Act II, continued
Don’t get me wrong: if you’re going to have an employee and you want to create an incentive for him or her to go out, write grants, and solicit major donations, a commission is a good idea. However, there should always be a channel by which a person can donate to the charity without entitling a particular person—who may not have caused the donation to occur—to automatically dip their beak. The IRS has a concept called “inurement”: donations or funds raised should not automatically accrue to any particular individual. In fact donations that are directed to a specific task or a specific project have to be spent on that project, not on any other kind of expense. This particular Executive Director, however, had no problem whatsoever dipping into pre-allocated money to cover unrelated expenses. The fact that such an act violated the rules governing tax exempt conduct wasn’t even a blip on that individual’s radar screen, and the Board was totally oblivious.
Besides fund raising, the Executive Director put together the follow-through courses for the mentors and youth, which were reasonably structured, but which lacked practical application and which were mostly supposed to be the kind of consciousness-expanding exercises attempted in the intensive course. Some of the mentors occasionally volunteered to put on a presentation, but offers made by people who had not been through the Landmark Forum were rejected. So, for the most part, the Executive Director supervised the follow-through meetings even though they didn’t really have to, and put most of their work into fund raising to pay their own salary and that of their professional speaker cronies.
After about a year on the Board, I finally grasped the extent of the corruption (although I was still underestimating the stupidity). So far as I could tell, the charity was breaking at least two out of the eight crash-and-burn, nuke-your-tax-exempt-status rules, in at least five different ways.
1. There was significant private benefit (thanks to the inappropriately high pay for the guest speakers, available only because they were members of the clique)
2. The Executive Director was not recused from decisions in which they had significant personal interest (again an inappropriate private benefit)
3. Donated funds were being misappropriated, because the Executive Director was being paid a 10% commission of all donations, regardless of whether they were intended for a different purpose (which is a form of inurement and which also violates rules concerning the management of donations); this amount was not made up from general revenue because it frequently occurred when there was literally no other money in the bank. Grant money was likewise being spent on purposes other than the purpose for which it had been given
4. Donations were not being appropriately receipted, and
5. The Board was being used like a rubber stamp to retroactively approve the Executive Director’s decisions, including some extremely dangerous deficit spending.
In addition, the organization was teetering on the edge of bankruptcy. But nobody seemed to realize that until after I’d joined the Board and done some math for them. I objected to this whole bankruptcy thing, and also the blatantly illegal conduct (as I became aware of it). I became increasingly unpopular because I had a habit of pointing at the offending behavior, indicating that it was illegal or unethical, and insisting that the organization clean up its act. I also made some enemies by voting against anything I decided was fiscally irresponsible. Which ended up being a lot of stuff.
While I’d been a mentor, I was also part of the volunteer pool, and it seemed to me at the time that the fundraising never fucking let up. Over that year, we sold tickets to a local semi-pro sports game and to a circus. We also had a thing-a-thon, a fund raising gala, and an associated silent auction, plus four days’ worth of labor based sales events. Damned if I could figure out why at the time, because we had only one paid employee who obviously wasn’t living high on the hog, but we never seemed to have any money. In fact, we were constantly desperate and barely scraping by. But once I joined the Board, I got to see the books. As I mentioned in Act I, the sight scarred me for life.
Just prior to my Board membership the charity had made a tentative commitment to run another program, hot on the heels of the very successful one in which I’d been a mentor. Naturally, this involved committing to a massive cash outlay to one of these professional speakers, for an extremely expensive on-site course. The only problem was that they didn’t have the money for it.
I ran some numbers to get a seat-of-the-pants estimate of how much the volunteer base was capable of sustainably raising. Then I looked at the previous year’s expenditures and realized the organization was spending more than double the fundraising team’s sustainable capacity. In fact, they were headed into diminishing returns territory, which meant that network based fundraisers weren’t producing the desired results. So we shifted into a labor based approach, which increased revenue but not by enough to justify signing a contract. So far as I could see, we were about to go heavily into debt for no good reason.
What did they do? They had a massive kum-ba-ya session, that's what. Instead of figuring out how they were going to manage their money intelligently, the Board spent hours in a guided imagination and fantasy session, talking about all the things they’d do if they had access to unlimited money. Then, they collectively decided that the limits to money collection were imaginary, and each person made a commitment (which they were never held to) to raise a truly unreasonable amount of cash. I committed only to a regular monthly donation I knew I could afford. (This was the only one of the commitments that actually got kept.)
We had a series of other meetings, in which the Executive Director and various other clique members introduced people who were passing themselves off as folks who raised money for a living. They were basically professional mouth noise makers. One was a minister, well versed in raising money from devotees who believed in the same scorekeeper-in-the-sky that he did. He could turn the water works on at will, bursting into “spontaneous” tears and expressing a desire to use our charity as a means to advance his oh-so-holy mission. This worked less well than expected (the majority of the audience happened to be Jewish) but a few of us got a good laugh out of it. Seldom have I seen bullshit piled that high or deep. They didn't hire the guy, due to a misalignment of interest that even the kum-ba-ya crowd appeared to recognize. I took their skepticism to be a sign that they were improving.
Meanwhile, did I mention that the executive team signed the fucking contract for the overpriced rah-rah artist and his cult-like kick-off session to start another program? Yes! They did! The Board didn’t get a say.
The Executive knew they didn’t have the money, but remember how I mentioned earlier that they truly believed that they could vibrate, visualize, mentally masturbate, and Law-of-Attraction their way into a higher level of competency just by making a commitment they had no idea how to keep? Yes. So, instead of doing the sensible thing and postponing the program, they got together and decided to give themselves a massive “breakthrough”. That’s right: they signed the contract with absolutely no idea how they were going to pay that bill. Everyone congratulated themselves on their new level of commitment and their spiritual superiority in recognizing and taking an opportunity to become better people.
What. The. Flaming. Fuck?
Fully half the individuals on that Board did not personally experience the months of hell that came next. We busted rump with massive amounts of labor based fundraising, because that produced a reliable return on investment and I for one refused to exploit my social network to benefit an organization that had proven itself utterly incapable of proper money management. Volunteers were dropping out from fatigue or work conflicts. Gradually, we lost ALL our casual volunteers, and were left only with the core group of Board members, program volunteers, and their families (this becomes important later in Act III)
We delayed the start (and paid a penalty), but still ended up owing the duckspeaker half our annual budget—HALF—which we borrowed from his company at something like a 14% APR. That’s right: the majority of sustainable fund raising dollars were now going to debt service and debt reduction. There was literally nothing left to cover payroll with, except for checks written by Board members who occasionally put in enough money to keep the boat afloat. The organization had no savings and no negotiable assets. All it had was debt amounting to half its usual annual budget (and 100% of what I calculated as our maximum sustainable fund raising capacity).
Around this time, the Executive Director left town. I mentally breathed a sigh of relief, because that was one less monthly expense. Unfortunately, despite aggressive fund raising, we did not meet our fundraising goal for the next program. The charity was in jeopardy. I volunteered to serve as Treasurer for one year, provided I could execute a viable budget and get the organization running in a fiscally responsible way. THIS OFFER WAS ACCEPTED.
Sadly, the organization didn't follow through on the promise. They never gave me signatory authority on the checking account; instead that remained with the outgoing Executive Director and with that person’s buddy, who was not a member of the Board and whom I’d met only in passing. They were always “gonna” make an appointment to have me put on the account, but found reasons not to do it. This was because they were (rightly) concerned that I would declare a moratorium on spending until such time as we’d paid off our debt. I also had a fetish for operating within the law, and they just weren’t good, giving, and game for that. But it took me a few months to figure out that they LIKED operating that way.
As my first action item, I immediately came up with alternatives to utter financial ruin and presented those ideas to the group. They included delaying the hire of a replacement Executive Director until the organization was solvent, delaying any future programs until there was money in the bank to support them (I calculated the dates at which each of these things would be possible), and scaling the program down to something the charity could actually afford to do every year. This involved skipping the kick-off course and focusing solely on the community mentoring, which is the aspect of the program that was producing tangible, quantifiable results that donors like so much.
You know the story about how, in parts of India, cows are said to be so revered that cows are allowed to roam around everywhere, including inside people's stores or homes, and shit all over everything, and it’s supposedly illegal to keep them from doing it, or to bump a few of them off when they get too aggressive? I don't know if the story is true or not. But what is true is that the crude brainwashing attempt that occurred during the kick-off course, and the perceived necessity of spending tens of thousands of dollars on what was essentially a mandatory circle jerk, was this group’s sacred cow. No matter what, the majority of the Board had an irrational devotion to the concept of the kick-off course, and to paying ridiculous amounts of money to hire a professional manipulator to conduct it.
We needed to do more than kill that particular sacred cow. We needed to barbecue the fucker and sell the burgers to raise operating capital.
You’d have thought I committed heresy. In fact, the new President took me out to the parking lot and yelled at me for a while, accusing me of trying to derail or break up the charity. He told me that the charity was going to run “the kind of program it knew how to run”, and that my job was to keep my mouth shut and write checks to cover operating expenses, and that if I didn’t like that, I could either resign from the Board, or get with the program. I responded by telling him that, as a businessman himself, he ought to have better sense than to engage in deficit spending. I told him his volunteer fundraising base was exhausted, that he was so deeply in the red it might actually be more ethical to go bankrupt, and that if he wanted to stay open I supported that, but it was vital to stay within the bounds of what we could intelligently raise.
Dude, I thought, keep your Kool-Aid. I’ll stick with vodka. I told him I’d fix his financial problems as long as he didn’t come up with anything even more stupid or self-destructive than what had already happened, and provided the organization learned from its experience. But I was definitely not going to do it by writing a check and buying their way out of the hole they were in just so that they could immediately jump into another one. I think the phrase I used was “codependent bullshit”.
My mistake, apparently, was in not declaring that there WAS pie in the sky, dogdammit, and it would be ours bye and bye. Kum-ba-yah, kum-ba-yah, and sign me up for the Landmark Forum and all its associated leadership academies! (Yeah, right…)
What followed was one final attempt at The Big Payoff: they decided to bring in a real, live, professional fundraiser. This was a company that specialized in a special kind of thing-a-thon. In exchange for signing up for three years or three of these special thing-a-thons, this organization was saying they could generate returns on the order of $100k per event.
I was late arriving to the special Board meeting where the fund raiser was giving the presentation. Praise Baphomet, I was sideswiped by a hit-and-run driver and it took a while for the police to arrive. This cost me a fair bit of money (a witness got the plate, but the owner was uninsured). Yet it saved me from the usual happy horseshit that constituted a Board meeting, and it also protected me from whatever it was that the presenter did to a room full of people at the start of his presentation to shut down the critical thinking faculties of all present.
The thing-a-thon in question was supposed to have about a dozen participants raise about $10k apiece, which after the organizers took their slice and deducted the expenses, would net a profit of about $100k to the charity. Each of the golfers would not only solicit pledges on their own behalf, but have a small pyramid of other pledge seekers who, together, would make up an average of $10k per golfer by raising about $2,000 apiece.
Exactly how were we to accomplish this goal?
Cue the brimstone…
Each volunteer was to call people he or she knew, and say: “I’m in trouble, and I need a hundred dollars. Would you mind sending me that amount of money to help me out?” Apparently, there are people who say yes to that. Admittedly, I have friends I’d gladly give money to if they were that badly up the creek. It’s imaginably possible that there are other humans who would help me out the same way, except it would cost me an unacceptable amount of social capital to admit that I’d fucked up so badly that $100 from them would make the difference between success and failure.
The volunteer was further instructed to say: ”I got myself signed up for this (thing-a-thon) where we’re each committed to do 100 (units). I shouldn’t have given in and agreed to it, but I did, so I’m trying to get twenty people to pledge just one dollar per (unit). Is there any chance you could help me out by giving me just one dollar per (unit)? If I don’t raise enough, I’ll have to pay two thousand dollars myself.”
I don’t know about you guys, but I’d rather wax my pubes than let such horseshit come out of my mouth. The speaker in question was instructed to admit that the request was unreasonable BUT MAKE IT ANYWAY, and trust to the strength of that person’s emotional attachment to you.
This is an example of going to the well and taking way, way too much. I said so.
“Don’t you have anyone in your life who loves you?” Asked the presenter. “Or are your parents so poor that they couldn’t afford a hundred bucks?”
My parents were (and still are) independently wealthy, and were about to go FIRE despite some decidedly anti-Mustachian tendencies. I admitted that they had more than enough cash on hand, and that it would not be a major hardship for them.
“Well, wouldn’t your mother give you a hundred dollars if you needed it?” He asked.
“For this? No, of course not.” For whatever reason, this must have been an unexpected response. He asked me why.
Clearly this guy had never been a lawyer, and hadn’t heard the rule about asking a question you don’t want publicly answered, or you don’t know the answer to. All eyes were on me, and I found myself doing that jaw-clicking thing I so often do before I really unload on someone. Then I explained, slowly, as if speaking to a young and math-challenged child, that I’m expected to not be that big of a screw-up.
If I were sick, or lost my job, or was in a more serious accident than the one I’d just experienced an hour before, of course my parents would help me out. But self-inflicted drama due to my own stupidity? No. Even if by some freakish fluke I got away with it the first time, nobody would believe the same story, coming from me, ever again. Particularly not the following year. Or the year after that. In fact, after the first offense, I’d pretty much lose my adult card. After the second offense, they'd likely have me committed to an institution for the criminally stupid, and rightly so.
After the presentation, when we debated whether or not to sign the contract, I said not just “no” but “hell, no”. I explained why making a request like that was unethical as fuck, and why it put such a strain on the social network of the people who did it (unless they were part of a social circle where people exchanged $100 donations like party favors—none of us fit that description). I explained that bit I told you earlier about the well, and how everyone present was being instructed to overtax their personal network and basically burn their credibility for a short-term gain.
I don’t know whether the entire Board had been Mickey Finned before I arrived, or whether the presenter had hypnotized them with PowerPoint, or whether they’d been drinking more than their usual Kool-Aid. Maybe they were just that desperate, like a group of gamblers badly in debt to the Mob and anxious to roll the dice just one more time for the big payoff. I do know that everyone there had dollar signs in their eyes. They were also desperate to pay off the last of the debt and commit to a new program.
Not only was I the only person who voted against signing the contract, I resigned rather than be associated with the initiative. The Prez accepted my resignation with obvious relief, and I rather suspect the rest of the Executive appreciated the fact I was gone. For my part, I felt a huge and smelly load being lifted from my shoulders, and went off in search of a more sustainable venture.
A few years later, I had another run-in with the same President, in—as Lord Baphomet is my witness—in another parking lot. No, nobody got shanked and there were no fisticuffs. One of us was walking into a grocery store, as the other was walking out, and he related the events in Act III of this drama.