead ratio). We recommend that any evaluation include a variety of data points – a 360 degree view – which is what our new nonprofit report format tries to provide.
But the events of the past week with Komen (and before that with SOPA) are making me think – as an avid proponent of user reviews – that I may have underestimated the power of the people to measure the performance of a nonprofit.
Posted By Bob Ottenhoff on July 5th, 2011, in these categories: Economy | Public PolicyI think it’s time to change which kind of organizations are eligible for a tax exemption.
Two reasons have brought me to this conclusion. One, I don’t think it is good public policy to be providing tax exemptions – and providing donor tax deductions – for organizations that provide absolutely no charitable benefit. Big football bowls come to mind. (Check out the recent Arizona Republic article regarding the Fiesta Bowl and its efforts to save their tax-exempt status.) College booster clubs are another. Nonprofits formed by corporations simply to advance the corporation’s promotional goals, or those that provide a person with a convenient tax shelter. It’s not hard to come up with quite a few examples.
Secondly, as an American citizen, I’m concerned about the federal budget deficit and am persuaded that we need to make some painful adjustments before things get worse. It will require everyone working for the common good, rather than for ideology or party. That probably means slowly raising the eligibility for Social Security and Medicare based on income and age. A recent Washington Post article reports that the huge Defense Department budget is also being considered by both parties for cuts.
I am also persuaded that a significant opportunity exists in cutting back on “tax expenditures.” These are tax deductions – or loopholes – that lower tax obligations, thereby reducing the amount of revenue going to the Treasury. In recent weeks, we’ve seen the battle over whether ethanol should continue to receive a $5 billion deduction and whether the oil industry should receive a tax credit for new drilling. General Electric was recently in the news because it paid no taxes last year thanks to credits and deductions. Many corporations now employ a platoon of lawyers and accountants to find – or lobby for – deductions that can lower corporate taxes. It is estimated that elimination of tax expenditures could bring hundreds of billions in revenue to the Treasury.
In order for this to be as fair as possible, and not just driven by lobbyists and powerful PACs, every idea to reduce the budget should be on the table for consideration – including some that may affect the nonprofit sector. Rather than change the limits on the amount that one can deduct on personal income taxes, as the Obama administration is proposing, I would impose a “social benefit” requirement before an organization could achieve tax exemption. It would have the added benefit of reducing some of the confusion the public now has about charitable status and the meaning of being a nonprofit.
I know it won’t be easy but I think it’s worth a try. Perhaps we could consider it the nonprofit sector’s contribution to balance the budget.
What do you think?
Posted By Bob Ottenhoff on November 4th, 2010, in these categories: Economy | GuideStar | Public Policy What would you do if someone gave you $4 billion dollars with only one requirement: that it is spent on promoting civic engagement, providing voter education, and encouraging efforts to get out the vote? That’s the amount of money experts are estimating was spent on Tuesday’s election campaigns. And what did we get in return?
Well, let Edward Luce of the Financial Times sum it up:
In no other profession would Americans rank inexperience higher than experience. And in no other pitch would the advertising so badly distort the underlying product.
Such is the combination of America’s deep-rooted political folklore with a year in which incumbents of any kind are even more toxic than usual.
One additional casualty in the past 10 weeks, however, has been the prospect of any serious debate about America’s future – a year when the country particularly needed to evaluate its narrowing options.
Whether quantitative easing works will be central to America’s economic future. No mention has been made of it on the campaign trail.
Nor has anybody thought it worth raising Barack Obama’s deficit commission, which is due to report on December 1. The question of how the US should tackle its mounting national debt has been relegated to a bunch of Punch and Judy bumper stickers that bear as little relation to its fiscal reality as astrology does to astronomy.
The same applies to infrastructure, education, immigration – pretty much anything that touches on America’s future competitiveness: “Literally clueless,” stands as an apt summary on the hustings.
Then there is the matter of whether Americans should be fighting and dying in the “graveyard of empires”.
A month from now, General David Petraeus will issue his report on Mr Obama’s surge in Afghanistan – a critical milestone in a war that America could well be losing.
Again, the debate over AfPak has been notable by its absence. If your candidate pretends he has never been to Washington, there is little chance he will betray a grasp of central Asia.
There was a moment two years ago when Mr Obama promised to revive American democracy as a model for others around the world – the kind of place that can send a man to the moon.
Right now, however, it is not even a model to itself. Mr Obama must be looking forward to the distractions awaiting him in Asia.
I’m not against protesting previous decisions, or being so mad I can’t take it anymore, or throwing the bums out – that’s all part of a vigorous democracy. But a little more serious discussion of important issues would be nice. Here’s my modest proposal to get started: What if we banned negative, slickly produced commercials and required candidates to actually appear – and speak a few paragraphs – in each of their commercials? Not only would it force candidates to think about something to say, we might actually learn what’s on their mind (or not).
Posted By Bob Ottenhoff on July 21st, 2010, in these categories: General | Public PolicyI’ve written before about how confusing the nonprofit sector appears to most Americans. Some of this is of our own doing. For starters there’s the term we use to describe ourselves: "nonprofit." To many it suggests something small, or something that is missing (a "non"), or certainly something less important than for-profit. Adding to the confusion is the way we often fundraise, suggesting in our appeals that we’re poor, run by volunteers or underpaid staff, teetering on the edge of collapse. Yet we know many nonprofits that are strong financially, well-run, and providing meaningful—often critical—services.
Because it so easy to start a nonprofit organization, we often hear about nonprofits that do not fit our normal definitions of charity or public service. One of my biggest pet peeves is the proliferation of nonprofits started by elected officials. Although undoubtedly many of these nonprofits are doing good work, the connection to fundraising and lobbyists is a little too close for my comfort.
Now the New York Times has reported on a new way to beat the system: The creation of nonprofit subsidiaries of for-profit companies that are started for the sole purpose of receiving earmarks from Congress. The Times reports on several examples of nonprofits that just happened to specialize in the same kind of work performed by for-profit companies—and at the same address.
The proposed earmarks are among dozens—totaling more than $150 million—from around the country that would indirectly benefit profit-making companies, according to an examination by The New York Times of House appropriation requests submitted after the new rule was imposed in March. …
Companies have shown remarkable ingenuity in skirting the rule or veiling their requests through nonprofit organizations, the Times review found. Among the examples:
The Virtual Reality Medical Center, a California-based company that sells visual simulation headgear as an experimental form of medical therapy, had sought nearly $6 million in earmarks before the ban. Soon after, company officials instead proposed that the money go to the Interactive Media Institute, a nonprofit group controlled by the center’s top executives, which had been set up to sponsor educational conferences. …
In Pennsylvania, General Electric is likely to get as much as 80 percent of a $2 million earmark proposed by Pennsylvania State University for research on clean-burning GE locomotives. At the suggestion of the company and the university’s lobbyist, according to a Penn State professor, the university is listed as the lead player in the collaboration instead of GE, as was done previously. …
In New York, the Copper Development Association, a nonprofit group controlled by copper manufacturers, is pursuing a $4.1 million earmark to hire suppliers to install its members’ copper products in New York City subway cars, asserting that the metal has qualities that inhibit the spread of infectious diseases.
And a group called the Solar Energy Consortium in Kingston, N.Y., is pursuing nearly $30 million in earmarks, with the help of Representative Maurice D. Hinchey, Democrat of New York. The group, working out of a tiny office above a machine shop, does not perform its own research. Instead, it plans to pass on most of the earmark money to local businesses, some of which directly collected federal earmarks for solar projects this year but would no longer qualify.
My conclusion: These are obvious examples of phony nonprofits that are designed to circumvent a Congressional ban on earmarks, and they unfortunately add to the public’s confusion about nonprofit organizations, thereby potentially hurting every nonprofit trying to provide meaningful service and win the confidence of the giving public. It hurts the public’s trust in the good work of nonprofits. For the sake of the nonprofit sector, I’d like to see the IRS be tougher in applying standards for creating a new nonprofit and exercise a little more oversight.
Posted By Bob Ottenhoff on June 4th, 2010, in these categories: Public PolicyA couple of weeks ago, many of the regulators of nonprofit organizations from the English-speaking countries around the world met in Washington, D.C. One of them stopped by our offices to learn more about GuideStar. My guest divides the regulators into two groups: those within a tax-revenue organization (U.S., Canada, and Australia) and those housed in independent agencies (U.K., New Zealand, Ireland, Northern Ireland, and others). In his view, those housed in regulatory agencies tend to be "more secretive" about what they do and how they do it. And he thinks this leads to a culture that emphasizes regulation and tax revenue as more important than supporting the nonprofit sector. As the head of an independent agency, he sees his role as both a regulator and policy advisor serving three clients: government, the charitable sector, and the public at large. It sounded to me that his independent status gave him more flexibility—and perhaps a more gentle approach—in decision making than employees of the IRS might be permitted to take.
This discussion was of more interest to me than usual since the previous week I had attended an interesting seminar hosted by the Urban Institute and the Houser Center for Nonprofit Organizations on whether we need a new federal agency for nonprofit organizations.
The case for such an office was made primarily by Marcus Owens of Caplin & Drysdale—and the former head of Exempt Organizations at the IRS. Owens argues that the IRS keeps lousy records of nonprofits, does a sloppy job of oversight, and is bureaucratic and difficult to work with on legal matters. These problems will never get fixed, he claims, as long as the Exempt Organizations Division is a tiny appendage of a huge organization whose primary focus is on tax collection. He argues for a semi-independent authority, modeled loosely on the National Association of Securities Dealers, that has sufficient funding for vigorous oversight, the flexibility to make its own purchasing decisions, and the freedom to set its own agenda and priorities.
Many participants argued against Owens’s recommendation, saying it would be nearly impossible to get approval from the IRS and Congress for such an agency and furthermore would still suffer from the handicaps of being part of the federal bureaucracy. Besides, many asked, just what is the problem? Despite its shortcomings, the IRS does a pretty good job under challenging circumstances. We don’t need more regulation or oversight. Maybe what we need is an organization that promotes the welfare of nonprofits. Shirley Sagawa of the Center for American Progress led a presentation urging the formation of an organization similar to the Small Business Administration—one that could gather data, influence federal agencies, and generally advance and promote the work of nonprofit organizations.
I think this is an interesting discussion, but I’m not sure it is very productive. I can’t imagine the IRS wanting to give up its authority over nonprofits. The task of creating a new independent authority or agency in today’s toxic political environment seems highly unlikely. I think our energy is best spent trying to make our current system better. I would focus on two things: making the IRS more effective, while encouraging it to not engage in over-regulation, and doing a better job of coordinating activities among nonprofits so we can be more effective in telling our stories to Congress and the American people. It is within our power to improve the standing and respect of the nonprofit sector without creating another federal agency.
Posted By Bob Ottenhoff on January 8th, 2010, in these categories: Donors | Health Care | Nonprofit Practice | Public PolicyOne of the joys of living in the Washington area is that while watching the news on television, we get to see the strangest advertisements urging Congress to do such-and-such sponsored by some supposedly high-minded, publicly spirited organization. I always think to myself, who are these people and where is their money coming from? Maybe it’s my cynical side coming out, but I usually assume that behind the scenes there are a bunch of organizations fighting over market share and a pile of money.
Most discussions about the nonprofit sector usually focus on the needs of traditional donors, whether they are individuals or professionals, and charities that are providing public services.
But there are thousands of nonprofit organizations that are organized to serve very narrow subjects. One of my pet peeves, for example, are the nonprofits organized by elected officials, a subject that I think doesn’t get nearly enough attention. Some of these charities do terrific work, but many serve little purpose other than to attract donations which ultimately serve only the interest of the elected official.
I’m not talking about advocacy groups per se. I support the right of 501(c)(3) nonprofit organizations to advocate for their points of view and the passage of legislation to benefit their cause, within the guidelines of the IRS. We all need to be ever vigilant so that our rights aren’t watered down. We also have the 501(c)(4) category for those nonprofit organizations that want to undertake major, sustained lobbying efforts.
No, what I’m speaking about are those nonprofits where the funding source is nebulous, executives are overlapping, the activities are unclear, and—worst of all—the names of the organizations are misleading. I think these types of nonprofits breed public mistrust and have a negative effect on charitable giving in general.
The Washington Post had a front-page story yesterday looking at organizations lobbying for changes in health care titled "How interest groups behind health-care legislation are financed is often unclear." The first two paragraphs of the piece lay out the premise:
Many of the Washington interest groups that are seeking to shape final health-care legislation in the coming weeks operate with opaque financing, often receiving hidden support from insurers, drugmakers or unions.
The groups, some newly formed and others reappearing with different sponsors, have spent months staging noisy protests, organizing letter-writing campaigns and contributing to a record $200 million advertising blitz on health-care reform.
I asked Chuck McLean, GuideStar’s V.P. of research, and his assistant, Carol Brouwer, to dig into the GuideStar database to see what we could learn about the organizations mentioned in today’s article. They found that most of them are either charitable—501(c)(3)—or lobbying—501(c)(4)—organizations and in the GuideStar database. But the 990s and other tax documents available from the IRS don’t really tell you very much about the funding sources of these organizations. This is an obvious case where going beyond the IRS data is absolutely essential.
These organizations are not required to disclose to the public the sources of the contributions they receive. So if the fictional Society for Compassionate Care for the Elderly is a nonprofit that is lobbying for the Congress to pay for nursing home care for any senior who needs it, we have no idea if the money that pays for the lobbying comes from thousands of concerned individuals or from the business interests that stand to make a fortune if the lobbying efforts are successful. It isn’t clear to me that anonymity of donors is fair to us in instances like these. What do you think?
Posted By Bob Ottenhoff on December 1st, 2009, in these categories: Public Policy | ReligionThere’s an interesting battle going on in local Washington, D.C., politics that could have national implications.
The D.C. Council is scheduled to vote today on a historic measure to legalize same-sex marriage in the District. The proposal has generated considerable opposition, but none more public and forceful than from leaders of the Catholic Church. Several weeks ago the church announced that if the legislation passes, it will terminate the $20 million or so in contracts that Catholic Charities has with the city for funding of homeless shelters, medical clinics, and other charitable enterprises that Catholic Charities operates because it believes the proposed legislation forces the Church to violate its teachings. According to the Washington Post, "Eleventh-hour talks were being held Monday to see whether the law’s wording could be tweaked to keep the Church from having to recognize same-sex marriages by, among other things, offering benefits to gay employees’ partners." The Post article suggests that this is an issue on a "collision course" between "religious liberties and civil rights."
But there is another collision course to be concerned about. Increasingly our society relies on nonprofit organizations to deliver desperately needed social services. Consider these three trends. One, for many years now, government agencies having been outsourcing much of the delivery of social services to nonprofit organizations. Two, we know from the Urban Institute’s analysis that government contracts for services is the single largest source of revenue for the nonprofit sector. And three, nonprofits with religious affiliations are increasingly providing social services and more often subsidized by government contracts.
I asked Chuck McLean, GuideStar’s VP of research, what we could learn from the GuideStar database. He noted that religious organizations are not required to file with the IRS so information is hard to come by, but he reports that about 120,000 religious organizations have voluntarily supplied information to GuideStar or the IRS, most of them social services, health services, or education organizations. This is less than 30 percent of the estimated 400,000 religious organizations in the United States, so it’s not really possible to draw any solid conclusions. It’s safe to say that religious organizations have long been a vital part of the charitable sector. Just think of all the universities and hospitals and homeless shelters in any major city run by religiously affiliated organizations. We couldn’t do without them. Other than the issue of abortion, which has had long running national and legal implications for religious insitutions, I can’t remember too many incidences like this one. Is the situation in Washington an anomaly or should we expect more of these collisions? And what does that mean for the future of the delivery of social services?
Posted By Bob Ottenhoff on October 13th, 2009, in these categories: Health Care | Public PolicyI’ve been disappointed in the tone of the public debate on health care reform. Rather than have a reasoned discussion about different approaches to this complicated and difficult issue, we seem to be bombing each other with slogans and sound bites.
Sunday’s Washington Post has a front-page story that says, "The nation’s political discourse seems sour, angry, even dangerous," and that "‘uglier than it’s ever been’ is a phrase often volunteered" in this debate. The article reminds us that we’ve always had cycles of unruly political discourse, starting from the founding of our nation. What may be different today is that the Internet and cable television can much more easily spread over-the-top rhetoric (which, as the article points out, is often financially lucrative.)
George Will, the frequently grouchy conservative columnist, takes well-off liberals to task in his Sunday column, suggesting that "our vocabulary is composed exclusively of references to rights, a.k.a. entitlements." In the health care debate, Will observes, "Each proposal must be invested with the dignity of a right. And since not all proposals are compatible, you have not merely differences of opinion but apocalyptic clashes of rights." I think his observation holds equally true for conservatives and liberals in the health care debate.
A recent column by Roger Cohen in the New York Times brought this all into focus for me. "Whatever may be right, something is rotten in American medicine. It should be fixed. But fixing it requires the acknowledgment that, when it comes to health, we’re all in this together. Pooling the risk between everybody is the most efficient way to forge a healthier society." But Americans hear "pooled risk" and think, "Hey, somebody’s freeloading on my hard work."
Concludes Cohen, "Americans, born in revolt against Europe and so ever defining themselves against the old Continent’s models, mythologize their rugged (always rugged) individualism as the bulwark against initiative-sapping entitlements. We’re not talking about health here. We’re talking about national narratives and mythologies—as well as money. These are things not much susceptible to logic. But in matters of life and death, mythology must cede to reality, profit to wellbeing."
One of the things I like about working in the nonprofit sector is that there is an explicit commitment to thinking of others, not just our own well-being. We donate because we want to share our resources with others, often those less fortunate than us. We volunteer because we have skills and energy that can help others. We work for nonprofit organizations because it is an opportunity to serve others and make this a better world. The health care debate could use a little less complaining about me and mine and a lot more talk about you and us.
Posted By Bob Ottenhoff on September 25th, 2009, in these categories: Health Care | Public PolicyI’m still trying to decide how health care cooperatives work and whether they can reach the scope and scale that our health care system needs to introduce some of the reforms that are being discussed.
Last week I interviewed Steve Delfin, executive director of the National Credit Union Foundation, who told me about how credit unions work. His blog on this issue is interesting. We learned from him that cooperatives are owned and controlled by their members—the people who use the co-op’s services or buy its goods. Any surplus revenues are reinvested in the business.
Steve also recommended an interesting Web site, the National Cooperative Business Association, or NCBA. Here’s a link: http://www.ncba.coop/abcoop_health.cfm. The site has a lot of interesting information on why NCBA thinks cooperatives can work for health care delivery. On it I learned that there are about 30,000 cooperatives in all, and that they have a significant impact in four sectors of the U.S. economy: agriculture and food, credit unions, mutual insurance, and rural electric. But not health care!
NCBA reports that there are four kinds of co-ops. Every model has at least a few examples of health care services.
- consumer-owned co-ops (credit unions and rural electric co-ops)
- purchasing cooperatives (hospitals buying equipment together)
- worked owned cooperatives (there are several in home health care)
- producer cooperatives (such as Land O’Lakes)
Unfortunately, the impact of consumer-owned health cooperatives today is relatively small. The NCBA estimates that approximately 2 million Americans are member owners of consumer-owned health-care cooperatives.
The NCBA identifies some important unanswered questions that policy makers will need to address:
- Will the co-ops be seeded by government grants or will they be loans?
- How much control will the government exert?
- How much time will the government give to get health care co-ops started?
- Will the co-ops be allowed to form into a federated co-op on a national scale?
- Will there be minimum federal standards that supersede state law?
- What laws would regulate regional co-ops?
These seem like pretty difficult and complicated issues to solve. What do you think?
Posted By Bob Ottenhoff on September 18th, 2009, in these categories: Health Care | Public PolicyNonprofit medical cooperatives still seem to be in the picture as an alternative to the so-called public option as part of the medical reforms being discussed.
In my last blog on this issue, I mentioned there are very few co-ops in the GuideStar database, and I expressed some doubts about the capabilities and scalability of creating new nonprofit co-ops to provide health services. To learn more about how co-ops work, I contacted a friend, Stephen Delfin, who serves as the executive director of the National Credit Union Foundation. Steve says that "credit unions are not-for-profit, member-owned financial service cooperatives. The thread between different types of coops is the non-profit, member-ownership stature and commitment to social responsibility."
He says they all operate with a commitment to the following principles:
- Open and voluntary membership
- Democratic control
- Non-discrimination
- Service to members
- Distribution to members
- Building financial stability
- Ongoing education (financial)
- Cooperation among cooperatives
- Social responsibility
Steve also told me that the co-op is a "business model uniquely positioned to tap into the post-economic melt-down psyche of Americans. Whether in health care or financial services, the business motives of cooperatives are not profit, but service to members." He discusses the cooperative model in a recent blog.
After talking to Steve, the concept of a nonprofit health co-op sounds a little more intriguing to me. Wouldn’t it be great to be a member of an organization focused solely on providing me and my family with excellent health care, rather than fighting through all the paperwork and bureaucracies that exist in health care today?
In my next post, I’ll take a closer look at how current health co-ops work.
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Several years ago, we formed a partnership with GreatNonprofits to encourage the comments of donors, volunteers and program recipients about their interactions with a nonprofit in the form of “personal reviews.” In 2011, nonprofits received 16,903 reviews through our site alone, and you can learn more about writing reviews here: http://www2.guidestar.org/rxg/give-to-charity/review-a-charity.aspx.
