Archive for February 2014

When Divided We Stand, United We Fall

February 17, 2014

“The American system of government is adversarial in nature but not a win-at-all-costs system.”

-Anonymous Atlanta Lawyer at a Leadership Conference

It surprised me last December when Congress passed a budget for fiscal year 2014 with such little drama.  Albeit it was almost three months into the fiscal year, which started October 1st, but after the reckless inaction in recent years, it was a marked improvement.  That occurred again last week with seemingly normal legislation to increase the debt ceiling.  After Mitch McConnell, the Senate Minority Leader, voted to increase the borrowing authority of the United States causing the measure to pass, several in his party changed their votes before the official count to support him.  Those are telling shifting winds in a political party that recently shutdown the government over similar financial controversies.  (Further it is a particular option to change your vote after one knows the outcome before the final recorded vote; one can vote against and decry something beneficial to their district as often happened with government spending during the recession of recent past.  Alas that is another post.)

What has caused the recent drastic shift in political calculus for both parties; over the last few years Congressional dysfunction is seemingly both politically and personally beneficial.  And it is still present.  As political brinkmanship again threatened a politically dramatic show of wills over the country’s financial solvency, the reversal of reductions in military retirement pays—at no small cost to the country—sails through nearly unanimously.  I do not recall those cuts passing with such unanimity in the weeks prior.

It was at a conference on Ethical Leadership many years ago that a local litigator offered a beautiful insight.  The American system of government is adversarial in nature but not a win-at-all-costs system.

If politics is the gaming of a political system, the current sitting Congress, and those of recent years past, would well heed this lesson.  Which Congressmen fail to understand and heed that divided we stand, united we fall?  There is no shame in not winning or getting one’s way.  This country gives freedom to the minority voice.  What is does not offer is permission for the minority to hijack the process until their way is met.  There is a greater good that is seemingly lost in the reckless pursuit for individual interests.  What comes to mind is the colonial America cartoon by Benjamin Franklin of a rattlesnake chopped into pieces.  Each piece was labeled as a state and the picture carried a simple caption: “Join, or die.”  Today’s snake contains more pieces in a world not less fraught with dangers.

From the outside, I prefer relationships in which the other is more predictable and less self-centered than the one I currently share with my representatives in government.

So it again returns to us.  Do we permit this hijacking by any political party?  Do we trust those that represent us or not; if not, we deserve better.  Do we hold them accountable or do we permit ourselves to tolerate an abusive relationship?

What’s in a Name: Non-Profit or Not-for-Profit Organizations?

February 1, 2014

For some time I have wanted to clarify: what is a Non-Profit organization?  Without fail during the year organizations and alma maters send me requests for donations pleading for funds in essence to colloquially “make ends meet” or otherwise raise funds.  They often cite difficult economic times and a need to promote their vision and contribute to society.  There are not insignificant differences between the various social groups, fraternal orders,  religious institutions, charities, politically orientated groups, social welfare organizations, and others that are lumped together as “non-profit” organizations.  (Not to mention those that are hybrids that sometimes aggressively, illegally,  or unethically blur the lines).  Yet is that the best way to describe them?  I believe not.

It is common to hear someone refer to an organization that engages in social causes as a non-profit organization (also a non-profit corporation).  What is imprecisely called a non-profit organization is more accurately called a not-for-profit organization. This recognizes two very important facts:

  1. An organization that does not generate a profit–essentially taking in more funds than expended–will not survive.
  1. This correctly identifies that the primary organizational mission is strikingly different from a commercial entity whose primary purpose is the generation of wealth for its owners.

The belief that a not-for-profit organization is “not making a profit” is strikingly misleading.  An organization must receive more funds than it expends or it becomes financially insolvent.  The key point I believe is: How sustainable is the organization’s funding strategy?

In the corporate world this has long been referred to as a “sustainable business model.”  Annually requesting donations and contributions because an organization cannot meet expenditures may indicate an organization is living-beyond-its-means.  If once could not responsibly run their personal finances in this manner, why would an organization?

The uncomfortable, question that makes some squirm is: Should not-for-profit organizations make a profit? Making a profit or pursuing wealth is not inherently evil.  For some the word profit is associated with nameless cold corporations with mirrored-windowed high-rise office buildings and not a warm fuzzy good-for-humanity organization staffed primarily with volunteers provided by social groups.  What is interesting and important to ask is: where does that profit go?

The US Government, through the Internal Revenue Service, has deemed that organizations committed to purposes of common good are exempt from federal income tax as stated in Section 501(c)(3) of the Internal Revenue Code.  These purposes per the IRS include:

“charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals.  The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency. (1)

In essence, the US Government permits these organizations to uses monies for their cause that would otherwise be sent to the US Treasury as taxes.  These are called tax-exempt organizations.  These organizations are legally compelled, beyond reasonable reserves or saving accounts, to spend any profits within three years of earning them on their primary purpose.

All of these organizations, with the exception of religious institutions, are required to file IRS form 990 each year.  This document is the organization’s equilivient to an individual’s annual form 1040.  These annual returns are public documents and provide insight into the organization’s revenue and expenses.  This permits an important degree of transparency to the citizenry to examine if an organization truly is focused on purposes of common good.

Further the US Government encourages individuals to contribute to an organization of their choice by not taxing monies donated.  This signals that an individual can, at times, better decide than the government what specific programs or organizations should receive funding.  It encourages private organization to fulfill a social need without the intervention of a federal or state government.  This is a blending of democracy and with the capitalistic (or Darwinian) virtues of free market economic theory:  only the organizations that fill the societal needs deemed most important by those that contribute will survive.

(Or they just have the better marketing departments; that is a different story.)

References

1.  Internal Revenue Service, “Exempt Purposes – Internal Revenue Code Section 501(c)(3)” Retrieved March 4, 2013,   http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations/Exempt-Purposes-Internal-Revenue-Code-Section-501%28c%29%283%29