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From the President's Office, February 2006

Dear Friend:

What should we make of all the donations elected officials have made to nonprofit organizations in recent weeks?

Over the last few months, scores of politicians have donated hundreds of thousands of dollars they received from Indian tribes and other clients related to the activities of Jack Abramoff. He, of course, is the lobbyist on his way to a long jail sentence for bilking millions of dollars from Indian tribes and spreading money all over Washington in order to win friends and influence legislation.

Once the contributions became tainted by the Abramoff connection, politicians were faced with a dilemma: hold on to them and endure media scrutiny or try to drop this hot potato into someone else's lap. But what to do with the money? They couldn't very well give it back to Abramoff. So nonprofit organizations became the recipients of choice.

People and corporations give to nonprofits for a variety of motivations. It's nice to know that nonprofits are still seen as the "good guys" and a reasonable way to create something good out of an awkward situation. But I wonder if this unexpected largesse also adds to the public's confusion about nonprofits. Although it's nice to get the extra money to further the cause, I prefer a "cheerful giver" eager to support our mission to a donation made possible by a sticky political decision.

This whole affair underscores a couple of other issues that I believe negatively affect public perceptions of the nonprofit sector. It has come to light that Mr. Abramoff and a number of his allies created nonprofit organizations that, as it turns out, performed very few public services but were very effective vehicles for raising money and sponsoring lavish trips. Where was the public scrutiny of these so-called nonprofits? Were there adequate demands for transparency and accountability? Should GuideStar be doing more to help the public understand how nonprofits work?

Which leads me to my final concern. Recent news articles have reported that many elected officials have now created nonprofit organizations, some for reasons pursuing public service agendas, others as a convenient way to attract money from lobbyists. In either case these activities take place under the nonprofit's umbrella of "good will."

I'm not here to comment on campaign finance laws, but doesn't this practice add to the public's confusion about the proper role of nonprofit organizations? The recent study by Public Agenda on public opinion of nonprofits underscored the fact that the public still admires the work and dedication of the nonprofit sector. But the study also found that the public has a firm set of opinions about what is appropriate behavior regarding such things as marketing, compensation, and expenses.

Maybe it's time to get serious about clarifying the definition of a "nonprofit organization." When the definition of "nonprofit" includes not only what the public thinks it means—public service charities supported by donations—but nonprofits created by elected officials and the New York Stock Exchange, it adds to the public's mistrust of the integrity of all nonprofit organizations.

What do you think?

Sincerely,

Bob

Bob Ottenhoff
President and CEO, GuideStar