United Way debacle may teach lessons

A SILVER LINING

May 04, 1992|By LESTER A. PICKER

"To every thing there is a purpose under heaven," the saying goes. Maybe, just maybe, we'll see some positive developments arise from the ashes of United Way of America. If so, the devastating events may serve a useful purpose.

But judging from conversations with corporate donors, senior staff and board members of non-profits, and others concerned with philanthropy, any positive developments are being tempered by problems.

In some cases, the headlong rush to distance an organization from procedures at United Way headquarters means that important lessons are being ignored.

Organizations that have categorically rejected any similarity between themselves and United Way of America are missing the boat. Before too quickly distancing themselves from United Way of America practices, every non-profit should carefully look for similarities. Only then can meaningful lessons be learned.

Most non-profits in our region do not begin to approach the immoral compensation levels of William Aramony, the former head of UWA, and his associates. In fact, as I've written before, most non-profit executives are poorly compensated. But compensation is not the most critical lesson arising from the United Way debacle.

The issue of accountability is far more fundamental to non-profits. And every non-profit must face it now or confront serious problems.

Executives in a for-profit corporation, by and large, are held accountable for their performance. They must account to their directors and shareholders. When specific business objectives are not met there's often hell to pay. Of course, there are exceptions to this rule, but even Roger Smith, formerly General Motors' top boss, has had his knuckles rapped for forgetting about the accountability thing.

Unfortunately, non-profits have not developed the same self-discipline as for-profit companies, which go out of business if the bottom line bleeds too long.

Too many non-profits do not set specific, measurable, time-limited goals for themselves every year and every quarter as their for-profit counterparts do. If a non-profit serves youths at risk, how many will it help this year? If it provides after-school tutoring, what percentage of the youths will it aim to raise at least one grade level in their major subjects?

Are staff members accountable for their work? Do they set annual and quarterly goals and objectives? Are these goals and objectives reviewed? Are staff members rewarded for exceeding goals?

Unfortunately, even if a non-profit does have these accountability standards in place, it rarely translates them to its board.

Boards that are serious about their work set examples for the entire organization. They also set goals and objectives in areas of policy, skill development, CEO oversight -- and most critically nowadays -- in fund-raising. United Way of America-type disasters can be triggered when a board does not have such accountability standards.

Whether non-profits recognize it or not, watchdog agencies and donors will increasingly demand accountability.

And why not? A charitable organization has an obligation to deliver on the promise of public trust.

Years ago, it was enough simply to do "good works." In today's highly competitive philanthropic environment, that standard is not enough. The non-profits that set specific objectives and provide donors with data on accomplishments -- or lessons learned from their failures -- will thrive, not just survive.

Recent media attention focused on non-profit executive compensation and perks has been useful. But the deeper issue is accountability.

When non-profits set high standards, have an open management and disclosure style, and hold themselves fully accountable, donors will support adequate compensation for employees.

Les Picker, a consultant in the field of philanthropy, works with charitable organizations and for-profit companies.

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