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