I really look forward to using these cases in my classes! It’s a wonderfully broad collection. It covers a wise gamut of settings in which nonprofit organizations operate, as well as a wide range of situations, many of which are not dealt with in the extant case literature.
Peter Dobkin Hall, Ph.D.
Hauser Center
Harvard University
I want to commend you on putting this book together. It has been needed in the field for a very long time and I am sure it will be most useful to most people teaching nonprofit management.
Paul Govekar, Ph.D.
Northern Ohio University
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THE NONPROFIT MANAGEMENT CASEBOOK
Scenes from the Frontlines
Gary M. Grobman
Published by White Hat Communications
at Smashwords.com
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The Nonprofit Management Casebook: Scenes from the Frontlines
Published by:
White Hat Communications
P.O. Box 5390
Harrisburg, PA 17110-0390
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This edition published by White Hat Communications at Smashwords.com.
All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying , recording, or by any information and retrieval system without written permission from the publisher, except for the inclusion of brief quotations in a review.
This e-book is licensed for your personal enjoyment only. This e-book may not be re-sold or given away to other people. If you would like to share this book with another person, please purchase an additional copy for each person with whom you share it. If you are reading this book and did not purchase it, or it was not purchased for your use only, please return to Smashwords.com and purchase your own copy. Thank you for respecting the hard work of the author.
Copyright 2010 Gary M. Grobman
The author may be contacted by e-mail at: gary.grobman@paonline.com
Note: The cases in this volume are purely works of fiction, and any resemblance between the characters and persons living or dead is purely coincidental.
ISBN: 978-1-929109-25-8
Paperback ISBN: 978-1-929109-23-4
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Table of Contents
Introduction
Acknowledgments
Case 1: Jane’s Dilemma—Hiring the Development Director
Case 2: I Choose to Live Foundation—One Man’s Vision to Form a New Charity
Case 3: Cutting the Budget of the Harristown Family Service
Case 4: HHA’s Dilemma: Be a Good Citizen or Fight Extortion
Case 5: Museum and Historical Association State Budget Cuts
Case 6: Evaluating Dr. Luddite, Harristown Asperger’s Syndrome Foundation Executive Director
Case 7: Navigating a Dual Relationship at the Public Interest Policy Center
Case 8: Gambling on an Outside Fundraising Consultant for the “For the Kids” Shelter
Case 9: Reporting Financial Misconduct at Uncommon Agenda
Case 10: The Disruptive Board Member of the Harristown Vet Center
Case 11: Public Relations Dilemma at the Harristown Hospital and Health System
Case 12: Approving a Partnership Agreement—Board Paralysis at the State Association
Case 13: The State Volunteer Firefighters Association’s Dilemma
Case 14: The One (Wo)Man Band Running the Kenmore Midget Baseball League
Case 15: The Professor’s Farewell
Case 16: Doctoring the Résumé—Giving the Third Degree to the Director of Research at SCRC
Introduction
The Nonprofit Management Casebook: Scenes from the Frontlines is the result of a passion I have had for several years to create educational materials that both teach and entertain. My first exposure to this concept was back in the mid-1990s when, as a Ph.D. student, I discovered novels written by Dr. Eliyahu M. Goldratt, a business consultant who created the Theory of Constraints and used fiction to teach the concepts of his management theories about removing bottlenecks in manufacturing processes. What a wonderful medium to use to explain otherwise dry concepts of management!
When I was studying for my master’s degree, I took courses that relied exclusively on cases to generate class discussion. I continue to remain impressed by the way cases generate engagement and can illustrate dilemmas that encourage the sharing of diverse points of view by students. Although I continue to believe that a well-written textbook remains valuable, I also feel that well-written cases can play a positive role in educating students.
Finding the right cases, particularly those that may be useful in nonprofit management courses, however, can be elusive. As the author of the introductory nonprofit management textbook, Introduction to the Nonprofit Sector: A Practical Approach for the 21st Century, I constantly seek feedback to improve that book, which will soon be in its third edition. Some faculty who use this book suggested that I include a few cases that illustrate some of the lessons on ethics, financial management, human resources, fundraising, and the use of technology.
My intent was to try my hand at writing a few cases and add them to the next edition of the textbook. Because I had so much fun writing, I was unable to stop once I completed the first four, my original objective. Before I knew it, I had enough for a stand-alone casebook.
My inspiration for these stories came from a variety of sources. For more than 13 years, I was the CEO of a small nonprofit state association, and I encountered many management dilemmas during that time. I have also spent an additional 13 years writing about nonprofit organizations and providing consulting services to national, state, and local nonprofits. Every situation in these cases came out of my imagination. The cases have been designed to illustrate important lessons that I try to share in my general nonprofit textbooks, but in a more entertaining format. I made an effort to provide a variety of nonprofit settings, such as associations, long-term care facilities, universities, human service agencies, advocacy organizations, and think tanks, among others.
All of these cases are fictional, and any similarity between the organizations and characters in these cases and actual organizations and individuals is purely coincidental. But I would suggest that the situations that occur in these cases are not farfetched. They could be actual situations one might encounter when managing or governing a nonprofit organization.
I’ve begun this collection of cases with Jane’s Dilemma: Hiring the Development Director. In this case, the executive director of a foundation faces several ethical dilemmas simultaneously. She and her organization have paid a heavy price for her abrogation of her responsibilities to supervise the investments made on behalf of the organization by a trusted employee. And she is being held accountable for that failure. When given an opportunity to recover from this traumatic experience, she must choose between doing what is right (and potentially pay a heavy personal cost for doing so) or taking advantage of an ethically distasteful solution to all of her problems. Even if she does choose the “right” response, there are issues involved with respect to communications among herself, her board chair, and her board about the situation in which she finds herself.
I Choose to Live Foundation—One Man’s Vision to Form a New Charity is the story of a new startup. According to the IRS, even at a time when economic output has been shrinking, the number of nonprofit organizations applying for charitable tax exempt status was 79,236 in 2008, and many more than that number were incorporated that year in the 50 states. The theme of this story is not atypical of many I come across in my consulting work with those who wish to give birth to a new organization. An individual has a vision of addressing a particular social problem of interest by creating an instrument that will harness the power of others. Yet that individual often will feel constrained by the appropriate separation between managing and governing, or other limitations that apply to organizations that receive substantial public benefits in exchange for following certain laws and regulations. The recognition that it is appropriate to form a public board consisting of members who are not either relatives or personal friends of the entrepreneur starting the organization appears to me to be more of an exception than the rule.
Cutting the Budget of the Harristown Family Service addresses an important issue for every nonprofit organization—funding enough resources during times of retrenchment. During economically challenging times, demand for the services provided by nonprofit organizations often expands at the same time that revenue from all sources shrinks. Most nonprofit organizations rarely have surplus resources even in the best of economic times. When a recession hits, nonprofit organizations are disproportionately affected. In this case, the executive director utilizes a particular change management tool, Large Group Intervention, to engage her staff in discussing possible strategies to close a serious budget shortfall. For more information about this tool and others, see Chapter 15 of my textbook, Introduction to the Nonprofit Sector.
HHA’s Dilemma: Be a Good Citizen or Fight Extortion presents a public policy issue that is increasingly of importance to those nonprofits that own property in distressed communities. More and more, local governments see nonprofit organizations, particularly hospitals, nursing homes, and universities, as sources of potential revenue. The pressures on nonprofit organizations to make payments to local governments for services during times of economic distress increases when tax increases are not politically feasible. And, as I make a case in Chapter 27 of my book for practitioners, The Nonprofit Handbook (5th Edition), a case can be made that those nonprofits that can make some contribution to local governments for the services they receive should be open to doing so—at least on a voluntary basis. But there is nothing “voluntary” about having a choice of negotiating a payment-in-lieu-of-taxes agreement with a local government or having to invest tens of thousands of dollars and hundreds of staff hours in a court fight to protect an organization’s tax exemption. Some organizations might take a pragmatic view of this choice and pursue the path that would result in the least revenue loss over the long term. Others might take a different approach, choosing to resist, particularly when they perceive that the law is on their side. For more than a decade, I was intimately involved in addressing this issue in Pennsylvania as an advocate for scores of nonprofit hospitals, nursing homes, schools, umbrella fundraising organizations, family services, and others facing the very choice that the CEO of the long-term care facility in this case faces. It is with some pride that I can point to a law passed by the Pennsylvania General Assembly that was quite favorable to the position of charities on this issue, and the success of several judicial interventions, in the form of amicus briefs filed with the Pennsylvania Supreme Court, that assisted in favorable rulings. For more specific information on the general issue of nonprofit tax exemptions, see chapter 27 of The Nonprofit Handbook.
When I first started writing Museum and Historical Association State Budget Cuts, in the winter of 2009, state governments were just beginning to recognize that massive revenue shortfalls were on the horizon. Totally by coincidence, alternative budgets were introduced in Pennsylvania a few months later that actually did zero out programs supporting museums in the state, and it was a possibility that a final budget agreement would codify such a policy. Closing a $3 billion budget shortfall within a $29 billion budget presents a major challenge in a state such as Pennsylvania. And considering that hardly anyone in the state legislature is willing to consider a general tax increase and federal entitlement programs are legally required to provide increased funding, there is not much room for funding programs that don’t directly affect public health and safety. Many individuals strongly feel, as I do, that programs affecting the arts and humanities are essential to the quality of life we all treasure, and merit protection. In this particular case, the executive director of this association must find a way to protect the interests of her members and advocate for funding at a time when finding dollars for this purpose will be difficult.
Blackberries, blogs, Facebook, Twitter, iPhones—one can come up with a list of dozens of new technologies that have changed the face of organizational communication. Our children have grown up with these and take them for granted. But some of us continue to resist, despite many advantages they offer. The tools one uses to run a modern nonprofit have changed, and those who haven’t mastered them are in danger of seriously constraining organizational effectiveness. Evaluating Dr. Luddite, Harristown Asperger’s Syndrome Foundation Executive Director involves the case of an otherwise exemplary nonprofit CEO who has failed to adjust to the demands of communication techniques in the 21st century. This case also illustrates another aspect of nonprofit organization boards—not everyone on the board shares the same view with respect to the organization’s mission. This contrasts to a board of a for-profit organization, which, in theory, is to make as much money as possible for the organization’s stockholders. It is not unusual for nonprofit organization boards to have members, or groups of members, with their own agendas. It is also not unusual for a board meeting to get “out of hand” and require substantial interpersonal skills by the board chair, and a deft use of Robert’s Rules of Order when necessary, to keep things under control. A few years ago, a new issue surfaced of interest to the nonprofit sector—how prepared organizations in the sector are with respect to leadership succession. Beyond the immediate issue of dealing with a long-term CEO who refuses to harness the new technologies to the foundation’s advantage, the board must begin to think of how it would deal with finding that CEO’s replacement, should he be removed or in the event he retires.
Case 7, Navigating a Dual Relationship at the Public Interest Policy Center, involves a delicate situation that highlights issues relating to an inappropriate power relationship between a funder and an organization. In this case, the relationship is clearly inappropriate, unethical, and bordering on the illegal. Perhaps belatedly, the CEO has reported this to her board, and the board faces sensitive political issues in a quest to resolve the problem. It is not unusual, however, for a funder to place substantial burdens on organizations to which it makes grants. In any case, people are, well, human. It is not unusual for harmful personal relationships to develop between staff members of an organization, board members and staff members, board members and other board members, and staff and other organization stakeholders. Complicated ethics issues often ensue in which decisions are made when there is not an arms-length relationship between the parties, and decisions may not be made that are totally in the interest of the organization.
To the central character of Gambling on an Outside Fundraising Consultant for the “For the Kids” Shelter, getting the required approval of her board for a new program is perceived to be a slam dunk. This case highlights issues relating to the sharing of decision-making power between board and staff. In this case, the organization’s CEO has not performed due diligence with respect to checking out a prospective partner, and has failed to consider many important issues that she should have before presenting a proposal to the board. CEOs of nonprofit organizations are constantly bombarded with proposals from for-profit organizations to engage in collaborations. Many of these proposals are certainly win-win situations and make sense to pursue. In this case, there are certainly clear red flags that should give the CEO pause about participating in this particular program.
There are many issues that arise when individuals observe misconduct within their organizations. Should they report it? If so, to whom? What protection might they have from retaliation for reporting misconduct? Reporting Financial Misconduct at Uncommon Agenda considers these issues, and adds another complication, as the observer of the misconduct is a personal friend of the perpetrator. The protagonist of this story outlines eight possible actions he might take to respond to his serendipitously obtained knowledge about serious misconduct by a personal friend and colleague at the nonprofit advocacy organization where they both work, each of which has costs and benefits. There is a myth that federal whistleblower protection laws protect whistleblowers in nonprofit organizations from retaliation. As this case makes clear, federal law provides only limited protection for whistleblowers in such organizations. Nonprofit organizations should have written policies that encourage their employees to report misconduct internally without fearing retaliation for doing so.
Case 10, The Disruptive Board Member of the Harristown Vet Center is the story of a board member with some obvious mental health issues. He is creating unwelcome distractions at board meetings and at the headquarters of the organization. Someone has to do something, but there are complications and adverse consequences to simply removing him from the board. More often, board members need to be removed simply because they are unproductive. It is an important task of the chair of the board to keep all board members informed, engaged, and participating. As this case provides evidence, it requires sensitivity and substantial leadership skills for a board chair to be successful.
When does loyalty to one’s nonprofit organization take precedence over one’s responsibility to be loyal to his or her profession? Public Relations Dilemma at the Harristown Hospital and Health System examines a situation in which an honest and ethical public relations professional faces a dilemma concerning how to “spin” a particular ethics situation that has somehow leaked to the media. This particular staff member has voiced his concern about the consequences of one particular decision, but has been unsuccessful in convincing his colleagues to take the “high road.” Now, he may be in the unenviable position of being called upon to “publicly” defend that decision, which understandably makes him very uncomfortable.
As both a nonprofit organization CEO and a for-profit provider of services of nonprofit organizations, I have been on both sides of the table with respect to forging agreements between nonprofits and for-profits. It has been clear to me that there is a distinct difference in the time it takes each of these parties to make decisions. In Approving a Partnership Agreement—Board Paralysis at the State Association, I illustrate some of the obstructions that have served as a barrier to one state association approving a partnering agreement with a for-profit vendor in a timely manner. Although the facts of this hypothetical case may appear to be quite extreme, I know of real cases that were even more egregious than this one. Delays in obtaining final board approval for an agreement are perhaps inevitable and emanate from many factors, including the diffusion of power within a board, board diversity, and a less than homogeneous perspective on the mission of the organization compared to for-profits. I think that nonprofit boards also provide less authority for staff to make decisions than do their for-profit counterparts.
In The State Volunteer Firefighters Association’s Dilemma, a respected, long-time association CEO is suspected of writing a tell-all book that is perceived as embarrassing to both his organization and his profession. During a hastily-called telephone conference call, board members discuss how to respond. Should he be summarily fired? Should the organization claim book royalties as its own because much of the information came from protected organizational sources? What has this professional done that is “wrong”? This case serves to point out that organizations should have clear written policies outlining what is expected of their staff members, including what outside income may be permitted or proscribed, and what organizational documents and other internal communications are considered proprietary.
There are certainly many benefits of one person in an organization doing the bulk of the work. And there are costs, as well. The One (Wo)Man Band Running the Kenmore Midget Baseball League illustrates that organizations may pay a high price for permitting one person to have too much power over organizational decision-making. In this particular case, that one person is generally selfless and honest and wants to do whatever is in the best interests of the kids in her program. Yet as this case makes clear, she does not have any understanding about certain ethical concepts that must be understood by those who manage and govern nonprofit organizations, such as conflicts of interest and dual relationships. All board members of a nonprofit must be active players in organizational governing, and this board, as a whole, has abrogated its responsibility to both govern the organization and assure that it is managed properly.
Nonprofit institutions of higher education are unlike any other nonprofit organizations, in many respects. I have served as both an employee and as a private contractor to such institutions as an adjunct professor for more than five years. During that time, I have been an observer of their organizational cultures. Each, while unique, shares some aspects that I find fascinating. In The Professor’s Farewell, a tenured professor is sharing his frustrations with being pushed out after four decades with a particular university. I use this case to illustrate some unusual facets about this particular nonprofit setting. While some of what appears in this case is intended to be tongue-in-cheek, reviewers of this case who have been full-time college professors for decades have told me that most of what appears here is quite plausible, from their experience. In any event, issues such as tax-exempt property, the extent to which the market sets pricing, and the “politics” of working for a large nonprofit organization are among those that are featured. I’ve generally had good experiences working for educational institutions, but I have occasionally seen management practices that simply leave my head shaking in disbelief.
How would you respond as a CEO if you discovered that one of your most trusted and productive employees exaggerated his credentials in order to obtain his job? In this particular case, Doctoring the Résumé—Giving the Third Degree to the Director of Research at SCRC, there are several viable options for the CEO to consider, none of which is particularly attractive. This case also considers the pros and cons of creating a culture that encourages personal friendships among staff within an organization.
Case 1
Jane’s Dilemma: Hiring the Development Director
“Thank you, and I appreciated our meeting,” Jane said, rising to shake Bernie Plotkoff’s hand. She would have preferred to avoid this customary gesture at the end of such a meeting, but she knew it would have been rude to do so. “I’ll be in touch soon, perhaps next week, about whether you were the successful candidate for this position,” she added stiffly, trying to conjure up a smile—which was a struggle, considering the circumstances.
Jane’s stomach knotted up, and she began to sweat profusely as she considered her options, none of which were attractive.
For fifteen years, Jane Doesky had devoted herself to making the A. K. Schwarzkin Charitable Foundation the best charity it could be. She was well-paid as the executive director of the organization, and the income was now much more necessary than when she was first hired, because her mother was in a nursing home, and she was making payments of $6,000 each month to the home. Mom showed increasing signs of developing Alzheimer’s, and Jane feared that this would necessitate having her moved to a unit that provided services to these patients, with a substantially higher monthly charge.
Jane had sacrificed her personal life, making herself available to the organization 24/7. She had the usual number of crises during her tenure, but had always come through with solutions that were creative. Her colleagues in the general nonprofit community held her in high esteem for her integrity and leadership.
Now, it appeared that not only was her job on the line, but the continued existence of the charity was at risk. It was a perfect storm that had put her in this unenviable situation—a flagging economy, the trust of a friend and colleague that was violated, and the resignation of the organization’s dependable, long-time Director of Development and de facto chief financial officer, Myron Cohn, for “personal reasons.” Almost everyone knew what those “personal reasons” were by now, as the newspapers had had a field day documenting the financial scandal that had rocked the Jewish charitable community in general and the Schwarzkin charity in particular.
Cohn had fallen hook, line, and sinker for the Madoff Ponzi scheme, investing most of the foundation’s assets, lured by a promise of returns that were substantially better than the market. Doesky had trusted Cohn’s judgment, providing only cursory oversight over his financial management, recognizing that he had an exemplary track record and almost 20 years more experience than she had. Once it became evident that $30 million in Foundation assets were gone with virtually no chance of any recovery, Myron had submitted his resignation, content to retire to a comfy condo in Florida. Leaving Jane and the Foundation holding the bag. An empty bag.
Jane thought back to her meeting a month before with her board chair, Goldie Sharafsky, who had been livid after hearing about how much the Foundation had lost. She had summoned Jane to her own office, located in a posh, downtown office building adjacent to Rittenhouse Square in Philadelphia. Once there, she had provided Jane with a deftly-delivered ultimatum.
“I’ll be frank,” Goldie had begun, closing the door for privacy, her tone of voice masking any cordiality that had usually been there whenever Jane was asked, infrequently, to meet in Goldie’s office. More often, meetings between the two were held over a casual lunch in one of the trendy cafés along Broad Street. Jane did not expect this meeting to be pleasant, but she felt blindsided by what followed.
“I’ve exchanged some telephone calls with the Foundation leadership, and we have come to a consensus on how to handle this unpleasant situation with the financial scandal,” Goldie began, her words measured. Jane did not take this as a good sign for what was to come.
“Your job is on the line here. Since the Foundation has taken such an unexpected hit from both the scandal and poor fundraising brought on by the tanking of the economy, everyone’s job is on the line, including mine as chair. One of our board members, I won’t tell you which mumser that was but you could probably guess, even suggested liquidating the Foundation. Others wanted to simply fire you and rebuild. Even your supporters are kvetching.”
Jane felt the blood rush to her head. But she said nothing. Maintain some control, she thought.
“I fought to keep you. I can’t find any justification for simply giving up,” Goldie continued. “So many people depend on our programs. And you have considerable talent that I think can work to our advantage as we try to recover from this debacle. I know Myron let you down, and God knows, I can understand why you let him have free rein over investment policy. But when push comes to shove, you are responsible and accountable for the results of all of the Foundation’s employees.”
Jane took a deep breath, waiting for the shoe to drop. It did.
“So, here’s what we decided. You have two years to rebuild the Foundation’s assets to a level that we feel comfortable funding our commitments, and you will be evaluated in a year and must demonstrate that you are making significant progress toward achieving that goal. If you can agree to do that, you can stay; otherwise, we will provide you with two months of severance pay, shake hands, thank you for your service over the years, and launch a search for your successor.”
Jane, speechless, shaken, simply nodded her head and left after exchanging the bare minimum of parting pleasantries.
Now back in her office, contemplating what was told to her in confidence by the third candidate she had interviewed that day for the vacant Director of Development position, her anxiety heightened as she considered what he had offered to her.
Bernie Plotkoff was a name well known to her. She was intrigued that he had applied for the vacant position although she granted him an interview more out of curiosity than any realistic expectation that she would actually hire him. He was the current Director of Development for the S.D. Leibman Foundation, the Swartzkin Foundation’s principal competitor for charitable donations directed to serving Jewish adolescent runaways and missing children. Both foundations had been established at about the same time, inspired by the disappearance of Chandra Levy in Washington, D.C. during the summer of 2001. At one time, the boards of both foundations had considered merging, but relations between the two organizations had soured during negotiations and both had gone their separate ways. The board chairs of both organizations at that time had once been personal friends, bonded by the shared trauma of separate, but similar, family tragedies involving young family members.
Yet following the breakup of the proposed merger, they were no longer on speaking terms. While this breakup appeared to be irreconcilable at the time, most board members and staff leadership, including Jane, judged that an eventual merger would be inevitable, particularly when economic times necessitated an end to competition for funds and programs that served essentially the same clients.
Jane had to admit that the Leibman Foundation was the more successful of the two, attributed for the most part to the aggressive fundraising tactics of the development director whom she had just finished interviewing as part of her process to find a successor to Cohn. “Aggressive” was perhaps too polite a word to describe Bernie’s fundraising reputation. The Leibman Foundation raised millions of dollars, including from some folks who contributed to both foundations.
The Leibman Foundation’s fundraising tactics were anything but low-key. It was among the first to enclose a check in its direct mailings that recipients could cash regardless of whether they made a contribution, instilling an additional level of guilt to make one. It was one of the few Jewish charities that enclosed a small prayer book or religious article such as a yamulke (a skull cap), which would make recipients who were religiously observant to be violative of Jewish law if they simply tossed the mail piece into the trash rather than having it undergo a ritual burial.
It was rumored that Leibman’s annual development budget included a line-item for the hiring of a private detective, and that Plotkoff utilized the services of shady Internet database businesses that sold information to anyone for a fee—information that most of us would assume would not be available publicly to anyone. This was part of what is called “prospect research,” what otherwise was a legitimate technique of fundraisers to learn about the capacity of donors and potential donors. As “refined” by Plotkoff, it was more akin to “spying.”
In short, the Leibman Foundation sanctioned whatever worked, kept constant pressure on giving, and held over-the-top lavish fundraisers that attracted giving that only minimally was provided because of the organization’s mission. And the grand conductor of the fundraising strategy was Bernie Plotkoff, looked upon with undisguised disdain by many of his colleagues, most of whom were secretly envious of the results he recorded for his employer.
Prior to the interview, Jane had no evidence to think that he did anything overtly illegal, although it would not have come as a surprise to her if he routinely crossed the line of ethical conduct without a second thought. If he did so, she would have attributed it to being a zealot for the cause, and she wouldn’t have expected that he violated professional ethics for his own personal gain. Now that she had finished her interview with him and heard his pitch, she had second thoughts about her judgment about both his ethics and his allegiance to following the letter of the law in pursuing his craft.
What Bernie had offered her was communicated quite directly, and he didn’t make any effort to veil his proposal in euphemistic references to make it appear less distasteful to her. She was shocked by his brazen chutzpah, and she felt even a bit insulted that he would trust her to keep his offer in confidence.
He offered to leave the Leibman Foundation for Cohn’s position, giving two week’s notice. He would want his current salary that he received from Leibman, plus a 10% raise. He would want an unvouchered expense account of $20,000 annually and a company car. On top of that, he would expect an annual incentive bonus of 2% of the amount he raised. He would guarantee that he could increase the Foundation’s fundraising income by 100% in the first year, and make up most of the losses from the Madoff financial scandal by focusing particularly on donors who had the capacity to participate in planned giving.
What gave Jane even more pause was what he told her would be his strategy for achieving these lofty goals, and when he disclosed that, Jane didn’t doubt his ability to come through and save her own job as well as keep the foundation viable for many years to come.
Bernie intimated that he had on disk all of the fundraising records of the Leibman Foundation, including all of the prospect research files and history of giving for 10,000 donors, about four times the number of donors that were in the Schwarzkin fundraising database. Hire him, and he would integrate that disk into the fundraising operations of the Schwarzkin Foundation. Even without this database, his contacts alone would result in millions of dollars in additional donations to the Foundation. And with this database and the files that came with it, the Schwarzkin Foundation’s future would be cemented, and its major competitor for donations, the Leibman Foundation, would be crippled. Within a year or two, the Leibman Foundation leadership would be begging for a merger, so the integration of the database files and the end to destructive competition between the two organizations would come to an end. So, while his plan might be somewhat on the shady side, all of the money raised would be going to a cause both organizations support, so in the long run, what would be the harm?
As Jane contemplated how difficult it might be to find another job in this economic environment, she considered the pros and cons of Bernie’s proposal.
Discussion Questions:
1. What are Jane’s options, and what are the pros and cons of each option?
2. Should Jane report the offer she received from Bernie to anyone within or outside of her organization?
3. How much should the fact that Jane needs to maintain her income to support her mother’s nursing home costs factor into her decision? Discuss any conflict between Jane’s ethical responsibility to act in the best interests of the organization and the need to serve her own interests, and how such a conflict should be resolved.
4. How much does the fact that these two organizations are likely to merge sometime in the near future factor into her decision?
5. Discuss the ethics of each of the fundraising strategies used by Bernie Plotkoff.
6. Discuss what is appropriate with respect to prospect research and what are some of the prospect research techniques that might cross the line of acceptability, even if they are effective.
7. Discuss the pros and cons of paying fundraisers based on the amount they raise. Why do almost all organizations that represent fundraisers have ethics codes that consider compensation based on the amount a fundraiser raises to be unethical?
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Case 2
I Choose to Live Foundation—One Man’s Vision to Form a New Charity
John Buck was a man with a mission and a vision, and he wasn’t going to let anyone stand in his way until he got what he wanted. Whatever it was. Whether it was finding a wealthy, socially connected spouse; getting his MBA from Columbia; helping his wife raise twin boys; furnishing a small yet tasteful summer home in the Hamptons; or winning his age group in the New York Marathon (actually, the best he could achieve was third, but he resolved to train hard enough to move up in the national Master’s road race rankings each year).
Regardless of the goal of the moment, he focused on it with the concentration of a Zen Master and did whatever it took to achieve his objective—often taking no prisoners. At 60, he felt he was in the prime of his life, and he often referred to his wife of 35 years, Stacy, an attorney who specialized in family law, as his “trophy wife,” although she was his first and only love.
He conceded to himself that he often ruffled some feathers, but he had minimal patience for those who found objections, usually specious, for his aggressive problem-solving. Whatever he got involved in, he did so in a manner that did not leave very much out of his control, either at work or managing his personal life.
When he was diagnosed with prostate cancer two years earlier, he initially assumed that he was beginning a downward spiral that would end in a slow, painful death. He was taken totally by surprise by the diagnosis. He had had a routine PSA blood test at the age of 55 to diagnose the presence of an antigen that often shows up in those with this cancer. It had been negative, but even with a positive test, many doctors recommended against aggressive responses because prostate cancer tumors are often so slow developing that most men with this cancer will die from other causes. Regardless, he had learned that prostate cancer was the most common form of cancer among men in the U.S. and the second leading cause of cancer death among men, with only lung cancer having a higher rate.
It was not a positive blood test but rather some difficulty urinating that had triggered the diagnosis, which was confirmed after a biopsy.
Upon hearing the diagnosis, John didn’t spend a minute wallowing in self-pity. Rather, beating the disease became another challenge, even when his long-time primary physician had suggested that he might consider simply letting the disease take its course. In consultation with an oncologist he knew from his running club, John had some radiation treatments, took hormones, and eventually underwent surgery to remove his prostate. After a six-month absence, he resumed his running workouts.
Inspiring him to not only survive but to thrive was Lance Armstrong, who at the age of 25 overcame testicular cancer that had spread to his lungs and brain and a prognosis of having only a 50% chance of survival to become one of the greatest athletes in modern history. Almost every day, before his workouts, John would visit the Lance Armstrong Foundation Web site at http://www.livestrong.org and create a virtual bond with this icon of the bicycling world who also competed alongside him, somewhere in the crowd, in the New York Marathon.
John networked with other upper middle-class male prostate cancer survivors in Northern New Jersey where he lived and in the Big Apple, where he still worked a modified schedule. Many men he spoke with had survived much longer without the return of cancer, some for as many as ten years. Unlike John, some had gone through the five stages of grief after learning of their diagnosis. Many had suffered bouts of depression. Some had retreated from their friends and families, losing their zest for life. For those with advanced forms of the disease and who were in chronic pain, morphine was one drug of choice. Some turned to an overdependence on other drugs, both prescribed and those that were not, to relieve their physical and psychic pain.
Occasionally, someone in his network died. John’s mother had died of breast cancer when she was 60. John remembered that Mom had spiraled into depression, shutting herself off from family and friends, isolating herself in her Manhattan apartment with only a mangy cat for companionship, never venturing out to enjoy what life could offer one even in the clutches of the late stage breast cancer that claimed her life prematurely. The cancer had metastasized to her bones, lungs, and liver. She became emaciated, and her spirit had been ravaged along with her body. John had watched his mother die slowly, receiving daily reports from the nurse whom he had hired to care for her while John managed his hedge funds, earning more in a week than his Mom earned in nearly a lifetime—at least until the Madoff scandal and the economic meltdown of 2008-2009 had encouraged his clients to seek more secure, stable investment options, if they had any assets left to invest.
These men with prostate cancer with whom he networked became his friends and extended family. They would meet in the City to attend Knicks games at Madison Square Garden and have dinner afterwards at trendy, expensive restaurants on the West Side. And they would talk. What they had in common was a resolve not to let cancer claim their spirit and zest for life.
John recognized the therapeutic value of being with others who shared the unique experience of being diagnosed with this killer disease. And he also saw that the stress of this disease accrued not just on the men struck by cancer but on their families.
One of his friends suggested organizing a trip to see “In the Heights” for nearly a dozen men with advanced stages of prostate cancer in and around John’s bedroom community of Harristown, New Jersey, a short 25-minute train ride to Grand Central Station. This might possibly be the last opportunity for independence for some of them before the disease claimed their lives. Most of these men were like John—professional men who would not give a second thought to buying a new suit for $800 if it was both fashionable and functional. But John knew that other men on the invitation list would be making a major financial sacrifice to accept the invitation, and some men were unable to afford the trip at all. Many had lost their livelihoods as a result of their cancer diagnosis, and others were victimized by the economic recession the entire country was sinking into beginning in 2008.
John didn’t hesitate in writing a generous check to subsidize the trip for several men whom he knew would not be able to afford to accept this invitation. But this spontaneous philanthropy planted a seed of an idea. Why not start an organization that would be the conduit of charitable contributions for this purpose? At least this way, the funds he was providing out of his own pocket would be tax deductible. And there were hundreds of men who might benefit from programs that would focus on letting those with prostate cancer have some fun and enjoy the precious little time they had left, when most money directed to the issue of prostate cancer seemed to be focused on finding a cure. And unlike the days when his own mother was diagnosed, new drugs and treatments afforded thousands of men and women diagnosed with cancer much better odds for survival, and for longer periods.
John latched on to his idea as if it were a new toy. His wife was smart enough not to discourage him, not that there was anything she could have said that would have convinced him to drop the idea. First, he would begin raising money so he could quit his job as a hedge fund manager (the firm was going under anyway, and employees were talking among themselves about how to negotiate severance packages) and be the full-time director of this new program. Second, he would need to form a board of directors for him to lead. It would have to be a small board, and not have anyone who would interfere with his vision. His wife would be a good choice for Vice-President, he thought, as she was an attorney, and that would come in handy for handling all of the legal affairs of this new organization. Their twin boys, now grown, and one daughter-in-law would also provide some valuable skills and be excellent board members. (He and his wife were not on speaking terms with the other daughter-in-law, after his wife got into an irreconcilable disagreement with her over the color of bridesmaid dresses.)
And perhaps a couple of the men from the network would make good board members, provided they didn’t try to run things and would be satisfied with being major donors and finding others to donate. But if they did expect to have more than a cosmetic role, he would be assured of control of at least a majority of votes through his relatives, if anything ever came down to a vote or his influence to direct the activities and substantive programs of the organization was challenged. If that occurred, he would be assured of having enough power to throw anyone off the board who didn’t cooperate with his vision.
It has been pointed out by many that board members should be recruited who offer at a minimum, one of the three “W’s”: wealth, wisdom, or work. In John’s mind, the first was a priority, and any of the second or third attributes any of these individuals could bring with them would be gravy.
The ideas for making this dream become a reality were flowing, and he needed to get them down while they were still fresh in his mind.
He took out a pen, found a legal tablet, and started writing down what he would need to do to form his new organization, which he decided to name the “I Choose to Live Foundation.”
• Incorporate: New Jersey or NY?
• Recruit board members
• Write bylaws. Gotta keep everything under my control.
• Design a Web site. Reserve a domain name. Should have an area for men to leave their stories about their experiences with diagnosis and treatment and help others with questions. Needs an “Ask the Doctor” page.
• Prepare a fundraising plan. Need to register with anyone to do this? Can raise money at a dinner with a celebrity speaker. Can auction off sports memorabilia online?
• Open a bank account
• Apply for 501(c)(3) tax-exempt status. Does this cost any money??? Can Stacey do this?
• Make sure no one else is using this name. How do I do this?
• Find a celebrity (New York Rangers player?) to be an endorser/sponsor. Maybe a goalie who can help make a “stop” or a goal scorer can help score a goal of helping those with prostate cancer.
Discussion Questions:
1. If John came to you for advice on whether to start this organization, what would you tell him?
2. What would you advise John with respect to the governance model of his organization?
3. What problems might you see if he decides to apply on behalf of this organization for 501(c)(3) tax-exempt status with his current vision of organizational governance?
4. Would you expect this organization to still be around after 20 years?
5. If he did decide not to invest his time in starting a new organization focusing on providing entertainment options for men with prostate cancer, what other options might he have for achieving his goal of providing these services?
6. Should John’s organization consider providing its services to those with other forms of cancer?
7. What other tasks should be on John’s list of things to do when forming his organization?
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Case 3
Cutting the Budget of the Harristown Family Service
The image that kept returning to Sarah Jordan’s brain was the scene from The Wizard of Oz where water is poured over the wicked witch, who is screaming, “I’m melting, I’m melting!” In this case, the metaphor did not describe Sarah herself but rather the income stream of the Harristown Family Service. At the same time, demand for the organization’s services was skyrocketing, fueled by the credit crunch, burgeoning unemployment, and increases in reported child abuse. For the first time in the HFS’s history, clients were being turned away for some services, or placed on expanding waiting lists for others.
HFS was 60 years old now, a pillar of the community’s social service safety net. Sarah had been at the helm of HFS for 20 years, after serving ten years with the organization as head of the social work department. Although an administrator, she still managed a small social work caseload so she could keep current with the “street level” aspects of her operation. Another reason for this was that she was a “not afraid to roll up your sleeves and get your hands dirty” social worker at heart, continuing to find immense personal satisfaction in working directly with needy clients rather than moving paper around and attending meetings, the two tasks that dominated her daily agenda.