I'm a big Star Wars fan. The story line resonates for me in a personal way in part because of what I have seen in my years of helping to manage public charities. I have observed the same story over and over again: a CEO or Executive Director rises to the top, and as their authority grows, they take the path to the dark side. Some started out of the gate that way and others evolved into it, but the end result remains the same. They focus on getting whatever they can for themselves out of the charity, rather than serving the mission. I submit three examples to corroborate this point.
In the first case, the Executive Director started right off on the dark side. He formed a charity in a field where he saw financial opportunity for himself. He aggressively grew the company and secured as many grants and donations as he could for the primary purpose of lining his pockets. He hired a strong number two person to run the day-to-day operations while he spent his days watching his stock investments and brainstorming new ways to take from the company. He successfully became a millionaire and pilfered from the charity for many years. In the end he was investigated and fired. However, he remains a wealthy man and I am sure he will go on to do more awful things.
In the second case, the Executive Director had worked for many years in the sector at a middle management level. She then secured the top position at a small non-profit and began her tenure with the mantra, "Stupid people have made a fortune. We are smart so we should have no problem doing so." That mantra would be fine if she were running a for-profit, but in a charity dedicated to serving the poor, the perspective had frightening consequences. Once again, she hired a decent number two to run the day-to-day operations and spent her time reading novels, balancing her checkbook or talking for hours on end with friends. However, her mantra of becoming wealthy grew louder and louder as her number two grew the organization. She eventually found a willing partner in her scheme to draw money out of the organization and was found out and fired a couple of years into her wealth building scheme.
In the final case, the CEO was much cleverer. He was more careful to stay technically within the bounds of the law. As a result, he remained in the position of leadership of a large charity for over 30 years. He also amassed a significant amount of money, did little to no work day-to-day and manipulated the board into thinking that every good thing that happened at the agency flowed from his genius. Because he was slicker, he was more dangerous than the two earlier examples because the damage he caused to the mission of the organization was sustained over a much longer period of time. As a result, the morale within the organization was abysmal and their ability to maintain a financially and programmatically strong agency was even more dramatically reduced.
I have intentionally not named names here because I do not want the many wonderful programs within these charities to suffer any more than they already have. There are also stories of wonderful leadership that is reflected in the fact that 65% of the charities we evaluate rate Good to Exceptional. I believe these are the places where self-interest is less focused on and mission is front and center.
However, my emphasis in this particular blog is to highlight how important transparency and accountability are in the charitable sector. These terms are becoming buzz words that almost everyone in a management position seems to be using. Anyone who calls for less regulation of charities to unleash their full potential needs to be reminded of the stories such as those above. The temptation to go to the dark side is strong when big money is involved. Some people believe they are above the normal rules and regulations once they reach the top tiers. What a sad day it is for any charity that has to endure the kind of selfish, myopic leadership I described above. As a result, I believe there is a need for more oversight, not less, in the charity sector. Given what is happening in the for-profit sector at the moment, I suspect the same could be said for them!