Program’s critic defends his views

To the Editor:

In his letter to the editor (“General Powell’s Charity Deserves Government Support,” September 7) Peter A. Gallagher, president of America’s Promise, accuses me of writing an article about his organization that is “laced with inaccuracies” and “ill-informed.”

As an example, he cites my comments about Administaff, a for-profit professional employer.

In my column, I pointed out that, as a private commercial employer, Administaff does not have to disclose the salaries it pays to its employees. According to a 1998 report that America’s Promise made to the Internal Revenue Service, the organization paid a little more than $350,000 to Administaff that year as a fee for payroll, administrative, and human-resource services. Presumably, the fees for 1999 and 2000 are at least as high. There is no breakdown of the salaries of Administaff personnel who are performing these services.

To say the least, the relationship with Administaff, which by contract is officially a co-employer with America’s Promise, is highly unusual for the non-profit world. Since America’s Promise also has on staff a highly paid chief financial officer — $125,000 — who handles all financial and administrative requirements of the organization, including tax, insurance, human resources, and information systems, and a well-paid director of human resources and financial services who handles payroll and approval of invoices, an observer is left wondering what Administaff actually does.

With a core operating budget of over $7.5-million, America’s Promise is not a small organization.

Non-profits of that size don’t usually contract out for administrative and financial services other than checking services for payroll — at a very small fee. They do it in-house at less of a cost. Nor are they burdened by private co-employers who do not share the mission of their non-profit partners.

While America’s Promise does not seem recently to have used Administaff as a cover for non-disclosure of its salaries, its reluctance to reveal some salaries has created problems of transparency. In an interview a year ago in the Bloomberg News, General Powell was quoted as saying that he didn’t have to report salaries paid by either anonymous donors or Administaff. Only after repeated requests from The New York Times did the charity disclose that the bulk of Mr. Gallagher’s salary was paid by Van Beuren Management, a for-profit company tied to New Jersey financier Raymond Chambers, a strong supporter of America’s Promise.

The firm did not return calls asking for comment from either Reed Abelson of The New York Times or me. Nor has America’s Promise divulged the salary of its chief of staff, Col. Bill Smullen, who, though apparently paid by General Powell, has been an important member of the organization’s operations. It is also not clear how much volunteer time General Powell is giving to the organization. We were told up to recently that the general was providing three-quarters of his time to the organization as a volunteer. When I spoke to an America’s Promise spokesman in August, the general’s time had been cut to about half-time. Is it still half-time or so? The public deserves to know this information.

Mr. Gallagher also accuses me of not understanding the broad mission of America’s Promise. I understand it, but I disagree with his notion that the charity’s core operating budget should be funded almost entirely or primarily by government. The big selling point of America’s Promise was that it would mobilize the vast resources of the private sector to support at-risk youth in this country. There is plenty of money in corporate America to meet this challenge. And, apparently, according to the charity’s own financial statements for 1999, it raised considerably more private money than it actually spent. Why should America’s Promise, then, have to turn to the Corporation for National Service for a huge federal handout? Is it tired of doing the job of raising private money it promised to do?

Following the lead of America’s Promise, should other national non-profit organizations demand that their core operating budgets be financed by public funds? Why shouldn’t the N.A.A.C.P., the National Council of La Raza, the Urban League, the Center for Community Change, the Children’s Defense Fund, the Food Research and Action Center, and many others receive core support from the Corporation for National Service? They at least are working at the grassroots level in a real partnership with low-income and other disadvantaged constituencies to better the lives of those who need it most.

Let’s not be disingenuous. The arrangement between America’s Promise and the Corporation for National Service is political and opportunistic. It has little to do with mobilizing all sectors, or of ” scaling up” the commitment to young people. It has plenty to do with letting America’s Promise off the financial hook and making sure the organization is assured support after General Powell’s departure. It is extraordinary that neither Mr. Gallagher nor his organization has expressed any concern about increasing the number of volunteers that the corporation supports and the fact that their forthcoming general support from the corporation could finance some 500 additional volunteers.

Pablo Eisenberg
Senior Fellow
Georgetown Public Policy Institute
Washington