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Thursday, Apr 11, 2013 9:01 PM UTC

Is the small nonprofit in big trouble?

In "With Charity for All," former NPR president Ken Stern sheds light on the dark side of NPOs

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Topics: LA Review of Books, Books, nonprofits, charities, NPR, essays, , ,

Is the small nonprofit in big trouble? (Credit: Shutterstock)
This article originally appeared on the L.A. Review of Books.

Los Angeles Review of BooksIN A RECENT Los Angeles Times article about Los Angeles’ Museum of Contemporary Art’s (MOCA) efforts to raise $100 million, a fundraising consultant said, “People like to give to excellence. It’s excellence, not need that generates big gifts.”

If that were really the case, author Ken Stern argues, then D.A.R.E., the darling drug abuse education program started by former Los Angeles Police chief Daryl Gates and now in more than 75 percent of the school districts of this country, wouldn’t raise a dime, most after-school programs would be bankrupt, and the next disaster the Red Cross should be attending to would be in its own executive offices.

The ability to survive, even thrive, with programs that have been proven not to work is just one of the many oddities With Charity for All documents in the topsy-turvy, misunderstood, and mostly ignored world of nonprofits.

Maybe it’s the name. “Nonprofit” is the only sector of society that defines itself by what it isn’t. Insiders keep trying on new names — voluntary sector, service sector, independent sector — but none of them sticks. There’s plenty of irony in the term, as well, for nobody chases the dollar any harder than nonprofits. This leads, Stern warns us, to nonprofits tolerating, even pandering to the pervasive but wrong-headed donor notion that the lower the overhead, the better the organization.

Ken Stern knows an awful lot about nonprofits, having spent the better part of a decade as chief operating officer, then president of NPR, one of the best-known, and controversial, nonprofits in America. To his credit, Stern addresses the perceived snobbery of NPR with its pledge breaks and tote bags. He is also quick to acknowledge that NPR’s $250 million gift from Joan Kroc had less to do with strategic fundraising, and more to do with a pleasant brunch between Kroc and the charismatic former NPR head Kevin Klose.

Stern entirely ignores, however, the hemorrhaging elephant in the public broadcasting living room, PBS. With small- and mid-market public television stations dropping like flies and PBS itself deeply in debt, the future of nonprofit television as it is presently configured is unclear. An obvious solution is a PBS cable network, which would instantly increase viewership, save tens of millions of dollars, and end those dreadful pledge breaks forever. It would also sound the death knell for most local public television stations, who consider themselves, not viewers, the ultimate clients. It was this same parochial view among public radio stations that got Stern fired when he went looking at alternative radio delivery systems in 2008, so maybe the PBS exclusion is understandable. Too bad, because it is a cautionary tale about the end-line consumer.

That aside, Stern covers an enormous amount of nonprofit ground in his feisty, humorous style of reporting in a book that is as entertaining as it is informative. His blood-boiling chapter on nonprofit fraud will make you wonder if the IRS ever checks on these miscreants, especially those with the word “veteran” in the title. Well actually, Stern says, it doesn’t. It is the very rare and very unlucky nonprofit thief who gets caught. Less than one percent of all nonprofit tax returns are even reviewed. And nonprofit theft is pervasive, we learn:

The average charitable theft is estimated to be $100,000, meaning that money is walking out in large chunks. Given that the average bank robber in the United States gets away with only about $4,000 and runs a far higher risk of apprehension, one might expect that in a sensible theft marketplace, more people would be attracted to the soft targets of charities.

If Willie Sutton were alive today, he might well be the head of the Cuddly Bear Veterans’ Children’s Cancer Fund (I just made that one up, so put away your checkbook).

Stern introduces us to some exemplary nonprofits like Pat Lawler’s program for at-risk kids, Youth Village. With the help of a strategic planning grant from the Edna McConnell Clark Foundation and a rigorous client-monitoring longitudinal study, Youth Village works, and can prove it. So can the Baltimore-based Nurse–Family Partnership also profiled by Stern, but sadly most nonprofits scoff at measurable outcomes and rely on time-tested anecdotal stories of happy clients to attract donors.

To clean up the messy nonprofit landscape, Stern offers some suggestions that are sure to cause concern in some nonprofit quarters, including increased government oversight, increasing the application fee to cover the cost of better IRS review and, most radical of all, putting a life span on the charitable status afforded nonprofits, then requiring a renewal after a certain period of time (maybe 10 years). It’s an admirable goal, but in a sector where the stated goal of private foundations is self-preservation and “once a charity; always a charity,” is the mantra, it ain’t gonna happen. Stern knows this, of course, but it doesn’t stop him from asking this and many other valid questions about a sector that is loath to engage in self-evaluation.

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