Panel Discussion: Nonprofit Organizations
May 2, 1998
Discussion Who's Who
- Crewdson, John – Investigative National Correspondent, Chicago Tribune.
- Delaney, Paul – Former Assistant National Editor, New York Times, now involved in planning "Our World," a newspaper with a black perspective.
- Grimes, Charlotte – Shorenstein Fellow, Kennedy School of Government, Harvard University.
- Hall, David – Editor of The Cleveland Plain Dealer.
- Parker, Richard – Senior Fellow, Shorenstein Center on Press, Politics and Public Policy, Kennedy School of Government, Harvard University.
- Rodrigue, George – Managing Editor, Press-Enterprise, Riverside, Calif.
- Welna, David – Mexico Bureau Chief, National Public Radio.
- Wilson, Janet – Reporter, The Los Angeles Times.
George Rodrigue, the panel chair, began the discussion:
Are we doing an adequate job of monitoring nonprofits? The answer is – Hell, no. The IRS admits that it's doing a poor job. How could it not be? There are about 1.4 million nonprofits. There are 635 revenue agents to watch them. You could go about 100 years without an IRS audit.
State oversight? Well, California has 78,000 nonprofit organizations and, Janet [Wilson] said yesterday, five attorneys to watch them.
Within the news we, generally, have not focused on them partly because we don't understand how important they are becoming, partly because they have friends who are friends with their publishers, partly because we're inhibited about seeming to attack a do-gooder organization, but the result is that, in 1990, there was a move to regulate or to have Congress increase disclosure requirements on nonprofits.
The nonprofits pushed for that very hard, the good ones did, because they thought they were being run out of money by squeezy opportunistic nonprofits. The news media were pretty silent on that debate, and, again, we have to ask ourselves whether we are doing the right thing when we remain in silence.
The upshot, as far as I can tell, is we tend to favor two kinds of stories – Number one, Give to the United Way; Number two, United Way Chairman Spends Charity Dollars on Teenage Mistress.
CREWDSON – After a day of listening to really a very daunting list of things that we ought to be doing better in foreign affairs, urban affairs, economic affairs, I think it's perfectly reasonable to ask whether we really need to add charities to the list of things we ought to pay more attention to. After all, charities are the good guys. Charitable works, by definition, are good works. Why pick on the good guys when there are so many bad guys around to choose from?
Beyond that, charities aren't government agencies. They don't spend tax dollars. Don't we have a higher obligation to monitor the spending of tax dollars that are involuntarily paid than charitable contributions which, of course, are given voluntarily?
Based on my limited, but recent and still vivid experience in looking at a certain kind of charity, I think the answer, unfortunately, has to be, yes, charities are worthy of a place on that list – and a fairly high place on that list.
The best argument may be for looking more closely than we do at what charities do with those dollars. "More closely than we do" is really to say "at all" because I'm not aware of any concerted effort by any news organization to examine closely, say, how United Way really spends all that money.
The best argument I can come up with at this point is this project we did for The Tribune in March. We spent a year looking at child sponsorship organizations like Save the Children, which tell you that for 70 cents a day, you can make a miracle happen in the life of a child somewhere far away. Like most people who see those ads on TV, I'd always wondered if that was really true, hoping that it was true because, if it was true, it would be a good thing. But being skeptical enough [I suggested] to The Tribune that we sponsor a number of children ourselves and then see if we could find them and find out how their lives have been changed by our sponsorship dollars. And that's what we did.
We sponsored a dozen or so children for a couple years. A year ago we set out around the world to try to find them, and we found all of them, which surprised me, and discovered that, in fact, their lives had not been much changed by our sponsorship. It was interesting enough to us to fill 32 pages of the newspaper, and we called it "The Myths of Child Sponsorship."
The bottom line is that the notion that the check you write to Save the Children is actually going to benefit the child whose picture is on your refrigerator door and from whom you get what looks like letters once or twice a year telling you how much your sponsorship means to that child is a myth. That's not the way it works.
It's much more complicated than that. The bottom line is that much or all of the money you send to Save the Children, and organizations like Save the Children, never reaches your sponsored child, and, in fact, a lot of those letters that come back are written by somebody else. In one case a kid had been dead for four years before his sponsor found out that he was not the person who was writing those letters, telling her how nice his life was in Mali now that he was a sponsored child.
Nobody's going to go to jail because of what we found out, but I think this fits the matrix of things that don't necessarily qualify as wrong doing, but things that are just not working well or, certainly, not working the way they're supposed to be. To the extent that people are being deceived about how their money is being used, I think that's a useful service. It's more than useful because there's really no regulation with charities.
Nobody is watching these groups to make sure that they spend money in an efficient or effective way or that they really do what they tell their contributors they're supposed to be doing. I assume, without really knowing, that the same thing is true of other kinds of charities. The fact that nobody else is doing this means that we really have to, at least, consider giving charities, at least, a place on the list of things that we need to pay more attention to.
HALL – We have two large nonprofits in Cleveland, the Cleveland Foundation, which is actually the oldest one in the country, and the Gund Foundation – which is a little bit of the Gund money and a little bit of the Gund money is a lot of money.
They exercise an influence in the city that goes beyond what they do in terms of programs. I don't for a moment necessarily suspect the people that run it of having ulterior motives, but I do not think that we have watched them closely enough. I talked about in the article [in Nieman Reports] that I did where the two executive directors were persuaded by the mayor to chair a local committee about school governments that subsequent reporting has shown was a sham. But they had the name, they had the power and they had the reputation and they got themselves drawn into politics. It took us, I'm sorry to say, late in the game to realize this and catch up with it. We did, but we should have been out there earlier. If we were paying more attention to what those two foundations and others do in terms of influencing politics and public policy, we would have been out there.
It isn't to say that what they're doing is wrong. They're very clever; they're very smart; they have good lawyers; they operate within the law when it comes to how they play the game of politics, but all of us in this room know that there are a lot of ways to play politics, and you can play it at the country club or the union club sometimes more effectively than you can at the precinct.
Increasingly, the men and the women who run these foundations are being called upon to get into something that is even beyond public-private partnerships, which have gotten a lot of publicity the last few years, but they are a nonprofit with an elected official partnership which helps in many ways to isolate or protect the public official. There ought to be a presumption there that we should be watching it and knowing what is going on and why, and we are not doing it.
There is a trend among foundations right now to encourage this, to be, as one national official put it, the safe gathering place for people who want to make public policy. Well, any time you get together to make public policy, I don't think it ought to be safe, and I certainly don't think it ought to be inside the board room of a foundation. They're calling themselves the City Conveners, and I was thinking, is this another variant of that intellectually mutant strain called civic journalism? I think that it probably is.
Foundations have been pillars of communities for a long time, and most certainly, they have done a lot of good, but times are a-changing. More money is going to them. They're being called upon by clever people to do more, and I don't think that we are watching them well enough. I know we aren't, and others around the country aren't either.
You see excellent reporting like The Tribune did on [child sponsorship] but in terms of the pillar of the community types of foundations they have a presumption of doing the Lord's work and the right thing, and they're not always doing that.
WILSON – Coverage of nonprofits – looking at how to do it – reveals in interesting ways kind of a soft underbelly in our ethical system. A lot of us are crusaders, corny as that sounds. We want to save the world, and so do program people with a lot of nonprofits, but that shared mission we have can muddy what is a very vital separation of church and state. This plays out in a lot of ways in news rooms and, I think, prevents more comprehensive or continuous coverage of what is really a burgeoning, increasingly influential sector of our economy.
I reported last year about how a lot of the clothing you donate to the Salvation Army and Good Will is sold in Third World countries for very exorbitant prices. There's a fellow in California who's the world's king of this. He made $78 million off of exclusive contracts with Salvation Army last year. I told one little old lady about this, and she cried. She was very upset, and she wanted to know why, in essence, I was reporting on this, and it was hard for me to hear that, more even than internal criticism.
Civic journalism – maybe its time has come and gone. It's taking a lot of heat today, but I think this played out again in our relationships with nonprofits and charities, at least, in the last five to ten years.
On one six-figure circulation paper the publisher wanted to help children in the inner city, so a team of reporters was assigned to work with charities and promote, basically, what those charities were doing. Well, within three months, the paper had to do front page stories about one of the biggest charities headed by a local celebrity absconding with funds.
They did the story. They did the right thing, but they also had to explain why they had this unique partnership or relationship with this nonprofit and, again, for me, a very strong argument about separation of church and state between journalism and nonprofits.
Another story that didn't run this year, in a seven-figure circulation paper – two reporters discovered a "boiler room" church in California. The church, the minister, all he did was, he and his buddy who ran a direct mail marketing firm, would call people up and get contributions. There were no Sunday services; there was no congregation; there was nothing at all. But churches are the hardest to track. They don't even have to file 990's. Once you get that church exemption, you're set really.
An editor of this paper decided the story shouldn't run because there was nothing illegal about what this man was doing, and it wasn't nice to write about a church. I think he felt it was dangerous, that you could upset people. Yesterday we were talking about the fact that it can be dangerous to look at churches, that freedom of religion is just as important as freedom of the press in this country, so you don't want to start just attacking or going after what might seem like odd ball, to us, churches.
An example of a story that was buried, but did run – The reporter discovers that [at] a household-name charity, the CEO is earning $200,000 a year, traveling the globe at the charity's expense, getting a new car of his choice every year. The six administrators under him are earning close to a million dollars between them. The books are reviewed, and the charity cannot illustrate how one dime of their profits is actually going to their programming. They're getting some government grants and doing a little bit that way. In terms of the money they're getting from the public, they can't show how any of it is being used for programs. Again, an editor tells the reporter the story is a cheap shot, and it goes inside.
What we can do about this sad state of affairs, this particular area of coverage? One thing we talked about is kind of a concrete small idea – how did United Way end up with this check-off program on all our paychecks on many American newspapers? Not only that, there's very aggressive marketing of this in the newsrooms, and not only that, there are marathons where the paper is a co-sponsor, and reporters are urged to gather contributions from colleagues and neighbors and friends.
There's the argument on the other side, that some of these nonprofits, the grassroots ones, do incredibly good work, incredibly important work that needs to be done. We've got to make sure we do coverage of that, also, in creative ways. Perhaps some of us really do properly feel strongly about giving to charity in some way, and if we can get our corporate employer to match that, all the better, but at least, don't make it just United Way.
Editors support those ideas that rattle the internal, as well as the external, status quo. If they seem like a genuinely good idea, try and make time and space for that reporter or those teams of reporters to look at some of these institutions.
Top editors, give your publisher a heads up if you're going to write something true, but embarrassing about a philanthropy he heads or sits on the board of even. Get him on your side up front. Talk to him or her. There's a good chance that they will be on your side then.
DELANEY – In the coverage of nonprofits, our committee concluded that, in order to foster better coverage, it is important, it is crucial, to include an editor in the process and to have an editor responsible for overseeing the coverage of the nonprofit and philanthropic industry.
This is to give the paper's blessing to strengthen the importance of the paper's mission in covering the nonprofits if, indeed, that is the mission of the paper. Assign an editor to be responsible for coordinating the coverage in this important and crucial area we went into rather deeply.
The committee also debated the efficacy of having a single investigative reporter or an investigative team or desk, as opposed to spreading out the coverage of nonprofits throughout the paper. Some on the committee felt that one person responsible across the board for covering nonprofits, investigative or however, is better than relying on different departments to be responsible for coverage.
We didn't resolve that, but it was a part of the debate.
Finally, we concluded that a good editor can help overcome the traditional belief that no one will read such stories, that they are dull and boring, and because nobody cares. A good strong editor who's in charge of this coverage, we did conclude, would be vital to that coverage.
RODRIGUE – Just to toss out a few additional thoughts that we had:
Keep your distance, and keep your eyes open. Pretty simple. Watch what people do and not what they say. That's basic. Challenge all your basic assumptions. I was stunned to see that some charity hospitals spend less on charity than for-profit hospitals.
An endowment for a city foundation could be seen also as a pork barrel, as a way of rewarding people for political favors or buying influence in a community, and it needs to be thought of that way.
We all agree that we need to be more systematic collecting Form 990's. How many newspapers do that? How many read them? How many, for instance, go beyond the sort of charity proclamations and actually look at salaries, or advertising? A tip – in the future, the Form 990's will also include mention of times when the IRS has fined a charity. Again, thinking systematically, check out who's on the boards of your local foundations and charities. You will find a lot of interlocking relationships. Often, it's as good a diagram as you'll get to the local power structures.
We did differ on whether one should have a nonprofit reporter or a team of nonprofit reporters. I think we all agree that we need to get more people across the newspaper aware of [material], and trained to report on it. Business people looking at nonprofits, education people looking at universities and we all agree we need more resources. It's just a question of what the local paper can do.
Finally, I think we need to do a better job of sharing ideas. Everyone here who has ever checked into the IRE bulletin board on the World Wide Web knows how useful that can be. I think we need to do a better job of sharing ideas, advertising successful stories and promoting better inquiry.
CUNNINGHAM – Along the spirit of the conference, I'd like to pose the question – who will watch the watchdogs? Very specifically, I've been covering China for about 10 years and I'm very interested in human rights. There's a group in New York City called Human Rights in China which is part of Asian Watch, which is part of Human Rights Watch. Initially, I didn't even know they were both in one office. I thought these were all different organizations, and I felt that these were my kind of people. They were doing something good. When I came back to the States, and I talked to people, I just found some things that were really disturbing about certain dissidents getting book and money tours and other people not getting it, and I thought this is the kind of thing The New York Times would be perfect for. The New York Times is actually tied in very tightly with this organization, so someone like Abe Rosenthal gets a lot of his information from Human Rights in China.
And so Ying Chan, who's a former Nieman investigative journalist, talked to me about this a little bit. She looked at the Form 990, and we know now that what was supposed to be a purely Chinese organization actually is headed by a man named Robert Bernstein, who's a former CEO of Random House.
A group like Human Rights in China is [accepted] without question. They say there's a crackdown on dissidents. It's taken on face value. It seems to me that, upon closer examination, some of the things they say are not very reliable, [are] politically motivated. There's American political motivation, perhaps, to protect American jobs, et cetera, but this is something that's very close to The New York Times, and it's very troubling to me, and I'm not sure what to do with that.
CREWDSON – It seems to me you're talking about sources of information, whether the source is a nonprofit human rights group or somebody else is. I'm not sure how relevant that is. What would be relevant in that instance and every instance would be the veracity of information more than the motives of the people who are giving you that information which are very often impossible or difficult to fathom.
BURNHAM – I have a question about a foundation that I think is great. This is the Center for the Public Integrity, which is funded by the Ford Foundation. Chuck [Lewis] is very good at getting money, and they have done wonderful investigative reporting on a whole bunch of issues which is then given to newspapers. Now, I think that's wonderful, but why aren't the newspapers paying for this?
GRIMES – We're in a peculiar position talking about covering nonprofits, you know, when the phrase "civic journalism" pops up because that is the Pew Charitable Trust and the Pew Center for Civic Journalism, and many news organizations are taking this money.
I'm wondering two things. How many organizations in here have gotten any money from that nonprofit, and what do we think, and how do we cover that as part of what we're doing?
HALL – I can tell you right now that we've never taken a dime of their money.
WILSON – I know Knight-Ridder took funds. I'm not sure how much or in what capacity. I also feel Knight Ridder newspapers, where there have been problems with civic journalism, they've done the right thing.
DELANEY – I think that most newspapers have enough money that if they wanted to fund whatever civic journalism or whatever they wanted to fund, they could do it with their foundations or simply by putting some of the profits back into the business.
WELNA – John, what I found as interesting as The Trib's series on these organizations taking money to sponsor children was the readers' response, which I read on the Internet. I didn't keep a tally. At least half of the letters were extremely angry about this series and chastised The Tribune for dumping on these good organizations. I also know that at least one reporter was threatened with a lawsuit by one organization, and the newspaper, by extension, faced the possibility of lots of legal fees. I wonder to what extent did the reader response and the possibility of future lawsuits chill the drive at The Trib to do future projects like this?
CREWDSON – Good question. The responses on the Internet – fewer than 50 – and some of the people who were critical didn't mention in their responses that they're employees of the organizations we wrote about. When they log on to respond, they have to give their name and their E-mail address, and we were not surprised to discover that a certain amount of that was orchestrated. We've gotten lots more response over the phone and in the mail from people, and that's mostly best characterized as people who had always wondered about this and were interested in finding out what we found out, and a lot of calls and letters from people who'd been sponsoring children with one of these organizations and had had problems with their sponsorship.
So, I'd say apart from the orchestrated response, there is, I'd say, 80 percent positive. As for lawsuits, yes, we were, I guess we were threatened with a lawsuit. We got a lot of intimidating letters from one organization out of four, just one, which was also the one that wouldn't talk to us at all, and no lawsuit has materialized, and I don't think there is going to be a lawsuit, and I'm sure there's been no chilling effect.
I would also say that the one organization that did seem to be threatening to sue us is one we devoted 11 pages to, which was more pages than we gave to any other organization.
MINTZ – Referring to David Burnham's remark, it seems to me that, unless I'm naive and wrong, that our purpose should be to provide the information to solve our needs. If that comes from the Center for Public Integrity or it comes from some public interest group, why should we let our egos or other things stand in the way? If we're not going to do it or have not done it, why should the public be deprived of the information?
BURNHAM – I'm just wondering why the newspapers aren't paying for it themselves. There was a column in The Post criticizing this group. Outsiders are coming in and taking over control of investigations.
MINTZ – Well, I think the answer is, A, you can't do it all and, B, the moment you have control, as with the freelancers, our legal liability, I think, goes way up. If you have no connection, other than you think it's news, I think that you're in a better position.
But if we can go back to [the Salvation Army] story.
WILSON – Basically, when you donate something or it's picked up, it goes to huge sorting rooms at Salvation Army, Good Will, wherever. The best stuff is hung up on the hangers and put in the thrift shops. The [rest of the] stuff – people give really disgusting stuff, stained and holey that they want to get rid of – is sold in bulk to used clothing dealers.
One guy brings in his tractor trailers, picks the stuff up, takes it to his factories. Minimum-wage sorters sort through it, it's loaded in bulk into freighters and shipped around the globe. China gets tons of it. West Africa gets hundreds of millions of pounds of donated clothing. There it's sold. A pair of shoes over there that's donated can cost 10 bucks.
Branches around the country can be doing quite good work, and there's a risk, there's a down side if you write about a national problem. The national office, the administrators often are the ones with fancy cars and the mistresses and whatever. Meanwhile, the grassroots organization gets hurt, so it's tricky. You've just got to check every single time.
The whole industry, if you want to call it, is trying to promote recycling as a big piece of what they do, too. That's a valid argument.
RODRIGUE – I urge you all not to do what I did which is, I went to a city. I looked at this great church-run charity, which had been recommended to me by the Heritage Foundation, as an example of how charities do everything better than government, and it was doing a lot of stuff.
It had a business incubator, it had child care, it had loans for people getting into business and I, like a moron, forgot to ask where they got all their money, or, rather, I asked the wrong guy, and he said it was mostly just donations from the church.
This was stupid because the church only had about 500 people in it, and they're poor people. It's an inner city neighborhood, but I went back and did this story, and then a couple of weeks later, I got the Bradley Foundation list of donations, Bradley being one of the more conservative foundations, and found they'd been just throwing money at this church. They'd set up a Potemkin charity, and I was the fish that swallowed this story, so follow the money.
WILSON – One point I just want to make, maybe because I was so negative before is, I think it's important to remember. There's a lot of very creative, true do-gooders out there who have very good ideas and are working extremely hard, and often, those ideas, hopefully, with our help, will percolate more widely. That's another area that's undercovered in terms of the type of work we do involving nonprofits. An example of that is Goodwill. It does traditional work with the disabled. Again, in some areas, they may do perfectly good work.