When Self Interest Trumps Mission, Disgrace Often Results

To the Editor:

The recent stories regarding the lack of leadership and board oversight at the local United Way in Washington, D.C., make me sick (“What Went Wrong?,” September 4). It wasn’t long after I moved to Washington to start my new job as president of United Way of America that this story started to unravel in my own backyard. I immediately called for the removal of the management team and the entire board; they have been replaced by an outstanding new group of leaders that has already taken great strides to undo the damage that was done.

I’ll leave it to the courts to determine the legal outcome, but it’s pretty clear to me that the organization’s former executive, Oral Suer, used and abused his position for his own personal gain. And to make matters worse, members of the former board did not act openly and decisively to stop it.

It is time for United Way, and the entire charitable sector, to stop relearning the same painful lessons. We can no longer think of ourselves as private institutions that can operate without the scrutiny of donors, the media, or elected officials. Instead, we have to think of ourselves as public charitable or philanthropic organizations that happen to carry tax-exempt status. Our business rides on the highway of trust, and when that trust is called into question, our ability to deliver on our mission is slowed if not stopped.

There are 1,393 local United Ways across the country, and nearly every one of them has operated without an ethical or legal issue. But if there is even one breach of confidence, we are all damaged. In January of this year, with trouble brewing in Washington and the nation focused on corporate and nonprofit accountability, the United Way system adopted self-imposed, tougher operating standards. Compliance with these standards is now a United Way membership requirement.

But the challenge of operating effectively and efficiently, with the highest level of integrity in our 24/7 multimedia “gotcha” culture, is something we all face. The other reality is that there are bad people in the world who make bad choices. Charitable organizations must not only operate with a higher level of integrity, we also have to take active measures to eliminate the possibility of wrongdoing. My colleagues and I have zero tolerance for any lack of compliance to our new operating standards and, in cases like the one in Washington, D.C., believe that guilty parties should be punished to the fullest extent of the law.

America doubled the number of nonprofit agencies during the 1990s. As a sector we now employ 10.4 million people. We’re a significant part of the American economy. When you grow that much in such a short period of time, you are going to be noticed. You are going to be analyzed, criticized, and held accountable. But I say this is a good thing.

The American public should hold our sector accountable, not only for the operating side of our work, but also to deliver on our missions. Unlike the business world we do not have forces in play that directly reward the creation of value and punish the lack thereof. We should be asked to report concrete results that are directly tied to our missions, not just the level of activity we produce.

As important as collaboration is in our work, we also must embrace the value of competition. Competition is about the relentless pursuit of value; competition makes you better. For those of us in human development, that means efforts that lead to measurable improvements in people’s lives ought to be the ones that are rewarded with public or private investment. In other words, the organizations that produce the greatest results should grow and be rewarded. Those that do not should be forced to change or go out of business.

In United Way, and as a philanthropic sector, if we embrace the reality that we forevermore operate in the white-hot spotlight of the public eye, we will pay more attention to ethics in operations. We will put appropriate governance and financial oversights in place. And, as a sector, we will pursue accountability that is as much about getting measurable results as it is about governance and oversight.

By relentlessly working in service of our missions, communities will grow stronger, and in turn, our institutional and personal interests will be better served. Putting institutional or personal interests first doesn’t serve people, communities, or mission and usually ends in irrelevance or disgrace.

Brian Gallagher
CEO
United Way of America
Alexandria, Va.

To the Editor:

Your article on the United Way of the National Capital Area sets up some compelling issues and challenges regarding the effective governance and management of civic-sector organizations.

One is the tension between the sad history of the organization and the comment by one interviewee that “if an individual in power intends to hide certain things, or mischaracterize them, it doesn’t matter how many pointed questions board members ask.”

The notion seems to set the standard too high and then encourage resignation. No level of questioning or probing can absolutely ensure that a dishonest executive will be detected, but steady, thoughtful probing is a basic element of the responsibility of a board. Though far more difficult, it is also the responsibility of the honest members of staff. Staff members, after all, are hired to serve a mission, not a chief executive. They must be willing to challenge a boss who is engaged in actions that are inimical to the mission. Having watched the D.C. United Way story unfold, I am confident that two of the people you quote in your article, former board member Donna Kloch and former staff member Nancy LaValle, performed great service at considerable personal cost by insisting that troubling information be pursued and that inappropriate behavior be challenged.

Another interesting tension in the article lies between the existence of a 45-member board and the comment of Brian Gallagher, United Way of America president, that “Any time you allow too much control to be in too few hands, that’s a formula for potentially bad stuff to happen.” The reader might ask how 45 board members can represent “too few hands.”

However, my experience is that overly large boards create circumstances in which responsibility is so widely diffused that, in effect, it lies with no one. And, irresponsible executives can be masterful at manipulating that situation to concentrate control in their own hands. Furthering the paradox, one favorite tool for that manipulation is to provide too much in-formation. By deluging board members with carefully controlled and selected information, the executive creates the illusion of openness and gives the board members the feeling that passive oversight (simply reading the flood of prose) satisfies their responsibilities.

I lead organizations through strategic transitions, serving as interim CEO. In that capacity, I regularly find myself working with very committed, selfless board members who, though individually very responsible people, have not been able to create a culture of effective responsibility in their organizations. When a chief executive deftly discourages responsibility, the results can be catastrophic.

Wm. Patrick Nichols
President
Transition Leadership International
Washington