Nonprofit accountability – what does it mean?

Just last week, I taught a short class, as part of a visit to a Mid-western university. I chose the topic of nonprofit accountability and how it is conceptualized. I shared this paper by Alnoor Ebrahim, where he argues that nonprofits must focus on strategy driven forms of accountability that help organizations achieve their missions, instead of being accountable for everything, to everyone.

Ebrahim’s argument is important and we must pay attention to this simply because there is increasing demand for more accountability from all our public serving agencies. Right from donors who seek greater accountability for the money they give, to public agencies that seek to provide services such as healthcare or education, there is an increasing focus on accountability.

Where does this leave the nonprofit executive or leader? What areas should he/she focus on and to whom should they be ‘accountable?’. The answer, Ebrahim suggests, lies in being aware of the different kinds of accountability – horizontal, vertical etc. that is; being accountable to those whom the organization serves and also those who ‘oversee’ its work.

In other words, while some forms of accountability may be coercive, other forms are more peer-based and act as checks and balances. This means that many a time, a nonprofit must choose where it will focus and why. Ebrahim suggests four factors to identity accountability : Transparency, Answerability, Compliance and Enforcement.

This can make the process of being ‘accountable’ quite hard. For instance, is a soda manufacturer accountable to only its share holders or to the general public, given that its products have a negative public impact? what does it mean in to be accountable, in this context?

While this is not a perfect example, given that it is drawn from the world of for-profits, the principle still holds – who does an organization hold itself accountable to? In the class discussion, we spoke about the various stakeholders and their roles in the process of building accountability.

Ultimately, the narrative of accountability is about accountability to certain people or institutions and for certain actions. Unless one clarifies this, it makes little sense to talk about the concept. Depending on the nature of the organization, one can be accountable to one’s members, beneficiaries or donors.  This entire process is about building trust.

While one can use tools such as annual reports, disclosure documents etc. it will work in cases where there is a direct cause-effect relationship. But in more complex cases of rights based work etc. the business of accountability can be more complicated.

Accountability is about building trust and this means that being aware and putting into place practices that add to both internal processes that do this, as well as external ones. Ebrahim’s insight that the future of accountability is more in the realm of adaptive learning rather than enforcement seems poignant.

 

 

How will the new administration and its policies impact the Nonprofit sector?

I recently attended the ARNOVA Conference, the annual conference of ARNOVA, a leading organization that is dedicated to research of the Voluntary and Nonprofit sector. As one of the most important convenings of its kind; this conference brings together both scholars and practitioners from around the world.

This year, there were close to 1000 attendees, from around the world. As someone who pays attention to this sector, I was interested in documenting some of the key changes that one can expect in the coming year, with a Trump administration. What would the sector look like, in the coming year and what factors would contribute towards that? Here are some key points, based on a conversation that took place between three leading practitioners/ observers of the sector :

  • The changes in the Affordable Care Act – or Obamacare – as it is popularly known will impact all levels of government, both local and federal. As the Council on Nonprofit’s Tim Delaney pointed out, this is one of the biggest shocks that may hit the system. Depending on how the Obamacare is rolled back, this may mean that states have to pay up more of the Medicare funds etc. and any moves at the federal level can trickle down to the state and local governments
  • The second key point is that ‘repealing the estate tax and capping itemized deductions at $100,000 for individuals and $200,000 for couples.’ This, according to one analysis, ‘would cause charitable giving to decline by between 4.5 percent and 9 percent, or as much as $26.1 billion per year.’ This is a significant change, if it occurs.
  • Nonprofit Electioneering Ban : As the NCNP argues, the ‘Johnson Amendment’ that prohibits 501 c 3s from engaging in political campaigning may be lifted, as that is one of the promises made by the Trump administration.

As Stacey Palmer of the Chronicle of Philanthropy pointed out, there may be more introspection on part of nonprofits and scholars, in terms of what nonprofits can do and their limitations. The public may get swayed by rhetoric that nonprofits can fix all problems, but that is simply not true, she warned; pointing out the severe resource constraints that many nonprofits work under.

So, what will the new administration bring, that will shake up the sector?  potentially quite a few changes, but one can hope that these are not deleterious to the sector or the people that it serves.

The New American Community?

I recorded my first professional style talk today. This series of talks called ARNOVA Talks is styled after the famous ( or rather infamous) TED Talks, that many love and others loathe. Those who love it, love it because it helps one present really complex research or work in a manner that is understandable, relatable to a general audience. Those who hate it, hate it for the very same reasons. They call it ‘dumbing down’ of research or ideas. Regardless of the controversy around the idea, I went ahead and did a 12 minute talk on my new book, that I have been working on. The book is titled ‘The New American Community: How Philanthropy is Changing our boundaries of Community.’ 

 The fundamental question I am seeking to answer in this book is this : Can philanthropy create communities?  While this question may seem too simple or even converse to what we know of, which is to say that most people think of philanthropy ( giving of money, time, efforts) in the context of community building, how can giving create this sense of belonging?

This book is essentially seeking to ask this question because of the kinds of collaborations, permutations and combinations of ideas that I am witnessing around me. Consider two examples.

  1. Muslims praying at an Episcopal Church every Friday, in downtown D.C. : While this is not out of the ordinary and there is no prohibition for Muslims to pray any place of worship, it is unusual and not a common day occurrence; as you may admit. This means that the creative spirit and pragmatic reality of life in D.C., where some Muslims ( who work in downtown DC) and need to pray during the day on a Friday has motivated them to explore an inter-faith idea, i.e, praying at a Church
  2. Indigenous communities’ land rights : Ford Foundation, among many others are promoting land rights for indigenous people, around the world; including in the U.S. The fact that much of the forest land is owned ( though not in direct control) of these indigenous communities is significant, given that they can control this land to prevent deforestation and abuse of land. All of this is crucial in mitigating the harmful effects of climate change.

As one can see, these two disparate examples show us, in a small way how different groups and people are coming together to address and tackle different ideas, that are forming new ‘communities of conscience’ going beyond their denominational categories.

It is not all good news though, as the same spirit that brings people to give for causes that build communities also gives rise to causes that create rift or tension. This is, what some scholars have called the ‘dark side’ of philanthropy.

More on that later in my next post.

 

 

Is the ‘American mythos’ in need of revision?

I am writing this on the second day of election results, that have shaken the country; rather badly. With the election of Donald Trump, Washington D.C., is in mourning. It looks and feels like almost all of the country is at the precipice of something. Mainstream media are still coming to terms with what this means. While the pundits speculate and those who have won celebrate, the question that seems to be at the back of everyone’s mind – and this is a very serious one – is whether the U.S. will stop being a ‘land of opportunities.’ By this, most people mean an inclusive society, where everyone stands a fair chance of succeeding, despite one’s origins, social status or religious beliefs.

At first glance, it looks like everything that the progressives fought for is at stake. There is enough empirical proof for this fear. Consider this : In his memo, Mr. Trump has indicated that he will scrap all ‘unconstitutional Executive Orders’ of President Obama in his first 100 days. In addition, he has also indicated that he will ‘remove criminal illegal immigrants’ and ‘suspend immigration from terror prone regions’ meaning putting an end to the refugee resettlement plans. Also, significantly, he has promised to cancel payments to the UN Climate Change plans.

Statue of Liberty seen from the Circle Line ferry, Manhattan, New York
source : https://upload.wikimedia.org/wikipedia/commons/d/d3/Statue_of_Liberty,_NY.jpg

While each of these will impact an area of American public life, what is at stake is ultimately how Americans define who they are and the ‘myths’ that uphold their sense of identity. As Robert Wuthnow points out in his book  American Mythos, the myths of American being a ‘land of opportunity’ that gives everyone a fair chance is true only because a lot of people ( if not all) believe in it, and work to make it possible. If there is a seismic shift in this attitude, and there is great skepticism and nationalism – combined with isolationism – as we are seeing globally, with Brexit and the recent reaction in the US Elections, then this myth may well be no longer believed.

In this interview, Wuthnow offers an insight into materialism and immigration. Using the perspective of materialism among immigrants, he suggests that the sense of hardship and sacrifice were part of their narratives.  These narratives helped shape their immigrant identity. There seems to be a clash of narratives taking place now. With the rise of a nativist narratives, that are defining America being only a place for caucasians?  The blatant racism that was on play during the election seems to be playing out, with increased incidents of racist attacks, as several media are reporting – across the country.

The narratives of migration, opportunity and freedom have defined America. If these shift in a major way, then everything that the country stands for will also change. We are already witnessing isolationism, nativism and protectionism in Europe and other parts of the world. Is this a trend that will catch up in the U.S., as well?

While it is too early to say how the next four years will shape up and what it would mean, for immigrants and others; who see the U.S. as their home; one can see that the meta-narratives about what the U.S. is, and what it stands for, is changing.

While there is no need to panic, I do believe it is time for right-thinking people to reexamine how the current political scenario will impact all Americans – whether they are Republicans or Democrats.

There is certainly need for more dialogue, tolerance and open mindedness on part of everyone. But the ball is certainly in the Republicans court. Given that the administration is going to be run by Mr.Trump’s side, and much of the rhetoric that has caused division has come from that camp, it falls on them to reach out and heal the wounds. It falls upon Mr. Trump to also be Presidential and stand up for what makes America a great nation – tolerance, openness, inclusiveness and creativity. To ignore this and to remain silent while his supporters create fear and intolerance would be betraying the very values that made his success possible.

 

 

“What about public service?” you ask…

When it comes to the discourse of charity, philanthropy and ‘doing good’ most people don’t consider working for the government, in a ‘public service’ role as being particularly altruistic. But consider this :  Most public servants ( whether working for federal government, state or even a nonprofit) make much less salary than a comparably educated person, at a ‘for-profit’ firm. I have met some of the smartest, best educated people working for the government; with the motivation to ‘serve.’ While this may sound hunkie-dory for the capitalists amongst us, I would like to believe that there is such a thing as a public service motivation and it is important to sustain this motivation, to ensure there is a solid, working bureaucracy and a society that honors such traits.May be it is our evolutionary disposition to value those who sacrifice something for us, or  a social norm to value those who do good.

Regardless, this trait is something to be considered when evaluating how one spends one’s life, and is often a criterion for selecting leaders in the public sphere. Particularly, in a society where time is money, and in some cases more important than money; giving of one’s self, to others; in the form of time; efforts and psychic attention and energy is a valuable commodity.

Volunteer hours are also quantified by nonprofits, just so you know. Most nonprofits report them in their annual reports.

As a group of people, Americans need to be reminded now, more than ever – given the election cycle – that such a ‘service’ motive is indeed important, to serve common good. Not just the ability to make money and throw it away.

If not for profit, for what?

nonprofit

I sat next to an older gentleman on my flight from D.C. to Atlanta, GA. While he was quite in the beginning and was absorbed in his newspapers, a quick smile and conversation started him talking. And despite his strong southern accent – he was from Alabama – we managed to discuss a lot of ideas on this short trip.

One of the first things he said when I pointed out that I was working in the nonprofit sector was that it’s all a sham. “It is all about tax write-offs, ultimately, someone has to pay for all that service.” He argued.

While I do meet the occasional Libertarian, who brushes off all feel-good work of nonprofits as just instances of market catallaxy, or the ‘entrepreneur’, who quite genuinely scoffs at the idea of the nonprofit being a sector, the truth is that about 10 percent of Americans are employed in this sector and it is one of the most enduring parts of American work-force and cultural landscape. Nonprofits today are growing and thriving, if anything. There is no denying that this sector is important and worthy of our attention, even if we don’t believe in how it operates or its assumptions.

This conversation brought to mind the famous book by Dennis Young, ‘If not for profit, for what’?  In this book, he has argued for a behavioral theory of studying the nonprofit sector.  In terms of framing the study or discourse of nonprofits, young suggests that the demand side of nonprofits has been studied quite extensively, i.e, how nonprofits provide public goods as studied by Burton Weisbrod and as providers of ‘trust goods’ as offered by Henry Hansmann – where nonprofits ‘asymmetric information led consumers to prefer nonprofits over less trustworthy for-profit providers.’ What this means is that there is a market-gap in most areas, where consumers/ citizens don’t have access to the best information and in the absence of that, for-profits would – given their motivation to make as much money as possible- make use of this gap. On the other hand, a non-profit, which has a service motive is not likely to indulge in this sort of behavior.

Young offers an explanation that the ‘supply’ side of nonprofit behavior has not been extensively analyzed and this can help understand the motivations for why people work in this sector and why it even exists. He uses entrepreneurship as a motivating factor to understand the sector. His framing of the nonprofit sector leadership and motivations as ‘entrepreneurship’ is key to our discussion. Most nonprofit leaders and organizations are trying to solve some social problems for which there is no market solution. Or if there is, it is too expensive or exclusionary.

As Peter Frumkin, writing in this book suggests “The value of his (Young’s) early contribution was and continues to be his focus on the way the values, personal traits, and skill sets of individual entrepreneurs are a useful starting point in understanding where nonprofit ideas and organizations originate.”  By this means that the focus of most scholarship and discourse has been on why market failure has been responsible for the rise of nonprofits, while there hasn’t been much focus on the supply side – meaning why individuals do what they do, in the context of social organizations and institutions. The study of values, motivations and drives is key as well. This also explains the rise of the civil society sector in the U.S., which Alexis De Tocqueville wrote about, in Democracy in America.

Back to the question: if not for profit, then for what? The answer to this lies in both normative and philosophical dimensions. Sometimes profit is not the key motive. It could be service or the desire to make a difference. The motive to serve public and do ‘good’ is inherent in the social sector, of which nonprofits are a part. This also means that we need to take into account other motives, other than pure profit motive, that drives individuals to serve and work in these forms of organizations. The market and government cannot provide all answers to questions before us, hence the need for nonprofits.

Does Bill Gates’s philanthropy make a difference?

I have been reading about the philanthropy of the super-rich or the Hi-Networth individuals ( HNW) as they are called. The media celebrates wealthy people, and their acts. As the saying goes, a wealthy’s man’s joke is always funny and few question the ‘good works’ of the super-wealthy. With the ‘Giving Pledge’ and similar initiatives, the super-wealthy have come together to give their wealth away, to the poor. Noble indeed, but is it all there is to this story?

Not quite, point out some scholars and activists/ thinkers. bill-gates-wide-wallpaper-3790One of the interesting arguments that is out there is that their philanthropy or giving can do good, but also cause harm. How so, you might ask? 

For starters, there are two arguments against HNW doing more ‘good’ for the world.

  1. By picking their own visions of what needs to be done, and setting their own agenda, the HNW individuals may ‘distort’ the priorities of the given location/ country, where they are working
  2. HNW can become a facade for showcasing ‘benevolence’ while ignoring the ground reality in many of these situations and the structural inequality that produced that massive amount of wealth disparities.

Lets look at each criticism, in turn.

Firstly, as this post points out, the fact that the HNW individual/ foundation can set its own priorities, which may, in some cases; go against the policies of the country/ region they are working in, can distort the situation. What if, for instance; the national government wants to implement a certain program, which the administrators there think is far more important than what the ‘experts’ of the foundation think? How do the actions of this foundation reflect? Who is this HNW or foundation accountable to?

Secondly, the involvement of private sector players, that are often driven by bottom-lines and profits in policy making is problematic, as the same article points out. The network can soon become a ‘group-think’ exercise, which may leave out the best solution, and decrease changes that the best solutions will be adopted; in favor of those solutions or ideas that the foundation favors. Redtapism and favoritism can begin to take root, in these contexts.

Finally, the question of priorities comes up. As Bowman points out” Research by Devi Sridhar at Oxford University warns that philanthropic interventions are ‘radically skewing public health programmes towards issues of the greatest concern to wealthy donors’. ‘Issues,’ she writes, ‘which are not necessarily top priority for people in the recipient country.’”   This disparity in power, in putting the priorities on the table is a worrying trend, indeed.

At the same time, there is no denying that several thousands, if not millions of lives have been saved by the Malaria and other vaccines that these foundations have given out.

So, how does one evaluate the work of HNW philanthropists/ Foundations?

There are no easy answers, as in life. The question itself is a political one and the answer one offers depends on one’s  worldview.

The alternative, as many; including the President of Ford Foundation has pointed out – and even Bill Gates acknowledges, is to make sure that the structural issues, that cause poverty are tackled. There is a need to ensure that everyone is able to access healthcare, good quality education and other amenities that make for a complete and ‘free’ life. But this is easier said than done, especially in a system that is skewed towards the rich and well-connected, even in a ‘developed world.’

As long as there is sensitivity to local needs and inputs from the governments/ agencies that are in the regions, then the foundations can actually do a lot of good, ensuring that the local infrastructure is built up and people don’t perpetually depend on the largesse of the rich and famous.

If this is not kept in mind, then such philanthropy can become an exercise in publicity and in an effort to further establish the ‘greater glory of rich.’