Thursday, March 8, 2018

The Historical Lesson of Integrity

In each edition of The Washington Post there is a section titled “Happening Today” that lists some important meetings and events,  usually in the government – the President’s schedule, meetings, economic report roll outs, etc. On February 26 one announcement caught my eye: “3 p.m. The Senate gathers for the annual reading of George Washington’s 1796 Farewell Address to be delivered by Sen. Gary Peters (D-Mich.)”

According to the Senate Historical Office, the annual reading of the address by a current member is “one of the Senate’s most enduring traditions.” The first reading in 1862 was held as a means to boost morale during the Civil War. It was established as a yearly event in 1896, the centennial of its first publication. 

 It occurs to me that the rationale for its first Senate reading –morale  boosting– is particularly appropriate today with a country polarized by divisive disputes and led by a president lacking in basic leadership qualities, not the least of which is integrity, as so calmly exemplified by our first president.
The almost 7000 word “address” was not intended to be delivered in person but rather as a letter. Assisting in its preparation were James Madison and thereafter Alexander Hamilton.  It was first published in a journal called the American Daily Advertiser on September 19, 1796 in Philadelphia, then our nation’s capital. Washington’s purpose was to give advice to the young country for its future. 

 He first cleared a path by announcing he would not seek a third term as president in the upcoming election, just weeks away. He then went on to plead for national unity, well aware of the growth of political parties (then Federalists and Republicans) and the growing divisions in the nation. 

The U.S. Senate website summarizes the address as follows:  “Washington warned that the forces of geographical sectionalism, political factionalism, and interference by foreign powers in the nation's domestic affairs threatened the stability of the Republic. He urged Americans to subordinate sectional jealousies to common national interests.”  Doesn’t that summary resonate with our current situation? For instance, wasn’t the Russian attempt in 2016 to disrupt our presidential election tantamount to an effort to destabilize the Republic?

I daresay George Washington would be dismayed by the state of the nation today, and how his prescient warnings and advice are being ignored.  He also wrote:” It is substantially true that virtue or morality is a necessary spring of popular government. The rule, indeed, extends with more or less force to every species of free government. Who that is a sincere friend to it can look with indifference upon attempts to shake the foundation of the fabric.”  Even the most casual of observers can see that our current president, through his own immoral character and actions, is shaking that foundation. The indifference of many politicians only adds to the downward slide.

Washington’s address springs from his own integrity; Trump’s words and deeds issue from the lack thereof.  There are many synonyms for integrity, such as honesty, rectitude,  a character based on high moral and ethical principles.  The word is based on the Latin integer – meaning  whole or complete. A leader with integrity has to lead from within- from who he or she is completely. 

This applies to our leaders in the nonprofit sector every bit as much as it applies to government officials. We must not lose sight of the leadership standard of integrity, even as examples of the opposite flare up around us every day. I don’t know how many U.S. senators heard or took to heart the words of Washington’s Farewell Address recited in the chamber a few weeks ago. I hope some did. They, and others in position of authority in all sectors of our society, have got to pay attention.

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Friday, January 19, 2018

Time to Change Nonprofits' Game Plan

It's NFL football playoff season and that brings to mind the situation now facing nonprofits with the newly enacted federal tax overhaul bill.  When a quarterback breaking out of the huddle comes to the line of scrimmage and sees the situation has changed since he fixed the play, he calls out an
"audible," which informs his team of necessary last minute adjustments. In the same way, nonprofits must now quickly change their game plan.

The recent legislation is potentially very injurious to nonprofits. Although the tax deduction for charitable giving remains, the incentives to do so are constricted by the redesign of the deductibility architecture. The doubling of the standard deduction (now for a single person $12,000, a couple  $24,000) makes it unnecessary for  many taxpayers in the middle income ranges to itemize deductions. Before, itemization of charitable gifts as tax deductible was believed to encourage such donations. Similarly for the very wealthy the prospect of a hefty estate tax made present day donations attractive to some. That tax was virtually eliminated in the legislation.

On top of all this, nonprofit leaders are worried about the inevitable upcoming battles over federal spending made more acute by the looming budget deficits. If, as widely predicted, the Republican leadership will use the budget shortfalls as an excuse to attack the social safety net/entitlements (Medicaid, Medicare, etc. ) long a favorite target of the Right. As these are cut, the pressure on social service nonprofits to make up the difference becomes acute.

So the quarterbacks for the charitable community come to the line of scrimmage and see the landscape has changed radically. Time for an audible. First, the issues must be faced head on.  Will donors reduce giving because of the changes to deductibility? Do  donors know what the changes are and how they might be affected? To the extent that nonprofits  have had a hands-off relationship with  donors except for year-end asking for money, this attitude needs to change. Perhaps organizations should collaborate in presenting a seminar for donors led by accountants and financial advisors on tax law changes. Then enter into a dialogue with donors. How important actually is deductibility to them?

If it is an important  factor, then provide a counterweight to that rationale. Logically that should be an increased emphasis on communicating your mission - what service do you provide the community? What return do you provide on the donated dollar? The effectiveness of those messages depends on building a strong relationship with the donor. If it is weak, strengthening that bond should be a goal embarked on now. I am not sure tax deductibility is the principal impetus to philanthropy but it is important to ascertain how important it is has been in your organization and build powerful alternative reasons for support. 

As for the other threat - budget cutbacks- relationship is once again the key, here with elected representatives at all levels of government. There is consensus that the nonprofit community dropped the ball (to continue my football analogy) in the recent tax bill fracas.  The advocates relied too much on assumption that previous support from legislators would continue without factoring in the speed in which the bill was fashioned and the changes in political climate. It relied too much on the old formulas - for instance the mass "advocacy day" assault on Capital Hill. In November 2012 I wrote a blog post called "Getting the Dog Back" about political persuasion. It still makes sense to me. Here it is:

If "trickle-down" was a buzzword for adherents of the tax changes, then their effect on state and local governments, along with impending federal budget cuts, would resemble more of a mudslide. In the offing might be additional fees, payment in lieu of taxes on nonprofit real estate and overall reconfiguration of  state and local tax laws. So building relationships with state and local officials  has to be part of the advocacy/firewall  mix. If you review the backgrounds of federal legislators many of them came up through the local and state elected ranks. A county commission can do as much damage - or good - to a nonprofit as any federal legislature.

So, nonprofit quarterbacks, signal the necessary changes to the game plan. Position your blockers, align your receivers to catch your brilliant initiatives and most of all, know the players, both defensive and offensive. It's early in the game. But don't wait until the last quarter to act!

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