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No Truth or Consequences

December 19, 2012

(Mark Rosenman is an emeritus professor at the Union Institute & University and directs Caring to Change in Washington, D.C. You can read some of his other posts on PhilanTopic here, here, here, and here.)

Rosenman_headshotNonprofit leaders, as well as those in government and the corporate world, seem unwilling to accept responsibility for their decisions and actions. Recently, the founding president of Social Accountability International, a nonprofit that works to advance the human rights of workers around the world, failed to live up to her organization's name when she vaguely defended SAI's decision to award its highest certification to a Bangladesh garment factory that burned down just weeks after its most recent inspection, killing more than two hundred and sixty workers.

As in so many similar situations, instead of acknowledging responsibility for a mistake and accepting the consequences, leaders like the president of SAI are quick to lay that responsibility on others -- and then support only minimal consequences for those assigned the blame. The corporate world saw an example of this after one of the greatest environmental disasters in recent memory, the Deepwater Horizon blow-out that released nearly five million barrels of crude oil into the Gulf of Mexico. Executives of BP, which had leased the rig and owned the rights to the undersea drilling site, remain free while two employees who were on the scene have been indicted for negligence related to the disaster.

Similarly, when it comes to the 2008 financial crisis and subsequent economic meltdown, corporate leaders who contributed mightily to the collapse have escaped responsibility for their wrongdoing. Not one top executive of Countrywide Financial, AIG, Lehman Brothers, Bear Sterns, or any other Wall Street firm has gone to jail, even as millions of Americans continue to suffer the economic consequences of their actions.

Sadly, politicians in Washington continue to ignore the interests of the American public and scramble instead to do the bidding of lobbyists and campaign contributors. Conservatives are bent on preserving low tax rates for their wealthiest supporters while cutting entitlements and programs for the middle class and neediest among us. Rather than raise taxes on the top two percent of income earners, a move favored by a significant majority of Americans, they would rather send the country over the fiscal cliff -- a combination of tax increases and draconian across-the-board spending cuts scheduled to take effect on January 2 -- or play chicken with the economic chaos of national default by vowing intransigence in the coming debate over extending the debt ceiling.

Other politicians are unwilling to even acknowledge their positions when it would be unpopular to do so. NBC reported that not one of the thirty-one pro-gun members of the U.S. Senate was willing to appear on "Meet the Press" following the recent Newtown school massacre to share his or her views on assault weapons or to address the consequences of past votes on gun legislation. CBS also reported that the nonprofit National Rifle Association and pro-gun politicians refused invitations to appear and acted as if they had no responsibility to explain their positions on this critical issue or to accept accountability for them.

Nonprofit executives in general have been shamefully absent from the fiscal debates, working mightily to preserve the charitable tax deduction in its current form while remaining silent on the larger and more consequential fiscal battles before us. Even the last-minute statement in support of higher taxes by one infrastructure group betrays the fact that it and other organizations have steadfastly refused pleas to get off the sidelines and advocate for policies that benefit the less advantaged in society; instead, these organizations poured precious resources into keeping the deduction as is.

What are we to think when nonprofit CEOs fail to lead and instead embrace self-interest -- both theirs and that of their members. What are we to think when they seem to forget that the public interest is more significantly and effectively served by government funded out of the public fisc than by privately funded groups.

A similar dynamic of unaccountable self-interest allows nonprofit university presidents to remain unchallenged in their cupidity. Even in modest-sized institutions, many command eye-opening salaries and benefits. Indeed, over twenty percent of university presidents in America earn in excess of $600,000 a year, with better than seven percent pulling in more than $1 million annually.

These university presidents and other administrators draw large salaries while higher education employs close to 750,000 workers on below-poverty wages. And while they ostensibly lead tax-exempt institutions, those institutions routinely fail to provide an affordable education or opportunities for upward mobility to low-income kids who desperately need both.

Out-sized financial compensation at the executive level is also a characteristic of many large health and cultural institutions as well as some social service charities. It's as if the executives of our largest nonprofits are determined to "get while the getting is good" rather than champion the public good that their institutions are supposed to deliver. To whom are they accountable?

Occasionally, albeit infrequently, responsibility and accountability is imposed from outside the sector. New York State's attorney general recently forced the president of one nonprofit, Educational Housing Services, to repay millions in excess compensation and other benefits achieved through "self-dealing" while also requiring board members to pay $1 million for their "stunning" negligence.

Punishment may also be meted out to Graham Spanier, the former president of Penn State University, in the Jerry Sandusky case. Spanier was indicted last month, joining other administrative colleagues also scheduled to be tried, for helping to establish and maintain a "culture of silence" surrounding years of child sexual abuse committed by Sandusky, a former coach attached to Penn State's renowned football program.

But such consequences are the rare exception.

Far more common is the tendency to blame and perpetuate an amorphous "institutional culture" for wrong or misguided actions. Too often, we fail to hold individuals to account for their sometimes criminal and/or selfish decisions and actions. Rather than demand accountability from those with personal responsibility, we act as if faceless institutions and organizations somehow cause abuse without human agency.

It's as if banks do wrong, not bankers. Corporations, not CEOs. Congress, not elected legislators. Charities, not board members or executives. We even talk of a sector's culture as if people are powerless to do anything but acquiesce -- often to their own benefit -- to dysfunctional practices that profit the individual over the common good.

It's time for it to stop. America has a serious problem with abuse, self-dealing, and lack of accountability in some of its most important institutions, including charitable ones. And while many are affected by these sometimes calamitous actions, the responsible individuals appear to face few meaningful consequences. That is wrong.

Too many nonprofits allow, even encourage, practices that further victimize those they should be serving. This is even more true in business and in politics. We're much more likely to lock up a street criminal than a corrupt executive -- although in most cases it's the latter who causes the greater harm. We need to change that.

Charity leaders should encourage and support efforts to hold one another accountable for serving the common good over private interests. Those efforts must extend to elected officials and other public leaders and to corporate executives. We need powerful and effective new mechanisms, both voluntary and regulatory, to accomplish this.

If we, as a society, don't insist on holding individuals accountable for their bad decisions and actions, it will continue to be others who suffer the consequences. That may be in the interest of elites, but it is of little benefit to the rest of us.

-- Mark Rosenman

Comments

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Mark-

First of all, Happy Holidays.

Respectfully, I'm sorry to say you may be just as culpable as most of us. You don't seem much interested in holding people accountable if they're outside the usual boogeymen you rail against. I have no desire to get into a political tit-for-tat with you, but for most of the problems you mentioned.....lets just say the finger of accusation seems to be pointing in one direction constantly. Which is amusing, because if I wanted, I could list quite a few alternative directions to point at, most that would make you uncomfortable I'm sure. Based on that, it really seems that what you wrote is a basic political broadside dressed up in the veneer of calling for social responsibility.

True accountability would include holding "your side" - for lack of a better term - accountable also, wouldn't you agree?

Hi, David. As you, first my best wishes for a happy holiday and for a joyful new year in which we all come closer to justice and peace.

I certainly believe that people, on all sides of political, corporate, institutional or charitable issues and practices, need to be responsible for their decisions and actions -- no matter where their values and ideas are on a conservative to progressive spectrum.

Reading between the lines of your comment, I wonder if you're also referring to the choices that some people make in their personal lives -- for instance, someone in poverty behaving in ways that most of us would find unacceptable or sometimes even criminal.

My answer to that unasked question is, of course, yes -- I think they too are responsible for the choices they make. There is a difference in my mind, however, between those of us with relative privilege who have a much greater range of options and support to do the right thing and marginalized people without those necessary and helpful resources.

While I may still deplore their bad decisions and actions, I find myself with much greater compassion and understanding for them than I can muster for board room criminals, self-serving executives, and cynical politicians.

I believe that it is those who are poorly served by our principal institutions who have a higher (although not exclusive) claim on our good will and on our altruism, on our search for the power to forgive and our desire to serve the common good, than those who directly and indirectly further their abuse.

Hi Mark. Thanks for sharing your thoughts. Accountability and responsible management are definitely practices that I believe anyone serving the public sector aims to achieve. However, I think that executive compensation is a separate issue from abuse and corruption. Proponents of executive compensation would argue that providing salaries to nonprofit leaders that are comparable with the private sector can help foster these values by attracting people with talent and leadership experience that helps to shape or re-shape the culture of an organization. Ideally those salaries are an investment towards more effective institutions that can bring even greater benefits to the people they serve, which can ultimately benefit society at large.

Thanks for your considered response, Emily. I'm afraid that we have a disagreement about what I consider to be excessive salaries and your elaborate rationale for them.

I don't believe that the nonprofit world should simply try to out-bid or match salaries in the corporate world in order to attract the staff expertise they need. Charities need much more than technocratic competence in order to fulfill their nonprofit mission -- they need people with passion for their work and a commitment to it.

To build a staff by paying extravagant wages that further skew economic inequality is not helpful to either individual organizations or the society as a whole. Rather, we need to find people for whom serving the public interest, for whom contributing to the common good, is part of the compensation package, people whose calculus goes beyond dollars and does indeed include charity.

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