If It Were Only That Easy

It has been making the rounds throughout the culture blog circuit all week but in case you haven’t seen it already, there’s a wonderful piece of satire at The Nonprofit Quarterly titled A Strategic Nonprofit Reorganization Plan that deals with the frustrations many arts organizations experience when playing the grant application game.

On a more serious note, the piece serves an excellent vehicle to explore one of the topics that will make most nonprofit managers squirm: (real) program costs. Simply put, you’ll be hard pressed to find an arts organization that doesn’t engage in some creative accounting when it comes to program expenses and the more they rely on grant revenue, the more they expand the boundaries of creativity.

On one side of the coin, you have grantors who want to make certain that their funds aren’t being abused by paying for padded expense accounts, lavish executive perks, or on some other well intentioned program other than what they want to fund. Consequently, you have the modern grant application process, most of which make the average Department of Motor Vehicles experience look like a cakewalk by comparison. But on the other side of the coin, you have arts organizations that need to pay for all of the unsexy items like electric bills, copy paper, and staplers; not to mention employee health benefits.

So what’s an arts organization supposed to do?!?

Unfortunately, one of the most common solutions is to fabricate data (A.K.A. lie).

Think of it like the classic Pentagon procurement stories most of us are familiar with. Does a toilet seat really cost $600? Of course not, but most of the funds reportedly spent on said toilet seat are being redirected elsewhere to cover the costs of other “program activities” that certain individuals would prefer to keep off the books.

The problem with all of this within our field is it creates an environment that is a breeding ground for abuse; it promotes sloppy accounting, can attract corporate thieves, and tempt an otherwise good employee to engage in embezzlement. Moreover, even good managers are sometimes forced to get dirty because there is no other way around the system unless the organization is able to bring in sufficient revenue from non-grant making sources to cover all of those unsexy, yet critical, expenses.

I deal with this all the time in my consulting work when examining an organization’s financial records and executives and finance officers tend to be frightened at the prospect of being “discovered.” But the reality is that I expect to encounter this sort of thing from time to time and take all of the factors into consideration during the evaluation process. In short, sometimes the only solution is to get dirty.

So until the system changes (don’t hold your breath), we’ll have to be content with the way things are and find therapeutic release in satirical gems like A Strategic Nonprofit Reorganization Plan.