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Are You Accidentally Supporting Corrupt Nonprofit Organizations and Charities?

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Muslim Nonprofit fiefdoms

Former Pennsylvania State Rep. Movita Johnson-Harrell has a compelling story.  Even the State Attorney General, who recently charged her with several crimes, alluded to the pain she experienced in her life.  It was a remarkable story of perseverance after being affected by gun violence, triumph and helping others. Yet, there she is, facing time in prison for using a charity called “MECA” for assorted alleged acts of theft, fraud, and other crimes of dishonesty.  

According to the Attorney General, Johnson-Harrell has accepted responsibility for her crimes and is pleading guilty.  She has also resigned from her public office.  Johnson-Harrell has stated she may dispute some charges. She like any other defendant is innocent until the state proves her guilty.   

What is also undeniable is that many of the kinds of things the Attorney General accused Johnson-Harrell of are common with nonprofits, both Muslim and non-Muslim.  Indeed, the President of the United States has also done egregious things with his “charity” in New York, undetected by law enforcement despite his public profile, until news media started asking questions. The President faces no criminal charges.  

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My purpose here goes beyond Johnson-Harrell’s legal troubles. Instead, it is to help nonprofits and their leaders stay out of trouble and to give donors an essential tool in being a thoughtful donor. We often donate because of “social proof.” Someone invites you to donate online; a friend invites us to a fundraiser, we hear a good speech or testimonial, and we give.

 We often don’t particularly care about accountability. We should. Let’s dig deeper to understand how charities work so that we can be better donors with the limited funds we have to give with excellence. 

The Role of Government Oversight in Charities 

What state a nonprofit is in makes a difference.  The state attorney general typically has regulatory authority over the nonprofit sector.  Charities have tax benefits because of the social good they theoretically provide. But what happens if the charity is not keeping faith with its beneficial role?  If a CEO of an environmental charity pilfers funds for personal use, you cannot reasonably expect a family of ducks to sue. The Attorney General is there for the ducks, the trees, the homeless, the addicted, the mentally ill, the beaches, the works of art, the future poor patients who are not yet poor or sick, and everything else charity should benefit.  At least that’s the idea 

Abuse by nonprofits is a violation of the public trust.  It is public corruption against society and not merely cheating a donor.  

Because of this role, from time to time, you see lawsuits and even criminal prosecutions by state attorneys general for corruption by nonprofit leaders. A high-profile state representative like Johnson-Harrell is an obvious target since prosecuting her lets the rest of us citizens know law enforcement is paying attention. But these lawsuits and occasional criminal prosecutions are rare compared to how rampant nonprofit corruption is. Attorneys General typically don’t put adequate resources into regulating the more than trillion-dollar nonprofit sector.  

Religious Charities Can Usually Get Away With More

In some states, for example, California, religious corporations are exempt by statute from oversight for things like breaches of fiduciary duty. The lack of accountability is remarkable since religious charities can be extremely corrupt, something known to Americans for much of its history.  Exposing religious charity corruption has long been fodder for documentaries and movies. Certain Christian preachers on TV are known to abuse nonprofit status to flaunt extreme wealth with no negative consequences.

People who run religious nonprofits, including Executive Directors and board members, can still be criminally prosecuted, but you usually would not expect it. Various taxing authorities also have authority over charities. The IRS is the primary regulator for charities nationally. For the most part, though, the IRS has been leaving nonprofits, even obviously bad ones, alone. Religious nonprofits, like those classified as “churches,” don’t need to file Form 990s, annual disclosures required for other nonprofits. Therefore much of what these groups activities are opaque to both the government and the public.   

With some notable exceptions, governments and law enforcement at all levels mostly ignore nonprofit corruption. The times they do is typically the exception that proves the rule.  

For the most part, then, sorting out the good nonprofits from the bad ones is left to donors. We all contend with hard-sell data-driven marketing tactics from social psychology.  We don’t usually don’t know how to distinguish between good organizations and bad.  

Look Beyond The Pitch

Stories of nonprofits and their leaders can be compelling. But narratives can also be used to manipulate, distract, and hide. The raw charisma of a speaker quoting Quran and Hadith can be waived up to donors to make them think they are doing good work in the path of Allah when they may sometimes be enabling criminality. Charisma and the power of stories can get us to contribute to causes better than just about anything.  

There are various red flags to look out for, but I will focus on perhaps the most obvious one, an executive of a charity acting as a member of the board.  

No Real Board Accountability

Johnson-Harrell was on her own nonprofit board while also serving as an executive.  This practice was also present at scandal-plagued Ta’leef Collective. State law does not typically forbid a CEO or other employee (like an imam) from being a board member, despite it being a glaring conflict of interest. It has never been nonprofit best practices to have employees oversee themselves since it is a horrible idea on its face.  The only possible real justification for this is when a nonprofit is new, small, all volunteer-run, and there are not enough volunteers or funds available to make accountability a priority.  While there is potential for abuse here, we tend to ignore it out of practicality.  

Now larger nonprofits can have employees, as well as others, with personal, family or business interests with the charity (like a vendor) on the board might point to a “conflict of interest policy.”  Of course every nonprofit should have one in case unexpected conflicts come up.  They are not, however, solutions to self-created problems the organization never needed to have.   

Accountability is Hard 

It still begs the question:  Why engage in the reckless practice of having an executive overseeing himself or herself?  Are there no sufficiently qualified people in the Muslim community capable of helping with the board of an organization?  Unlikely. 

What we do know is the main reason Muslim leaders (non-Muslims as well) chose to police themselves is that real accountability is hard, maybe even a little messy.   

You may have heard this story before: An Imam and a Masjid Board have a conflict, resulting in the Imam leaving.  The Imam does not go quietly, though, since he is angry with the board. He tells his supporters (of which he has many in the local community) that boards are incompetent, imbecilic, don’t understand the “youth” or whatnot.  The best way to run a Masjid, you see, is for the Imam to call all the shots. He will usually adorably say all this with the earnestness of someone who feels he is the first person who ever had this insight. Plenty of Muslims believe him and are hurt by whatever petty drama took place at the Masjid last week. They will join his new storefront Masjid, sometimes across the street from the Imam’s former Masjid.  

These are often pop-up institutions born out of vainglorious temper tantrums, built on the foundation of one man and some upset donors who soon move on to chase the next shiny thing, or simply rejoin their old Masjid. Such places typically do not last over the long haul. If you have been around a Muslim community for a few decades, you have seen several come and go.  

Badly Governed Respected Institutions 

More of a long-term threat for the Muslim community is when real institutions with staying power with endowments, employees, and buildings go the route of slipshod accountability-free governance where an executive gets to oversee himself.  Eventually, when you set up institutions with plain-as-day opportunities for corruption and abuse, everything can collapse. It happened in a spectacular style for Christian institutions with no real accountability for the people running it (many are still like that).  Many Muslim institutions we all respect that do good work have nonprofit governance so poor they almost seem custom-built for corruption. 

The beautiful Crystal Cathedral outside Los Angeles once boasted a massive endowment, a global TV viewership for its “hour of power” and donor memorials that would last forever.   It fell into bankruptcy because of the same kind of nonprofit governance increasingly common in the Muslim community. Inadequate or non-existent board oversight is a form of structural corruption, even if no abusive practices are currently taking place.  It should be enough of a red flag that someone can abuse authority with no real accountability. Unless we start demanding accountability from Muslim leaders, those we trust our donations to, we should reasonably expect more criminal charges as we saw with MECA, scandals like Ta’leef, and spectacular failures like the Crystal Cathedral. 

Other Board Members May Not Be Much Help

One response by self-interested board members may be to point to the existence of “independent” board members to keep insiders (like the CEO or equivalent) in check.  You should never assume this creates accountability. We cannot stereotype nonprofit boards, of course, and many operate in different ways. I have seen Muslim institutions were board members: 

  •  Have no visibility into the organization’s operations, budget, or much of anything else important. Though they do have meetings and manage to argue about things. 
  •  Never attended board meetings despite being members for many years and did not know if the charity has been having meetings all these years.
  •  Were never informed they were members of the board, despite their names being on public information filings with the state.
  • Helped start the organization as Ph.D. students and got a lifetime membership on the board, but that was decades ago when they lived in the United States.  

Those who dislike accountability prefer “straw” board members who are either not present or can be “handled” by management.   A well-known example of this is Theranos, a Silicon Valley “unicorn” startup with a fake blood-testing product. Many supposedly sophisticated investors were reassured when the company stacked its board with famous octogenarians and nonagenarians. None of them knew and did not bother to ask if the entire operation they were overseeing was a fraud.  

These kinds of board shenanigans generally take place where there is a CEO who is also a board member and would prefer to run things without dealing with pesky difficult questions.  Board members are there for the appearance of accountability but are often little more than seat-warmers.  

It’s Not About a Leader’s “Integrity”

Some Muslim leaders will take a call for accountability as a personal insult to their integrity.  This sentiment is misguided. Instead, it is about building systems that make our institutions sustainable. I don’t know Johnson-Harrell.  However, no Muslim can honestly claim to be better than her, either in intent or commitment to the community.  Yet, without a system of accountability, the fallibility of decent men and women magnifies.

 You need to have a Shura (mutual consultation) in leadership, that is how the Quran advises us to handle our affairs.  A nonexistent or fundamentally insincere “Shura” designed to not hold anyone accountable is asking for trouble.  

Muslim nonprofit leaders can find their freedom to spend charitable dollars without meaningful accountability intoxicating. Leaders who you would never think can make severe errors in judgment start to make them.  It only gets worse from there.  

Work in an Islamic charitable institution is bigger than one man or woman.  If you create a charity with no meaningful checks and balances, your work won’t be sustainable.  

Abu Bakr raḍyAllāhu 'anhu (may Allāh be pleased with him), the first Khalifah, could not determine his salary as the leader of Muslims.  He was always accountable, and as I pointed out in a previous article, he preferred it that way. Muslim leaders should welcome accountability and not think of it as a personal slight when asked about the issue from within the community.

What Board Members Should Do 

If someone entrusted you with oversight of a charity, there are helpful educational resources that can help you be excellent. Use them.  Remove board members with conflicts of interest, especially employees and vendors.  

You need to prepare for and be present at meetings.  Hold the organization and each other as board members accountable.  Don’t be on the board to win anyone’s favor, least of all the CEO or Imam. You have an Amanah (a trust), to make sure the charity is operating with excellence in everything it is doing.   Ask difficult questions that donors will rarely know to ask. Read all financial statements and reports, that is where the mischief happens.  Make sure no executive can “handle” you into submission.  If you cannot do these things, don’t be on the board. 

The common denominator in virtually all nonprofit corruption cases is executive domination. Don’t be used.

What Donors Should Do

Encourage charities you like that have weak governance to change their practices. Uncritical support can enable structural problems, which can be destructive to the organization over the long term. Sometimes, the best contribution you can make to an organization is to encourage them to reform their governance. You can do this as a small donor. Don’t expect major donors to request such changes.  

You may not know much about the organization’s finances or how good or bad the organization’s operations are. However, you do know an employee or vendor is on the board of a charity is a signal the organization is uninterested in holding its leaders accountable. There are plenty of good charities worth supporting. If the charity remains stubborn about not allowing accountability, move on to the next one.  

 

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Ahmed Shaikh is a Southern California Attorney. He writes about inheritance, nonprofits and other legal issues affecting Muslims in the United States. He is the co-author of "Estate Planning for the Muslim Client," published by the American Bar Association. His Islamic Inheritance website is www.islamicinheritance.com

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Podcast: Hijabi Girls in a Barbie World: The Halima Aden Edition

Zainab (AnonyMouse)

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Panel discussion with Zainab b. Younus, Hena Zuberi, her daughter, and Fousia from the Naptime is Sacred podcast to talk about Halima Aden’s Instagram posts about hijab and her modeling career.

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Podcast: David’s Dollar | Tariq Touré and Khaled Nurhssien

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We often preach about our children learning the importance of money, group economics, and developing healthy spending habits. How awesome would it be to have a fully illustrated picture book that explores how a dollar travels from hand-to-hand?

Join Khaled Nurhssien and award winning poet and author Tariq Touré as they discuss Tariq’s new children’s book David’s Dollar. In this Interview they touch on art, Islam’s approach to community and Tariq’s creative process.

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Beyond 2020: Grounding Our Politics in Community

Kyle Ismail, Guest Contributor

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As tense and agonizing as these unending election days have been, it pales in comparison to the last four years.  I plainly remember how it all began on the night of November 07, 2016. I watched as the political map of the US became increasingly red late into the night. All the social media banter, conspiracy theories and left-wing critiques of candidate Hillary Clinton, formed an amorphous blob of white noise as I heard Trump announced as the next president. Now that Trump has run for re-election, half the country was hoping for a repudiation but will have to settle for the fact that despite a small margin, Donald J. Trump will not have a second chance to erode our democratic institutions and divide us. But we can’t move forward until each of us acknowledges our own pathological role in what we’ve become as a deeply divided country. 

We need to grapple with how we can gradually improve the circus-like reality that has become our ordinary, daily politics. We’ll relive more and perhaps improved “Trumps” if we don’t accept our own responsibility in creating a divided America. This starts with being better members of local communities. Here are a few of Trump-induced realizations that I’ve come to accept:

  1. Caring about our immediate neighbors and listening to their challenges and concerns is the part of political engagement that we all have to embrace above and beyond actually voting if we hope to be more than a 50/50 nation.
  2. Social media and its profit-driven algorithms are actually eroding how we see each other but could also be altered to help better educate us about our local social/political landscape.
  3. Local Politics has direct impact on our lives and is also at the heart our religious obligations to our neighbors. It also sets the tone for where the federal level derives policies that prove to be best practices (some examples are included below).
  4. Agitation and protest are not the same as being politically organized on a local level. Protest is sometimes needed, but it will never replace consistent and patient work. We learned this lesson with the Arab Spring as that movement failed to transform into a movement that was able to govern effectively. And the same appears to be true about the Black Lives Matter movement.

The voting is over for now. But voting is really the smallest part of being committed to bettering our communities. It was Prophet Muhammad ṣallallāhu 'alayhi wa sallam (peace and blessings of Allāh be upon him) who gave the most specific definition of community/neighbor and encouraged his followers to guard the rights of the neighbor:

“Your neighbor is 40 houses ahead of you and 40 houses at your back, 40 houses to your left and 40 houses to your right” Prophet Muhammad ṣallallāhu 'alayhi wa sallam (peace and blessings of Allāh be upon him)

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Why does this relate to being politically organized?? The need for political organizing comes when any group of people want to create change in accordance with their values. We’ve all watched protest after protest that change little to nothing at the neighborhood level. This will continue to happen without organization, which span school boards, block clubs, nonprofits, and religious community outreach.  How can Muslims enjoin right and discourage wrong in any meaningful way? It comes through having authentic relationships with neighbors and turning that into organized and engaged communities.

Rosa Parks

Nothing illuminates the value of such relationships better than the story of Rosa Parks in her role in the Montgomery Bus Boycott. People often think that she was the first brave soul to defy the custom of allowing whites to sit before African-Americans could be seated on her city’s buses. Nothing could be further from the truth. The difference was that her sets of relationships were so interwoven into her local community that it forced a massive response. Park’s connections spanned socioeconomic circles as she had close friendships from professors to field hands. She held memberships in a dozen local organizations including her church and the local NAACP. She was a volunteer seamstress in poor communities and provided the same for profit in wealthy white circles. When someone with her relational positioning was able to leverage the political organizing ability of MLK and Dr. Ralph Abernathy, the Montgomery Bus Boycott was sparked.

When something happens to Muslims, who can we mobilize to respond? Who becomes angry? Who do we work with in our communities to create policies that reflect our values And what are our internal barriers to such cooperation?

“Whosoever of you sees an evil action, let him change it with his hand; and if he is not able to do so, then with his tongue; and if he is not able to do so, then with his heart—and that is the weakest of faith.” Prophet Muhammad ṣallallāhu 'alayhi wa sallam (peace and blessings of Allāh be upon him)

Our Predecessors Organized Locally

At some point in time voting became the sum total of political engagement in the minds of many and is now deemed by some as worthless. We quickly forget that the organizations that battled for voting rights were first locally organized to improve communities. SNCC, SNCC, CORE, NAACP, and the Urban League all formed to create change in various ways and the fight for voting rights was a component of these local agendas. So when we’re tempted to believe that voting doesn’t matter, it’s likely due to our lack of engagement in local issues that form the contours of our community life. If you’ve ever heard of Ella Baker or Fannie Lou Hamer (worth researching!), you probably never bought into this type of logic.

One of the many lessons we can pull from this rich history is that we cannot pursue policies, seek alliances, or negotiate a position with political parties (see Ice Cube’s debacle in negotiating with Trump) without first being organized from within. No set of friendships or outside philanthropic support can supplant the need for internal organization. This lack of organized political engagement has weakened Muslims in general but has fatally weakened African-American Muslims as voices within the larger Black community – a voice that gave Islam its first fully accepted and influential place in American society.

Immigrant-based Muslim communities could also benefit from a local approach because despite being several generations in America, their American bonafides are still not set in stone. Concerns about Islamophobia will not change outside of developing authentic relationships with non-Muslims.

This also pushes back against a culture shaped disproportionately by social media algorithms that promote isolation and division for the sake of profit. Our attention to the national news cycle also takes our attention away from local communities where our power is formed. In this type of political malaise, re-engagement in local politics and community relationships can bring us back to important principles that resonate with the values of Islam.

Local politics help shape federal policy

The final word on any law or policy rests with the federal government, but much of what becomes orthodoxy begins with a few concerned citizens in local communities. As with community policing, criminal justice reform, climate sustainability, or any issues that has not caught on, the federal government will often step back to see how a new law plays out at state and local levels. Illinois didn’t wait for Obamacare but has a well-established program to ensure that anyone 18 and younger in Illinois has health insurance through a program called All Kids . Colorado has, in the midst of protests against police brutality, altered their law of Qualified Immunity to make police more accountable. And California has advanced the conversation on reparations  by sanctioning a study to understand how the state could benefit by redressing the descendants of American slavery.

By advancing issues and electing representatives who support the causes we believe in, we insert ourselves into a narrative that would’ve otherwise been forged without us. There’s no shortcut in this process short of rolling up our sleeves to understand our local systems and existing organizations. Moneyed interests are prepare to control the narrative regardless of who the president is and we have to remake this system from the ground up. Our history provides us with a roadmap to do this and it goes far beyond being citizens who only argue over national issues while standing on the sidelines. Remembering our 40 neighbors as advised by the Prophet ṣallallāhu 'alayhi wa sallam (peace and blessings of Allāh be upon him) is the best place to start.

Some helpful links:

Local Elections

State Legislatures

School Boards

County Prosecutors

Mayors

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