2015 has been, in a word, intense. We have identified nine significant trends and stories to reflect on and encourage you to add a tenth, or as many as you like. We thank all of the readers and others who contributed ideas for this annual column.
- Activism through loose networks continues as a force to be reckoned with…and that’s us
- Nonprofits as political footballs: You’d better learn the game
- Race moves to center stage and refuses to leave quietly: Embrace it
- A qualitative leap in LGBTQ legal and human rights is achieved—what follows?
- The PILOT and property tax issue intensifies: What distinguishes a nonprofit?
- The U.S. social enterprise field remains an overhyped, underfocused, confused mess—take no wooden nickels
- Billionaire-Giver-Hating: Or, valuing democracy above riches
- Many health co-ops fail: What not to do
- Big Philanthropy and the (for now, still) Public Schools
- Activism through Loose Networks Continues as a Force to Be Reckoned with…and That’s Us
In 2011, Time Magazine named “The Protestor” as Person of the Year, and last year “the Ferguson protestor” came in second only to “Ebola Fighters.” When a mainstream magazine comes to understand that it’s not the individual leader that makes a resilient movement, perhaps it is time to acknowledge that there has been a persistence and vitality in collective action over the past decade that speaks to the power of civil society—not embodied in one nonprofit or foundation, or even a single coalition, but in networks of action that have a unified purpose. On the organizational level, we have seen it in stories like Sweet Briar College and the San Diego Opera, and on the state level we have seen it in the widespread pushback to Indiana’s Religious Freedom Restoration Act. On the national level, we have seen consistent action (and some progress) this past year on wages, racial justice, and environmental issues. Take a bow if you participated, but only for a quick moment, because the work is far from done.
- Nonprofits as Political Footballs: You’d Better Learn the Game
Some nonprofits spent 2015 being hauled into the middle of national partisan fights. The most identifiable by name, of course, is Planned Parenthood, which was “stung” by a series of videos released by the Center for Medical Progress in July of this year. Though the footage was later revealed to be rather heavily edited, allegations from the CMP that Planned Parenthood was selling fetal tissue for a profit dogged the organization, which spent the rest of the year fending off attacks made on that basis. The Republican Party and its members made most of the calls to action, threatening to once again shut down the federal government if they could not get a rider defunding the group. (Planned Parenthood, to be clear, has never been federally funded to provide abortions; the funding it receives is for other women’s health services.)
At the time the videos were released, Rick Cohen wrote “Smoke and Mirrors and Malice: What Nonprofits can Learn from the Planned Parenthood Imbroglio,” a critique of the organization’s original communications response.
Nonprofits can take a few lessons from this. First, caution staff against callous discussions of sensitive issues—ever. It is a bad look for any organization dealing with questions of life and death, and a disastrous one when the organization is already in a decades-long war.
Second, when attacked, find a way to use the moment to re-declare your own principles and strengths: “We believe in a women’s right to choose and we admire women who even in their own moment of difficulty can make this decision. We want to be helpful to those good intentions, as any medical facility must, even when a family might be grieving.”
Later in the year, we saw a legislative hearing that was meant to take Planned Parenthood to task for the fetal tissue issue but instead wandered off into other mini-attacks, one of which was an attempt to call out Cecile Rogers, the CEO of Planned Parenthood, for her salary. She was momentarily stymied—probably surprised by the irrelevance of the question—though NPQ later showed that she is relatively underpaid for her position, as many nonprofit women leaders continue to be. Still, it is worth noting that virtually any attack on a nonprofit will eventually include a look at the salaries of its leaders—often available in the public record via the Form 990—and it’s best to be prepared for this cultural prerogative. It is a basic tenet in this sector, which enjoys some reputation for doing good, that excessive greed is not a good look.
As we ended the year, many had moved on to a different vein of extremist rhetoric, aimed at trying to prevent Syrian and Iraqi refugees from entering the United States. While this issue was not identified with any particular organization, in some of the states whose governors had declared them unfriendly to refugees, nonprofit resettlement agencies were threatened with loss of state funding if they were, as is required by their federal contracts, to resettle these refugees. Some groups calmly faced this down, refusing to capitulate while remaining civil. In Texas, this turned into multiple lawsuits brought by the state against both the feds and the resettlement agencies, many of which are national and faith-based. And, indeed, faith communities emerged in force to protect resettlement efforts, as exhibited here and here. This protection from groups other than those involved is critical to the attacked organization’s positioning, and we wish we saw more of it from nonprofits in general.
Other smaller stories from the states included Maine’s Governor LePage threatening to yank funding from a local nonprofit charter school if they went ahead as planned to hire a political rival as president of the school. The school folded in the face of the pressure, but not without reputational losses:
CentralMaine.com reports that alumni and parents feel that the Good Will-Hinckley board’s decision to withdraw a job offer to Mark Eves is a bad example for students indicating that bullying is acceptable and that money trumps values.
Jack Moore, chair of the board, responded in a telephone interview [June 29th] that he just wanted to let the whole situation and that the board made the decision that was in the best interest of the students. “As fiduciaries faced with the loss of state and significant private funding, the very real financial consequences for the school made the board’s unanimous decision on June 24th black and white,” said Moore.
As part of risk management, nonprofits who stand on principle need to be aware that they may be fair game in political infights and that their communications strategies need to be anticipatory of this. In our opinion, central to that strategy should be a repeated restatement of values but do not for a moment think that if you do not live those values that they will be accepted.
- Race Moves to Center Stage and Refuses to Leave Quietly: Embrace It
In Rick Cohen’s predictions for 2015, he wrote:
There will be no hiding place for racism, overt or otherwise. The time for giving racism a pass is drawing to an end. This isn’t a matter of being PC, but a new or renewed commitment of this country toward eradicating the vestiges of official, structural, institutional racism—ranging from the sanctioned, studious ignorance of sports teams to the nation’s failure to indict police for the use of unnecessary, extreme, and often deadly force when not warranted against persons of color—and attacking the roots and persistence of implicit bias. We expect that in 2015, racism will be ratcheted up as a top priority concern for nonprofits.
This has, in fact, played out on many levels. Loose networks like the Black Lives Matter movement have remained active not only in protesting police violence against black people, but in confronting national candidates for government on their attention to race. This confrontation targeted even the most progressive candidates, like Bernie Sanders, which of course shook up the worlds of some lefties, as Cohen relates here:
Some progressives question whether the Black Lives Matter movement has undermined the campaign of the candidate who might be most likely to offer concrete policy responses to the issues they raise. To these critics of the BLM activists, this might be yet another instance of internecine warfare within the left that weakens the candidates the left might otherwise support and hopefully see to victory. Others suggest that it is critically important for BLM activists to shake up the comfortable world of white progressives, including those typically aligned with the Sanders campaign, to make them grasp the seriousness of racial inequities in this country. The #BlackLivesMatter disruptions, in their view, compel politicians like Sanders to address institutional racism in order to adequately respond to the dynamics unleashed after the killing of Michael Brown in Ferguson.
At this time, #BlackLivesMatter does not endorse any presidential candidate. Moreover, we are not affiliated with a political party. […] As stated in our mission, #BlackLivesMatter is an ideological and political intervention; we are not controlled by the same political machine we are attempting to hold accountable. In the year leading up to the elections, we are committed to holding all candidates for office accountable to the needs and dreams of Black people.
And, indeed, as I write this, yet two more black people are dead from police shootings in Chicago. Neither was in possession of a firearm; one was an emotionally disturbed honor student with a bat in hand, and the other was a woman named Bettie Jones, a member of Action Now Chicago who was, according to witnesses, shot in the neck as she opened the door to police. The Chicago Police Department is currently undergoing a federal civil rights investigation that will look into patterns of racial disparity in the use of force, after the release in November of police dashboard camera video from 2014 showing white officer Jason Van Dyke shooting black 17-year-old Laquan McDonald 16 times. (Action Now Chicago is one of the community organizations calling for Mayor Rahm Emanuel to step down.)
But attention to race has not been confined to this one movement or issue or racial group. A number of studies this year have pointed out persistent diversity problems in the ranks of nonprofits, building more data that confirms the findings of a study released by the Green 2.0 working group which showed that racial diversity among large environmental organizations and their funders was not only low, but lower at leadership levels than at subordinate levels of the organizations. This suggests a kind of ghetto effect. Other studies include one on museums, one on the alternative press, and one on boards of directors and leadership of nonprofits more generally. All exhibit findings that align.
In a country headed toward a non-white majority population, the fact that 90 percent of board chairs and 89 percent of executives (in BoardSource’s sample) are white should be cause for concern. Maybe the terrible persistence of racially based differentials in income, health, and educational statistics would begin to shift more quickly if we insisted on a change in the leadership profiles of our own organizations, and that might be helped by establishing a baseline.
Meanwhile, our most read newswire or article of any kind by far this year was one called “Native Lives Matter: Police Killing Native Americans at Astounding Rate,” and as we ended the year, we were faced with a miasma of the most outlandish hate speech from a front runner in the presidential race. It included as targets Mexicans, disabled people, women, Muslims and more. At one point, we chose to stop covering it because it seemed to be drawing power from the reaction to it, a reaction we and our coverage were a part of. But the dynamic of some significant part of the population tolerating and approving of hate speech while another, growing part demonstrates a real drive for racial justice and human rights is a dichotomy that will likely try to resolve itself in coming months. Do you know how your organization will respond?
- A Qualitative Leap in LGBTQ Legal and Human Rights Is Achieved—What Follows?
In June of this year, after a decades-long struggle by LGBTQ advocates, the Supreme Court ruled in Obergefell v. Hodges that same-sex couples had the constitutional right to marry. This is an amazing step, and can we all just stop for a minute to consider the profound qualitative shift this reflects?
But, although a huge stride forward, the ruling was not a be-all, end-all where the legal rights of LGBTQ people are concerned. NPQ quoted, at that time, John Culhane in a column for Politico discussing the certainty of a backlash and the continued need for vigilance, writing:
In many states, gay and lesbian couples will have great difficulty exercising their newfound marriage rights. In some ways, this new chapter of the gay marriage fight will likely mirror abortion rights in the wake of Roe v. Wade—a right technically legal but frustratingly difficult to exercise in many corners of the country.
So despite the fact that this decision is momentous, all of us who care about civil rights must expect to have to protect and reinforce it with vigilance, whether the pushback comes in in our own neighborhood or a few states over.
But a report suggests that institutional philanthropy’s money does not flow as easily as it once had, and that individual givers are beginning to make up a larger portion of the base. As some may remember, a report for the previous year had shown a substantial increase in philanthropic funding. The Ford Foundation made its withdrawal explicit in a statement about its overall shifts in focus. Darren Walker points to domestic funding of groups working on LGBT issues as an example of important work from which Ford will be pulling back in favor of funding such work outside of the United States. “As a global foundation,” says Walker, “we’re adapting and recalibrating our focus where the greatest need exists.” And on a related front, a small cabal of foundations, including ARCUS, which remains one of the largest funders of LGBTQ causes, have just committed $20 million to pursue the rights of transgender people internationally.
Was it the right time for philanthropy to pull back relative to this movement’s needs? Will individuals step forward to pick up any slack? All that remains to be seen. One thing made evident by the rapid and spontaneous outcry about the Indiana Religious Freedom Restoration Act, however, is that many institutions seem poised to use their financial weight to encourage a legal environment that is healthy for the LGBTQ population.
- The PILOT and Property Tax Issue Intensifies: What Distinguishes a Nonprofit?
In NPQ’s predictions for 2015, we predicted both that municipalities would continue to experience shortfalls and that the issue of PILOTs (payments in lieu of taxes) would become more widespread. We worried that municipalities might begin to tax all nonprofits rather than the very largest. In fact, what we are seeing is that the issue has heated up in the courts and among state regulators in a way that tries to bypass the negotiation of fair payments from universities and hospitals and, in some places, just aims at having them declared less than fully property tax exempt.
This is not an entirely new dynamic, of course—see here and here—but there were some pretty significant cases in 2015, one of which, having to do with the Morristown Medical Center in New Jersey, resulted in a tax law judge declaring the modern nonprofit hospital a “legal fiction.” The town was then able to negotiate a higher payment in lieu of taxes from the institutions with retroactive payments included in the settlement. The same judge, in a subsequent ruling about Princeton University, required Princeton to affirmatively prove just how tax-exempt it was rather than requiring the plaintiff to prove that it was not. Both cases challenged the institutions on the grounds that significant portions of their operations were, in fact, profit-making.
Rob Meiksins points out that an analysis on Law360 shortly after the ruling offered three takeaways: “One is that mixing charity and profit leads to lawsuits. This case is different from most others, where the decisions centered on how much the hospital donated to the local community. In Morristown, the decision was based on the organization’s structure, in which for-profit and nonprofit entities became entangled. A second takeaway is that payments in lieu of taxes, or PILOTs, might offer an alternative. The third takeaway is that legislators will take on tax exemptions.”
And, indeed, that is what is happening in New Jersey, where a standardized approach to taxability and PILOT levels is being pursued by legislators and nonprofit hospitals worried that the court precedent could result in higher negotiated settlements if cases were pursued individually. It is worth noting that at least in the Morristown case, the judge took executive salaries into consideration.
Also this year, NPQ wrote extensively about the fact that the California Franchise Tax Board pulled the tax exemption of Blue Shield of California last August. At that time, Rick Cohen wrote:
Chad Terhune, the L.A. Times reporter on the story, catalogs some of the possible reasons that the Franchise Tax Board might have made this decision. For one, Blue Shield maintains a reserve of $4.2 billion, which Johnson says is four times as much as Blue Shield needs to cover potential future claims. With that kind of reserve, it raises questions as to why Blue Shield sought rate increases recently, even if the company has pledged to hold its “profits” to less than two percent. Another might have been Blue Shield’s high salaries, including paying its former CEO back in 2010 and 2011 $4.6 million a year. Public information isn’t available apparently on Blue Shield’s current salary structure except that it pays a few people over a million each in annual compensation. Terhune also mentions Blue Shield’s past run-ins with state regulators and charges that it hasn’t done well in serving California’s poor.
There is definitely a formula emerging here to determine how a charitable purpose can be measured effectively, and all nonprofits should take note about how it evolves. Note, again, that not only did salaries figure in, but also so did the level of reserves vs. the level of benefit felt by residents, and the state’s poorest residents in particular. The California case has helped to revive such concerns about nonprofit insurers elsewhere.
- The U.S. Social Enterprise Field Remains an Overhyped, Underfocused, Confused Mess—Take No Wooden Nickels
As NPQ has reported time and again, the definitional boundaries of the realm of social enterprise are confused at best. We regret the fact that they are not, in this country, associated as much with worker-owned co-ops as they are elsewhere in the world. Here, the social ente