Charity Governance

AS IS TRUE WITH MANY THINGS IN LIFE, SIZE DOESN’T MATTER: NATIONAL COMMITTEE FOR RESPONSIVE PHILANTHROPY'S STUDY DRAWS THE WRONG CONCLUSION

DATELINE:  July 25, 2009, Chicago

The National Committee for Responsive Philanthropy (NCRP) released a study claiming losses by charities in the Madoff Ponzi scheme are explained by small and  homogeneous boards.  When we see anyone talking about diversity and foundation boards these days, we see a hidden agenda.  So we want to set the record straight:  There is... 

A COMMONFUND STUDY CONFIRMS WHAT WE SUSPECTED

DATELINE: June 25, 2009, Chicago

Today, the Commonfund released a benchmark study that provides statistics on foundation investment performance.  Two hundred Ninety (290) private and community foundations responded.  The average return on investments for the 2008 calendar year was...

INDEXING INVESTMENT PORTFOLIOS IS A COMING TREND: SOMETIMES SIMPLER IS BETTER

DATELINE: June 23, 2009, Chicago

College, university, and other endowments certainly have taken a hit during the last year.  We all know the numbers—25% to 40% declines in value.  We all know the consequences—insufficient cash flows, inability to access principal due to lock-ups, possible UBIT as a result of borrowings, and shortfalls in program funding.

But what should really be bothering investment committees is the fact that...

WHO IS REALLY RUNNING THE NEW YORK CITY OPERA?

DATELINE: June 21, 2009, Chicago

Robin Pogrebin of the New York Times did a bang-up job this past week when she reported on the New York City Opera’s perilous financial condition.  City Opera Tries to Hold Off the Ultimate Finale (June 17, 2009).  Her in-depth article deserves to be read by everyone who is interested in nonprofit governance.  

Quite the Mess.  The New York City Opera is in a financial mess. Pogrebin reports that the company’s endowment has dropped from $57 million in 2003 to...

IRS NEEDS TO SHUT OUT THE JIM BUNNING FOUNDATION: WILL SENATOR GRASSLEY PLAY HARDBALL WITH HIS REPUBLICAN COLLEAGUE?

DATELINE: June 16, 2009, Chicago

Jim Bunning may be a United States Senator, but that does not mean that he is above the law.  Based on a report appearing in the Hill, the IRS should revoke the tax-exempt status of the Jim Bunning Foundation.  Reid Wilson, Bunning Makes $20K From Baseball Signings (June 12, 2009).  According to the article, Bunning is prohibited from selling his autograph because of Senate ethics rules.  In an apparent attempt to steal home base, Bunning created a charitable foundation.  Senate ethics rules reportedly permit the foundation to sell the baseballs that Bunning autographs and donates to the foundation.   That’s a story by itself.

According to the  2008-Form 990-EZ filed by the foundation, Bunning was paid...

GOOD FOR THE ACLU: REPORT ON CHILLING EFFECT OF OFAC

DATELINE: June 16, 2009, Chicago

Mainstream charities have been upset since President George Bush (43) first began his efforts to identify and shut down charities that finance terrorist activities.  Everyone acknowledges that some charities have been used as fronts to finance terrorism.  Nobody disputes the need to shut those charities down.

What has troubled many U.S. charitable organizations that make foreign grants, provide disaster relief, and provide aid to third world nations has been the...

CAN’T EVEN PREDICT THE FUTURE FIVE YEARS OUT: SALVATION ARMY SHOULD HAVE GONE TO COURT

DATELINE: June 15, 2009, Chicago

Over the years, we have examined a number of restricted gifts.  While we always acknowledge the right of donors to make the gifts, we also have always questioned whether such gifts are wise.  Donors are lousy at predicting the future, as we have seen time and again.  Stephanie Strom offers up Exhibit A in Plan for Dozens of Salvation Army Centers Falters (June 14, 2009).

Joan Kroc, the widow of Ray, the founder of McDonald’s, left $1.8 billion to the Salvation Army at her death in 2003.  The Salvation was instructed to go on a spending and building spree.  Kroc required the Salvation Army to build...

HOW DELICIOUS: A LAWSUIT AGAINST THE RONALD REAGAN PRESIDENTIAL FOUNDATION OVER DONOR INTENT

DATELINE: May 4, 2009, Chicago

We try not to side with conservatives or liberals in this blog.  We just call them as we see them.  We, however, have been annoyed by the conservative movement’s attempt to turn donor intent into a left-right issue.   We suspect that the conservatives have adopted that position because they believe most colleges and universities have a decidedly liberal bent.  The result has been repeated assertions that colleges and universities knowingly violate donor intent, with the implication being that they do so to pursue their liberal agendas.  At least that is the subtext of much of what we have read.

In our view, the issue has always been about the straightjacket that donors put nonprofits in when they try to tell them how to run the institution and then die.  As time passes, the institution is faced with legal restrictions that by any objective measure no longer make sense because circumstances have changed in ways that donors never foresaw.  We don’t have a solution to the problem, but we recognize it as an inevitable problem that cuts across the political and philosophical spectrum.  That is why we find the lawsuit filed by Richard Sills in the New York State lower court on November 25, 2008 both...

SO YOU WANT TO WIN A PULITZER: NEW YORK POST BOTCHES AIG STORY

DATELINE: June 3, 2009, Chicago

On June 1, 2009, the New York Post reported that AIG was trying to recover a $490 million charitable endowment from the Starr International Foundation.  Paul Tharp, AIG Charity Grab: Bids to Claw Back Grants to Pay Bonuses.  There couldn’t be a more explosive story:  The most hated corporation in America seizing assets from charities to pay its executives larger bonuses.  We were so excited.  In fact, based on the article, we gave some consideration to filing a report under the IRS whistleblower program, hoping to cash in when the IRS revoked the Starr International Foundation’s tax-exempt status.  But we stopped and read the story closer before completing and filing IRS Form 211.  To be blunt, the story makes...

THERE IS NO FREE LUNCH: ART INSTITUTE PROPOSAL FOR FREE ADMISSION IS A MISTAKE

DATELINE: May 27, 2009, Chicago

Sandra Guy of the Chicago Sun-Times is reporting today that the Art Institute of Chicago is considering the elimination of its admission fee.  In Free, No Fee at the Art Institute?

We had the good fortune to visit the Art Institute’s new modern wing on opening day.  Admission was free, as it was for the next six days.  Admission to the second largest art museum in the country then was to return to $18 ($16 for city residents).  That number had been reduced from $20 following vocal objections to a raise in admission fees that was tied to the opening of the new wing.  

Now Art Institute Director James Cuno is proposing that admission be eliminated, restoring the pre-2006 status quo.  The Sun-Times reports that the board has been playing with the idea for the last six to eight months.  The plan would be for the Art Institute to raise $250 million in permanent endowment.  The income from the fund would then be used to fund free admission.

We are sure that many populists will applaud the proposal, but adoption of this proposal would be...