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Thursday, April 21, 2011

Lessons in Nonprofit Ethics from Three Cups of Tea and 60 Minutes

Often when we discuss potential ethical dilemmas, someone says, "Do you want to see this on the front page of the paper?" I guess the question now is, "Do you want to see this on 60 Minutes?"

After the release of the 60 Minutes story investigating Greg Mortenson, author of Three Cups of Tea and Executive Director of the Central Asia Institute, many questions have been raised about the truth of Mortenson's books, the legitimacy of his charity, and the transparency of the CAI's financials.

And all these questions have been raised just in time for me to do a presentation on fundraising ethics!

Originally, my presentation was supposed to summarize the findings of the Association of Fundraising Professionals (AFP) Ethics Think Tank and use the case study format led by Paul Pribbenow, chair of the AFP Ethics Committee, to discuss fictional cases. Instead, I facilitated a discussion with participants from the AFP Northern Arizona Chapter about the issues and impact of the 60 Minutes story.

So, using Dr. Pribbenow's case study analysis process, here's what we learned from Three Cups of Tea and 60 Minutes:



1. What are the issues?
  • Greg Mortenson receives compensation and travel expenses from the Central Asia Institute, and there is a question as to whether he receives "excess compensation." The CAI board states that they retained counsel prior to the 60 Minutes story and that counsel determined that this is not the case.
  • There is lack of understanding by the public on the mission of CAI. Much of the audience of Mortenson's books assumes that the sole purpose is to build schools, but CAI says that their mission is to build schools and educate the American public about the issue through Mortenson's talks. While it's all education, these are very different kinds of education, and the domestic portion seems cloudy.
  • There is conflicting information circulating about how many schools have been built and the effectiveness of building those schools.
  • There is even more conflicting information about the details of Mortenson's "genesis" stories of the Central Asia Institute.
  • Mortenson and CAI did not willingly participate in the 60 Minutes investigation and following the story are playing "catch up" in their media response.
  • Mortenson is the face and keystone of CAI's fundraising efforts.
2. How should this have played out?
  • A clearer separation of CAI and Mortenson's finances would have eliminated much of the charity's issues: for example, Mortenson could have sold his book, took his expenses out of the royalties, then provided a personal donation to CAI to fund the programs. Or, at minimum, CAI could have clearer and more public policies regarding reasonable travel expense reimbursement.
  • More consistent and transparent financial reports would allow CAI to more accurately report how funds were expended and how their efforts impacted the women in Afghanistan and Pakistan. To wit, CAI has added a link to their financial reports on the front page of their website since the airing of the story.
3. What other nuances or relationship dynamics are playing into this?
  • The CAI Board of Directors consists of Mortenson and two others. That is not a large enough board, given the cult of personality around Mortenson, to promote critical, independent analysis. Mike DeLucia, Former Director of Charitable Trusts for the New Hampshire Attorney General's Office, noted, "Fraud may be easier to perpetrate in nonprofits due to an atmosphere of trust, weak internal controls, lack of financial expertise, and reliance on voluntary boards." While there is not proof of fraud, CAI may still benefit from a broader and more independent board of directors.
  • Mortenson is a visionary, but by the accounts of those who know him, he's not an administrator. This is true for a lot of non-profit organizations--the founder is inspirational, but not one for details. CAI may want to modify its organizational structure to remove Mortenson from the regular operations of the charity. They may actually have this structure already, but it needs to be more prominently noted if that is the case.
4. If you were on the board, what would you do?
  • Develop a crisis communications plan to use NOW and in the future. Avoiding the media is never the best approach--they just get more persistent. CAI is attempting to respond now on their website, but they could have proactively addressed the 60 Minutes challenges well before the story aired, potentially minimizing the impact of the story.
  • Create an easy to read financial report that provides specifics on how much was spent overseas to build schools and fund programs in Afghanistan and Pakistan and how much was spent in the US on speaking engagements. Donors have the right to know where their money was spent, but let's face it, most will not wade through the audit or the Form 990. Make it easy to understand.
  • Get the facts straight on how many schools were built, where they are, and what their current statuses are. No need to embellish.
  • Consider hiring a new independent auditor to not only verify financials but also provide analysis on organizational structure and internal controls.
  • Expand and diversify the board of directors.
Regardless of the current allegations, CAI has a respectable mission and appears to be doing good work. Let's hope that they can move beyond this and become a stronger, more effective organization.

Other opinions:
Three Cups of Tea, spilled, New York Times Op-Ed
Lessons Learned from Three Cups of Tea, Justice for All blog by Akhila Kolisetty


Links to other relevant information:
Association of Fundraising Professionals Code of Ethics and Standards of Professional Practice

Thanks to Paul E. Doherty for asking me for this post.-AF

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