Accumulating millions in endowment returns is not unethical if they are being reserved for legitimate reasons. If an accountant notices that a client has a going concern problem, he or she is obligated to request the client’s capitalization and financing plans for the long term—awkward as this may be. And, while not strictly illegal, there is indeed a conflict of interest when the board of a membership organization also serves as the board of the organization’s daughter nonprofit.
The laws of economics say, “Grow . . . Compete . . . Use it up fast . . . Take it now and turn it into dollars . . . Do whatever makes sense in monetary terms.” The laws of the Earth say, “Just so much and no more . . . Compete, yes, but keep your competition in bounds . . . Never take more in your generation than you give back to the next.” Only time will tell which laws eventually prevail, and the consequences we will suffer if we do not make our economic laws consistent with our planetary ones.
Stakeholders, Shareholders, and the Meaning of Market Basket: An Interview with Tom Kochan by the editors (Fall 2014)
The Market Basket protest against the shareholders’ decision to oust their CEO is unprecedented—involving, as it did, the full workforce joined by the chain’s customers and suppliers. But it is doubtful that this will be the last we see of this kind of action. It demonstrates an abiding concern in American society about inequality, bolstered by the development of social media and organizational transparency.
Although shackled by the competition of large, well-established insurance companies, the unexpected provision for early renewal of policies not in accordance with ACA standards, and the prohibition on using federal funds for the purpose of marketing, nonprofit health co-ops are doing surprisingly well.
Is This as Good as It Gets? The False Promise of Risk-Based Medicare and For-Profit Dominance of Care by William D. Cabin, PhD, JD, MPH, MSW (Fall 2014)
Up until 1980, home-health agencies were excluded from receiving Medicare funding. Since the reversal of the prohibition and later institution of a risk-based managed-care model, there has been a surge of for-profits into the home-health/nursing-home/hospice field. Proponents of the managed-care model promised increased quality and decreased cost—but research is showing that the very opposite is true.
Competitive Positioning: Why Knowing Your Competition Is Essential to Social Impact Success by Peter Frumkin and Suzi Sosa (Fall 2014)
As the authors explain, “Competitive analysis is an essential tool . . . for leaders seeking to position a new innovation and/or organization” and for “established organizations to continually orient themselves.” This article lays out the steps to building, positioning, and growing in the changeable landscape of social innovation.
There are many reasons to scale, but organizations should think carefully about what is motivating them to do so, as there are even more reasons not to. For, as the author contends, “If done well, a scaling approach can exponentially increase an organization’s impact”; but if done poorly, it can be “a disruptive diversion of precious resources that commodifies rather than serves communities of need.”
Fair or Foul? A Review of Federal Tax Laws Governing Unfair Competition by Gene Takagi, JD, MNA, and Tony Wang, JD, MBA (Fall 2014)
When nonprofits compete in spaces traditionally operated by for-profits, there are two primary legal issues to contend with: unrelated business income and restraint of trade—both of which were put in place to govern unfair competition, and neither of whose boundaries tend to be all that easy to determine. That these laws are necessary is clear; but, note the authors, “In light of all the constraints on a nonprofit running a profitable business, the alarm of unfair competition rings a little hollow.”
While foundations enthusiastically engage in supporting Detroit’s museums, and mainstream media celebrate the influx of “young, white, creative hipsters” into the city’s wealthier neighborhoods, many of the more diverse artistic and entrepreneurial expressions of civil society are largely ignored—or, worse, shut down. This article is an explicit call to action for the philanthropic sector to come to the defense of civil society in the pure and raw form found in Detroit.
Friday Is the New Tuesday— and Other Observations on the “New Normal” in the Nonprofit Arts Sector by Eileen Cunniffe (Fall 2014)
While the worst effects of the economic downturn seem to be fading, the 2013 Americans for the Arts National Arts Index shows that larger cultural institutions are still, in effect, in recession. That said, there is some evidence that funding of the arts may be on the rebound.
Nineteen Practices toward a Nonprofit Theory of Leadership and Organizational Culture by Jon Pratt, JD, MPA (Fall 2014)
The accountability principles and management practices outlined in this article were designed by the Minnesota Council of Nonprofits to lay out an explicitly nonprofit set of expectations for leadership from board members, managers, and volunteers.