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Showing posts with label GovernanceIssues. Show all posts
Showing posts with label GovernanceIssues. Show all posts
Thursday, July 25, 2013
Policy Update & Call to Action
Friday, June 14, 2013
Call to Action: Oppose Paid Board Members
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Wednesday, May 22, 2013
This Morning, NYCON CEO Doug Sauer Testifies in Front of Senate Committee
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NY AG, Lawmakers Propose Overhaul of Laws Governing Nonprofits (Business Journal Central New York)
NY AG, lawmakers propose overhaul of laws governing nonprofits5/15/2013 9:45:00 AM |
New York Attorney General Eric Schneiderman on Tuesday joined members of the state Senate and Assembly in proposing legislation to overhaul the laws governing New York’s nonprofit sector. The proposed Nonprofit Revitalization Act and Executive Compensation Reform Act would be the first “major reforms” to the state’s charities laws in more than 40 years, the attorney general’s office said in a news release. The proposals are meant to “make New York a model for nonprofit governance in the country, while cutting unnecessary red tape to better enable nonprofits to perform,” the statement said. New York’s nonprofit organizations are responsible for one in seven jobs in the state and generate hundreds of billions of dollars in annual revenue, according to the attorney general’s office. The lingering recession, slow economic recovery, and a series of weather-related disasters have provided financial, strategic, and governance challenges for nonprofits. “At the same time, the public’s trust in the nonprofit sector has ‘eroded,’ as stories of public officials and other people abusing charities have been uncovered,” according to the statement from the attorney general’s office. The Nonprofit Revitalization Act would require charities’ boards of directors to perform active oversight over financial audits. The nonprofit boards would be responsible for retaining independent auditors and reviewing results of the audit. Larger charities (those with more than $1 million in annual revenue) would be required to follow additional oversight procedures, according to the attorney general’s office. That same proposal would also require full disclosure of transactions between a nonprofit and insiders who stand to benefit. The provision is intended to prevent conflicts of interest. The nonprofit’s board of directors should also determine if the transaction is “fair, reasonable, and in organizations’ best interests,” as described in the attorney general’s statement. When a charity engages in a substantial transaction with an insider, the board will have to consider alternatives and document its basis for choosing the insider transaction, according to the attorney general’s office. The Nonprofit Revitalization Act would also streamline procedures for nonprofit mergers, property sales, and corporate dissolutions, according to Schneiderman. The Executive Compensation Reform Act is intended to “rein in excessive compensation,” he added. The proposal would require the boards of nonprofits to review and approve CEO compensation. Charities with annual revenue of more than $2 million will also have to review the compensation of their five highest-paid officers or key employees and compare it to the compensation provided at similar organizations, the attorney general said. From Business Journal Central New York (link) |
Friday, May 17, 2013
Camp Finance to Welcome Dan Pallotta, October 10
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Thursday, July 21, 2011
Nominate Your CPA Board Member for Special Aware
2011 Michael H. Urbach, CPA, Community Builders Award Now Accepting Nominations
Sponsored by the New York Council of Nonprofits (NYCON) and the New York State Society of Certified Public Accountants (NYSSCPA)
Submission Accepted through August 22nd, 2011
In recognition of the important role, talents and leadership that a Certified Public Accountant (CPA) in New York State can provide as a board member for community-based charities, NYCON and NYSSCPA are pleased to announce the 8th Annual Michael H. Urbach, CPA, Community Builders Award.
The award is named in honor of the late Michael H. Urbach, CPA, former partner of Urbach, Kahn and Werlin, former NYS Commissioner of Tax and Finance and Chair of the State Employees federated Appeal, and board leader of a number of charities.
Award Criteria & Submission
Candidates must:
Sponsored by the New York Council of Nonprofits (NYCON) and the New York State Society of Certified Public Accountants (NYSSCPA)
Submission Accepted through August 22nd, 2011
In recognition of the important role, talents and leadership that a Certified Public Accountant (CPA) in New York State can provide as a board member for community-based charities, NYCON and NYSSCPA are pleased to announce the 8th Annual Michael H. Urbach, CPA, Community Builders Award.
The award is named in honor of the late Michael H. Urbach, CPA, former partner of Urbach, Kahn and Werlin, former NYS Commissioner of Tax and Finance and Chair of the State Employees federated Appeal, and board leader of a number of charities.
Award Criteria & Submission
Candidates must:
- Be a CPA in good standing and a member of the New York State Society of Certified Public Accountants;
- Have served as an Officer on at least 3 different charitable 501(c)(3) community-based nonprofits with service as President/Chair at least once;
- Have demonstrated exemplary board leadership resulting in significant and positive organizational impact including, but not limited to, financial turn-around, growth, and/or organizational re-structuring; and
- Preference will be given to nominees whose board leadership accomplishments have been with community-based charities.
Deadline - August 22, 2011
Nominations addressing the candidate's qualifications must be received by August 22nd. Nominators are strongly encouraged to address the candidate's qualifications related to the four (4) criteria's mentioned above and to include at least three (3) letters of support from the charities who have benefited from the candidate's volunteer leadership.
Send seven (7) packets of nomination materials to:
Urbach Community Builders Award Committee
New York Council of Nonprofits
272 Broadway
Albany NY 12204
or email the packet to Melissa Currado, Executive Assistant to the CEO at mcurrado@nycon.org.
Announcement & Presentation
The 2011 award will be formally presented at the Annual Member Meeting of NYCON slated for the afternoon of October 6th at Mohonk Mountain House, New Paltz, New York.
The Luncheon will take place during CAMP FINANCE, a two-day retreat that provides the very best in knowledge, skill and strategy sessions for your staff and volunteer leaders.
In honor of the late Harold Mandel, a certified public accountant who worked for Urbach, Kahn & Werlin in Albany, NY and retired in West Palm Beach, FL, the 2011 Urbach Honoree has the privilege to award one (1) nonprofit executive of their choice a Camp Finance scholarship in Hal's name. In 2009, Mr. Mandel's family accepted a posthumous Michael H. Urbach, CPA Community Builders Award in his tribute.
Past Urbach Award Honorees
2010
Edward S. Mucenski, CPA of Potsdam
2009
Lewis "Lew" Kramer, CPA of Chappaqua
2008
Mel Zachter, CPA of Staten Island
2007
Eugene H. Fleishman, CPA of Poughkeepsie
2006
Craig Sickler, CPA from Kingston
2005
Paul Battaglia, CPA from Batavia
For More Information
visit NYCON at http://www.nycon.org/ or contact Melissa Currado at (800) 515-5012 or mcurrado@nycon.org
Tuesday, May 31, 2011
Nonprofit Quarterly Addresses Issues with E-mail Votes
For any board taking votes by e-mail, this is an essential article, offered by the Nonprofit Quarterly:
Email, texting, Facebook, Twitter . . . these diverse modes of electronic communication and others have exploded over recent years. We are now able to communicate faster, cheaper, and with more people simultaneously than we ever have been able to before.
To busy nonprofit board members, whose schedules make face-to-face board meetings seem like a luxury, a new trend in nonprofit governance has surfaced that may run afoul of the law – the “vote” by e-mail option.
Responding to the difficulty in wrangling a geographically diverse and time-crunched board, many nonprofit organizations are now allowing directors to “vote” by e-mail. This seems like the perfect solution. An issue or opportunity arises that calls for quick response. Directors are reluctant to attend an extra meeting. Why not circulate an e-mail, ascertain that there is general agreement and take action?
The ease and speed of email voting is seductively simple. But, this practice is a trap, because a board that relies on e-mail voting fails to comply with legal requirements for a proper vote, and exposes its decisions to attack. Nonprofit corporate statutes typically provide for board action to be taken either at a meeting (including a meeting by phone or video conference) or by unanimous written consent. Since an e-mail vote technically does not fit either category, it is quite possible that a court would consider an e-mail vote nothing more than an informal action, which is not legally valid. Even more likely, an attorney representing a nonprofit organization in a loan transaction might not be able to issue the “opinion of counsel” typically required by a lender, and this could delay or derail the entire deal.
Let’s take an example.
Playball (PB) runs a youth baseball program. A local businessman offers to donate land for fields, and arranges for a loan to cover construction costs. As interest rates are rising, PB needs to lock in the rate quickly. PB’s president tries to schedule a special meeting of the board to approve the loan, but can’t find a time when a quorum of four of the seven directors can meet.
So, she sends an e-mail seeking approval for the loan. Five directors respond, “Sure,” while two object. With a majority vote in hand, PB’s president signs the commitment letter and pays a commitment fee.
The closing approaches. PB’s attorney prepares the required opinion, which must state that: “All corporate proceedings required by law or the provisions of PB’s Certificate of Incorporation or bylaws to be taken by PB in connection with the transaction have been duly and validly taken.”
“Let me see the minutes of the meeting approving the loan,” says PB’s attorney.
“We couldn’t call a meeting, so we voted by e-mail,” responds PB’s president.
“Ok,” says the attorney. “You need a unanimous written consent, or to ratify the vote at a meeting or by teleconference.”
Unanimous consent is unattainable because two directors object. And, one of the five original consenting directors changes his vote. And of the remaining consenting directors, two are traveling in Asia, and cannot even meet by teleconference. With five of seven directors available, but only two who will vote in favor of the loan, PB’s attorney can’t deliver the opinion, the bank won’t make the loan, there is no deal, and PB forfeits its commitment fee.
While far-fetched, this scenario illustrates the danger of relying on informal board action.
Prohibition on Proxy Voting
In most states, directors may not vote by proxy. The theory behind this prohibition is that the discussion and interchange of ideas that occurs at board meetings is essential to the informed exercise of the directors’ fiduciary duty to the corporation.
An e-mail vote – that is, a proposal circulated and responded to by e-mail – is essentially a proxy vote delivered electronically.
The prohibition on proxy voting by directors has its roots in case law developed over many decades, known as “common law,” and eventually codified in statutes. The law regarding proper board action is substantially the same under the common law and under statutes governing business corporations and nonprofit corporations. In fact, most of the law developed in the business (or stock) corporation arena, but is applicable to nonprofit (or nonstock) organizations as well. But nonprofit organizations, whose directors are usually uncompensated volunteers, may be particularly prone to allowing their directors to vote by email.
The principal case in Connecticut on the issue of proxy voting by directors is a fairly typical one. In the 1956 business corporation case called Greenberg v. Harrison, the court invalidated the repayment of a loan by a corporation to its lender. The loan was to continue for one year unless earlier repayment was approved by unanimous consent of the directors. Finding that there was no unanimous consent because one director gave a proxy to another director but did not attend the board meeting, the court explained:
The affairs of a corporation are in the hands of its board of directors, whose duty it is to give deliberative control to the corporate business. This requires the physical presence of a director at directors’ meetings, and he cannot act by proxy.
Alternatives
In our example, PB’s attorney tired to implement the statutory exceptions to the requirement that directors meet in person. These exceptions can be easily adapted as modern technology progresses, and should be incorporated into an organization’s bylaws.
Teleconference
The statute allows meetings to be conducted by “any means of communication by which all directors participating may simultaneously hear each other during the meeting.” This provision allows teleconferences, and should permit web conferencing that combines voice or video communication with document sharing.
Unanimous Consent
Closer to the concept of e-mail voting, the statute also permits a board to act by unanimous written consent, if each director signs “a consent describing the action taken or to be taken.” This protects a director’s right to question the action or insist that the board discuss the matter, as a director may compel a meeting simply by withholding consent.
Combining the formality of unanimous written consent with the simplicity of e-mail, an organization’s staff member or officer may circulate the proposed resolution as a formal consent attached to an email. The organization must then collect all of the directors’ signatures. The consent may be signed electronically – \\John H. Smith\\ – for example, and delivered electronically – as a PDF attached to an e-mail.
E-mailed Resolution
An organization might also send an e-mail containing the full text of the resolution and ask each director to specifically respond and sign electronically. However, this procedure increases the risk that a technicality will be overlooked, and it is no simpler than attaching a formal consent to an e-mail.
The distinction between a formal consent circulated as an attachment to an e-mail, and an e-mailed poll of the board may seem inconsequential. But, note three important differences. Most important, all directors must vote unanimously. The directors must also receive a complete description of the proposed resolution and they must “sign” the consent.
E-mail is a useful tool for taking the pulse of a board. An organization may informally poll its directors and then ratify the decision with a formal in-person or teleconference meeting or by unanimous written consent.
The risk that an informal e-mail vote will prove problematic is small if the decision is unanimous, if no one litigates to pursue an objection or if no opinion of counsel is required. Nonetheless, directors should protect the integrity of their decisions by adhering to the statutory procedures and ensuring that through active and meaningful participation they stay informed and comply with their fiduciary duty of care.
Leah Cohen Chatinover is of counsel at Stanger & Arnold, LLP in West Hartford, Connecticut. She is a business lawyer for nonprofit organizations of all types, and can be reached at lchatinover@stangerlaw.com
Email, texting, Facebook, Twitter . . . these diverse modes of electronic communication and others have exploded over recent years. We are now able to communicate faster, cheaper, and with more people simultaneously than we ever have been able to before.
To busy nonprofit board members, whose schedules make face-to-face board meetings seem like a luxury, a new trend in nonprofit governance has surfaced that may run afoul of the law – the “vote” by e-mail option.
Responding to the difficulty in wrangling a geographically diverse and time-crunched board, many nonprofit organizations are now allowing directors to “vote” by e-mail. This seems like the perfect solution. An issue or opportunity arises that calls for quick response. Directors are reluctant to attend an extra meeting. Why not circulate an e-mail, ascertain that there is general agreement and take action?
The ease and speed of email voting is seductively simple. But, this practice is a trap, because a board that relies on e-mail voting fails to comply with legal requirements for a proper vote, and exposes its decisions to attack. Nonprofit corporate statutes typically provide for board action to be taken either at a meeting (including a meeting by phone or video conference) or by unanimous written consent. Since an e-mail vote technically does not fit either category, it is quite possible that a court would consider an e-mail vote nothing more than an informal action, which is not legally valid. Even more likely, an attorney representing a nonprofit organization in a loan transaction might not be able to issue the “opinion of counsel” typically required by a lender, and this could delay or derail the entire deal.
Let’s take an example.
Playball (PB) runs a youth baseball program. A local businessman offers to donate land for fields, and arranges for a loan to cover construction costs. As interest rates are rising, PB needs to lock in the rate quickly. PB’s president tries to schedule a special meeting of the board to approve the loan, but can’t find a time when a quorum of four of the seven directors can meet.
So, she sends an e-mail seeking approval for the loan. Five directors respond, “Sure,” while two object. With a majority vote in hand, PB’s president signs the commitment letter and pays a commitment fee.
The closing approaches. PB’s attorney prepares the required opinion, which must state that: “All corporate proceedings required by law or the provisions of PB’s Certificate of Incorporation or bylaws to be taken by PB in connection with the transaction have been duly and validly taken.”
“Let me see the minutes of the meeting approving the loan,” says PB’s attorney.
“We couldn’t call a meeting, so we voted by e-mail,” responds PB’s president.
“Ok,” says the attorney. “You need a unanimous written consent, or to ratify the vote at a meeting or by teleconference.”
Unanimous consent is unattainable because two directors object. And, one of the five original consenting directors changes his vote. And of the remaining consenting directors, two are traveling in Asia, and cannot even meet by teleconference. With five of seven directors available, but only two who will vote in favor of the loan, PB’s attorney can’t deliver the opinion, the bank won’t make the loan, there is no deal, and PB forfeits its commitment fee.
While far-fetched, this scenario illustrates the danger of relying on informal board action.
Prohibition on Proxy Voting
In most states, directors may not vote by proxy. The theory behind this prohibition is that the discussion and interchange of ideas that occurs at board meetings is essential to the informed exercise of the directors’ fiduciary duty to the corporation.
An e-mail vote – that is, a proposal circulated and responded to by e-mail – is essentially a proxy vote delivered electronically.
The prohibition on proxy voting by directors has its roots in case law developed over many decades, known as “common law,” and eventually codified in statutes. The law regarding proper board action is substantially the same under the common law and under statutes governing business corporations and nonprofit corporations. In fact, most of the law developed in the business (or stock) corporation arena, but is applicable to nonprofit (or nonstock) organizations as well. But nonprofit organizations, whose directors are usually uncompensated volunteers, may be particularly prone to allowing their directors to vote by email.
The principal case in Connecticut on the issue of proxy voting by directors is a fairly typical one. In the 1956 business corporation case called Greenberg v. Harrison, the court invalidated the repayment of a loan by a corporation to its lender. The loan was to continue for one year unless earlier repayment was approved by unanimous consent of the directors. Finding that there was no unanimous consent because one director gave a proxy to another director but did not attend the board meeting, the court explained:
The affairs of a corporation are in the hands of its board of directors, whose duty it is to give deliberative control to the corporate business. This requires the physical presence of a director at directors’ meetings, and he cannot act by proxy.
Alternatives
In our example, PB’s attorney tired to implement the statutory exceptions to the requirement that directors meet in person. These exceptions can be easily adapted as modern technology progresses, and should be incorporated into an organization’s bylaws.
Teleconference
The statute allows meetings to be conducted by “any means of communication by which all directors participating may simultaneously hear each other during the meeting.” This provision allows teleconferences, and should permit web conferencing that combines voice or video communication with document sharing.
Unanimous Consent
Closer to the concept of e-mail voting, the statute also permits a board to act by unanimous written consent, if each director signs “a consent describing the action taken or to be taken.” This protects a director’s right to question the action or insist that the board discuss the matter, as a director may compel a meeting simply by withholding consent.
Combining the formality of unanimous written consent with the simplicity of e-mail, an organization’s staff member or officer may circulate the proposed resolution as a formal consent attached to an email. The organization must then collect all of the directors’ signatures. The consent may be signed electronically – \\John H. Smith\\ – for example, and delivered electronically – as a PDF attached to an e-mail.
E-mailed Resolution
An organization might also send an e-mail containing the full text of the resolution and ask each director to specifically respond and sign electronically. However, this procedure increases the risk that a technicality will be overlooked, and it is no simpler than attaching a formal consent to an e-mail.
The distinction between a formal consent circulated as an attachment to an e-mail, and an e-mailed poll of the board may seem inconsequential. But, note three important differences. Most important, all directors must vote unanimously. The directors must also receive a complete description of the proposed resolution and they must “sign” the consent.
E-mail is a useful tool for taking the pulse of a board. An organization may informally poll its directors and then ratify the decision with a formal in-person or teleconference meeting or by unanimous written consent.
The risk that an informal e-mail vote will prove problematic is small if the decision is unanimous, if no one litigates to pursue an objection or if no opinion of counsel is required. Nonetheless, directors should protect the integrity of their decisions by adhering to the statutory procedures and ensuring that through active and meaningful participation they stay informed and comply with their fiduciary duty of care.
Leah Cohen Chatinover is of counsel at Stanger & Arnold, LLP in West Hartford, Connecticut. She is a business lawyer for nonprofit organizations of all types, and can be reached at lchatinover@stangerlaw.com
Thursday, April 21, 2011
Weak enforcement of rules on U.S. charities: experts
(Reuters) - Authorities in the United States, particularly in cash-strapped states, have not devoted enough resources to policing nonprofit groups like those involved in recent philanthropy controversies, experts say
U.S. tax authorities grant groups charitable status, which exempts them from taxes, and require most to file annual informational tax returns, but experts say the main source of regulation faced by nonprofit groups is at state level from the attorney-general.
"The problem is that very few states have put the resources they should into this part of the attorney general's activities and the quality of regulation ... varies," said Leslie Lenkowsky, a professor of public affairs and philanthropic studies at Indiana University.
Best-selling author Greg Mortenson was accused by television program "60 Minutes" this week of misusing money given by donors, who include President Barack Obama, to his charitable organization Central Asia Institute. The New York Times reported last month that singer Madonna had ousted the board of her Raising Malawi charity due to mismanagement.
Many U.S. states are facing financial hardships stemming from the U.S. recession of 2007-2009, which has limited their budgets for law enforcement and other services.
There are about 2 million nonprofits in the United States. Of that number, just 20,000 receive about 85 percent of the $300 billion in U.S. donations made annually, experts said.
Mortenson, whose charity received $100,000 of Obama's $1.4 million Nobel Peace Prize award, has denied any wrongdoing and Madonna has said that her group was not under investigation.
Montana Attorney General Steve Bullock, who is responsible for overseeing the Central Asia Institute, said he will investigate concerns raised that the charity spends more promoting the importance of constructing schools in Afghanistan and Pakistan that is spends to build them.
"We've kept our rules relatively loose for charities in the United States," Lenkowsky said. "The reason being that our philosophy is that we would like to see lots of private initiatives that aim to serve a public interest."
HIGHER FRAUD RATE
Tax authorities reject very few applications by groups wanting to become charities, but making it more difficult would raise concerns about what criteria would be used to determine a nonprofit and could hinder efforts by groups to do good.
There are several independent charity watchdogs such as Charity Navigator and the American Institute for Philanthropy, where donors can get advice about larger nonprofit groups.
But their views can differ. The institute wrote a critical report about Mortenson's Central Asia Institute, while the Navigator gave it a top four star rating and then added a donor advisory warning when concerns about the group were raised.
"The vast majority of donors are looking for information that is readily available; they don't have a lot of time to do research for their charitable giving," said Ken Berger, chief executive of Charity Navigator.
"We're trying to oversee what is basically a $2 trillion part of the American economy -- one out of every 10 jobs -- 10 percent of GDP, and we are a very small operation," he said. "Creating further regulation would not be viable unless we get serious about enforcing existing law more rigorously."
Research shows that theft in the nonprofit sector accounts for 13 percent of annual donations, or about twice the rate of fraud in the for-profit sector, said Mark Kramer, co-founder of nonprofit consulting firm FSG and author of "Do More Than Give: The 6 Practices of Donors Who Change the World."
"In the for-profit sector, the line between what is illegal and what is merely bad judgment is clearly defined: Madoff committed fraud and is in jail," Kramer said.
"When one takes on the moral weight of running a charity, however, the rules are less clear," he said. "Unlike the for-profit sector, the scandal doesn't depend on whether something is illegal -- merely whether it sounds bad."
Kramer said donors tend to focus on funding good causes rather than judging charities by their results -- an approach which creates greater opportunities for mismanagement.
U.S. tax authorities grant groups charitable status, which exempts them from taxes, and require most to file annual informational tax returns, but experts say the main source of regulation faced by nonprofit groups is at state level from the attorney-general.
"The problem is that very few states have put the resources they should into this part of the attorney general's activities and the quality of regulation ... varies," said Leslie Lenkowsky, a professor of public affairs and philanthropic studies at Indiana University.
Best-selling author Greg Mortenson was accused by television program "60 Minutes" this week of misusing money given by donors, who include President Barack Obama, to his charitable organization Central Asia Institute. The New York Times reported last month that singer Madonna had ousted the board of her Raising Malawi charity due to mismanagement.
Many U.S. states are facing financial hardships stemming from the U.S. recession of 2007-2009, which has limited their budgets for law enforcement and other services.
There are about 2 million nonprofits in the United States. Of that number, just 20,000 receive about 85 percent of the $300 billion in U.S. donations made annually, experts said.
Mortenson, whose charity received $100,000 of Obama's $1.4 million Nobel Peace Prize award, has denied any wrongdoing and Madonna has said that her group was not under investigation.
Montana Attorney General Steve Bullock, who is responsible for overseeing the Central Asia Institute, said he will investigate concerns raised that the charity spends more promoting the importance of constructing schools in Afghanistan and Pakistan that is spends to build them.
"We've kept our rules relatively loose for charities in the United States," Lenkowsky said. "The reason being that our philosophy is that we would like to see lots of private initiatives that aim to serve a public interest."
HIGHER FRAUD RATE
Tax authorities reject very few applications by groups wanting to become charities, but making it more difficult would raise concerns about what criteria would be used to determine a nonprofit and could hinder efforts by groups to do good.
There are several independent charity watchdogs such as Charity Navigator and the American Institute for Philanthropy, where donors can get advice about larger nonprofit groups.
But their views can differ. The institute wrote a critical report about Mortenson's Central Asia Institute, while the Navigator gave it a top four star rating and then added a donor advisory warning when concerns about the group were raised.
"The vast majority of donors are looking for information that is readily available; they don't have a lot of time to do research for their charitable giving," said Ken Berger, chief executive of Charity Navigator.
"We're trying to oversee what is basically a $2 trillion part of the American economy -- one out of every 10 jobs -- 10 percent of GDP, and we are a very small operation," he said. "Creating further regulation would not be viable unless we get serious about enforcing existing law more rigorously."
Research shows that theft in the nonprofit sector accounts for 13 percent of annual donations, or about twice the rate of fraud in the for-profit sector, said Mark Kramer, co-founder of nonprofit consulting firm FSG and author of "Do More Than Give: The 6 Practices of Donors Who Change the World."
"In the for-profit sector, the line between what is illegal and what is merely bad judgment is clearly defined: Madoff committed fraud and is in jail," Kramer said.
"When one takes on the moral weight of running a charity, however, the rules are less clear," he said. "Unlike the for-profit sector, the scandal doesn't depend on whether something is illegal -- merely whether it sounds bad."
Kramer said donors tend to focus on funding good causes rather than judging charities by their results -- an approach which creates greater opportunities for mismanagement.
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