My dinner with Julian

A few weeks ago, I got to have dinner with Julian Bond.  We have a friend in common, who asked me to recommend a play for when “my friend Julian Bond” came to town. “Did you say ‘your friend Julian Bond?’” I squeaked into the phone; whereupon she invited my boyfriend and me to join her and her husband and Bond and his wife for dinner.

As I drove our star-struck way downtown, I listened to Michael read from Bond’s biography on Wikipedia, even as I pretended to ignore him: “Honey, they’re not going to give us a test!”  But after he rolled through the familiar list of credits–leader in the American civil rights movement, helped establish the Student Nonviolent Coordinating Committee, first president of the Southern Poverty Law Center, twenty years in the Georgia legislature, University of Virginia history professor, past chair of the NAACP–Michael said, “Oh, listen to this.  His father got one of the first PhDs granted to an African-American by the University of Chicago.”

“Really,” I said.  “I wonder if he was a Rosenwald Fellow.”

You’ve probably never heard of the Rosenwald Fellowships, but you’ve undoubtedly heard of many of the Fellows: W.E.B. DuBois, Gordon Parks, Jacob Lawrence, Zora Neale Hurston, Alain Locke, Langston Hughes, James Baldwin, Marian Anderson, Katherine Dunham, James Weldon Johnson, Ralph Ellison and nearly every other African-American artist and scholar active in  mid-Twentieth Century America.  The Rosenwald Fellowships, like the MacArthur genius grants which succeeded them, gave no-strings-attached cash to scholars and artists to continue their work; but unlike the MacArthur grants, the Rosenwalds went almost exclusively to African-Americans.

The fellowship program was part of Julius Rosenwald’s one-man campaign for racial justice, a campaign which led him to build the Rosenwald Apartments in Chicago and YMCAs in other Northern cities to provide housing for African-Americans moving up from the South.  It also led him to construct 5,000 schools for black children who were kept out of public classrooms occupied by white students.  The Rosenwald Schools provided primary education to one-third of the South’s African-American schoolchildren between World War I and Brown v. Board of Education.

So why haven’t you learned about any of this?  Because Julius Rosenwald, who made a fortune as the president of Sears, gave much of that fortune away during his lifetime and directed that the rest be spent within ten years of his death.  So his legacy isn’t a foundation with a big building giving out the occasional grant and the frequent press release; it’s the thousands of people educated and housed by his generosity.  But no good deed goes unpunished: for failing to make perpetuity his highest concern, Rosenwald has largely been forgotten.

Not by all of us, though.  I learned the story several years ago when the Spertus Museum in Chicago put on an exhibit of work by Rosenwald  Fellows.  One item in the exhibit was enough to persuade me of the Fellowships’ significance: a kinescope of Katherine Dunham performing new dances influenced by her Rosenwald-funded trip to the Caribbean.  As I watched the motions and the gestures, I recognized the origins of Alvin Ailey’s classic “Revelations.”  Ailey was Dunham’s student; and so, from Rosenwald to Dunham to Ailey, we have perhaps the premier work of American dance.

Thus, after a pleasant dinner in which we talked about theater and travel and the demographic transformation of Washington–Bond’s wife Pam said, “Yes, Julian calls our neighborhood Upper Caucasia”–I turned to him and said, “So, your father was a Rosenwald Fellow?”

He seemed equal parts surprised and gratified to encounter someone who knew about the Rosenwalds, and what an honor it was to receive one, and told the following story:

During a trip South in the mid-1930s to do research as part of his fellowship, Horace Mann Bond drove his car into a ditch.  Apparently a pair of rural African-Americans made their living digging holes in the road and then charging hapless motorists to tow their cars out of them.  While the two entrepreneurs were hooking up the tow truck, one of them observed Mr. Bond’s elegant city clothes and the new car he was driving, and asked how a black man came to have such luxuries.  Mr. Bond explained that he was a Rosenwald Fellow and that the fellowship had paid for the clothes and the car as well as the research he was about to do.  His interlocutor smiled: “You know Cap’n Julius?”  He hoisted the car back onto the road.  “No charge.”

Later, over coffee, Julian showed me an iPhone photo of himself seated next to an extremely elderly white lady who was holding his hand in both of hers.  “Do you know who this is?” he asked.  “In 1961 her book outsold the Bible!”  It was, of course, Harper Lee, author of To Kill A Mockingbird; and on one of his recent trips South, Bond had gotten to meet her.  “I’m so excited, I’m stopping people on the street to say, ‘Look at this!  I had coffee with Harper Lee!’”

Which is, of course, just how I feel about my dinner with Julian.

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Charitable giving, radical utilitarianism and democracy

Over on The Nonprofiteer, I grapple with the justification for philanthropy which fails (as mine does) to increase Disability-Adjusted Life Years in the developing world. Not entirely satisfied with my arguments and would welcome any and all assistance.

Stupid Billionaire Tricks: Give Charity to MBAs

The Nonprofiteer is at it again, gently suggesting that a Sun Microsystems billionaire isn’t necessarily the world’s authority about how to combat poverty.  But maybe fighting poverty isn’t what he had in mind after all.

Who taught people to say “charity” with a sneer?

Public school funding: perhaps the public could help out?

I hold forth on/as the Nonprofiteer on the idiocy of our debating who should pay for public schools, and the extreme idiocy of our thinking it swell that the cradle of a democratic society should be controlled by individuals whom nobody elected.

Poverty, Meet Cash Transfers

In my guise as The Nonprofiteer, I suggest that the solution to poverty might be money.

dorothea lange depression era photographs 13

Alert the media.  No, really.

News Flash: Philanthropy Is Wealth Solving Problems of Its Own Creation

Warren Buffett’s son has figured out that the proud towers of philanthropy are built on the rotten foundations of inequality and excessive wealth accumulation. I give him credit for being willing to say this aloud–it’s usually left unsaid, one of those things everyone in the club understands but which might be resented by the polloi so we just won’t mention it.

I don’t grok the end of the piece, though, where Buffett calls for a “new paradigm.” Like “thinking outside of the box” or “disruptive technology,” that’s always a safe bet in the rarefied world of TED talks and innovation gatherings. But I dare to argue that what we actually need is the original paradigm–namely, that in a democratic society we come to consensus on the problems to be solved and then tax ourselves to solve them, rather than permitting accumulations of extreme wealth and letting wealthy people create their own social policies.

And I also dare to argue that for the moment, while living under the reign of Big Capital and Big Philanthropy, maybe we should be a little less grateful.

 

The last word (don’t we wish) on venture philanthropy

This is the smartest, ballsiest response I’ve seen to the omnipresent nonsense about how what’s wrong with philanthropy and charity is that they’re too soft-hearted and how all the problems of the world could be solved if they were just more rigorous and did their “due diligence” and brought other failed concepts and consultant buzzwords over from the for-profit sector. What refreshing thoughtfulness and appropriate humility. Bravo, Mr. Scanlan!

cross-posted with nonprofiteer.net

What price democracy?

There’s an old joke about a man who asks a woman to sleep with him for $1 million. She agrees, whereupon he asks her to sleep with him for $1. “What kind of a girl do you think I am?” asks the woman indignantly. “We’ve settled that,” replies the man, “We’re just arguing about the price.”

This came to mind in response to this story about the price of the Broad Foundation’s generosity to the schools of New Jersey. A recent Broad Foundation grant stipulates that it will be available only as long as Chris Christie remains governor.
Continue reading “What price democracy?”

Nonprofit Corporate Governance: The Board’s Role

In the nonprofit setting, misconceptions about corporate governance abound. Are board members primarily fundraisers? Cheerleaders? A rubber stamp to legitimize the actions and decisions of the executives? Do they run the organization to the extent staff is unable? Are they window-dressing to spruce up the organization’s letterhead? If they are rich or famous, must they attend board meetings? How do they know whether they are doing a good job, or when it is time to go? Despite nonprofit and for-profit corporations’ common ancestry and legal underpinnings, nonprofit corporate governance places heightened demands on trustees: a larger mix of stakeholders, a more complex economic model, and a lack of external accountability. This post, excerpted from Lesley Rosenthal‘s Good Counsel: Meeting the Legal Needs of Nonprofits and originally appearing in the Harvard Corporate Governance Forum, explores how substituting a charitable purpose for shareholders’ interests affects the board’s role.

In organizations of all kinds, good governance starts with the board of directors. The board’s role and legal obligation is to oversee the administration (management) of the organization and ensure that the organization fulfills its mission. Good board members monitor, guide, and enable good management; they do not do it themselves. The board generally has decision-making powers regarding matters of policy, direction, strategy, and governance of the organization.
The board of a well-governed nonprofit organization, like the board of a well-governed profit-making company, will do all of the following:

  • Formulate key corporate policies and strategic goals, focusing both on near-term and longer-term challenges and opportunities.
  • Authorize major transactions or other actions.
  • Oversee matters critical to the health of the organization— not decisions or approvals about specific matters, which is management’s role—but instead those involving fundamental matters such as the viability of its business model, the integrity of its internal systems and controls, and the accuracy of its financial statements.
  • Evaluate and help manage risk.
  • Steward the resources of the organization for the longer run, not just by carefully reviewing annual budgets and evaluating operations but also by encouraging foresight through several budget cycles, considering investments in light of future evolution, and planning for future capital needs.
  • Mentor senior management, provide resources, advice and introductions to help facilitate operations.

Similar to for-profit corporations, the power to control and oversee the management of the affairs and concerns of a nonprofit corporation is set forth in its corporate charter. Generally speaking, state law permits both kinds of corporations to self-direct significant allocations of power and responsibility, and then requires them to follow their own corporate governance and operational policies. The familiar fiduciary duties of care, loyalty, and – sometimes – obedience, undergird these requirements in both sectors.

In a well-governed organization of either the for-profit or nonprofit kind, the board does not permit executives to run and dominate board meetings, set agendas, or determine what information will be provided to board members. Under the leadership of an active and functioning board chair, there is adequate opportunity at board meetings for members to receive and discuss reports from not only the chief executive, but also, as appropriate, directly from other executives, in-house and outside professionals, and independent consultants if necessary. Time should be reserved for executive sessions, at which management should be excluded so that its performance may be fully and freely discussed.

Mission is what distinguishes nonprofits from their for-profit cousins: Nonprofits have missions instead of owners or shareholders. While the prime directive for board members of for-profit organizations is to ensure the highest possible value for owners, by contrast, nonprofit board members’ prime directive is mission fulfillment.

Board independence and board attention are of paramount importance in good nonprofit governance. The independence of the board is key because of the non-distribution constraint – nonprofits exist to serve the public interest, not to benefit owners or other private parties. Business or family relationships between the organization or its executives and a board member or her firm are frowned upon and should be strictly scrutinized under a conflict of interest policy administered by independent directors. Even absent outright business or family relationships, a common shortcoming of nonprofit boards is that they are too small, too insular, or too deferential to the founder or chief executive.

Another frequent error of nonprofit boards is inviting new members because of their marquee name within a certain field of endeavor (e.g., a famous dancer on the board of a dance organization) or their means and inclination to donate, without due consideration to the person’s ability and availability to fulfill fiduciary duties, providing the critical oversight function. The governing body of a nonprofit must be made up entirely of people in a position to govern it—setting the strategic direction of the organization and overseeing management’s execution of the mission. Wealthy or prominent persons— donors, artists, scientists, public officials, and others—with an interest in the organization’s program but lacking the time, availability, or expertise to provide meaningful oversight may serve the organization in a non-fiduciary capacity, such as an honorary or advisory board, donors’ circle, or professional council.

Governance is more complex in charitable nonprofits for a number of reasons. Public charities (501(c)(3) organizations) are intended to serve a public purpose, and the board must bear in mind that broad interest. Depending on its mission, history, and geographic reach, a nonprofit may also have specific stakeholders or different groups of stakeholders, some or all of whom may be represented by categories of board members under the organization’s by-laws. The interests of the organization’s ultimate clients, who may be indigent or otherwise disadvantaged, are another important consideration. The organization’s management and workforce may be paid less than their for-profit peers for similar work – if at all – further complicating the board’s oversight duties. In addition, nonprofit trustees may feel role-strain – or worse – because of real or perceived obligations to interact with, attract – or even be – charitable donors. These additional factors make nonprofit board decision-making arguably a much more complex process than the straightforward mandate of maximizing return.

Moreover, nonprofits’ economic models may be more complex than for-profits’ models, including a dynamic blend of earned revenue (ticket sales for a symphony, fee-for-service billings by a hospital, tuition payments to a university) and contributed income (annual fundraisers, “Friends of” membership groups, end-of-year solicitations, capital campaigns). Wealthier nonprofits with endowments can also count on a stream of revenues from investments. In harsh economic climates, however, there is a high correlation between reduced contributions and weaker investment returns. Compounding the difficulty, hard times on the revenue side often coincide with heightened demand for organizations’ services, particularly social services, increasing expenses and creating cash crunches, trouble balancing budgets, or even persistent deficits. Savvy nonprofits have added “third streams” of revenue to supplement and diversify traditional two sources. Entrepreneurial initiatives may include leveraging real estate or other assets, monetizing treasure troves of intellectual property know-how, or engaging in joint ventures with fellow nonprofits or even commercial entities. In envisioning and evaluating such enterprises, board and management must observe regulatory requirements and consider tax implications. In lean years and in growth years, the board must be deeply engaged in overseeing the organization’s investments, its other sources of revenue and expense, and the planning of new initiatives.

What happens when board members fail? In theory, the mechanism in a for-profit corporation for correcting errant board members is straightforward: if the investors don’t like what the directors are doing, they vote them out of office. But in the absence of investors, nonprofit boards must be self-correcting. No one has ever made a tender offer because a nonprofit was inefficient. Moreover, governmental agencies regulating the sector tend to be small and under-resourced, making it highly unlikely that any but the most obvious misconduct will be detected and corrected from the outside. Unless board members are doing something illegal or are term-limited out of office, they may serve in perpetuity, giving them ultimate power over the organization. In this regard, nonprofit trusteeship is a unique and privileged role.

By a number of measures, nonprofit and for-profit board governance are similar: the board’s oversight role, its decision-making power, its structural place within the organization, and its members’ legal duties. The similarities end, however, where shareholder interest in maximizing returns gives way to mission fulfillment, a multiplicity of stakeholders, more complex business models, and self-accountability rather than external accountability.