May 10, 2011 | Read Time: 4 minutes
As donors last week began an effort to wage a class-action lawsuit against Greg Mortensen, the author of Three Cups of Tea, nonprofit leaders across the country were assessing whether they have sufficiently tight policies on how to handle book sales by their executives and other workers.
The lawsuit, in which the donors say they were defrauded by errors in Mr. Mortensen’s books, inducing them to buy his books and contribute to his charity, is the latest assault on Mr. Mortensen, who has faced questions from charity watchdogs and legal experts about his books and the charity he founded, the Central Asia Institute, in Bozeman, Mont. Among the allegations are that the charity spent too much money promoting book sales without getting a sufficient share of the royalties.
Mr. Mortensen and the charity’s board have said the news reports have distorted how the institute handled its finances. And they have not yet commented on the lawsuit.
Even so, other charity authors say the controversy has led journalists to question them about their own royalty arrangements. Darell Hammond, founder of KaBoom, the national playground-building group, has a new book called ”KaBoom: How One Man Built a Movement to Save Play,” which is currently No. 4 on The New York Times hardcover nonfiction bestseller list. Mr. Hammond says reporters reviewing the book have asked about his motivations for writing and promoting it.
Fortunately, he says, he has had an easy answer: The book was conceived as a way to benefit his charity. He describes it as “the organization’s project,” meant to tell KaBoom’s story to a broader audience and to advance the national dialogue about the state of children’s play.
“All the money from the book goes to the organization,” Mr. Hammond says, adding that his employment contract, written four years ago, stipulates that any outside income, including speaking fees and book royalties, go to KaBoom, in Washington.
“Half of the book is very personal, about my childhood experiences well before KaBoom existed, so you could even say that KaBoom is profiting off my personal story,” Mr. Hammond jokes.
Early Discussions
Daniel L. Kurtz, a New York lawyer and former state charity regulator, says that charity leaders who intend to write a book related to their organization’s work need to meet with the group’s governing board to decide early and openly who will benefit from the book’s proceeds and how.
“If you don’t address this, the default position is that it’s owned by the employer,” Mr. Kurtz says, adding that the specifics of the agreements are not as important as simply having policies in place to offer guidance and transparency.
Among recent examples of arrangements between authors and the organizations they run:
- Wayne Pacelle, head of the Humane Society of the United States, whose new book, The Bond: Our Kinship With Animals, Our Call to Defend Them, landed at No. 11 on The New York Times bestsellers’ list last month, says he split the advance he received with the charity about 50-50 and plans to do the same with the royalties.
- Oran B. Hesterman, chief executive of the Fair Food Network, in Ann Arbor, Mich., says he will donate to the organization one-third of the proceeds from his soon-to-be-published book, Fair Food: Growing a Healthy, Sustainable Food System for All, basing the formula in part on the fact that he did most of the work on the book before he started the charity a couple of years ago.
- Richard E. Stearns, at World Vision, in Federal Way, Wash., handed over to the aid organization his entire advance and hundreds of thousands of dollars so far in proceeds from his 2009 book, The Hole in Our Gospel: What Does God Expect of Us? The Answer That Changed My Life and Might Just Change the World.
An ‘Unwritten Code’
Robert Egger, founder and president of the D.C. Central Kitchen, in Washington, says he would also have given the royalties to his organization, if his 2004 book, Begging for Change: The Dollars and Sense of Making Nonprofits Responsive, Efficient, and Rewarding for All, had made any money.
D.C. Central Kitchen, which combines job training with food and other services to the needy, doesn’t have a policy regarding book royalties, so its leader would have turned over the proceeds based on what he calls the group’s “unwritten code” of sharing and his own desire to give back.
“In hindsight,” Mr. Egger wrote in an e-mail to The Chronicle, “that process left us wide open to all kinds of potential ‘failures to communicate.’ One person’s moral compass is another’s license to steal.”
He says that he and the board, who have lately been discussing the potential for new revenue-producing projects (such as a television show) are likely soon to codify policies over how to handle profits from books and other such endeavors.
“There are huge lessons to be learned from this episode,” Mr. Egger wrote, referring to the controversy at the Central Asia Institute. “The most important being: Have the tough conversations upfront, then roar forward in unison.”
