Tuesday, March 16, 2010

Mock Outrage or Justified Scrutiny?

Dan Pallota viciously attacks Senator Chuck Grassley for "undermining the humanitarian sector" (via Beata):

Senator Grassley and Wolf Blitzer want to frame this as a moral issue. So I do. It's immoral that in one 24-hour news cycle these leaders have manufactured a massive public relations and fundraising nightmare for the Boys and Girls Clubs, without the slightest effort to evaluate the CEO's compensation in the context of the value she is providing. Any first-year business school student who tried to make a case against an executive salary without a shred of cost-benefit analysis would be laughed out of class. [...]
It is time for us to turn the moral tables. Time to right the moral analysis. Time to call this destructive sanctimony by its real name. Senator Grassley has just dealt a sucker punch to the Boys and Girls Clubs, its CEO, and the millions of kids it helps every day in his own self-interest.
I'm not so sure I'm nearly as convinced or outraged. The problem with not for profit institutions are that in practice they're far more difficult to measure and evaluate. Surely the fact that the US government gave $41M to the Boys and Girls Clubs despite their significant current deficit suggests that Grassley does have a right to question the salaries of the organization just as much as they might for any given defense contractor. Further, Pallota is unfair in not pointing out some of the other objections that were made (AP): "They also questioned why in the same year officials spent $4.3 million on travel, $1.6 million on conferences, conventions and meetings, and $544,000 in lobbying fees."

Grassley also suggested that "changes Congress' original intent--providing initial seed money to providing a perpetual source of funds to sustain the Boys and Girls Club" (WSJ). It should be questioned why the organization didn't reach out to find more sustainable donors for their mission than the government.

While I can respect that you need to pay these people something and that organizationally it is important to attract good people to ensure operational capacity, if they accept funds from government they should accept that their salaries are also subject to political scrutiny. Further, a look at Charity Navigator rates them significant below comparable organizations and gives them only a 2 star rating largely for their organizational capacity though significantly below other comparable organizations.

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