Monthly Archives: June 2013

A STRANGE PHENOMENON

Almost 35 of the 45 years of my business career were spent in/around the nonprofit association community.  It was a fascinating adventure filled with the excitement of many victories and accomplishments, while facing a great variety of challenges, as well as a few small defeats.

During the last 25 of those years, I tried to maximize my efforts to find ways to expand my income by serving the nonprofit sector as an independent management contractor.  I had been somewhat successful in pursuing this goal but all the while puzzled by a strange phenomenon which seems to permeate much of our society.  Let me illustrate:

  1. On a number of project proposals over the years, I offered to provide a service to some group and finance the project because they had no money.  Based on the success of the program they would get a royalty, in addition to the P.R., etc.  There was not always a profit but that was the risk I was willing to take.
  2. In comparing the results of a nonprofit association offering a trade show or a publication, for example, competing with a profit-making entity, I have heard the inefficiencies and ineffectiveness of the “association” excused many times as “well, they are a nonprofit.”
  3. In a business dispute, a retired judge acting as a mediator said “my sympathies go to the association because you are a profit-making company and they are nonprofit.  I could never figure out what that had to do with the merits of the dispute.

Don’t misunderstand.  The wealth of opportunity which abounds in the nonprofit arena contributed far more to my success than the agony of this frustrating lack of economic understanding.

There are certainly many associations who are both effective and efficient in serving their constituents, but there are many who are neither.  Nonprofit status should not create an aura and a cloak of invincibility which automatically gives it preference in performance over a profit-making entity.

What are our schools and colleges teaching about free enterprise?  What do we need to do to provide a basic education in reality economics?

There is nothing magic about being a nonprofit corporation.  It is relatively easy to attain nonprofit status.  Somewhere, somehow nonprofit organizations are going to have to meet certain standards of accountability just as it is beginning to happen in the education arena.  The educational system is in total disarray and not the least of the contributing factors has been the dogged determination of teachers and administrators alike to resist any/all attempts at performance standards and evaluations of both fiscal and results-oriented achievements.

How far behind is the nonprofit, tax-exempt sector?

The principal advantage of gaining tax-exempt status from the IRS is you don’t have to pay taxes on any excess of revenue over expenses each year.  You can therefore accumulate money over a period of time without that accumulation being taxed.

The unfolding IRS scandal highlighted the illegal harassment and delays heaped upon conservative political groups.  Those actions appear to be criminal.

On a broader picture, I have always felt that nonprofit organizations who get tax-exempt status should have to undergo some kind of audit every three or five years to validate the continuation of their tax advantages.

The audit should make an attempt to measure their fiscal stewardship (no board meetings in Hawaii), their management effectiveness and how well they serve their members, as well as the “industry or public” they are organized to represent.

ArtSchwartzSig

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DO YOU WANT MORE SECURITY OR PRIVACY?

I personally have never been very concerned about my so-called “privacy.”  Truth be told, I’ve felt we’ve been over-concerned about privacy.

Whether it’s the forms in the doctor’s office, the cameras to catch shoplifters or drivers running red lights, I’ve had no problem with these measures and can’t quite understand why there are objections based on the “invasion of privacy.”

If you’re doing something illegal and getting caught by an eyewitness or a camera, I believe this serves the greater good.

Along comes the IRS scandal and now the NSA surveillance programs, and I begin to have some second thoughts.  In the case of the IRS, it wasn’t the problem of the procedures for granting tax exempt status to non-profit organizations.  The problem was the illegal harassment of targeted conservative groups by, as yet, an unknown number of government employees pursuing their own partisan agenda.

The NSA situations exploded when a former CIA contractor/employee revealed a top-secret order from the Foreign Intelligence Surveillance Court requiring Verizon Business Network to make all its records available to the government.  Also revealed were the existence of two government snooping programs.  In a program called PRISM, we are told tech companies have given the government unprecedented, direct access to data generated by their users.  These firms included Microsoft, Yahoo, Google, Facebook, PalTalk, AOL, Skype, YouTube, Apple.  “That has been interpreted to mean that the NSA could obtain emails, video chats and other communications without having to make specific requests of the service providers or having to obtain court orders for each search.

Could what happened with the IRS happen with the NSA data-mining program?  I’m afraid it could.  I always questioned the competence of government administrators.  The IRS situation has blown my confidence in the ability of government administrators to remain non-partisan in their implementation of our laws and regulations.

I have no idea that the IRS scandal came about on orders from higher ups, but I’m sure the polarized climate of the hostile DC politics made a contribution to this happening.

What I think it comes down to is this:  If the government or private entities invade the privacy of individuals who are caught breaking the law, that’s okay with me.

On the other hand, if the government breaks the law by illegally misusing the data (NSA) or the powers given to them, like the IRS, I think the punishment should be severe, uncompromising and swift.

Civil libertarians claim the NSA data mining itself is an invasion of privacy.  I don’t think so as long as the NSA administrators use the data to enhance our security as authorized by the FISA court under the Patriot Act passed by Congress.  If they misuse these provisions, as the IRS has, the full hammer of the law should come down on them.

No one, including the alleged leaker, Edward Snowden of the NSA surveillance program, has outlined any harm or abuse that has taken place.  His prosecution maybe a bit tricky.  By contrast, the prosecution of Pfc. Bradley Manning, who gave classified information to Wikileaks honcho Julian Assange, will be a lot easier.  The release of that information did cause a lot of harm to a number of people.

Americans bristle at the idea that the IRS has singled out political organizations that applied for tax-free status, but don’t seem too worked up about NSA data mining.  A Washington Post/Pew Research Center poll out last week found that 62% of Americans say it’s important for the government to investigate terror threats even if it intrudes on personal privacy.

Fifty-six percent say it’s okay that the NSA ”has been getting secret court orders to track telephone calls of millions of Americans in an effort to investigate terrorism.”

Forty-five percent say it’s okay for the government to read everyone’s emails if officials say it might prevent future terror attacks.

Each of us has to evaluate the need for security, as well as the privacy issues, to make your own determination on what you’re comfortable with.

ArtSchwartzSig

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THE BACK STORY ON BETA SIGMA GAMMA

A blog or two ago I related the story of Beta Sigma Gamma.  It was called “A Short History of a Small Beginning.”  In talking with a few people who commented on the blog I was reminded that there was a little more to the story, at least as far as I was personally concerned.

It may be interesting to add how I came to Beta Sig and UCONN.

The year was 1949.  I finished high school in NYC at the end of January without attending graduation and left for the University of Oklahoma.  I didn’t have a football scholarship but I decided to go there because I had two friends from summer camp who encouraged me to join them and they had a good Theater School.  I was interested in stage design and lighting, or so I thought.

I arrived in a blinding snowstorm and moved into a rooming house where my two friends were camped out.  That proved to be a big mistake. I should have gone into the freshmen dorm and been more immersed in college life.  The result was I never felt connected to the university.

It was the golden years of O.U. football and a great time to watch the Bud Wilkerson warriors conquer the Southwest Conference but it wasn’t enough to feel a real part of the university.

I got by.  Changed my major a time or two, got decent grades and ended up hanging out with a couple of war veterans who had come back to college after the Korean War.  I’m not sure why they put up with me.  Truth be told, I was in over my head with their drinking, carousing and story-telling.

They were good ole Oklahoma boys—Chester Lee Limes, a womanizer of the first degree from Lawton; Edward Ward Williams, an Indian rights activist from Muskegee; and Dale Franchez, a chess-playing, pre-law student from Ardmore.

One day in the fall of 1950 I read a small filler article in the lower right corner of the inside left page of the Daily Oklahoman (I can still see it).  It said that a new intercultural, interracial fraternity, had formed at the University of Connecticut, according to Sumner Cohen, UCONN’s Director of Housing.

I said “WOW,” I had to find out more.  I wrote to Sumner Cohen at the University for a course catalogue and to hear more about Beta Sigma Gamma.  It happened to be at a time I was thinking I probably should continue college closer to home.

During Christmas vacation I dragged my cousin Ron to go up with me to Storrs, Connecticut.  We took a train from Grand Central to Hartford and then a bus to Storrs.  It was pretty in the woods, out in the middle of nowhere.  Would you believe we arrived in a snowstorm.

We got a brief campus tour and a visit with Mr. Cohen.  He told us we could rent a room at Beta Sig beginning February 1st since their house was only 80% full.  He gave me the name and phone number of one of the members, Dave Holmes, who I visited on my way back through Hartford.

So there I was on February 1st at UCONN in the Beta Sig fraternity house.  It was new and exciting and a lot of fun.  It was a great experience.  I became a member shortly thereafter.

As the founding presidents, Gerry Brown and Danny Conn, graduated in a year or so, I became the third president.

We defeated a movement to install a quota system, we picketed a barbershop that refused to cut the hair of black students, and we helped start a girls’ sorority with the same platform.

At UCONN class attendance was not mandatory.  Since I was so immersed in Beta Sig I didn’t make too many classes.  When they averaged in my grades from O.U., I was able to skirt by and graduated in the summer of ’53.

It was a formative time in my life and we’ve had a chance to relive some of the bonds and memories at each of our three reunions.

ArtSchwartzSig

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IT’S AS GOOD A TIME AS ANY TO TAKE STOCK

I have no illusions.  I am not an objective historian and I won’t live long enough to see what the real historians will have to say about the era of Obama.  So here’s my take on where we stand on the accomplishments and negatives of the Obama presidency.

It’s as good a time as any to take stock because I don’t believe much more of any substance will be accomplished in the next three years.  Between the polarization in Congress, the trifecta of current scandals and his unwillingness to negotiate on a personal basis, he is already essentially a lame duck.

Major Accomplishments

  1. He mesmerized the electorate and the news media with his speeches and well-meaning platitudes of hope and change
  2. Created “Race to the Top,” a major educational reform
  3. Passage of ObamaCare which brought 30 million uninsured under the umbrella of healthcare with no pre-existing conditions
  4. Supported Dodd-Frank legislation with Consumer Financial Protection Bureau its major strength and a small dose of Wall Street Reform*
  5. Passed the 2009 $787 billion stimulus package*
  6. Turned around (bailed out) the auto industry (for the moment)*
  7. Repealed “Don’t Ask, Don’t Tell”
  8. Tightened sanctions on Iran
  9. Boosted fuel efficiency standards through the Environmental Protection Agency
  10. Helped topple Kadafi in Libya
  11. Finished off Osama Bin Laden
  12. Got banks out of the student loan program

*The full effects of these actions may well prove to be too little to accomplish their stated goals.

On The Other Side

  1. Fast & Furious – a botched sting operation and since then a stonewalled deal to trace arms shipped to Mexico.  AG Holder was held in contempt of Congress for not providing information or accountability on this episode.
  2. *Benghazi – After nine months, it’s still unclear what the administration did or did not do about security for the ambassador—who created the erroneous talking points—as well as our inability of bringing the culprits to justice.
  3. *The Justice Department’s investigation of the journalists at Fox News and the Associated Press phone records.  Another Holder stonewall supposedly to find security leaks.
  4. Scrutiny and stalling by the IRS of conservative groups’ applications for tax exempt status.  Obama also has a 501(c)4 tax exempt organization.  Apparently he didn’t have a problem.
  5. The Affordable Care Act (Obamacare) is a train wreck in concept and implementation and will be a drag on the economy.  Employers will use less workers and provide less benefits.  The fines are less than the premiums and the premiums continue to go up.  16,000 new IRS enforcement agents and ZERO new doctors.
  6. Hiring of an illegal agency (ACORN) to register food stamp and welfare recipients to vote in 2012
  7. Decisions not to enforce immigration laws and fighting states that try
  8. The disappearing redline in Syria
  9. The line that has never been declared in Iran
  10. The overly extensive use of executive power to get around Congress, far more than any other president, most of which will get tied up in the courts for years to come—i.e., the EPA mandating cap-n-trade that Congress turned down flat.
  11. The lack of fiscal responsibility with our mountain of debt approaching $17 trillion
  12. Holder’s bastardization of the Civil Rights laws
  13. The obsession with campaigning to the exclusion of governing – i.e., his distaste for negotiating with Congress
  14. $8.5 billion in loans and tax credits for egg-headed alternative energy solutions, most of which are already bankrupt.
  15. The “recess” appointments to the NRLB that the courts have ruled were not done in “recess”
  16. The false promises of transparency.  One DC watchdog group has submitted over 1,000 Freedom of Information requests as well as 100 lawsuits trying to compel compliance.

*Obama isn’t alone.  It’s almost a given that second-term presidents are involved in some kind of scandal(s).  The list includes Eisenhower (gifts), Reagan (Iran-Contra), George W. Bush (Valerie Plame), Bill Clinton (impeachment), and of course Nixon (Watergate).

All of them, including Obama, seem to make their scandals worse by hunkering down behind a self-imposed wall of secrecy and stalling.  The lack of transparency makes them last longer, impairs their agenda and their legislative legacy.

I’m sure you could question some of the negatives or maybe add something to the accomplishments, but if you’re not drinking the cool-aid from the left or the right, you’ll probably have to admit this is a fairly balanced summary.

ArtSchwartzSig

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