Debunking “Accountability to Donors” Part 6

Is the Donor Accountability movement correct? Should community organizations be aiming their primary accountability squarely at their donors?

Having spent the week throwing grenades at that notion, today’s is the last argument I will make before wrapping up this subject tomorrow.

(If you have not read the posts leading up to this one, you can start at the beginning here.)

Accountability for “The Money”
Now we’re at the heart of the matter. If organizations are to be held accountable to their donors, the only logical thing they could be accountable for is “The Money.” And if you ask a room full of nonprofit board members what they are primarily accountable for, that is the response you will get from many, if not most of them. “The Money.”

We know this because we have asked board after board. And almost always, that is their first reply – “The Money” – as if “The Money” were some special deity deserving of capital letters and quotation marks.

And as you have probably guessed by now, that is just not true.

As we saw in yesterday’s post, the corporate model actually points away from nonprofit accountability for “The Money.” So, then where does the logic behind “Accountability for The Money” come from?

Perhaps it comes from the law. Aren’t community organizations LEGALLY accountable to donors and funders? Aren’t they LEGALLY accountable for the money?

Well, no. Legally, community organizations are accountable for upholding the law. That’s it.

Now in some cases, the laws they must uphold may include contract law. For example, if there is a contract between an organization and a donor / funder / government contracting office, the organization must legally uphold its end of that contract, just as it would be legally bound to uphold any contract. But in those cases, it is not because the other party is a donor, but because there is a contract involved.

And so, short of ensuring that money is not used for an illegal purpose, the “legal accountability for the money” argument doesn’t hold any more water than the corporate argument.

Well what about tax exemption? In exchange for their tax exemption, community organizations must be accountable for the money, right?

Sorry – wrong again. Organizations receive their tax exemption for one reason: to provide community benefit. The prime example of that is tax exempt hospitals in the U.S., who often find themselves scrambling to put a cash value to the benefit they provide to the community. The IRS wants to know that the community is receiving at least as much in “community benefit” as the hospital is saving by not paying taxes.

Again – not the money; Community Benefit.

But just because it is fun to do, let’s take the tax exemption argument one step further.

If the reason an organization would be accountable to its donors has anything to do with the tax exemption the organization enjoys, then it stands to reason that the reverse is true as well – that donors are accountable to the organization.

Why? Because the organization is not the only one getting a tax advantage; the donor will receive a tax deduction for his/her gifts. And depending on the net worth and sophistication of the donor, he/she may get tremendous personal tax advantages for giving a particular gift in a particular way. So perhaps we should just leave the “tax exemption” issue alone…

Which all combines to leave us here:

IF accountability for the money is not an issue of legal accountability or the tax code; and
IF corporate accountability actually proves that organizations are accountable primarily to the community, rather than primarily to donors; and
IF it is almost impossible to discern to whom an organization would owe its accountability for a government grant; and
IF we have to think hard to determine why a cash donor should be the object of accountability over an in-kind donor or volunteer; and
IF we have to think just as hard, if not harder, to determine cut-off donation levels for varying degrees of accountability – and again determine what exactly that means;
And if we cannot for the life of us figure out to whom an organization would be accountable if it was fully endowed and did not have to raise money through donations or grants…

Well then maybe it is time to put to rest the notion that our primary accountability is for the money, and that we are primarily accountable to our donors.

Perhaps it is time to start looking not at the issue of accountability for the means – the money – but for the end results: community change. And perhaps it is time to start considering what could be accomplished if boards held themselves first and foremost accountable to their communities, rather than to their donors.

Tune in tomorrow, when I will wrap up this thread, by considering what is possible when we start governing for our potential to do amazing things in our communities, and stop aiming our boards’ accountability myopically at dollars and donors.

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