Spend It All?

 "Spend it all Jay!" - opposition bumper sticker seen during U.S. Sen. John D. Rockefeller IV's first Senate run in West Virginia.

An article by Jim Dwyer in the August 8 edition of The New York Times profiled the remarkable philanthropist Charles F. Fenney and his efforts to do just that - spend it all. "All" includes the $6 billion he has already given away since 1982 through his group of foundations called Atlantic Philanthropies. His goal is to dispose of the remaining approximately $1.5 billion by 2016.

Mr. Feeney, now 81, made his fortune by inventing and operating airport duty-free shops internationally. He sold the business in 1997, at which time he revealed that his wealth was the source of Atlantic Philanthropies,which he had managed to run anonymously for 15 years, even though it was one the largest grant makers in the world. Gradually he has opened himself up to publicity in an effort to encourage others of great wealth to become major philanthropists. Warren Buffett has termed Feeney the "spiritual leader" in that effort.

He resembles Mr. Buffett in his eschewing the trappings of wealth. His clothes come off the rack, he lives simply, on a side street in Manhattan, not on Park Avenue in a penthouse, and until recently he flew coach. He believes the problems of the world need attention, now before the solutions become even more expensive. Dwyer quotes Mr. Feeney: "When you've got the money, you spend it. When you've spent it all, let someone else get going and spend theirs." And so,with the exception of bequests for his five children, that is what he intends to do, or as he puts it: "I want the last  check I write to bounce."

It probably won't surprise you then that no building made possible by a gift of his bears a inscription with his name. Furthermore, he set up his philanthropies in Bermuda to avoid disclosure requirements, but because he did, he could not take tax deductions for his contributions.

This completes the counter cultural picture of Charles Feeney's philanthropy. For one thing, it is counter to the culture of "naming" as a reward for contributions. Who hasn't seen capital campaign appeals that list naming opportunities, sometimes even before making the case for support of the project. Paving bricks, exhibits, theatre seats, wings, entire buildings, etc. In a recent visit to a Boston museum, I even rode in an elevator named for a donor.

Please don't misunderstand me. As an administrator of nonprofits who has taken part in helping to raise some millions of dollars for capital projects, I know the power that the opportunity for public recognition brings to attracting contributions. It works. Certainly it can be overdone, where donor names clutter up space in a kind of philanthropic wallpaper. And occasionally  the background of a major donor  causes embarrassment. In the late '80s the Saudi Arabian international arms dealer Adnan Khassogi pledged millions to American University, where he was a trustee, to build a sports and convention center. When finally constructed it bore his name.  An outcry ensued and the name was removed only after he reneged on the remainder of his pledge.

Sports stadium naming has become a huge income source for both professional and amateur teams. It is a form of high profile marketing. In 1999 the internet service provider PSINet spent $100 million to have the new Baltimore Ravens stadium named PSINet Stadium. Then the company went broke and M&T Bank got the stadium name. Just as well, as apparently many Baltimoreans had trouble pronouncing PSINet and resorted to nicknaming it the "Piss Bowl." 

Finally, in a bizarre use of naming influence, Penn State University suggested last April to the Paterno family that it would rename Beaver Stadium for Joe Paterno in exchange for the family agreeing not to sue the university. The family declined.

The selfless philanthropy of Charles Feeney is rare.  How many have or will follow his example? The important message that everyone in the nonprofit field hopes will stick is that the very wealthy will want to open up their wallets wide to support nonprofit missions. A naming here and there is welcome and appropriate. Spend it all? Charles Feeney raises the bar, challenging especially those at his level of wealth to join him in making a big difference to society.

How Far to Stickle

I am readying to leave the first week of August for two weeks "Down East," so I will join in the spirit of summertime by being brief, if not breezy, this month.

On July 20,  the Harvard Business Review blog site posted an entry by Kyle Wiens entitled: "I Won't Hire People Who Use Poor Grammar. Here's Why." Wiens, CEO of Ifixit.com, the world's largest online repair manual and Dozuki, which helps companies write technical documentation, requires every job applicant to take a grammar test, regardless of the nature of the position. Wiens admits "we write for a living" and perhaps has higher standards about language usage than most (by the way he takes into account extenuating circumstances such as dyslexia and English as a second language). Poor test scores or errors like mixing up "to" and "too" means the application goes into the circular file. Period.

Wiens would be known as a grammar "stickler" the term Lynne Truss uses in her delightful book "Eats, Shoots & Leaves - the Zero Tolerance Approach to Punctuation."  Wiens defends his stern policy as being a way to ferret out sloppiness and inattention to detail. He claims that those who do better in the grammar test will make fewer mistakes even in non-writing tasks, such as labeling parts or stocking shelves.

I have reviewed hundreds of resumes and cover letters in my career and sympathize with Wiens's position. Improper spelling and screwy usage is an effective filter, for reasons Wiens outlines. These days, with tweets, emails and real time online chats, the chances grow that sticklers will be faced with greater challenges.

Added to spelling and punctuation whoppers are the odd phrases that have cropped up in everyday life. For instance, "you're welcome," as a reply to expression of gratitude or a compliment for good service, has been replaced by "no problem." I keep wanting to respond that I was not aware of there having been a problem in the first place. And what about that supremely irritating "Whatever..."  This dismissive word,with its tone, indicates the speaker can't be bothered with further discussion. If we ever see this written at the end of a Supreme Court opinion, we are in trouble.

Job applicants can't depend on computer spell checking either. It has been long corrected, but in 2008 when I happened to type in "Obama" in a document, the dreaded yellow outline was superimposed and suggested I should correct it to "Osama."  Ironic, no?

My friend and mentor the New Orleans attorney Thomas B. Lemann (see my blog of January) deserves a place in the Stickler Hall of Fame. He is well known to newspaper editors, including The New York Times, who have received any number of complaints regarding improper usage. On his desk is a plaque given to him by an admirer: "Which Hunter."  The frequent misuse of "which" for "that" is a favorite target of Mr. Lemann.

Sticklers enjoy debates among their number. James Thurber and his editor (THE editor) of The New Yorker Harold Ross had a famous long-running battle over the use of commas.  Ross favored them; Thurber did not. An example of this style dispute can be found regarding the description of our flag. Thurber wanted red white and blue; Ross insisted on red, white, and blue. Thurber complained: "All those commas make the flag seemed rained on. They give it a furled look. Leave them out and Old Glory is flung to the breeze as it should be."

How far to stickle? The Wiens approach is not an academic exercise; it results in action, unfair or not. He believes that good writing is important and indicates clarity of mind. If its basic rules are violated, then that sends a behavioral signal.  It is arguably an extreme position. By the way, his blog prompted 2400 comments, ranging from Boo to Bravo. Quite a few even challenged his grammar.  Perhaps you will want to take a crack at mine. I would be delighted. It means you have read the blog and I can always stand corrected. Now I must return to my packing.

Comments always welcome below ot at: info@geoffreyplattconsulting.com

Cavalier, Indeed

Some weeks ago I posted a blog about proper treatment of volunteers in nonprofits (“With Volunteers, Thank, Don’t Spank” 4/23). Here the lesson regards proper treatment of CEOs.

The University of Virginia (UVA) sports teams are known as The Cavaliers, and their logo is a crossed sword.  The original Cavaliers (the word means horsemen, from the French) were Royalists supporters of Kings Charles I and II in the 17^th century English Civil War. I am not sure why UVA took on that moniker, but Virginia does have an Anglophile tradition.

“Cavalier” also means haughty or disdainful, as in treating someone in a “cavalier manner.” Ironically that’s what best describes how the UVA governing board leadership recently handled the removal of UVA president Teresa Sullivan. The ouster was masterminded (or miniminded if there is such a word), by UVA Rector (UVA’s term for board president) Helen Dragas, who informed  Dr. Sullivan on June 10 that she had enough board votes to oust her. However, the full board was never convened to take a vote.  The popular Dr. Sullivan, in office for only two years, resigned. 

Then the proverbial excrement hit the fan, as much regarding the decision-making process as anything else. Students protested en masse, the faculty Senate demanded Sullivan’s reinstatement, some donors threatened to exit, and the media erupted into a high frenzy. The Board appointed an interim President from the Faculty, who later announced he would refuse to serve.  As a former Virginian (1992-2006), I know how passionately UVA grads feel about their school, and well they should, as it is one of the premier universities in the country, with fine sports teams to boot.

The board, known formally as the Board of Visitors, is composed of sixteen members, all appointed by the Governor for  four year terms, with legislative approval. As Virginia governors themselves are limited to one four year term, in this case eight of the Board members were appointed by either Democrat former Governors Tim Kaine, now running for U.S. Senate, and Mark Warner, a U.S. Senator, and the other eight by the present Republican Governor Bob McDonnell, mentioned as a possible Veep choice for Matt Romney. Thus this fracas took place in a politicized environment.  Governor McDonnell finally announced the Board had to take action at its specially called meeting on June 26, one way or another, on any possible reinstatement of Dr. Sullivan or he would fire them all.  Tim Kaine on June 22 called for the reinstatement of Sullivan.

As the matter unfolded, it became clear Ms. Dragas, a successful real estate developer from Virginia Beach, had co-conspired with some other big money board members, notably  Vice Rector Mark Kington (who subsequently resigned),  to effect the ouster.  I guess they believed in the golden rule: “Whoever has the gold, makes the rules.” 

But they underestimated the passion of UVA supporters and their outrage at foul play. Slate’s John Dickerson writing on June 22 suggested the Rector’s coup d’état entailed an unreasonably high degree of risk and advised: “When you’re climbing a tricky pass on El Capitan, don’t wear an anvil.”

The denouement of this drama took place at the special meeting of the full Board on June 26, where, by unanimous vote, Dr. Sullivan was re-instated as President. At the same time the Board expressed confidence in Ms. Dragas’ leadership. This apparently was a compromise, as Dr. Sullivan had previously declared she would not accept reinstatement unless Ms. Dragas resigned. Outside the Thomas Jefferson-designed Rotunda where the meeting was held, student and faculty awaiting the result broke into cheers at the news that Dr. Sullivan would regain the presidency.

The brouhaha drew national media attention, questioning the manner of dismissal, while musing on the financial strains faced by universities in general and public universities in particular.

Finding and retaining superior talent to run not only universities but any nonprofit these days is difficult enough without the example of a board such as UVA’s engaging in shabby and underhanded behavior. Some may lay blame on the fact that the UVA board is politically appointed and/or that is made up largely of big donors.  But any governing body in the nonprofit world, however constituted, can ill afford to make decisions in such a manner, which runs the risk of alienating the very constituencies - in this case, students, faculty, and alumni - it is pledged to support.

At a high cost to UVA’s reputation, it took sixteen days for the Board to right the wrong.  Let the Biblical admonition of reaping what one has sown be taken to heart.

Comments always welcome

Hire a milkshake??

A recent New Yorker profile (5/14/12) of the prominent management expert Clayton Christensen, Harvard Business School professor and author of the widely hailed book “The Innovator’s Dilemma,” described an interesting approach to how a business, profit or nonprofit, can better understand its customers.

One of the big fast food chains hired his consulting firm to help improve its sale of milkshakes. The company marketers had previously done thorough research on the profile of the typical milkshake consumer and made improvements accordingly. But sales did not increase. Christensen decided to take a different tack, summarized, in his words, in finding the answer to the question: “I wonder what job a customer is trying to do when he hires a milkshake?”

Now, please stay with me. You have first to digest (sorry…) the novel concept of hiring a milkshake. Christensen sheds some light when he quotes another marketing icon, Professor Theodore Leavitt who advised his students that “A person doesn’t want a quarter-inch drill, he wants a quarter-inch hole.” In other words, consumers don’t necessarily search for a product but rather a solution to a problem or a need for a certain job to be performed.

Back to the milkshake: Christensen and his crew spent 18 hours in a restaurant observing milkshake- buying behavior- who bought them, what time of day, alone or with someone, consumed on premises or off. They discovered that almost half of the shakes were sold to a single person, in the very early morning and consumed away from the restaurant. The next day they asked the people as they were leaving with their milkshakes to go to their cars: “what job were you trying to do when you hired that milkshake?” Not, why did you buy one or what flavor? The phrasing of the question got their attention.

The answers had to do with the purchaser having a long, tiresome drive to work. Because of their consistency milkshakes take a good while to drink, they are not messy or tricky to handle, like crumbly muffins. You can answer your phone when it rings. So the job that needed to be performed was occupying a commuter’s time along with providing some nourishment and the milkshake filled that bill. The recommendation to management was to make the shake even more viscous (add fruit), move the dispenser to the front of the counter and allow for quicker payment method. Sales went up.

Ok...so what’s the lesson, you may ask. Not everyone has 18 hours in which to observe customer/client/visitor behavior. Nor might they have a crew to conduct in-depth interviews. But stepping back, what the milkshake story suggests is that nonprofit marketers or leaders need to look beneath the surface of ordinary consumer activity and think about what their organization can do first to identify for its users the job they see at hand and then to help them accomplish it. You can easily ask a museum or performing arts visitor questions that reveal demographic information; more difficult is to discern the deeper motivation for attendance or, in the case of donors, for their gift. What Clayton Christensen offers is a unique format for phrasing the question that in its provocative way might offer up previously buried jewels of information. Try it, and in the process, why not give yourself an excuse to enjoy a milkshake.

Comments always welcome: see below.

With Volunteers: Thank, Don't Spank

Without question volunteers are critical to a nonprofit’s success. But they must be carefully tended, like a fine garden, and sometimes that includes weeding. Several recent incidents reveal, however, the perils of inept volunteer horticulture. The Wall Street Journal reported recently that the president of the Brooklyn Museum convened a meeting last December with the leaders of the Brooklyn Museum Community Committee, a women’s volunteer group that had been raising money for the museum since 1948. At the meeting Dr. Arnold Lehman informed them that the museum board had decided to disband the group.

The committee had started the docent program and planned fundraising events, including the museums’ first gala. It operated under the museum’s tax-exempt status, out of an office at the museum and paid a secretary from the funds it raised. Over the years the museum’s professional development office became more involved with the committee and the relationship seemed positive until last year when, according to the Journal, the Museum began to intercept and open the Committee’s mail, sending the checks directly to the Development office. That move precipitated the meeting where the axe fell.

After the meeting, Lehman sent a note of thanks to each committee member, enclosing a pin from the Museum gift shop. Not surprisingly, there was “blowback.” Memberships were cancelled and the some wills altered, including one with a bequest to the museum of a collection of prints by contemporary artists such as Robert Rauschenberg. Added to these discernible events there is now the sub stratum of hurt feelings and evidence of an insensitive, boneheaded play by management, made worse by it being broadcast in print and online detail by a prominent national newspaper, all of which cannot help but negatively affect what may loosely be called “community relations.”

Closer to home, at Boscobel (the historic site I managed from 2006-2011), late last year the new executive director and board development committee abruptly informed the Friends of Boscobel, which had been supporting the institution since 1995, that they were no longer needed. Although there is some evidence that the source of the upset was a communication breakdown, the results were recriminations, membership loss and a p.r. nightmare for the institution. One of the angry letters to the local paper was even included in the news story last week about the departure of the director after nine months in the post for a job in D.C.

There are some similarities between the Brooklyn and Boscobel stories. Each volunteer organization had its own separate board, received funds on behalf of the parent museum, which received, some if not all of the proceeds. The potential for collisions with the institution’s development staff/policies were there. At Boscobel, the Friends would sometimes without consultation donate a piece of equipment, perhaps needed or perhaps not. As museum development strategies become more sophisticated, this Friends model becomes more and more out of date.

Nevertheless, the lesson here (or “take away” – don’t get me started on that phrase) is in each instance what can ensue by poor handling of volunteer relations. The cavalier dismissal of these groups will have a longer shelf life than envisioned by management. Volunteers represent connection to the community the institution serves, unlike some distant foundation or corporate donor. These people have friends and neighbors, and they talk. Honor them and treat them carefully. As the late House Speaker Tip O'Neill used to say: All politics is local.

The week of April 15-21 was National Volunteer Week. Volunteering has been a part of American life, in fact a hallmark of it, since Benjamin Franklin in 1736 established the first volunteer fire department in Philadelphia. People serve nonprofits and communities in ways too numerous to list. Everyone who reads this blog post has been, or is presently, a volunteer someplace. Thank you.

That’s it. Express gratitude to volunteers, and for goodness sake, if you direct a nonprofit, avoid at all costs, the opposite. These stories illustrate the wages of managerial arrogance. A little diplomacy will go a long way

Ripping off the good guys...

The media stories reporting embezzlement from non-profits appear far too frequently. Just last month a former bookkeeper at a Van Nuys CA adoption charity named Inner Circle was sentenced to 41 months in federal prison for stealing $700,000 from the organization over a seven year period. In February the former executive director of the Waterbury (CT) Boys and Girls Clubs pleaded guilty to charges of fraud and embezzlement of more than $470,000 from the charity since 2008. Sentencing will be in May. And not to pick on Connecticut, in 2011 Donna Gregor the controller of the Mark Twain House in Hartford received a 3 ½ year sentence in federal court for defrauding the museum of over $1 million in the period 2002 to 2010.

All of this is heartbreaking. These non-profits work hard to find scarce resources to support their missions. And the loss of funds in these substantial amounts can have a significant impact. In the Mark Twain case, the museum was struggling and had to lay of two thirds of its staff in 2008, at the same time Ms. Gregor was ripping it off. Some of her colleagues lost their jobs while she was improving her home, going on vacations and buying theater tickets. The fraud was discovered by a bank employee comparing check signatures.

There is a pattern in these and other stories. One is that the criminal tends to have occupied a position involving daily management of the nonprofit’s money. Another is that the techniques for embezzlement have similarities – such as creation of phantom checking accounts, false credit cards, forging signatures, etc. At the Twain house Ms. Gregor also accessed the museum’s payroll system through the Internet where she set about to increase her salary.

Several questions arise. First and probably unanswerable is: why did these people commit these crimes? The second is, might they have been prevented and third is, what should a nonprofit do about them when revealed? As to the first, stealing from a non-profit seems like snatching a panhandler’s cup. But the motive of greed is always a good bet. Added to that is some form of ease of commission, in other words it wasn’t too hard to pull it off, especially if you know the system and the controls or lack thereof.

To address the second question - controls are at the heart of the matter. If the nonprofit hasn’t established a system of checks and balances and oversight in its financial system the temptation to steal will be there for the miscreant. Quite often, responding to news of the crime, someone will say: “Oh I couldn’t possibly imagine X would ever have done that, he/she is a long time trusted employee.” Unfortunately that profile is a likely fit for the culprit.

Establishing controls can be done with the help of your independent auditor, if you have one, or with the advice of a volunteer CPA. It is vital that board members be involved in implementing the controls process as the board is ultimately responsible for the organizations finances. That being the case, having Directors and Officers Liability Insurance would seem to be a necessity.

Now, what should nonprofit do after embezzlement is discovered? According to Bob Carlson in a 2011 article for the Chronicle of Philanthropy there are three steps that seem self-evident but are not always followed: 1) Punish the offender. A 2007 study found that only 72% of affected non-profits actually fired the employee; 2) Report the embezzlement to appropriate authorities and 3) Seek to get the money back.

On the latter point the non-profit, aside from its own financial health, has an obligation to its donors to pursue this course. In the case of Ms. Gregor, the court along with the punishment of a prison sentence ordered her to make full restitution to Mark Twain House of the embezzled funds totaling $1,080,811, and to pay $500,000 to the insurance company, the amount it paid out to the museum.

That’s not all. Ms. Gregor owes the IRS $323,480 in back taxes for under-reporting her income during the time of her crime spree. By law she should have reported the embezzled funds as income!

What percentage of these funds will ever find their way back to their rightful recipients is a good question. In any case, non-profits can guard against internal theft by imposing stringent financial system controls regardless of any inconvenience and additional work that may be involved. Above all, avoid the “it can never happen here” syndrome, because it can - unless the organization is vigilant. Mark Twain once said “the lack of money is the root of all evil.” With that in mind and a lack of controls in place, a non-profit can be vulnerable to fraud.

Boxes

It is February 2012, a short month. I want to write briefly about boxes. How often have you heard the admonition to “think outside the box?” In my view, this phrase has won its place in the Cliché Hall of Fame, Business Section. The meaning is to think both creatively and unconventionally. Its origins are unclear although there is consensus that it derives from a solution to a puzzle first published around 1914 called The Nine Dots, where you are challenged to draw a single line through each dot without lifting your pencil from the paper. The solution is to go beyond the perceived boundaries of the puzzle – hence “outside the box.” A number of consultants and business writers in the 60’s and 70’s claim to have translated this notion into the general management advice employed today.

In any case the phrase is now ubiquitous and I find at times used to disparage the thinking of managers and/or boards who, in the opinion of the “advisor” are too conservative or hidebound. I have been in meetings where the attendees are sternly admonished to think Outside the Box. The reactions are sometimes amusing. Some people almost assume the physical attitude of Rodin’s “The Thinker” –others are puzzled and some are defensive, immediately throwing out ideas they hope might alight somewhere beyond the box.

At the risk of being too literal I suggest there should be a first step: what’s in the box right now? Shouldn’t those contents be analyzed so that everyone concerned will understand what might ultimately qualify as being “outside?” And maybe a creative idea is within the present box, like the Peter Drucker’s “systematic and purposeful abandonment” of programs I described in my December 2011 blog. The Outside the Box directive is useful in encouraging new thinking provided the “old” thinking is not summarily devalued. At the core of this approach is THINK, the old IBM company mantra, regardless of an idea’s location relative to the box.

The second box I want to discuss is the sandbox. There are instances where some nonprofit board members are tempted to take advantage of their positions to espouse and even personally act on pet theories about management techniques and programs, often usurping the authority of the CEO in doing so. In these cases the non-profit becomes like a sandbox, open for play. Board chairs in in particular have to be vigilant in confining board members’ activity to the essentials: financial sustainability, policy development and the hiring and/or firing of the CEO. If the weakness of the CEO has invited sandbox play, that becomes a legitimate issue for board review.

My final box is in the nature of a commercial. Not far from where I live and work is the remarkable Dia Beacon (NY), a facility for contemporary art on the Hudson housed in a former Nabisco box printing factory. At close to 300,000 square feet, it is a world –class museum and well worth a visit. When you do so you can witness firsthand the result of thinking “outside the box” - literally.