Charity Governance

IOWANS SHOULD GET OFF THE AMERICAN RED CROSS' CASE

DATELINE: June 5, 2008, Chicago

People should get off the American Red Cross' case. According to Stephanie Strom of the New York Times, the Red Cross has been busy raising funds to assist victims of tornados that struck northeastern Iowa last month. Red Cross in New Dispute Over Disaster Relief Funds. Isn't that what we expect of the American Red Cross?

In recent years, the media has portrayed the Red Cross as a disorganized and ineffective bureaucracy. Red Cross officials must...

WHAT ARE THE INTERNATIONAL RELIEF ORGANIZATIONS DOING ABOUT MYANMAR AND WHAT ARE YOU DOING ABOUT IT?

DATELINE: May 7, 2008, Chicago

We suspect that the established disaster relief organizations are not receiving an outpouring of donations following Cyclone Nargis' direct hit on Myanmar. Many people don't know where Myanmar is, and those that do, are likely to be put off by the military government, particularly following the crackdown several months ago on Buddhist monks. Nevertheless, there probably are more than a few people who still want to do something. After all, those who...

COLLEGE GRADS LEARN THAT WALL STREET IS ANYTHING BUT CHARITABLE EVEN THOUGH IT USES THE COVER OF CHARITY TO SOFTEN THE BLOW

DATELINE: April 4, 2008, Chicago

"Let's see, I am a top-of-the class Harvard, Yale, University of Chicago, NYU, Stanford, or Northwestern University MBA. Should I go to Goldman, Lehman Brothers, J.P. Morgan, or Bear Stearns?" Such hard choices students faced last year, particularly with those lucrative $40,000 and $50,000 signing bonuses.

Some chose Door No. 3, Bear Stearns. As Monty Hall used to say when the lovely...

AN ALTERNATIVE HYPOTHESIS ABOUT THE AMERICAN RED CROSS’ $200 MILLION DEFICIT

DATELINE: January 16, 2008, Chicago

The American Red Cross just can't seem to catch a break. The opening paragraph of today's article by New York Times reporter Stephanie Strom reports that the American Red Cross is facing a $200 million operating deficit. Short on Fund-Raising, Red Cross Will Cut Jobs. This could lead to the layoff of up to 1,000 employees in the national office, according to Strom, which amounts to a one-third reduction in headquarters staff. There is also talk of reducing regional management. This will be a surprise to staff, but it should not be that much of a surprise. Prior to his forced departure last November, former-Red Cross president and CEO Mark Everson had apparently talked of a 20% reduction in staff.

One thing is for sure: Those who have argued...

DOING GOOD DOES NOT JUSTIFY AD HOC TAX BREAKS: LESSONS FROM VIRGINIA TECH, HURRICANE KATRINA, TSUNAMIS, AND OTHER TRAGEDIES

Dateline, April 26, 2007, Chicago

After every major tragedy there is an apparent desire on the part of complete strangers to provide some aid to the victims. The more intense the media coverage, the more intense the desire to provide aid. Often politicians encourage the outpouring, as Stephanie Strom of the New York Times reported this past weekend in Katrina Tax Break Spurs $11 Billion in Donations, April 21, 2007. You may recall that following Hurricane Katrina, Congress enacted legislation that lifted the 50% limit on charitable contributions of cash made to most charities during 2005. One Treasury official put the cost of that provision at $3 billion, according to Strom. Congress had originally estimated the cost at $819 million.  As we reported earlier, one of the legislation's prime beneficiaries was Vice-President...

A WORTHY CAUSE DOES NOT JUSTIFY STUPID LEGISLATION: FALLEN FIREFIGHTERS ASSISTANCE TAX CLARIFICATION ACT OF 2006

Dateline:  January 2, 2007, Chicago

Many will recall the tragic events of October 26, 2006, when five firefighters were killed by a sudden burst of flames from a brush fire that had been set by an arsonist. The event received widespread coverage around the nation.  It is therefore not surprising that someone decided to set up a fund for the firefighters’ survivors.  It is also not surprising that funds poured in, eventually exceeding $1 million.  The fund was handled by the United Way of Central County, California.  According to an article in the L.A. Times, at the half million mark, United Way official Bob Duistermars decided to place what the Times characterizes as a “cautionary call” to the IRS.  Maeve Reston, Donations to Firefighters’ Survivors Put at Risk, L.A. Times, Dec. 8, 2006.  And guess what?

The IRS told Duistermars that the United Ways’ actions could cost the United Way...

SIX HURRICANE SEASONS WILL COME AND GO BEFORE THE AMERICAN RED CROSS IS READY TO GOVERN ITSELF: UNACCEPTABLE

Yesterday was the big day.  The American Red Cross began the rollout of its new governance structure, with a more formal plan to arrive this Thursday.  You know there is a problem when...

VICE-PRESIDENT CHENEY WAS A PRIME BENEFICIARY OF KATRINA TAX RELIEF, OR AS JON STEWART SAYS, "QUACK, QUACK, QUACK"

  The Republican Congress sure knows how to take care of its friends.  This is tax weekend in the United States and in celebration of the annual ritual, the White House released President Bush's and Vice-President Cheney's tax returns.  The VP may be a lousy shot, but he sure can hit the target buried deep in the tax code.  The VP was one of the prime beneficiaries...

THE AMERICAN RED CROSS HAS A PROBLEM, BUT NOT THE ONE EVERYONE IS FOCUSED ON: MANAGING ITS OWN CRISIS

The American Red Cross came under a barrage of criticism last week regarding its stewardship of resources used in connection with its Hurricane Katrina relief operations.  New York Times reporter Stephanie Strom fronted the Friday, March 24, 2006 edition with an article entitled Red Cross Sifting Internal Charges Over Katrina Relief.  The accusations in question include “improper diversion of relief supplies, failure to follow required Red Cross procedures in tracking and distributing supplies, and use of felons as volunteers in the disaster area in violation of Red Cross rules.”  Strom reported that interviews with over a dozen volunteers suggested that the Red Cross had “virtually no...

IT IS TIME FOR SENATOR GRASSLEY TO PUT AN END TO EXPEDITED EXEMPTIONS: WHAT IS GOOD FOR THE RED CROSS IS GOOD FOR EVERYBODY ELSE

As regular readers of this blog know all too well, Senator Grassley, Chairman of the Senate Finance Committee, is very interested in reforming the nonprofit sector.  He and his staff have floated a litany of proposals of questionable merit.  His focus is on governance, which should really be the concern of state legislatures and attorneys general.  His focus should instead be on tax-related issues.

Monday’s New York Times carries an article by Stephanie Strom (Many Charities Founded After Hurricane Katrina Are Faltering) that examines some of the charities that received expedited review by the IRS because they claimed to be related to Hurricane Katrina.  As we have said before, this is a practice that should....