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The team from Charity Navigator, the nation's largest independent charity evaluator and leading donor advocate, shares their thoughts on emerging nonprofit-sector issues and offers tips to better inform your intelligent giving decisions.

Friday, August 29, 2008

Charity News Roundup

In case you missed it, here are some of the charity headlines making news this week:

  • Senators Charles Schumer (D-NY) and Richard Burr (R-NC) have established the Senate Philanthropy Caucus, which will work to find ways to help foundations and charities.

Wednesday, August 27, 2008

Ten More Rules for Public Charity Work

This is the last in a series of three weeks of blog entries on what I think are some of the qualities of a good public charity. The first week I listed three suggested Core Values. The second week I listed the first ten rules for public charity career advancement, public charity operations and evaluating a CEO. Below is the grand finale!

11. Small is beautiful and a small organization usually gives you more latitude to be creative and learn a lot. Beware of large bureaucratic organizations where you become a cog in someone’s wheel. However, sometimes a mid-sized organization is better than a small one, in that you do not have to constantly worry about agency survival and too many tasks for too few hands!
12. Never bad mouth anyone. EVER! OK, at least try your best not to do it.
13. Some CEO’s are very selfish. They settle into their agency and become lifers at self-promotion and draining the public trough to line their pockets. Learn what you can and move on.
14. Do you see a CEO wise in their own eyes? There is more hope for a fool than for them.* Learn what you can and move on.
15. Evil (unethical behavior) can prevail for a season, but eventually good prevails. That doesn’t mean you have to sit and take it, find a way to get the evil dealt with or move on.
16. The best team in the world can still fail, if the deck is stacked against you. Don’t take it personally if you’re dealt a bad hand. Pick yourself up and get back in the race.
17. A sense of humor is critical and that’s no joke, especially when the chips are down.
18. Question authority, but do it gently and in a collaborative, supportive way.
19. There are three core values that every CEO should strive to instill into the culture of their organization and they should nurture (move up) those staff who promote these values (see blog entry of August 13, 2008 for more details); A) a Client Centered Approach, B) a Team Model, and C) a Continuous Improvement Process.
20. You will never fully achieve the three core values, but you should continually strive to get better at them throughout your work life. That will “move up” the organization and you along with it!

* As per rule 14, I don’t presume to be wise, therefore take these rules with a grain of salt…..

Friday, August 22, 2008

Charity News Roundup

In case you missed it, here are some of the charity headlines making news this week:

  • Almost seven years after the September 11 terrorist attacks on our nation, groups aiding victims find their money dwindling.
  • Several charities and foundations are dealing with the after-effects of embezzlement.
  • The American Red Cross is facing a deficit, and is having trouble raising funds.
  • While some organizations would welcome more Federal involvement, others are wary of a television production being pitched to them.
  • The Entertainment Industry Foundation hopes to benefit when fifteen of the best female voices of today collaborate on the song ‘Just Stand Up’. Proceeds go to EIF’s program Stand Up to Cancer. The song, which is being released on September 2nd, will be performed live during the Stand Up to Cancer television special on September 5th.

Wednesday, August 20, 2008

Ten Rules for Public Charity Work

As I promised in last week's blog, I present to you today my observations on what I think are some of the qualities of good versus bad CEOs. Furthermore, if you are thinking about or currently working in a public charity, I submit these rules for you to consider as you advance (hopefully) in your career. I am providing ten rules this week and another ten next week. Some of these rules are quite universal and transcend public charities. I hope you find them helpful.

1. A CEO’s job is sometimes focused on process and reactive, like a person running beside a snowball rolling down a hill. It gets bigger and bigger and rolls faster and faster. Your key job at times is to simply run alongside it and yell, “Look out! Here it comes!” At other times you can be proactive and get to create your own snowball. At times you can also be outcome focused and plan ahead, building a trail that the snowball will follow. Then you don’t have to shout!
2. There is an 80/15/5 rule - 80% of staff do a day’s work for a day’s pay, they are reactive and do not question things. 15% are problem identifiers and will let you know what needs to get fixed. 5% are proactive problem solvers, the gems of an organization. If you can increase the problem solvers to 10% or more, you are among the best of the best and you’ll have good snowballs.
3. You can accomplish anything, as long as you let other people take credit for it. Especially if you are willing to be paid very little.
4. Stay at a place where you are encouraged to use your creativity and skills to the fullest. It is a rare and precious organization that allows you to do that.
5. Pace yourself and don’t sacrifice your personal life for a job, otherwise you will burn out.
6. You can’t please everyone, so you got to do what’s best.
7. Who you know may get you a job. Who you know can also result in you not getting a job. It depends on what level the job is and what level your contact is.
8. Nurture your organization’s Scarecrow and Tin Man (brains and heart). Margin and mission both must be kept in focus in order for a charitable non-profit to succeed.
9. Don’t wait for things to be handed to you, go out and get those things for yourself - but in a respectful way without stepping on anyone. Be assertive but not too aggressive.
10. In lieu of the profit motive as a reward system, most non-profits reward those who grow the organization, but growth without heart is meaningless.

Friday, August 15, 2008

Charity News Roundup

In case you missed it, here are some of the charity headlines making news this week:
  • American nonprofit groups have raised more than $110 million for victims of the natural disasters that hit Myanmar and China in May.
  • A nonprofit legal organization and watchdog group announced a plan aimed at restoring confidence in Muslim charities and protecting them from unfair government scrutiny.
  • The Bill & Melinda Gates Foundation has announced $17.6 million in emergency relief grants to help those affected by the global food crisis.
  • Following the trend set by four-year colleges, Bay Area community colleges have gotten into the philanthropy game.
  • As more Seattle residents struggle with high food and fuel prices, the organizations that are their safety net are beginning to falter.
  • The NFL is asking Congress for an exception to the requirement of publicly disclosing the names and salaries of employees at NFL headquarters who make more than $150,000 a year. Interestingly, the NFL headquarters in New York has nonprofit status which under the tax code requires the disclosure of "key employees."

Wednesday, August 13, 2008

Core Values are Not Just a Sign on the Wall

I went to a hotel a while back and saw a sign listing the Core Values for the organization next to the registration counter. It was a slow time of day for the hotel and the four employees behind the counter were all available to help. So I walked up to the counter, took a piece of paper and placed it over the Core Values sign and asked if any of them could name just one of the Core Values. They laughed sheepishly and admitted that none of them could.

I find this same level of awareness among the staff of many public charities, up to and including the CEO. The Core Values of an organization are meant to capture the essence of the culture and what is most important in how they conduct their work. If there is indifference to their very existence, I think it tells you a lot about how they operate.

I submit to you that the only way to make an agency's Core Values real, is to have ongoing discussions about them and whether or not they are being followed in the day to day operations. If they are not being adhered to, the leadership of the agency needs to take measures to correct the problem(s).

Given the nature of most organizations, it all starts from the top. If your CEO does not live the agency Core Values, they are not worth a hill of beans. In the coming weeks I will provide some suggestions for rules that public charities, their employees and CEOs should follow, but for now let's stick with the values.

After many years of being in the trenches and providing human and health care services to people in need, as well as observing the good, the bad and the ugly of public charity operations, I have boiled it all down to three basic Core Values that I find most important. I list a sample Statement of Core Values that encompasses the three below, for your consideration.

For our organization to maintain its high standards of excellence and integrity, it is important that all employees recognize and share similar Core Values. Core Values are defined here as the ideals by which an organization functions. They are the work ethic and philosophy of its employees. The three Core Values of our organization – A Team Model, Client Centered Approach, and Continuous Improvement Process – are the guiding principles of our organization, and what we aspire to.

#1 A Team Model
We believe that each employee must take ownership of their areas of responsibility, as well as care for the agency as a whole. To accomplish this, we must work together as a team. The following concepts are central to a successful team approach:
a) Everyone deserves and should be treated with respect, regardless of title or position. This includes having one’s ideas and suggestions heard. Everyone has a unique perspective and sometimes the best ideas come from people who bring a fresh point of view. Respect also means speaking to co-workers and subordinates courteously and professionally.
b) Creativity is the most precious jewel of an organization, and should be encouraged. Everyone is responsible for making the organization a “safe space” where employees at every level are comfortable voicing their ideas and opinions.
c) Communication is vital to the team approach. We should foster teamwork by holding interdepartmental meetings regularly to discuss issues, and to share ideas and brainstorm solutions.

#2 A Client Centered Approach
The clients we serve must be of central concern at all times. Various departments and/or positions within the organization may serve different clients such as donors, funders, other employees, and governmental regulators to name only a few. We need to know who our clients are and be consistently focused on providing the highest quality service. We should also think and work proactively, always keeping quality client services in mind. When making a decision we should always ask, “How will this affect our clients?”

#3 A Continuous Improvement Process
A continuous improvement process is used to ensure that there is constant review and enhancement of the work environment and client services. Each of us should question workplace issues that we are concerned about. Our policies, procedures and directives were created to establish a standard of excellence within our organization. It is only through continuous review that these standards can be maintained and improved upon. Genuine suggestions and questions are to be respected, encouraged and evaluated objectively. Never take the attitude that “it’s always been done that way.”

In summary, each employee shall agree to the following Core Values:
1. I will incorporate the Team Approach into my work. I will strive to keep open the lines of communication between myself and other people and departments to generate new thoughts, ideas, and to resolve issues.
2. I will focus on maintaining our organization as a Client Centered organization, where concern for the client is at the heart of all ideas and decisions.
3. I will make a commitment to Continuous Improvement of client services and
organizational standards.

Friday, August 8, 2008

Charity News Roundup

Here are some of the new and continuing charity stories in the headlines this week.

Thursday, August 7, 2008

CEO Compensation - Donor Frustration

For 4 years now we have been putting out our CEO compensation study . Reporters are asking us, "What's new with this year's study? Are there any surprises?" My answer to them is as follows:

"The results of the study are not that different than the year before, however there is something new that is enlightening. 9 months ago we added a new feature to our site, the ability for donors to make comments about charities they are considering donating to. Without question, the most common donor comment we are seeing goes something like this:

I can't believe how much money the CEO of this charity is making! I have been donating to them for years. However, I will NEVER do so again!"

We agree that, in some cases, salaries are way out of line. For example, the CEO of Johns Hopkins University is making over $1.5 million. That is NOT what we would consider to be reasonable for public charities!

However, the fact that the average CEO salary in the US is around $149,000 does not seem unreasonable to us. As we note in this year's study:

"To the skeptics, we ask that you keep in mind that the charities included in this study are multi-million dollar operations. Leading one of them requires an individual that possesses both an understanding of the issues that are unique to the charity's mission as well as business and management expertise similar to that required of for-profit CEOs. Attracting and retaining that type of talent requires a certain level of compensation."
What kind of expertise are we talking about here? The skills needed include financial management, fundraising, public relations, human resources, program operations, strategic planning, board relations and administration, among many other talents.

Nonetheless, many of the donors who make comments on our site do not agree. I believe that the reason in part relates to a very straightforward logic - I am donating to a CHARITY, therefore the leadership should be receiving only a small amount of compensation. In other words, it is assumed by some, that leaders of charities must sacrifice and have a "charity" level income or even take a "vow of poverty" to take the job. In theory, this would be great, but in reality it does not work that way. Furthermore, I believe that most CEOs of charities ARE making a very real sacrifice. We note in our study that CEOs of similar sized for profit operations make an average of $11 million with their stock options, etc.

So what do we think is best practice? Every charity, of the size we evaluate, should have a Board Compensation Committee that reviews the CEO salary on some periodic basis and benchmarks both the initial salary and ongoing raises according to norms within that particular category and cause of charity. Our study is one of the tools that the Board can use in this process. The CEO also has a responsibility to make sure that the Board is aware of the full financial cost of any decision they make. For example, if they give a 5% salary increase to the CEO and the agency also provides contributions to a pension plan or other deferred compensation, they need to know the cost of that as well.

The new IRS 990 has a number of questions about CEO compensation and whether an organization has a Compensation Committee. We will be adding this information to our web site down the road for returns in the future (starting some time in 2009). In the meanwhile, you as a donor are encouraged to contact the charity you are considering donating to and asking them if they have a committee in place and how they go about making these salary decisions.

That reminds me of another point that may further frustrate the donors mentioned above. Be aware that our information only captures certain categories of what the CEO gets; there are other benefits they may receive that are above and beyond what is reported here. For example, a CEO often receives contributions to a benefit plan or deferred compensation that could end up, over the years, totaling millions of dollars. This information is not included in the salary number on the 990 (unless the person is at or near retirement) and therefore it is in large measure not reflected in our study.* So, for some donors, the frustration they have with highly compensated CEOs may only be the tip of the iceberg. Donor beware!

*You can find the information regarding these benefiits in another area of the 990, part V column D, but that is not considered CURRENT compensation by the IRS.

Tuesday, August 5, 2008

This Call Has Been Disconnected

Our simple advice to donors on how to deal with telemarketing calls from charitable fundraisers: Hang up and do some research.

If you've ever wondered why that is, read this article. Kudos to the Office of the State Attorney General in Massachusetts for conducting a two year investigation, pressing charges and urging constituents to "do a little homework'' before giving money to charity.

Let the Olympic Games Inspire You

With the eyes of the world watching, some of the Globe’s most amazing athletes are about to embark on the sporting event of a lifetime. The 2008 Summer Olympic Games are set to begin on August 8 in China. And while we celebrate the achievements of the athletes (aided by such governing bodies as the United States Olympic Committee, and the United States Equestrian Team Foundation), we hope that the plight of the May 12, 2008 China earthquake victims is not forgotten. You can find out how to help by clicking here.

In addition, let the people whose feats of athleticism will flood our television sets in the coming weeks inspire us to reach out to those athletes whose accomplishments may never be celebrated in the global spotlight. Athletes participating in Special Olympics events are able to train year round, and hold their own Special Olympic summer and winter Games. You can find a list of local Special Olympics organizations rated by Charity Navigator here.

Monday, August 4, 2008

Charity Navigator's 2008 CEO Compensation Study is Complete

Even though some our users have clearly expressed their discontent with the compensation CEOs of their favorite charities receive, Charity Navigator’s 2008 CEO study indicates that the average CEO compensation is roughly $149,000, and represents on average 3.32% of an organization’s overall expenses. While some donors disagree that a nonprofit CEO deserves to earn a six figure salary, we ask that you keep in mind that the charities included in this study are multi-million dollar operations. Leading one of them requires an individual that possesses both an understanding of the issues that are unique to the charity's mission as well as business and management expertise similar to that required of for-profit CEOs.

Our complete study breaks out compensation by region, type and size of the organization. In addition, we also list some of the biggest paychecks received, as well as those organizations who compensate their CEOs via an affiliate, and those who have several members of the same family on the payroll. You can review the 2008 CEO Compensation Study by clicking here.

Friday, August 1, 2008

Charity News Roundup

Here is some charity news from the past week.

  • In an effort to raise money for The Children’s High Level Group charity, J.K. Rowling’s “The Tales of Beedle and Bard” will be published for charity.
  • A study by the Corporation for National and Community Services reveals that the national volunteer rate fell in 2007 for the second year in a row and Miami has been listed with the lowest ranking of the 50 US cities evaluated.
  • Giving circles are informal groups of grass-root philanthropy that collectively award tens of millions of dollars a year to community-based causes, according to the Forum of Regional Associations of Grantmakers.
  • A report finds that nearly three-fourths of charities do some kind of advocacy or lobbying, but the vast majority of them spend less than 2 percent of their budgets to such activities. The charities that conducted no advocacy or lobbying activities, 70 percent said staff members did not have enough time.

August Update

Today we published 278 updated ratings, 9 new charity evaluations, more new top 10 lists and our much anticipated 2008 CEO Compensation Study. With donors and regulators becoming more aware of and interested in the total compensation packages paid to charity leaders and the benchmarks used to set such amounts, this comprehensive study is a must read for those serious about the nonprofit sector.