Author Ken Stern and the cover of his book, 'With Charity for All'. (Doubleday )
Americans just love feeling philanthropic. In any debate over cutting tax breaks in the income tax system, the deduction for charitable donations is always held sacred — even more than that other sacred cow, the mortgage deduction.
It's a rare political leader who doesn't bow to the role played by charitable foundations in filling gaps left by government services to the indigent, the sick and the elderly, here in the United States and around the globe. The globe-trotting, tent-dwelling relief worker, the doctor without borders, the logistics expert getting food and medicine to camps of war refugees — all elicit unique reverence from us armchair empathizers in civilized lands.
So why, asks Ken Stern in his new book, "With Charity for All," do we spend so little time thinking about the charities we give our billions to?
Stern is a veteran of the nonprofit world, having spent nine years running National Public Radio, the nonprofit organization with which most of us are more familiar than any other. Thanks to his experience and a wealth of further research, "With Charity for All" makes many important points about how little we understand about the needs and the operations of even the most prominent global philanthropies. The book opens with a telling anecdote about the American Red Cross and its response to the disaster of 9/11.
In brief, its response was, well, disastrous. Material and personnel were deployed to the wrong places. Logistics broke down so badly that the organization was unable to get supplies, volunteers, food or cots for first responders quickly to the Pentagon — which was all of 2 miles from its national headquarters and emergency response center.
What did work to perfection was the Red Cross' fundraising apparatus, which collected $543 million for its Liberty Fund to aid the attack's victims. This was far more than could reasonably be spent on direct relief. Yet when Red Cross President Bernadine Healy decided to divert the excess funds to fix what 9/11 had shown was broken — improving its relief infrastructure, telecommunications and logistics management — she provoked a firestorm. Congressional hearings, threats of prosecution for fraud, the whole instrumentality of public outrage was deployed against the Red Cross. Healy soon resigned.
"The widespread fury," Stern observes, "was both predictable and misguided." Donors large and small don't understand that delivering direct relief requires investing in a sound infrastructure, yet such investments are often derided as waste and featherbedding.
Stern makes a strong case that the average American donor has become a sucker for any charity's glossy yarn. That's because almost no system exists for measuring a charity's effectiveness on the ground; the few efforts that have been made to hold charities to account have been overwhelmed by feel-good PR and undermined by the sector's resistance to transparency.
Stern tells this story terrifically through the prism of Third World water projects. Beats there a Western heart that hasn't been beguiled by a glossy brochure showing a white charity executive throwing her arms around an African child at the site of a village's gleaming new water pump? Billions of dollars have been thrown into the fight for clean water. It's an inviting cause, because it's cheap to install a brand new pump. But "drilling a well is far easier than maintaining one," Stern rightly observes. Once the drilling is done and the publicity photos snapped, the charity organizers move on.
As a result, the proper image of the standard Third World water project, as an expert tells Stern, should be one of a "woman walking slowly past a broken hand pump, bucket at her side or on her head, on her way to (or from) that scoop hole or dirty puddle that she once hoped would never again be part of her life."
One topic Stern explores is the exploitation of tax exemptions by nonprofits that don't resemble charities by any stretch of the imagination. Many are hospitals, which despite their nonprofit status behave with all the chilly inhumanity of a profit-seeking conglomerate — dunning indigent patients for inflated charges, leaving emergency rooms to fall to pieces while spending lavishly on surgical facilities for wealthy patrons of high-profile specialties — and, by the way, paying their CEOs in the millions.
Consider the New York Stock Exchange, which until recently was a nonprofit enjoying a tax exemption and which in 2003 awarded its chief executive, Richard Grasso, a pay package of $140 million. Three years later, bugged to distraction by the attentions of charities regulators, the Big Board reorganized itself as a profit-making corporation. As Stern observes, the Grasso affair "stands for the proposition that some organizations have no business being nonprofits in the first place."