Over the last two and half years, I have relayed dozens of stories about the good work the HALO (Hazardous Area, Life-Support Organization) Trust (www.halotrust.org) does in Africa. HALO has cleared thousands of landmines from Angola, Mozambique and Somalia, launched a new project in Zimbabwe and returned huge swaths of land to their communities to allow people affected by war to re-start their lives. Unfortunately, other outlets choose not to cover these stories which are the results of the efforts of thousands of men and women working around the world. Instead, two stories have been making the rounds in the last week, one of which has had a positive resolution, the other not so much, not yet. On January 21st, more than 60 of HALO’s employees, all Afghan nationals, were kidnapped by armed men near the city of Herat. After a few hours, all of the deminers were released thanks to the efforts of Afghanistan’s police forces (Washington Post). A couple of days before the kidnapping, stories appeared in the British papers the Telegraph and the Daily Mail describing the annual salary and benefits paid to HALO’s chief executive and co-founder, Guy Willoughby. The stories had a breathless tone as they described the fact that HALO pays for Willoghby’s four children to attend private schools where the annual tuition costs are US $45,000 or more. While I am not as scandalized by these stories as the Daily Mail or Telegraph would like me to be because I am admirer of HALO’s landmine clearance work, I do think the stories raise two important questions that are applicable to the entire not-for-profit community: 1) Is the HALO Trust’s chief executive (or any organization’s chief executive) overpaid? (No.); and 2) Did the HALO Trust’s board of directors do its job as a not-for-profit organization’s board? (Maybe.)
First, it’s important to remember that the Daily Mail is a celebrity-driven tabloid whose coverage of the story always includes references to the celebrities associated with HALO including Princess Diana, Prince Harry and Angelina Jolie. Were it not for these celebrities and their ties to HALO (and the opportunity to include photos of them with the story), the Daily Mail would probably not have covered this story. The Telegraph is not innocent in pursuing the celebrity angle either, naming Prince Harry and Angelina Jolie in their story’s headline. Second, I’ve covered questions of waste and fraud at not-for-profit organizations elsewhere on this blog and I think these particular stories represent an incomplete understanding of how the not-for-profit industry operates and exploits that absence of understanding to sensationalize what is a rather mundane question of executive compensation. Third, the HALO Trust clears landmines from countries like Afghanistan, Mozambique, Sudan, Sri Lanka; the importance of that work should never be lost in these organizational matters. So, let’s get into the substance at hand.
Question 1: Is the HALO Trust’s chief executive overpaid? Short answer: no. Like most chief executives at not-for-profit organizations (or charities), Mr. Willoughby’s primary responsibility to the organization is to raise money for the work of the organization and by any measure, he’s been pretty successful. In FY2013, HALO recorded income of more than US $43 million and employed between 5,000 and 8,000 people in more than a dozen countries around the world. Founded in 1988, HALO is celebrating its 25th anniversary and Willoughby has said in the past that he believes a mine-free world is possible in the next ten to twenty-five years. HALO has confirmed that it offers a “school fees scheme for senior staff with more than seven years’ service, and children from the age of 10 to 18 are eligible;” such benefits are considered taxable income and part of the employees’ salary (Third Sector). HALO defended its decision to offer such a benefit to Willoughby and a couple of other staff as being in line with benefits packages offered by United Nations organizations and other large development organizations for whom payment of school fees for expatriate staff is common.
Guy Willoughby’s salary is set by the HALO Trust’s board of directors and Willoughby is accountable to the board. Therefore, the salary HALO pays Willoughby is based upon the value the board places upon his work, which is very high and based upon the results he has achieved. Think about this way, if Willoughby were not successful at raising money and raising awareness, the opportunity for this story would not exist. Before the HALO Trust was founded, the concept of humanitarian demining barely existed. Willoughby has helped to shape the industry he is now a leader of. His fundraising success, work that has paid for clearance of thousands of landmines and enabled hundreds of communities to rebuild after conflict, makes him valuable to the organization as a leader and spokesperson. Willoughby’s ability to recruit celebrities, like Diana, Harry and Angelina, to help him spread the word about landmines is what makes him valuable to the organization. Without Willoughby, there would be no HALO Trust and no story for the Telegraph or Daily Mail to cover. Which brings us to the board.
Question 2: Did the board of directors of the HALO Trust do its job? Short answer: maybe. The board of directors for a not-for-profit organization or charity is tasked with oversight of the organization on the public’s behalf. As the co-founder of the HALO Trust, one of Willoughby’s responsibilities has been to recruit a board of directors to oversee the organization. And as the chief executive, Willoughby is accountable to the board. This is the problem. Willoughby is accountable to people he personally recruited to serve on the board; many of the board members joined the board because they believed in what Willoughby had created and wanted to support it. In situations like this, where a person starts and runs an organization, the board of that organization is often in the difficult situation of managing what it sees as the greatest asset of the organization: the founder. In that situation, can the board objectively evaluate the chief executive’s performance? Some boards can and some can’t. It all depends on the people who serve on the board and how they view their role. Or asked another way: is their role to support the founder’s vision or support the founder, him or herself? It can be hard to separate the person from the vision and it is not a task I envy of anyone.
Also, it is important to ask what is the correct motivation for the chief executive. In the for-profit world, chief executives are believed to be best motivated by financial compensation in the form of high salaries and stock options or benefits. If a chief executive felt he or she would receive a better financial package elsewhere, the executive would be tempted to leave. This assumes that chief executive’s skills are easily transportable and applicable to different companies. In the not-for-profit world, we believe (hope?) all employees are motivated by the mission of the organization and not by financial rewards. Sure, we all want to be able to provide for ourselves and our families, but the opportunity to support the organization’s mission alleviates the need for using money as the sole incentive. This leads to the question: what would it take to lure Guy Willoughby away from the HALO Trust? I don’t know, but if HALO’s board doesn’t, then it needs to find out.
Question 3: Does it matter? No. The HALO Trust, as evidenced by the experience of its deminers in Afghanistan, works in some of the most difficult conditions doing work that is necessary and life-saving. With thousands of men and women in the field clearing landmines to help rebuild countries torn apart by conflict, the real story about HALO should be about the lives it saves. If only it could get as much coverage for that. The not-for-profit community does far more good than it gets credit for and the sensationalization of stories about the industry is reckless and irresponsible. Could we be better? Yes, but there are safeguards in place – in the form of boards of directors, audits, financial reporting and internal controls – and they work far more often then the authors of stories like the Daily Mail’s would have you believe.
Michael P. Moore
January 23, 2014
After the Washington Post’s reprehensible piece on fraud and mismanagement in US not-for-profit organizations, I took the Post to task on this site. The Post’s story and database generated other attention and some Senators and state regulators piled on with Iowa’s Charles Grassley saying, “Tax-exempt dollars are meant for tax-exempt purposes, not bankrolling someone’s personal Champagne lifestyle.” Falling for the Post’s poor reporting, Grassley said it’s “stunning that diversion appears to be so common.” Here in Washington, DC, the city’s Attorney General said that he will investigate whether “nonprofits are fulfilling their basic obligation to protect the charitable assets entrusted to them.” One of the Attorney General’s staff suggested that not-for-profits are “tolerating embezzlement,” and some will now be under “greater scrutiny” (Washington Post).
Well done, Washington Post; just when not-for-profits are needed more than ever, you’ve called the entire industry into question on the basis of one bad apple. Thanks. Let me use your own pages to show the problem: On November 1st, food stamp subsidies (the Supplemental Nutrition Assistance Program or SNAP) were reduced by US $5 billion (Washington Post). In Washington, DC, this translated to a $15 million cut affecting 140,000 people; roughly a quarter of the city’s population. Local not-for-profit groups, including Martha’s Table and D.C. Hunger Solutions, are scrambling to fill this Congressionally-mandated cut, but as you published on November 7th, “Martha’s Table’s food budget is $1 million for the entire year” and “when SNAP benefits are cut by 5 percent, charitable organizations have to double their contributions across the nation to keep up.” Food banks survive on the generosity of others, generosity that you, Washington Post, have threatened with your reckless reporting. Martha’s Table and D.C. Hunger Solutions used the Post’s editorial page to ask “those who are able should increase their charitable giving — in money and in food” (Washington Post). Will the Post assure its readers that such charity is well-deserved and needed or continue to suggest that all not-for-profits are subject to fraud and embezzlement?
And it’s not just the Washington Post and US not-for-profits that are coming under attack. Last week in online publication, Pambazuka News, two items caught my eye. From Uganda, Vincent Nuwagaba, “a human rights defender, researcher and life member of the Foundation for Human Rights Initiative (FHRI)” wrote an editorial declaring that Ugandan not-for-profit organizations “are guilty of murdering this country” are “far [more] corrupt than the government they demonise.” Without naming a single example, Nuwagaba accuses directors of being “chauffeured” in expensive cars, paying journalists to cover events and write supportive stories, and “cheat and fleece their employees.” He declares “80 percent of NGO staff are pretenders, hypocrites and outright dishonest. The human rights organisations flagrantly abuse human rights. The anti-corruption organisations are more corrupt than corruption itself.” His logic is flawed when he says that because “the media are always awash with stories chronicling ghost soldiers, ghost teachers, ghost students, ghost pensioners and virtually ghost everything… Does it not plausibly follow that we have ghost NGOs and ghost CSOs [?]” No, it doesn’t. The accountability structures in not-for-profits are different from those in governments. But Nuwagaba doesn’t discount civil society entirely, he calls for “the association of social scientists… [to] provide lasting solutions to the decay that characterize our society” (Pambazuka News) assuming that such an association would be immune to the corruption he sees in every other organization.
Unfounded and arbitrary accusations like those brought by Nuwagaba and the Washington Post leads to the “greater scrutiny” described by the Post and also allows for increased regulation of the not-for-profit sector. In Cambodia, Russia and Ethiopia, laws have been passed that limit the amount of funding not-for-profit organizations can receive from external sources. In these countries, the limitations are specifically imposed upon organizations that advocate for human rights and government accountability and have been used to investigate and close organizations that challenge the regime. By accusing all organizations of fraud and corruption, the Post and Nuwagaba provide cover for these authoritarian regimes to stifle opposition voices. In Kenya, the Parliament has gone one step further and proposes a law that states “A Public Benefit Organization shall not receive more than fifteen percent of its total funding from external donors.” Kenya’s law covers all organizations, including those that provide humanitarian relief and development support and would force donor countries to give the assistance dollars that would have gone to Kenyan not-for-profits to the Kenyan government. At the moment, not-for-profits represent 200 billion shillings (equivalent to US $2.3 billion) of Kenya’s economy and while I do not know the proportion that derives from international sources, I imagine it’s the majority of that amount. And with Kenya facing a one trillion shilling budget shortfall (Pambazuka News), additional threats to the economy are unwelcome, and to assume that donors would contribute to the Kenyan government, when the President and Deputy President of Kenya face prosecution in the International Criminal Court, would be false.
Not-for-profit organizations fulfill a very important role in development and providing social safety nets. Yes, they are subject to fraud, waste and theft, but so are all industries. To suggest that they are more susceptible or even complicit in such is to threaten the health and livelihoods of those that have come to depend upon them. Frankly, I wish not-for-profits were not needed and that the public sector and the private sector could provide for all of societies’ needs, but that is not the case, not today. However, just as the First Amendment to the US Constitution and Article 20 of the Universal Declaration of Human Rights protect my right of association, so too do those documents protect the right of the media to publish whatever they choose. And, as I will fight for the media’s right to publish irresponsible journalism, I hope the media will accept mine and civil society’s right to point out the media’s errors and false assumptions.
Michael P. Moore
November 18, 2013