'we've got a huge problem w/ the non-profits in Providence. the head of Family Services R I ran the program funded by Enron's John Arnold to go back on pension agreements with state workers. that's only the beginning. they have a stranglehold on the arts community here which really cramps public criticism of people who well deserve a lot of criticism and free expression. The problems go way beyond universities and healthcare. they've got a lock on the politics here'.
Johns Hopkins released a study that showed non-profit growth in the US soaring with 56% of non-profit growth in health care----that is the privatization of all of our public health----and education being the highest---that is the privatization of our K-12 and public universities. Hopkins sees this as a success and an expansion of what it has done in Baltimore over several decades. What do we have in Baltimore? The most fraudulent, corrupt, wealth inequity and poverty creating crime and violence with heightened police brutality and abuse.
THAT IS EXACTLY WHAT KILLING THE PUBLIC SECTOR AND COMPLETE DEREGULATION WITH NO OVERSIGHT AND ACCOUNTABILITY HAS AS A GOAL. IT IS THIRD WORLD.
An international justice organization stated that the poverty for Baltimore children in underserved communities was equal to any in Africa. Ergo, we have riots and citizens in Baltimore are fearful for bodily harm and property vandalism and theft.
THAT IS WHAT HAPPENS WHEN WE ALLOW A FEW PEOPLE TO GET REALLY, REALLY, REALLY, REALLY RICH AND OTHERS LEFT WITH NO RIGHTS AS CITIZENS OR PROSPECTS FOR A FUTURE. HOW NEO-CONSERVATIVE/NEO-LIBERAL OF MARYLAND AND BALTIMORE.
In the media, a few cases of public employees stealing from government are shown making these public workers seem to be the problem with corruption in Baltimore. Meanwhile, a billion dollars of city and state revenue coming to the city is lost to corporate fraud because we have no public sector oversight and accountability.
After the riots in Baltimore the Congressional, State, and City Hall pols hit the streets telling people in these third world communities to have Baltimore Pride in the downtown development filled with global corporations and criminal financial institutions. Black churches and ministers are recruited to convince these citizens that corporations want to take care of the poor. Mikulski spent her entire years in Congress funneling funds to grow very neo-conservative Johns Hopkins to a global corporation while watching as the city decayed. Below you see a comment from a Baltimore citizen:
Can you imagine coming to hear Mikulski talk about justice in Baltimore? A friend posted this comment with a picture of a gathering of Baltimore ministers listening to Mikulski.
PLEASE PLEASE in JESUS NAME WHAT HAVE THESE PASTORS DONE prior to the RIOTS. THE CHURCH GOT SOME WORK TO DO...LOOK AT THE FACES AT THE TABLE
As Johns Hopkins points out----it is global corporate non-profits taking all of the public sector around the world---especially in nations tied to Trans Pacific Trade Pact. They call this CIVIL SOCIETY.
March 11, 2013 Johns Hopkins
Nonprofits a Major Source of Employment Growth Globally
A new report from the Johns Hopkins Institute for Policy Studies reveals that nonprofit organizations are major employers and major sources of employment growth in countries throughout the world. The report draws on new data generated by statistical offices in 16 countries that have implemented a new United Nations Handbook on Nonprofit Institutions. This Handbook calls on national statistical offices to report on the economic scale and composition of nonprofit organizations in their countries for the first time. Key findings to date from implementation of this Handbook, as summarized in this report, include these:
A Major Employer
• In 6 of the 16 countries for which data are available, nonprofits employ 10 percent or more of the total workforce, making them one of the largest employers of any industry in these countries.
• On average, in these 16 countries, nonprofits employ more workers than either the transportation or construction industry.
A Significant Contributor to GDP
• The nonprofit sector accounts for an average of 4.5 percent of the GDP in the covered countries, roughly equivalent to GDP contribution of the construction industry in these countries.
• In the fields in which nonprofit institutions operate, their GDP contribution is even larger. In Portugal, for example, nonprofit institutions account for 94 percent of the value added by membership organizations and 76 percent of the value added in the social-assistance field.
Diverse Sources of Revenue
• Nonprofits, on average, receive far less of their revenue from philanthropy than is commonly thought.
• Rather, 43 percent of the revenue comes from fees for their services, 32 percent from government sources, and only 23 percent from philanthropic giving, and this is likely an over-estimate given limitations of the data sources.
A Growing Sector
• In the eight countries on which historical data are available, the growth rate of the nonprofit sector contribution to GDP exceeded the growth rate of GDP.
“The global nonprofit sector is an enormously important economic actor, as well as a significant source of citizen well-being in countries throughout the world,” noted Lester M. Salamon, director of the Johns Hopkins Institute for Policy Studies, which compiled these data and worked with the U.N. to create the Handbook. “It is time that we recognize more fully the contribution it makes.”
The U.N. Nonprofit Handbook
The findings reported here cover 16 countries that have so far implemented the United Nations Handbook on Nonprofit Institutions in the System of National Accounts. Developed by the Johns Hopkins Institute for Policy Studies in cooperation with the U.N. Statistics Division and an international statistical advisory group, this Handbook calls on national statistical offices to prepare regular “satellite accounts” on the nonprofit sector, philanthropy, and volunteering as part of their official economic data-gathering and reporting. This is the first time that guidelines for such statistical reports on nonprofit institutions have been established.
The 16 countries completing at least one nonprofit institution satellite account and covered in this report are: Australia, Belgium, Brazil, Canada, the Czech Republic, France, Israel, Japan, Kyrgyzstan, Mexico, Mozambique, New Zealand, Norway, Portugal, Thailand, and the United States.
I wasn't in Baltimore when the 1960s saw the civil rights laws installed and desegregation created white flight from cities like Baltimore. We cannot change a race and class culture that does not want to change. Citizens in Baltimore of all races and classes are seeing today what can be worse than learning to live together and respecting everyone's rights----a Bloomberg International Economic Zone 2 North America taking over Baltimore, Maryland USA. Losing national sovereignty and US Constitutional rights HURTS EVERYONE. HOPKINS IS THE DRIVER OF GLOBAL CORPORATE RULE AND ENDING NATIONAL SOVEREIGNTY AND US CONSTITUTIONAL RIGHTS AND GOVERNMENT STRUCTURES. The response in Baltimore at desegregation was no doubt---how do we keep white control of government in a heavily black population and that gave us Schaefer, Shmoke, and O'Malley and the building of this quasi-governmental structure with Hopkins infused throughout the system via control of City Hall and non-profits. The city's white middle-class may have supported it then but they made a big mistake.....and it will be coming and clear shortly after this next great economic crash. AN INJUSTICE TO ONE DOES BECOME INJUSTICE TO ALL.
The rich needed to get rid of the New Deal and War on Poverty social structure because they were not going to pay taxes and all tax revenue would subsidize corporate wealth so they started the campaign of coloring the 'welfare state' as bad----going so far to call it a Democratic Plantation. Welfare was only a social safety net that worked for a few decades before Reagan/Clinton neo-liberals filled the system with fraud and corruption and created mass unemployment with global markets. NO ONE WAS EXPECTED TO LIVE LONG-TERM ON WELFARE. Who created these conditions? Republicans and Clinton neo-liberals.....not progressive liberal labor and justice. The US would still have a thriving domestic economy and a strong middle-class had Clinton not taken the Democratic Party to Wall Street.
Republicans and the rich deliberately create the propaganda against public sector and social programs because these are great equalizers and democratizers-----and the rich want power and wealth. Do not allow these lying, cheating, stealing sociopaths at the top dismantle a CIVIL SOCIETY OF WE THE PEOPLE.
Public Voices and Public Policy: Changing the Societal Discourse on "Welfare"
Lens, Vicki, Journal of Sociology & Social Welfare
Much of the public discourse on welfare reform is subjective and value laden, a composite of socially constructed stories and myths that support the dominant ideology. This article reports on a study that examines the language used by government officials, poverty experts, advocates and others to discuss welfare reform. Statements made about welfare reform were extracted from the Washington Post and the New York Times and analyzed using qualitative content analysis. Dissecting the public language of welfare provides insight into how prevailing ideologies are communicated and reinforced, and how they can be changed.
Social problems that involve a lack of something--such as health care, money, food, housing or child care--are inevitably framed by one basic question: is it the individual or the government's responsibility to provide it? Stated in this way, the answer is less empirical than ideological. Ideologies of "self-sufficiency" or "individualism" determine the response, with welfare serving more a symbolic than substantive purpose (Edelman, (1975), 1998; Schramm, 1995). This figurative use of welfare is communicated through language as we construct stories, myths, and "facts" to support this dominant ideology. Even scientific studies designed to measure and explain poverty often conform "to the prevailing biases of welfare policy discourse" (Schramm, 1995, p. 6) using language that supports those biases. In this way, when formulating policy, the "words of welfare" can become more significant than any "facts" about welfare (Schramm, 1995).
While welfare rarely falls completely off the public's radar screen, sometimes the public discourse about welfare remains in the background, generating no action. Other times, as in 1996 when the Aid to Families with Dependent Children (AFDC) program was abolished and replaced with the Temporary Assistance to Needy Families program (TANF), the rumblings turn into shouts, and major policy changes are enacted. While policy changes are, of course, the result of a confluence of factors, it is words that signal and embody the changes, with language "not simply an instrument for describing events, but ... a part of events, strongly shaping their meaning and the political roles officials and mass publics see themselves as playing" (Edelman, (1975), 1998, p. 132). Thinking about welfare thus requires thinking about the words used to describe it.
This article reports on a study of the "words of welfare" that preceded the enactment of TANF. It is based on a qualitative content analysis of statements made by elected officials, poverty experts, bureaucrats, advocates and others about welfare reform in the New York Times and the Washington Post between 1994 and 1996. Studying this public discussion provides insight into the prevailing ideology of welfare, and how that ideology is communicated and reinforced. It also leads the way to constructing different "words of welfare" that promote a different response to poverty (Schramm, 1995).
It doesn't take a rocket scientist to know that corporate non-profits being sold as small business opportunities to Baltimore City citizens needing jobs will see the shift of funding go to larger global corporate non-profits once a public sector is privatized. Clinton did this with the state and city public works departments with outsourcing starting with small business contractors and now handed almost totally to global corporations. They did this to public transportation privatization starting with small businesses and now all of the funding is going to global corporations. So, we KNOW that the current soaring of small non-profits and businesses tied to the privatization of public health and public education will end with global corporations getting all of the funding and all small business owners out of business and joining the unemployed.
THIS IS A VERY, VERY, VERY, VERY BAD BUSINESS MODEL AND MEANT ONLY TO END OUR GOVERNMENT STRUCTURE BY THE PEOPLE AND TIE IT TO CONTROL BY GLOBAL CORPORATE TRIBUNAL.
Your taxes won't go down-----services will not improve-----you will be made to become the public sector by donating your personal time to do the work while your corporate employer has all the say of what happens in your community. Baltimore has some community associations that are well organized with people shouting what they want----but even the best organized are being rolled over in this building of Bloomberg International Economic Zone 2 North America. Baltimore's middle and working class has been bled from taxes to support this Hopkins sucking machine-----and it will get worse as control goes to a global corporate tribunal.
It is Hopkins' ability to buy its politicians that kill Baltimore's working and middle class with taxes and fees and kill Baltimore's poor with deepening poverty.....IT IS A LOSE LOSE FOR EVERYONE EXCEPT A VERY FEW ADMINISTRATING THIS MESS. Get rid of Maryland non-profits and Baltimore Granting----it kills the public sector and keeps corporate and wealth taxes from our general fund.
01 Feb 2008
What Do YOU Think? How Sustainable Is Sustainability in a For-Profit Organization?
by Jim Heskett
Summing Up How will sustainability be achieved? To sum up responses to this month's column, the question is not whether global sustainability will be achieved but how.
One school of thought could perhaps be characterized as enlightened self-interest, a realization on the part of managers and investors alike that, as Gaurav Goel put it, "Sustainable businesses have lesser risks associated with their future earnings ... triple bottom line (economic, social, and environmental sustainability) reduces uncertainty." Or as P. Nanjunda Pratap said, "Sustainability defines the life line of any organization." Carol Holding associated brand value with sustainability: "As brand value will soon be included in a company's valuation ... we can more than ever monetize sustainable behavior."
Others see the market working its effects on behavior to lead us to a sustainable future. Gerald Nanninga, for example, commented that "If we deplete resources too quickly, the shortage of supply ... will make conservation issues more financially viable."
Some felt that the free market might need some help. Elizabeth Doty put it this way: The "invisible hand" may not lead us to the greatest common good ... without government action(s).... These might take the form of incentives." Richard Eckel expanded on this idea, saying that "To suggest that for-profits embody any form of moral restraints is to infer an attribute foreign to the concept and history of these entities.... When it is monetized" (whether by competition or government) "the for-profit enterprise will select the lowest price alternative." But Allen Howlett expressed reservations about this approach, saying, "To do nothing will invite social pressure and 'one size fits all' legislation."
All of this will take time. Adrian Gonzalez commented that "There's a limit to what can be accomplished ... because today's products, manufacturing processes, and supply chains were not designed with sustainability in mind." Wole Fayemi added that sustainability is more achievable "if the concept is integrated into the business model at inception." And as Laura Howard put it, "This works best in small companies who can design their entire business and brand around a set of coherent sustainable values .... (They will) "change the conversation in the industry."
There was a less hopeful tone to some comments. Peter Maxson said, "... we don't have a common vision of where we need to go as a global society, and even if we did, we don't have a viable means of getting there."
A former associate and sometime contributor to this column, Stever Robbins, was provoked to send me an email that helps sum up the further questions that these views pose for us. In his words, "One way or another, we will become sustainable. I just hope we do it ourselves ...." (Should we call this the doomsday school of thought?) His questions were: "Here's a deeper puzzle: What would a sustainable economic system look like? For starters, how would you define 'success'?" What do you think?
Original Article Recent word that Google's leadership has identified sustainability as an important business initiative has given the issue new visibility alongside Al Gore's Nobel Peace Prize. At the same time, it raised some eyebrows among investment analysts who asked what sustainability has to do with Google's core business of making the world's information universally available. Will Google sacrifice focus and profitability in the name of sustainability? It remains to be seen whether this initiative is overblown, representing little more than solar panels on the roof of corporate headquarters.
This topic comes at a time when an interesting paper with the unfortunate title "A Framework of Sustainable Supply Chain Management Moving Toward New Theory" has crossed my desk. I receive these occasionally with a request for my blind (authors unknown to me) review for a juried academic journal with the equally unfortunate title International Journal of Physical Distribution & Logistics Management, which concerns itself with research in supply chain management.
The paper attempts to provide some context for those addressing issues of sustainability. Its intent is to get us beyond questions such as, Is sustainability desirable? or Does it pay to be green? Because supply chain management depends heavily on the sustainability of everything from energy sources to low-cost sources of products and services to security, it is not particularly surprising that for some of the most interesting thinking concerning sustainability we might turn to this field. The paper calls our attention to the fact that "68% of the Global 250 firms generated separate annual sustainability reports in 2004." Whether that represents a "management revolution" remains to be seen, but it's something that puts a number on a trend toward management attention to sustainability.
One oft-quoted definition of sustainability was provided in 1987 by the World Commission on Environment and Development: "development that meets the needs of the present without compromising the ability of future generations to meet their own needs." In their paper, the authors, citing the practical difficulty of implementing such a broad definition, support the idea of sustainability as the integration—and intersection—of social, environmental, and economic responsibilities that are borne by managers. In for-profit organizations these responsibilities converge in what has come to be known as the "triple bottom line." The authors posit (but do not prove) that organizations that satisfy all 3 criteria in their decision-making will realize greater economic success than those that fulfill only 1 or 2 of them. By extension, one could argue that decisions intended to support sustainability that satisfy all 3 management responsibilities are likely to be made first and without outside (governmental) encouragement.
In fact, some researchers claim that these decisions, representing "low hanging fruit," have already been made. This prompts the question of just how decisions will be made in the context of significant trade-offs among these criteria that may lie ahead. Will this prompt a continuation of the proliferation of board committees on sustainability or its first cousin, risk? If so, will this just confuse management entrusted with a single bottom line? Will further progress in this realm require government intervention, even if this proves more costly than proactive efforts on the part of management? Or does government intervention tend to negate the competitive benefits for those who have acted proactively? How sustainable is sustainability in a for-profit organization? What do you think?
Had the citizens of Baltimore known in the 1960s that a totalitarian capture by Hopkins with a trillion dollars and more taken from the Baltimore economy to build a global corporation leading to a complete decay and impoverishment of the city would occur, they may have seen the value of keeping the communities surrounding the city center sustainable and stable. It would have cost less to maintain the city as a whole then was looted by Johns Hopkins in its own self-interest.
This non-profit complex is simply corporations coming in to control the public domain-----social society-----this is where the citizens have their voices and operations protect the public interest. Baltimore is one great big CORPORATE GIFTING INDUSTRY WITH CORPORATIONS PAYING NO TAXES AND TAKING ALL THE REVENUE THEY WANT AND THEN 'DONATING' TO PRIVATIZE OUR PUBLIC EDUCATION, PUBLIC HEALTH, PUBLIC UTILITIES ALL WHILE PRETENDING IT IS A PUBLIC GOOD.
So, rather than have a public community ground where citizens can build or create what they want with the taxes they pay to the city-----they are made to write grants to non-profits with no public structure to support these projects. Our school grounds look like vacant lots because there is no public grounds people working to maintain school property----corporations are now sending their workforce into communities to do the work of the public sector all while writing all of this off their taxes rather than have a public work force with people living in the community hired to take care of it. This has created the feeling around the city of no one wanting to volunteer or to take this responsibility and it shows in Baltimore.
Below you see the corporate structure of non-profits----a highly paid CEO at the top with a lot of people volunteering or being paid very little----which is the goal of ending the public sector. Small businesses cannot survive if people do not have money. Global corporations do not care about impoverishment around them. These corporate non-profits are simply global corporations sucking yet another source of Federal, state, and local tax revenue!
PLEASE STOP ALLOWING REPUBLICANS, NEO-CONS, AND CLINTON NEO-LIBERALS CONVINCE YOU THAT DEREGULATION AND PRIVATIZING ALL THAT IS PUBLIC IS GOOD.
Big non-profit organizations have highly paid leaders
Updated 10/2/2009 1:44 PM
By Del Jones, USA TODAY
| NON-PROFIT COMPENSATION
Top 10 executive compensation packages at big non-profits in 2008: Organization Top executive Total comp.1 Partners HealthCare System James Mongan, CEO $3,421,870 Museum of Modern Art Glenn Lowry, director $2,710,607 Children's Hospital of Philadelphia Steven Altschuler, CEO $2,371,282 New York University John Sexton, president $1,385,339 Columbia University Lee Bollinger, president $1,380,035 University of Pennsylvania Amy Gutmann, president $1,279,819 Yale University Richard Levin, president $1,200,583 Johns Hopkins University William Brody, president $1,198,964 University of Southern Calif. Steven Sample, president $1,161,721 Metropolitan Opera Assoc. Peter Gelb, GM $1,158,296 Highest-paid non-profit employees Top 10 employee compensation packages at big non-profits in 2008: Organization Highest-paid employee2 Total comp.1 Yale University David Swensen, chief investment officer $4,389,727 University of Southern Calif. Pete Carroll, head coach, football $4,386,652 Columbia University David Silvers, clinical professor of dermatology $3,738,419 Duke University Mike Krzyzewski, head coach, men's basketball $3,705,909 Cornell University Zev Rosenwaks, professor obstetrics and gynecology $3,392,417 University of Chicago James Madara, vice president medical affairs $2,870,997 New York University James Grifo, professor obstetrics and gynecology $2,867,596 University of Pennsylvania Ralph Muller, CEO, University of Pennsylvania Health System $2,518,232 Stanford University John Powers, president Stanford Management Co. $2,429,757 Princeton University Andrew Golden, president, Princeton University Investment $2,091,425 Note: Other non-profit organizations may pay their executives more than executives listed here. 1 = may include base salary, bonus, incentive pay earned over several years, retirement, health insurance, housing, or other payments. 2 = other than CEO;
Source: The Chronicle of Philanthropy
There is big money in running the USA's big non-profits. CEO James Mongan of Partners HealthCare System, operator of non-profit hospitals in Boston, was the most highly compensated top executive in 2008 among those running the wealthiest foundations and charities that raise the most in donations.
Mongan, also a Harvard Medical School professor, was paid $3.4 million by Partners HealthCare, including nearly $1 million in deferred pay that was reported as a lump sum this year in accordance with IRS rules.
Museum of Modern Art director Glenn Lowry was No. 2 with 2008 compensation of $2.7 million, says The Chronicle of Philanthropy, which today releases its 17th annual pay rankings. Third was Steven Altschuler, CEO of Children's Hospital of Philadelphia, at $2.4 million.
"Partners HealthCare competes on a national stage for physician executives," and Mongan's pay "is in line with that of his national peers," says spokesman Rich Copp, who questioned the Chronicle's methodology. "We don't understand how Dr. Mongan could be No. 1 on this list when … data indicates that more than 15 non-profit hospital CEOs are more highly compensated."
Noelle Barton, manager of special projects for the Chronicle, says the ranking is of 325 of the largest and wealthiest charities and foundations and includes major private colleges, hospitals, museums and religious groups. About 1.3 million non-profits are required to report to the IRS, but the top 400 receive more than 25% of all private donations, and it's rare for a CEO of a smaller organization to be paid more than the leading non-profits' executives. However, Barton says some of the best paid may work for non-profits that receive the bulk of their funding from the government, and the Chronicle does not include those in its survey.
Donald Marron, chairman of the Museum of Modern Art compensation committee, says Lowry has "led MoMA through an intricate period of expansion and reinvention," that increased gallery space by 50%, attendance by 73% and membership fourfold.
Peggy Flynn, spokeswoman for Children's Hospital of Philadelphia, says Altschuler's compensation reflects accomplishments that have led it to be a leading pediatric hospital and research facility that has saved lives and tops rankings by U.S. News & World Report and Parents magazine.
The compensation published in USA TODAY is higher than published in the Chronicle to be consistent with compensation reported for corporate CEOs. For example, USA TODAY includes $693,000 for perks and benefits paid to Mongan. The median pay for top non-profit executives rose 7% in 2008 to $418,555, a fraction of the $7.6 million in median pay for S&P 500 CEOs in 2008, a USA TODAY analysis found.
But CEOs of non-profits do not escape public outrage over pay, and some donors are surprised to learn that leadership isn't voluntary, says Ken Berger, CEO of Charity Navigator, which evaluates charities. It released an examination of 5,448 charities in August, most smaller than those in the Chronicle's survey, and found the average CEO salary to be $158,075, up 6.1% from 2007.
Berger says the most frequent comment he hears goes: "I have been donating to this charity for years, and now that I see the salary of the CEO, I will never give them money again." Most salaries are warranted, Berger says, considering that non-profits are a $2 trillion slice of the economy that generate 10% of jobs.
Why are salaries so high?
Corporations often say CEO pay is high to retain talent that would otherwise be recruited away. Large non-profits offer the same defense. Flynn says Altschuler is routinely wooed, and in 2003 the Museum of Modern Art offered Lowry a $1 million retention bonus if he stayed until 2008. His 2008 compensation included that bonus, plus $336,000 in housing. Lowry is required to live in an apartment adjacent to the museum in Midtown Manhattan, paid for by the museum. He got a $200,000 bonus for his hand in raising more than $858 million for museum expansion.
CEOs and presidents are not always the best paid at their institutions. Yale University chief investment officer David Swensen made $4.4 million in 2008. His boss, Yale President Richard Levin, made $2 million. University of Southern California football coach Pete Carroll made $4.4 million. His boss, USC President Steven Sample, made $1.2 million.
The biggest compensation gainer among top executives was Franklin Graham of the Billy Graham Evangelistic Association, whose compensation rose 534% to $633,722, much of the gain because of a $366,000 retirement payment. Graham, 57, son of Billy Graham, also earns $483,000 as CEO of charity Samaritan's Purse.
Compensation increases are largely over going forward, Barton predicts. The economy has dealt a blow to contributions and investment portfolios. Altschuler will receive no salary increase in 2009. Lowry earned $833,582 in salary and bonus in the 2009 fiscal year that ended June 30, a voluntary cut of 15% below his contract with the museum.
This article is long but please glance through to the last article below. We know the extent of fraud and corruption in corporations after deregulation and dismantling of oversight and accountability. WE KNOW HOW BAD THIS WILL BE IN N0N-PROFITS THAT ARE ALLOWED TO OPERATE WITH NO PUBLIC TRANSPARENCY. Baltimore has the worst of records as regards moving money through non-profits in pay-to-play and in boosting individual wealth. It is used as a shell game. Not all non-profits are bad but many are created just to funnel money from government coffers to wealthy people's pockets. As these small non-profits are replaced by global non-profits---and they will be-----the fraud will soar.
We already know non-profits have operated in Baltimore in this capacity for decades----it is how Johns Hopkins and Baltimore Development controls development and elections. Look to the last article to see how that mirrors what US global Non-Governmental Organizations NGOs have been doing for decades------the system of fraud and corruption in these global organizations soared after Reagan/Clinton neo-liberals joined Republicans in dismantled regulatory and oversight structures. Institutions like Hopkins channeled those international development funds to themselves just as they do in Baltimore. The explosion of non-profits as the public sector will advance all of this fraud and corruption to yet more public sector agencies. Baltimore has seen this as Hopkins gained control but now they are expanding it nationally as Obama and Clinton neo-liberals work as hard as Bush in privatizing all that is public.
If you think all of this fraud and corruption will lead to lower taxes on the working and middle-class----you do not understand the goal----in Medieval times the Royal tax man would leave the castle walls to take from the peasants all that they had-----food included ----to keep them poor. AS JOHNS HOPKINS SAYS-----THE POOR MUST STAY POOR. Raise your hands if you know the goal is to kill all of the middle-class not tied to administering the global corporate tribunal and court!!!!
WHO ARE THE TOP AFFILIATIONS TO THESE NON-PROFITS? LABOR UNIONS, SORORITIES AND FRATERNITIES, AND JUSTICE ORGANIZATIONS LIKE CATHOLIC/JEWISH/BLACK CHARITIES. WHO SUPPORT CLINTON NEO-LIBERALS AND ARE SILENT IN EDUCATING THE PUBLIC ON PUBLIC POLICY?
Inside the hidden world of thefts, scams and phantom purchases at the nation’s nonprofits
By Joe Stephens and Mary Pat Flaherty October 26, 2013
The American Legacy Foundation’s headquarters in Northwest Washington (Linda Davidson/The Washington Post) For 14 years, the American Legacy Foundation has managed hundreds of millions of dollars drawn from a government settlement with big tobacco companies, priding itself on funding vital health research and telling the unadorned truth about the deadly effects of smoking.
Yet the foundation, located just blocks from the White House, was restrained when asked on a federal disclosure form whether it had experienced an embezzlement or other “diversion” of its assets.
Legacy officials typed “yes” on Page 6 of their 2011 form and provided a six-line explanation 32 pages later, disclosing that they “became aware” of a diversion “in excess of $250,000 committed by a former employee.” They wrote that the diversion was due to fraud and now say they believe they fulfilled their disclosure requirement.
Records and interviews reveal the full story: an estimated $3.4 million loss, linked to purchases from a business described sometimes as a computer supply firm and at others as a barbershop, and to an assistant vice president who now runs a video game emporium in Nigeria.
Also not included in the disclosure report: details about how Legacy officials waited nearly three years after an initial warning before they called in investigators.
“We’re not innocent in this,” said Legacy chief executive Cheryl Healton. “We are horrified it happened on our watch. . . . The truth hurts — we screwed up.”
A Washington Post analysis of filings from 2008 to 2012 found that Legacy is one of more than 1,000 nonprofit organizations that checked the box indicating that they had discovered a “significant diversion” of assets, disclosing losses attributed to theft, investment fraud, embezzlement and other unauthorized uses of funds.
The diversions drained hundreds of millions of dollars from institutions that are underwritten by public donations and government funds. Just 10 of the largest disclosures identified by The Post cited combined losses to nonprofit groups and their affiliates that potentially totaled more than a half-billion dollars.
While some of the diversions have come to public attention, many others — such as the one at the American Legacy Foundation — have not been reported in the news media. And The Post found that nonprofits routinely omitted important details from their public filings, leaving the public to guess what had happened — even though federal disclosure instructions direct nonprofit groups to explain the circumstances. About half the organizations did not disclose the total amount lost.
The findings are striking because organizations are required to report only diversions of more than $250,000 or those identified as having exceeded 5 percent of an organization’s annual gross receipts or total assets. Of those, filing instructions direct nonprofits to disclose “any unauthorized conversion or use of the organization’s assets other than for the organization’s authorized purposes, including but not limited to embezzlement or theft.”
send a tip: Has your nonprofit experienced a significant diversion of assets? Contact the reporter.
As part of its analysis, The Post assembled the first public, searchable database of nonprofits that have disclosed diversions, available at wapo.st/
diversionsdatabase. Groups on the list were identified with the assistance of GuideStar, an organization that gathers and disseminates federal filings by nonprofits.
Examples of financial skullduggery abound in the District, throughout the Washington region and across the United States.
A few blocks from Legacy’s offices on Massachusetts Avenue, the nonprofit Youth Service America reported two years ago that it discovered a diversion in 2009 of about $2 million that had been “misappropriated” by a former employee. After The Post asked about the incident, he was charged in federal court and in June was sentenced to four years in prison for theft.
A few blocks in the other direction is the Alliance for Excellent Education, which disclosed four years ago that investment manager Bernard L. Madoff’s Ponzi scheme had wiped nearly $7 million from its balance sheets. In a statement to The Post, officials there called the figure a “paper” loss.
A deeper look at disclosures
A few blocks farther is AARP, the national charity that advocates for older Americans. In 2011, it disclosed two incidents with losses totaling more than $230,000, attributed to embezzlement and billing irregularities. An organization spokesman said no one has been charged in those incidents.
And just outside the Beltway, the Maryland Legal Aid Bureau, with offices throughout the state, disclosed two years ago that a former finance director and an accomplice had been convicted of making off with $1.1 million; officials there said in interviews they now think the total loss was closer to $2.5 million.
Investment fraud was blamed for some of the largest losses identified. Funds linked to Madoff’s scheme, which bilked investors across the country for decades, reportedly drained $106 million from Yeshiva University and its affiliates, $38.8 million from the Upstate New York Engineers Health Fund and $26 million from New York University, according to the disclosures they filed.
But hefty sums disappeared in many other ways, too:
●The Global Fund to Fight AIDS, Tuberculosis and Malaria, based in Geneva but registered and largely financed in the United States, reported in 2012 that it had found evidence of misuse or unsubstantiated spending of $43 million in grant funds.
●The Conference on Jewish Material Claims Against Germany, a New York-based charity for Holocaust survivors, reported in 2010 that it had been bilked out of $42 million in an elaborate, decade-long conspiracy by swindlers who created thousands of fake identities. A spokesman said the estimate has since been raised to $60 million.
●The Vassar Brothers Medical Center in Poughkeepsie, N.Y., in 2011 reported a loss of $8.6 million through the “theft of certain medical devices.” A medical center spokeswoman said a confidentiality agreement prohibited her from explaining further.
●The Miami Beach Community Health Center in 2012 reported losing $7 million to alleged embezzlement by its former chief executive, later convicted of theft.
● Columbia University disclosed in 2011 that it had been defrauded of $5.2 million in “electronic payments.” A university spokesman confirmed that the disclosure referred to an incident involving a former university accounting clerk and three associates, later convicted of redirecting $5.7 million meant for a New York hospital.
●And the 140-year-old Woodcock Foundation of Kentucky, which awards scholarships to students in need, disclosed that alleged fraud by a former chairman drained more than $1 million from its accounts, leaving the charity with assets totaling just $8.
“You go out of your way to trust a nonprofit. People give their money and expect integrity. And when the integrity goes out the window, it just hurts everybody. It hurts the community, it hurts the organization, everything. It’s just tragic.”
The Rev. Raymond Moreland, Maryland Bible Society
Each year, larger registered nonprofits file a form with the federal government that lays out their mission, leadership, revenue and expenses. The question about diversions was added to the forms with little fanfare in 2008, one of several changes meant to make it easier for the public to gauge how well nonprofit organizations manage money.
While the losses identified in The Post’s study total hundreds of millions of dollars, they represent only a fraction of the total. The new question was phased in over three years and appears only on forms submitted by larger nonprofit groups. Private foundations and many smaller groups fill out alternative forms or no forms at all.
The Internal Revenue Service has said little about what information it has gathered from the responses, beyond reporting last year that 285 diversions totaling $170 million had been disclosed in one year alone, 2009.
Chicago lawyer and governance consultant Jack B. Siegel, an early proponent of adding the diversions question to the disclosure forms, said he had hoped it would allow the public to discover for the first time just how much theft was taking place and would discourage organizations from covering up problems.
“People should follow up and ask, ‘Are you properly monitoring the money I’ve given you?’ ” Siegel said. “If I’m giving you my money and you’re wasting it by allowing people to steal it, why should you be allowed to hush that up? Why shouldn’t I know that?”
More than 1.6 million nonprofit groups are registered with the federal government, and they control more than $4.5 trillion in assets. An additional 700,000 organizations, such as churches and smaller groups, need not register.
From 2000 to 2010, the number of registered nonprofits increased by 24 percent, according to an Urban Institute study. Annual revenue at such organizations, adjusted for inflation, grew by 41 percent.
Those nonprofits perform vital work in the community and depend on public goodwill, volunteers and donations. But the public’s stake in the organizations is even greater. Tax benefits extended to nonprofit organizations and their donors cost the U.S. Treasury about $100 billion a year in foregone revenue, according to the Congressional Research Service — a form of subsidy meant to further the organizations’ good works.
As it has grown, the nonprofit sector has repeatedly run into accountability problems, prompting congressional inquiries over the past decade into groups as varied as the Nature Conservancy and the Smithsonian Institution.
“We need to seek out and stop those who are hiding behind tax-exempt status for their own gain,” Senate Finance Committee Chairman Max Baucus (D-Mont.) said in 2007 after a string of high-profile financial scandals.
Little comparative data are available about the prevalence of fraud across business sectors. But a 2012 study by Marquet International, a Boston-based security firm that conducts an annual study of white-collar fraud, concluded that nonprofits and religious organizations accounted for one-sixth of major embezzlements, placing second only to the financial-services industry.
John D. White, president of the Virginia Scholastic Rowing Association, says his group is trusting of no one after its longtime treasurer embezzled money that has prevented the association from making needed improvements. (Matt McClain/The Washington Post) “I come across these cases all the time,” said Christopher T. Marquet, who heads the firm. He said oversight at nonprofits is often thinner and supervisors more trusting. “The control structures in these organizations are much weaker,” he said.
In Legacy’s case, its report not only failed to disclose the total of its estimated loss but also did not reveal that multiple diversions had occurred over seven years and that they were not discovered until more than a decade after they began.
Roughly half the organizations examined in the Post study did not appear to have revealed the full amount lost, even though federal filing instructions direct charities to disclose the amounts or property involved.
Some organization officials said in documents and interviews that they chose not to alert police, instead settling for restitution, which often meant they also avoided public attention.
In interviews, some organizations said estimates of their losses had changed since their filings. The Post also found that a small percentage of groups chose to disclose financial restructurings, mergers and other types of financial losses, even though they involved no apparent wrongdoing.
The groups filing the reports were as varied as the nonprofit sector itself.
Locally, Georgetown University reported in 2012 that an unidentified administrator paid himself $390,000 in “unapproved compensation” over four years from a bank account the university did not know existed. No one was charged.
The Virginia Scholastic Rowing Association in Alexandria said it lost as much as $223,000 — an estimate the association president now has raised to $500,000 — to a longtime bookkeeper, later convicted of embezzlement.
“People are going to say, ‘You stupid people,’ ” said the group’s president, John D. White. “They’re exactly right. You have to pay attention.”
Rowing club oblivious, teen athletes get fleeced(4:08) The Virginia Scholastic Rowing Association says it had no idea the “queen” of regattas was quietly spending tens of thousands of dollars on things such as NFL tickets, vacations and cable TV. The Post’s Lee Powell explains how a nonprofit group got taken. (Lee Powell/The Fold/The Washington Post) And the 200-year-old Maryland Bible Society of Baltimore disclosed that it had been defrauded of an undetermined amount by an unnamed former employee.
“It’s sadder when it happens to a nonprofit,” said the Rev. Raymond Moreland, a Bible Society official who said in an interview that a former secretary took $86,000 by falsifying checks and misusing credit cards, then concocted fake audit reports to cover her trail. “You go out of your way to trust a nonprofit. People give their money and expect integrity,” he said. “And when the integrity goes out the window, it just hurts everybody. It hurts the community, it hurts the organization, everything. It’s just tragic.”
The former secretary was convicted of theft, Moreland said, but “the scar is still there.”
Legacy’s big loss The American Legacy Foundation is a revealing case study. While some challenges it faced were uncommon, fraud examiners said many resemble those they see time and again.
Legacy was founded as a nonprofit organization in 1999 out of the Master Settlement Agreement that resolved health claims brought against cigarette companies on behalf of the public by authorities in 46 states and the District.
With $50 million in annual expenditures and $1 billion in assets, Legacy is perhaps best known for its edgy anti-tobacco advertising campaign known as “Truth.’’ In one high-profile stunt, Legacy filmed young people piling hundreds of body bags outside a cigarette company’s headquarters in Manhattan, graphically depicting the daily toll of tobacco-related illness.
“Being an honest and dependable source of information is our bread and butter, because the minute we start bending and manipulating the truth, we’re no better than the tobacco industry,” the organization says on its “Truth” Web site.
Its board includes Idaho Attorney General Lawrence Wasden (R), its chairman; Missouri Gov. Jay Nixon (D); Utah Gov. Gary R. Herbert (R); and Iowa Attorney General Tom Miller (D). Janet Napolitano, the recently departed U.S. secretary of homeland security, served on the board, and Sen. Thomas R. Carper (D-Del.) was Legacy’s founding vice chairman.
When first asked by The Post about gaps in their disclosure report, Legacy officials declined to provide full details. But they said they had a change of heart when they later learned that authorities did not plan to seek charges against the man they thought was responsible for the group’s loss.
After discussions with The Post, Legacy officials supplied copies of some documents and financial data related to what they allege was a fraud committed by one of their most beloved former employees.
Deen Sanwoola, they said, was a charismatic computer specialist who was Legacy’s sixth hire. He was tasked with building the organization’s information technology department.
No one realized, during Legacy’s frenetic early days, that the department had been formed without adequate financial controls, Legacy officials said. Or that Sanwoola had been placed in charge of both ordering electronic equipment and logging it as having been received — a mix of responsibilities that an outside auditor later described as a classic error that placed Legacy at risk.
“He had the keys to the kingdom of IT,” said Healton, who as Legacy’s president and chief executive received a compensation package worth $729,000 in fiscal 2012.
Reached by phone recently, Sanwoola, 43, told The Post he has had no contact with Legacy for six years and had no idea that anyone had raised questions about his department’s operations. “You’re kidding, right?” Sanwoola asked.
Sanwoola promised to call back with additional information. He did not and did not respond to numerous subsequent attempts to contact him by telephone and e-mail about Legacy’s allegations that he defrauded the organization.
After Sanwoola’s arrival in October 1999, Legacy’s IT department began spending freely on computers, monitors and software, much of it purchased from a single company in suburban Maryland, Healton said. Thanks to the court settlement, Legacy enjoyed a tremendous flow of cash, with revenue exceeding $320 million.
The first questionable purchase came in December 1999, according to a forensic audit conducted years later. “The fraudulent billing started almost immediately on his arrival,” said Wasden, the board chairman.
In that first transaction, the foundation paid more than $18,000 for a computer processor and related equipment that auditors concluded should have retailed for less than $7,000.
Data, documents and a summary of findings that Wasden provided to The Post show that questionable purchases of printers, software and servers steadily increased in size and frequency, peaking with 49 charges in 2006. In some instances, Legacy appeared to have paid many times an item’s worth, auditors said. In others, auditors said Legacy paid an inflated price for “phantom purchases” of equipment that apparently never arrived.
Over years, Sanwoola is thought to have generated as many as 255 invoices for computer equipment sold to the foundation, Legacy officials said; 75 percent of them later were deemed by the foundation to have been fraudulent. During that period, the officials said, Sanwoola developed close personal ties to Legacy’s chief financial officer, Anthony T. O’Toole.
“Everybody loved Deen,” O’Toole acknowledged.
In early 2007, Sanwoola, by then an assistant vice president with a $180,000 compensation package, announced he was leaving. It jolted Healton, who said she “begged” him to stay. O’Toole recalled Sanwoola saying that his wife wanted to raise their children in Nigeria and that the move would allow him to help his ailing mother.
And that appeared to be the end of it.
Until six months later, when an executive at Legacy approached O’Toole and told him he was unable to locate computer equipment listed in the inventory. O’Toole said he waved away the complaint without bothering to investigate.
“He just pooh-poohed it,” Healton said of O’Toole, who received current and deferred compensation totaling $568,000 in fiscal 2012.
Three years later, the same employee — Legacy officials describe him as a whistleblower — again raised an alarm. This time, he bypassed O’Toole and took his concerns to a staffer close to Healton.
The response this time was different. Within days, Legacy hired forensic examiners to investigate and Healton notified the board.
One of the outside auditors’ first reactions, Healton recalled, was, “There’s no way an organization like yours could spend this much on IT.”
Auditors interviewed employees, reviewed invoices and recovered deleted files from a backup computer server in Chicago. Auditors found a template for invoices from the outside supply company, Legacy officials said, as well as computer code that showed the template had been designed and generated by someone using Sanwoola’s log-in.
Officials concluded that of $4.5 million in checks and credit card charges associated with the Maryland IT supply company, $3.4 million had been fraudulent.
Explanation from Legacy’s disclosure form
See more examples of nonprofit reporting patterns
Legacy officials and their auditors did not provide The Post with any documentation showing how Sanwoola, who is not named as a director on the supply company’s incorporation records, personally benefited from the sales. In a written statement, Legacy officials said, “we have no information or opinion regarding whether anyone other than Sanwoola had any involvement in any fraud or other improper activity.”
“We stumbled,” Wasden said. “There are kids out there we could have touched that we didn’t, because this money was taken from our coffers.”
In late 2010 or early 2011, foundation executives asked Miller, the Iowa attorney general on Legacy’s board, to call the office of the U.S. attorney.
From Legacy to Fun City Legacy officials said they had made no attempt to contact Sanwoola, based on a request from federal prosecutors. In a statement for this article, the U.S. Attorney’s Office responded that they had made no such request.
The Post located Sanwoola in Lagos, Nigeria, where he said he continued to work in IT and owned a business — he is “mayor” of Fun City, a brightly painted children’s amusement center featuring refreshments and a variety of video games. “I love games,” he said in a brief telephone conversation.
Sanwoola said that there were no problems during his tenure at Legacy and that he had heard no complaints since his departure. He initially questioned whether a reporter’s call was a trick orchestrated by tobacco companies.
“Are you serious?” he asked when told of the investigations. “Wow. . . . I’m kind of bothered and concerned. Why couldn’t they just call me up and say, ‘Hey, we’re doing an audit. This is what we found out. What’s going on?’ ”
American Legacy Foundation board member Tom Miller, center left, who is Iowa’s attorney general, and Legacy Chairman Lawrence Wasden, the attorney general of Idaho, sit on a panel discussing the 1998 tobacco settlement Wednesday at the National Press Club. (Mary F. Calvert/For The Washington Post) “It’s way more than a shock to me, coming to me after more than six years,” Sanwoola said. “If they are putting it on me — I don’t get it. . . . Using the word ‘defrauded’ is just frustrating my head. I need to sit down and get my head together.”
The invoices that auditors identified as questionable purported to have come from Xclusiv, a Maryland company that appears to no longer be in business. Some invoices used the slightly different spelling of Xclusive.
Contacted by The Post, neither of the men listed as corporate directors said he knew Sanwoola. One of them, Mack Adedokun, said he had never heard of Legacy and that Xclusiv had been a barbershop, not an electronics supply company. The other, Abdul R. Yusuf, said that the company had sold computers to Legacy but that he was unsure how many or who had arranged it. He declined to say who controlled Xclusiv.
Yusuf said he did not know how personal papers bearing his name and Social Security number had ended up on documents that Legacy said were recovered from Sanwoola’s computer, but Yusuf speculated that he may have been the victim of identity theft.
Told that property records showed Sanwoola had once bought a home in Greenbelt from a man bearing Yusuf’s name, Yusuf said that probably was his brother, who had the same name, shared the same address and has since died. “I’m just hearing all of this for the first time,” Yusuf said of details about Legacy’s claims. “I don’t know what you’re talking about. It’s so scary.”
Disclosure Word that millions of dollars were thought to be missing remained largely within Legacy until it came time in 2011 to file its annual disclosure, a public document signed under penalty of perjury.
The disclosure said that the “fraud” of more than $250,000 did not “meet other materiality tests for financial reporting” and that the organization had told its board and law enforcement. It also said Legacy had filed an insurance claim that had been “successfully settled.” The document did not reveal that the settlement fell far short of the loss.
When first approached by The Post, Legacy general counsel Ellen Vargyas said the organization had no obligation to identify the full estimate of the loss and stressed that more information was in the foundation’s 2012 filing. That filing included a reference to $1.3 million in miscellaneous revenue from an insurance settlement, without saying what it was for.
“I do think it was a full and appropriate disclosure,” Vargyas said.
Legal specialists consulted by The Post disagreed. “Those suffering a diversion are obligated to report the dollar amount,” said Gary R. Snyder, a charity consultant who tracks fraud.
Federal filing instructions direct nonprofits to “explain the nature of the diversion, amounts or property involved . . . and pertinent circumstances.” Charity specialists said there is no established penalty for a nonprofit that fails to follow the instructions.
A day after declining to disclose the amount to The Post, Vargyas reconsidered. “Our best estimate of the full loss comes to this: $3,391,648,” she wrote in an e-mail. She said her initial reluctance to disclose an amount was because Legacy’s number was based on estimates that had “never been tested in a court of law.”
Wasden added that the absence of a total dollar figure in its public filing was the foundation’s way of being restrained in describing its loss, in deference to the then-continuing federal investigation. The U.S. Attorney’s Office stressed, however, that it did not suggest that Legacy play down the size of the loss in its disclosure.
Legacy officials said they were told in March, for the first time, that there would be no charges. The U.S. Attorney’s Office disputed that, saying the FBI informed Legacy in February 2012 that the investigation had been closed because, despite warnings, Legacy had taken more than three years to report the missing computers and lacked reliable records of what it owned.
Healton said she had expected the criminal case to clear the way to recover its money. But now there also will be no civil lawsuit seeking repayment, Legacy officials said; as with the criminal case, the statute of limitations has passed.
“No excuses. It’s a terrible loss, and it shouldn’t have happened,” Healton said. “If we lost $3.4 million, that’s $3.4 million that did not go to save lives.”
Vargyas said officials had taken the discovery “enormously seriously” and are dedicated to avoiding a recurrence.
“Obviously, we have to do better,” Vargyas said. “We do view ourselves as holding a public trust.”
Dan Keating and Jennifer Jenkins contributed to this report.
Joe Stephens joined The Washington Post in 1999 and specializes in in-depth enterprise reporting.Mary Pat Flaherty works on investigative and long-range stories. Her work has won numerous national awards, including the Pulitzer Prize.
Global corporate pols know these last two decades were filled with corporate frauds of tens of trillions of dollars-----some right here in the US and much done with Federal funding of foreign development/defense funds. There has been tons of research by REAL government watchdogs proving all of this occurred. These global NGOs were found to not even do any paperwork in the movement of funds and purchasing of materials----it was all a shell game. If you look at Baltimore and Johns Hopkins control of government and non-profits you see the same system in place these decades all happening because of a dismantled public sector and no oversight and accountability. Baltimore has operated just as a third world city like Kabal, Afghanistan.
Think of whom these Bush neo-cons and Clinton neo-liberals see as the non-profits in charge of this soaring privatization of our state and local governments right now? It will not be warm and fuzzy local citizens and their small non-profits----it will become global corporations and their non-profits. This is how you end US sovereignty and install the Trans Pacific Trade Pact rule by global corporate tribunal and court. Baltimore is further along than other cities---but it is coming to your neck of the woods!
GET RID OF ALL BUSH NEO-CONS AND CLINTON NEO-LIBERALS BY RUNNING REAL LABOR AND JUSTICE IN ALL PRIMARIES----BE THE CANDIDATES AND GET ENGAGED IN POLITICS!
The result of this privatization will be a former Rule of Law nation operating like a third world India----
Corruption: What NGOs don’t want you to know
By Jeremy Sandbrook on March 11, 2015 See no evil, hear no evil, and speak no evil! Despite the growing level of funds channelled through NGOs (or maybe because of it), fraud and corruption continue to be a highly sensitive topic, with most NGOs reluctant to openly discuss it. This was highlighted a few years ago, when Médecins du Monde initiated a study in an attempt to open up discussion on corruption within the humanitarian aid sector (one of the most corruption prone areas of development). Of the 17 largest French NGOs contacted for a confidential interview, accounting for more than 80% of all French humanitarian aid, 11 refused to participate. Attitudes such as this, a general lack of transparency within the sector, and a scarcity of empirical evidence available on fraud and corruption, has resulted in the topic avoiding appropriate scrutiny.
Following on from my article on NGO accountability, this is the second in a series of three blogs examining NGO accountability and corruption. Its focus will be on what we know about actual corruption within the NGOs.
‘Rose-tinted’ glasses': Corruption only happens in NGOs working in the developing world … or does it! When the topic of corruption is raised, the natural inclination is to point the finger elsewhere. In the case of Northern NGOs, this tends to be at their counter-parts operating in the developing environments of the South. This was brought home to me in a discussion with a CEO & President of a North American based INGO last week, who stated with absolute conviction, that the ‘real’ need for anti-corruption measures was in Southern NGOs, as those in the North (like his) could safely “rely” on their external auditors and internal risk management systems to prevent it from happening. When I pointed out that the latest ACFE fraud survey showed that he had twice the chance of uncovering a fraud within his INGO by accident (at 6%) then it being uncovered by his external auditors (at 3%), he was a little taken aback. That aside, just how accurate was his assertion that the problem of fraud and corruption within the NGO / non-profit sector is limited to certain parts of the world?
While research available on NGO corruption is predominantly drawn from newspaper articles of fraud reported in national NGOs in the North, it represents the tip of the iceberg, as a KPMG survey has found that 77% of all fraud investigations never reach the public domain, and 54% are not even communicated internally. In a 2014 survey into fraud in the Australian NGO sector, 54% of respondents advised that they did not report fraud to the Police because of “concerns relating to the impact of future funding opportunities, and potential damage to the organisation’s reputation”. While over 90% of respondent’s viewed it as a problem for the non-profit sector as a whole (in another show of ‘finger pointing’), only 1 in 4 saw it as a problem for their own organisation!
Those in Glass Houses Shouldn’t throw stones: Fraud and corruption is in our own backyard Despite the ‘cone of silence’ built up around the topic, fraud and corruption within the NGO / non-profit sector is not limited to certain parts of the world only. Supporting this are the following:
1) A Working Paper by The Hauser Center for Nonprofit Organizations at Harvard University, found that a significant problem existed within the NGO sector, and that fraud amongst non-profit entities in the North was on the rise. Action to counter it was not always taken, due to a growing lack of regulatory resources.
2) The UK’s National Fraud Authority found that in 2012, fraud was estimated to have cost the charity sector in England, Scotland and Wales £1.1 billion annually, with serious incidents reported to the UK Charity Commission almost doubling in the previous year
3) In October 2013, The Washington Post published an article highlighting the potential extent of fraud and corruption within the US non-profit sector. Analysing the annual returns filed between 2008 and 2012, they found that over 1,000 NGOs had checked the box indicating that the organisation had ‘become aware of a significant diversion of assets during the year’; attributable to theft, investment fraud, embezzlement and other unauthorised uses of funds. Most of these were of a serious nature and not publicly reported. Important details were routinely omitted from the filings, with around half of the organisations not even disclosing the total amount lost.
4) According to the Economist (February 2014), a 20-month police investigation, uncovered evidence of widespread misuse of funds provided to around 600 Greek NGOs working overseas between 2000 and 2008; and, last month, the head the country’s public administration watchdog advised that 9 out of 10 NGOs subjected to checks by the national tax office officials appeared “problematical”.
5) While the list continues, one thing is clear, Northern NGOs are not immune to fraud and corruption, and cannot rely on their “external auditors and risk management systems” to deal properly with the issue.
Who are committing these frauds? An exploratory study of NGO corruption (again in the North) published in the International Journal of Voluntary and Nonprofit Organizations, found that all of the irregularities examined involved money, were opportunistic in nature, and were motivated by self-interest (greed), perceived entitlement, or sexual fulfilment. Of greater importance though, was the finding that the majority of cases involved the elite of the organisation (principally the CEO or CFO), pointing to key failures in overall governance and oversight at board level. This was mirrored in a global KPMG fraud survey carried out in 2011, which indicated the ‘typical fraudster’ to be a senior manager within an organisation.
What all of these, and other studies and surveys have shown, is that the accumulating number of alleged and substantiated cases of fraud and corruption, are not isolated or sporadic events limited to particular countries or parts of the world, but are a function of a broader global problem.
Corruption within development NGOs in the South Having briefly looked at the North, how sure are INGOs and other development actors who rely on Southern delivery partners, that the funds transferred into their care are used for the intended purpose?
While the Internet is littered with stories of Southern NGO corruption, and the rise of BINGOs (or briefcase NGOs), research on the topic of actual corruption within Southern NGOs is all but non-existent. What is available has tended to primarily focus on development INGOs that straddle the North/South divide (i.e. raising funds in the North to pay for the delivery of programmes in the South).
While far from scientific, a cursory Google search of the terms ‘corruption’ and ‘development INGOs’, highlighted only four cases of actual corruption (outlined below):
INGO Year Location Details Oxfam International 2006 Indonesia USD 20,000 procurement fraud, in Oxfam´s Aceh operations resulting in disciplinary action being taken against 22 employees World Vision International (WVI) 2005 to 2007 Liberia Theft of more than USD 1 million of foodstuffs (intended for programme beneficiaries) by three WVI employees. Two of the three were subsequently arrested and extradited to the US where they were found guilty of 13 charges, including Conspiracy to defraud the US Government,Mail Fraud, Wire Fraud, False Claims, and Tampering with a Witness.The USAID funded project was designed to provide food and work for people emerging from the lengthy civil conflict in Liberia. WVI had been selected by another INGO, Catholic Relief Services, as a sub-grantee for the food distribution and food-for-work parts of the project. Norwegian Refugee Council 2012 Pakistan Charges of corruption and mismanagement in NRC’s Bajaur Agency operations, resulting in the termination of 16 employees – including two senior managers – and the replacement of the agency’s coordinator Oxfam International 2014 UK Fraud and theft, resulting in the jailing of Oxfam’s former head of counter-fraud ,for the embezzlement of more than £64,000 while investigating alleged cases of fraud committed by aid workers in Haiti. In the case of the Oxfam Aceh incident, the following comment – by Nicholas Stockton of Humanitarian Aid Accountability International – is worth noting (as it supports the earlier assertion that most cases of NGO fraud and corruption are not reported): “I hope that this isn’t interpreted … as Oxfam being the only one with problems. They are, in fact, the only ones to come out to deal with the problem”
Types of corrupt practices Notwithstanding the small number of cases highlighted above, an analysis of four donor agencies and four INGOs in 2011, found that the risk of internal corruption in NGO operations was significant, and that many international donors – and NGOs themselves – had not taken a comprehensive approach to managing corruption risks. It found that the range of potentially corrupt practices committed by development NGOs was “extensive”, and that many of these practices took place within routine institutional operations, as well as within programme and project activities. The five most commonly documented forms of corruption identified were:
1) Inflated, duplicate, or fictitious invoices for goods and services procured for a project.
2) “Ghost” employees, participants or beneficiaries that inflated the cost of project activities.
3) Kickback arrangements in procurement of goods or services or in hiring of project staff
4) “Double-dipping”, or seeking or accepting funds from more than one donor for (parts of) the same project.
5) Fictitious NGOs, or politically connected organisations set up to win public contracts (including those setup to act as delivery partners for INGOs)
While it covers the main forms of financial corruption, I would argue that the list is incomplete, as it excludes any form of non-financial or social corruption (such as favouritism and conflict of interest) embedded in many parts of the developing world. While no explanation has been given for this exclusion, one reason could be the difficulty of outsiders getting close enough to view or record it.
The above findings are further supported by a case study of corruption within in an NGO operating in Malawi, which not only highlighted the nature and extent of internal corruption, but indicated that NGOs and INGOs were subject to the same – or similar – types and levels of corruption confronted by the society’s in which they operated.
So what does this all mean? While the bulk of cases never reach the public domain, fraud and corruption is increasing, and is affecting NGOs operating in both the North and the South. So insidious is it, that unless action is taken to manage it, the moral authority that the non-profit sector currently enjoys will soon be reduced to a thin veneer, which if splintered, has the potential to undermine the (public) trust on which the industry is built.
Having covered the issue of NGO accountability (Part 1), and examined the issue of actual fraud and corruption within the NGO / non-profit sector (Part 2), the final blog in this series will assess progress made in NGO anti-corruption efforts, and offer a set of broad recommendations on how organisations can start ‘corruption proofing’ themselves and their industry.