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Wright writes: "While there has traditionally been a close relationship between Wall Street donors and nonprofit organizations like charities and universities, a new study from the Stanford Social Innovation Review (SSIR) reveals a growing Wall Street takeover of nonprofit boards of directors."

Wall Street. (photo: NY Post)
Wall Street. (photo: NY Post)


Wall Street Taking Over Nonprofit Sector

By Dan Wright, Shadowproof

05 January 16

 

hile there has traditionally been a close relationship between Wall Street donors and nonprofit organizations like charities and universities, a new study from the Stanford Social Innovation Review (SSIR) reveals a growing Wall Street takeover of nonprofit boards of directors.

Using data from what are referred to in the study as major private research universities, elite small liberal arts colleges, and prominent New York City cultural and health institutions, SSIR calculates that “[T]he percentage of people from finance on the boards virtually doubled at all three types of nonprofits between 1989 and 2014.”

SSIR posits that nonprofits favor Wall Street partly because “nonprofit organizations are simply following the money.” Wall Street has grown increasingly rich in the past decades and fundraising is a vital aspect of running a nonprofit organization. Hedge fund managers’ compensation regularly outstrips other corporate executives, making them prime fundraising targets.

But the banksters are not content to just donate to the nonprofit organizations, financial service industry executives are taking positions of influence and control. As one might expect, the vision Wall Street players have of and for the world often clashes with the preexisting culture within those organizations. The most pronounced conflict, according to SSIR, is the effort to make nonprofits more like businesses:

As financiers come to dominate the boards of leading nonprofits, it is not surprising that their approaches and priorities have made their way, very explicitly and fundamentally, into the governance of the nonprofit sector … Nonprofit leaders regularly hear about these finance practices from board members and donors whose native habitat is the financial services world. Moreover, nonprofit managers have come to accept them as reasonable principles upon which donors base their giving

Numerous critics have written thoughtfully about the ways in which market-based thinking and approaches applied to the nonprofit sector provide false promise, with the potential to dilute charitable values, undermine long-term mission focus, incentivize small, incremental goals, and threaten shared governance and other forms of participatory problem-solving.

In other words, Wall Street is helping bring dubious management practices to the sector that was setup, in part, to deal with the failures of an economic system run by said dubious management practices. What could go wrong?

It is apparently lost on many donors to the nonprofit sector that if nonprofit work could have been achieved through a business approach it would already have been. For Wall Street, the problem with the nonprofit sector appears to be that it’s nonprofit.

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+6 # PeacefulGarden 2016-01-05 18:01
As a composer of classical concert music, which is formal music for you academic types and I am one of those types, I have been watching this take over for the past 35 years. It started during the Regan Admin.

Formal musicians have this thing called the League of American Orchestras. It is so freaking corrupt it is a joke at this point. You name it, Target Execs, Exxon, they run the show... and they run it right into the ground. There is a composer, if you could call her that, on the board; she controls everything. No one knows how she became a board member, no one.

So as a board member, she directs orchestras to commission her to write music. She profits from the activity of a nonprofit; as a freaking board member.

It is way way way to late to blow this whistle on this one. The boards of major music and art organizations have been fully taken over, for years, so any current board member will simply proclaim so legacy narrative.

This article is 35 years too late.

The only thing to do is sit back and watch the buffoonery, as if the board members have the community good in their minds.

Oh well, art exists in the mind.
 
 
+5 # cmp 2016-01-06 02:59
Thank you for what you do. It's a craft and a labor of love.

My grandmother was a concert pianist who played on the radio every Saturday night during the 30's in Syracuse NY. I used to beg her to play in the 60's thru the 90's. .. And, even though she could no longer see or hear, she would play complete pieces perfectly, from up to 65 years back, and totally from memory..

There is a genius to music, that is very special. Keep up the great work. ..And again, Thank You!
 
 
+4 # Patriot 2016-01-06 03:09
Peaceful Garden does that takeover help to account for the astonishing price of tickets to live entertainment such as orchestral concerts, the ballet, operas, and plays?

Although prices for tickets (to decent seats, from which I could see and hear well) always seemed high compared to my income, they could be managed fairly often--until about the last 15 years. Since then, I've seldom seen a ticket to ANYTHING available for less than $100 per seat--any seat.

I know that costs have steadily risen during the past several decades, but somehow I missed the jump from $45 or $50 in the 90s to more than $100 in the last several years. Is that what has caused such an increase?
 
 
+5 # PeacefulGarden 2016-01-06 06:43
Yes. But it is also from the corruption of Musicians Union. But the biggest pile of moneys fell upon the conductors of major orchestras; commanding salaries of 1.5 million dollars, add the fact that most are not US citizens that do not pay taxes. To an arts organization 1.5 million in a 5 year contract is like a giant vampire squid, it will suck the life out of what ever it comes into contact with.

But, yes, the corporate takeover does account for the price hike. They run the arts organization like a corporation; all of a sudden there are secretaries of secretaries and massive amounts of money is spent on marketing and research. Yep, arts research, not the kind you think... research about how to squeeze money out of a ticket sale.

Then weird things happen, like the stupid combination of rap and beethoven, big screen tvs and holst.... I could go on.

But the worst is the drop in quality, they don't even rehearse or try new works. They just slap together a concert, market it, and basically put it in a pill bottle. They have completely destroyed any relationship between orchestra and community.

It is completely fabricated, but oddly, the expression of music still burns through all the nonsense.
 
 
+4 # RLF 2016-01-06 07:40
Hey Peaceful...musi cians aren't getting rich. Orchestras are being run by a bunch of rich dilitants that are there for the gala parties and little else. self promotion of executive directors and music directors comes before salaries every time. The orchestras are being filled with fine Chinese musicians that are a dream every time a contract negotiation comes around. The rich aren't supporting the arts to the extent that their wealth has increased and gotten on the board to break the union which is incredibly weak and also corrupt. Everything was done with at least three rehearsals before and are now down to 1 or the old "you've played this before...right? " Don't blame the orchestras problems on the musicians...all but the 1% of them are changing careers about now!
 
 
+4 # RLF 2016-01-06 07:33
Patriot...it is not the tickets that are too expensive...it is that your income and my income has not been going up for 35 years...only the riches income has been going up and they want to keep it that way.
 
 
+5 # fletch1165 2016-01-06 03:32
Orwell predicted all of this. People are starting to finally pay attention. Its too bad about mainstream news everyone must boycott.
 
 
+5 # treerapper 2016-01-06 04:54
Just look at the extracurricular activities of the Koch boys. David H. sits on the Board of Directors of many institutions beyond the likes of Lincoln Center where he was able to get the name of the New York State Theater changed to the David H Koch Theater (a good reason to never attend). He's on the Boards of the Smithsonian and the American Museum of Natural History as well as institutes of higher learning the likes of Massachusetts of Technology. He has used his position to manipulate the research and reported science as it relates to Climate Change. When he was on the Board of the National Cancer Institute, he tried to use his influence to not label formaldehyde a carcinogen.
 
 
+4 # hjsteed 2016-01-06 04:57
Turning non-profit organizations into profit organizations for Wall Street?

Should all private profit & "non-profit" organizations, including 'religious, entertainment & educational' institutions, be taxed for the public good?
 
 
+2 # PeacefulGarden 2016-01-06 06:46
YES!
 
 
+5 # RLF 2016-01-06 07:41
Tax arts institutions when we don't even meaningfully tax corps??? Are you insane?
 
 
+2 # lfeuille 2016-01-06 23:20
No. Get the corporate types off the boards and out of management of non-profits.
 
 
+5 # zach 2016-01-06 08:08
I agree this article is late, just waking up to reality. But, the article misses entirely the point that concerns me.
Look at the health insurance field. There is a HUGE loophole in the tax codes. A for profit company can own a non-profit. There is a large, NYSE listed (I think) company that has been buying up the Blue Cross/Blue Shield companies around the country.
It is a neat gimmick. The non-profits don't earn profits because the parent charges fees for the various "services" provided to the non-profits. Since the non-profits are regulated, those fees are considered a legitimate expense.
The parent company thus sucks huge amounts of cash out of the tax-sheltered subsidiary companies.
Yes, the parent pays taxes. But this allows the parent to operate in many places without paying taxes they might otherwise pay (local and state, mainly) if they were a conventional corporation.
Why doesn't the IRS do something about it? Not their problem. It's the states that are getting screwed, not the Feds, so they simply say, in that line from the mnvies: "Frankly, I don't give a damn."
 
 
+2 # dkonstruction 2016-01-06 08:36
It is true that there is ever increasing influence in and power over nonprofits by Wall Street and the ruling class more broadly but this piece really only deals with the surface issues.

The deeper question is what role does the non-profit sector play in contemporary capitalism. For the past 20 years or more in the U.S. the nonprofit sector has been the fastest growing part of the U.S. Economy.

The nonprofit sector (or nonprofit industrial complex as it should be called) plays several critical roles in helping to reproduce capitalist social and economic relations:

1) It manages (rather than solves) societies' social problems (and thus in some ways helps to institutionaliz e and reproduce them).

2) It provides a buffer between the "masses" and the state.

3) It provides "union-busting" labor that adds to the downward pressure on wages that we have been experiencing since the 1970s.

Two important works to look at regarding the nonprofit sector are: The Revolution Will Not Be Funded: Beyond The Non-Profit Industrial Complex and an article written by William Domhoff (author of Who Rules America) on the connection between the Ford Foundation and the creation of local nonprofit community development corporations as a strategy for quelling urban rebellion in the face of the "urban renewal" (also known as "negro removal) programs of the 1950's, 60s and 70s.
http://www2.ucsc.edu/whorulesamerica/local/ford_foundation.html

(contunued)
 
 
+3 # dkonstruction 2016-01-06 08:41
I've worked for nonprofit housing and community development organizations for the past 25 years and have seen how this corporate influence works. It's not just about representation on the boards of directors but also about the nonprofits dependence for funding on the very same organizations and institutions that cause the problems they are dealing with in the first place. For example, when the foreclosure crisis hit (and many of us in the nonprofit housing world saw it coming) the nonprofits made a conscious decision to "help" individual homeowners one-on-one instead of trying to organize them to fight back collectively against the banks and for a collective/inst itutional solution (such as the federal gov't purchasing all of the delinquent mortgages, writing down the principal of the loan to the new lower value of the home and then refinancing them at the current lower interest rates which would have prevented the vast majority of foreclosures) instead of simply bailing out the very bankers that caused the problem in the first place. Why didn't the housing nonprofits do this? Simple, the vast majority were getting funding from the very same financial institutions that they would have to go up against in such a fight (through what was being called "foreclosure prevention" work).

So, the problem goes much deeper than simply representation on the boards of directors or a new sense that nonprofits have to run like a business.
 
 
+1 # PCPrincess 2016-01-06 09:35
As the income divide continues to grow and as the supply of living-wage jobs decreases, we will continue to see a corruption between what we used to call 'non-profit' and for-profit business. As 'goods and services' dwindle and companies look to new avenues to meet their always-growing greedy need for revenue, soon there will be very little room for philanthropic services and the moneyed elite will always have plenty of willing employees to help them eviscerate as much of the 'public' wealth as possible.
 
 
+3 # PABLO DIABLO 2016-01-06 16:26
If we give the rich the little bit we have left, will they leave us alone?
 
 
+2 # stoher9 2016-01-08 10:51
NO!!!!
 

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