Inside Philanthropy

A blog on philanthropy and nonprofit news and issues. A publication of Philanthropy Journal.

March 27, 2007

Bad-behavior show at Smithsonian

The Smithsonian Institution has produced a compelling exhibit on the need for more effective regulation and policing of the charitable marketplace.

Under the gun for lavish perks and excessive spending, Smiithsonian CEO Lawrence Small has quit, The New York Times reports today.

But despite Small’s exit, the mess he created and the failure of the Smithsonian’s board of regents to ride herd on him underscore the broader need for stronger government oversight of nonprofits.

Nonprofits boards certainly need to do a better job keeping their own houses in order.

As Rick Cohen of The Nonprofit Quarterly told the Times, the Smithsonian board, apparently seduced by Small’s fundraising success, “was prepared to turn a blind eye to questionable expenditures.”

But even stronger board oversight is no substitute for tougher rules and cops to hold nonprofits accountable.

A Washington Post review of spending by Smithsonian Secretary Lawrence Small since he took office in 2000 found $90,000 in unauthorized expenses and approval by the institution’s board of regents for $2 million in expenses for his private home and offices.

The Smithsonian’s former inspector general also told the Post last week that Small, whose compensation this year was budgeted at $915,698, had asked her last year to halt an audit of the Smithsonian division that generates revenue for unrestricted use.

In the wake of the Post’s reporting, the Senate last week voted to freeze a $17 million increase in the Smithsonian’s proposed 2008 budget, capping salaries for any Smithsonian executive at $400,000 and keeping the freeze in effect until the Smithsonian fixes how the secretary’s shop does business.

Independent Sector and the big foundations that bankroll it continue to claim the charitable marketplace can police itself, but self-policing clearly has been missing in action as executive greed and board sloppiness continue to infect organizations like the Smithsonian.

And it is the news media, not the self-appointed champions of nonprofit self-regulation, that have helped lift yet another rock to expose still another slimy practitioner of nonprofit excess and arrogance.

Big foundations and the trade groups they fund can fight all they like against the need for better regulation and enforcement.

But without rules and cops that are effective and even-handed, the charitable marketplace will continue to be a breeding ground for bad behavior that only erodes the trust on which all nonprofits depend.


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