LA Philanthropy Watch

Post #5 – This is my final post in this series following an interview with Amy Schur, who leads the Alliance of Californians for Community Empowerment.

Near the end of our interview I asked Amy Schur what her biggest challenges were – and what was in store for ACCE going forward.  Here is what I learned:

The organization is taking great pains to focus on organizational development, putting into place strong financial management and governance structures, human resources staff systems, and staff and board training programs.

Early in our interview she offered a summary of ACORN’s mistakes, which began with the failure, as the organization grew and acquired a measure of power, to invest in the quality infrastructure both to support its work and to adequately defend itself against attacks.

The steps ACCE is taking are designed to remedy this failure.  (Note that her critique matches the assessment of the Harshbarger report, while her focus for ACCE in the coming months overlaps with the roadmap the Harshbarger report lays out for ACORN.)

“Beyond that, we’re focused on what we do,” she told me, explaining that the organization’s leadership believed that it had freed itself in some measure from the ACORN controversies.  So, at this stage, it could draw on what had been California ACORN’s strengths, while leaving behind the encumbrances.

“People are hopeful,” she told me.  “It’s thrilling to be on the ground floor” creating a new organization.  She expressed confidence that they would succeed.

I asked her about whether there had been disputes with national ACORN.  (I believe that Illinois ACORN’s break from the national organization had not been amicable.)  She said that the national organization had been supportive.

“They wish us luck.”  ACORN has passed a resolution that they will not compete with ACCE in California.

I noted that the ACCE office in Los Angeles had been the ACORN office before the split, and asked about conflicts over assets.

ACORN terminated the lease – which is now held by ACCE – after the state board decided to break away.  ACCE will purchase computers, office furniture and other assets from ACORN at fair market prices – being negotiated by attorneys.  (As our interview began a few minutes late, Amy Schur remarked that she had been spending quite a bit of time on the phone with attorneys.)

Did she expect other states to follow California’s lead and break away?  Had she had calls from ACORN leaders of other chapters?

She acknowledged that other states might be exploring their options.  (New York ACORN, of course, has subsequently split off from the national group to form Communities for Change.)

When we spoke there was an interim board of directors in place – ‘interim’ because of plans to establish a deliberately bottom-up structure for ACCE.  The board of directors will be composed of elected officers of ACCE’s chapters throughout the state.  ACCE members were meeting the first weekend in February to draft by-laws.  A range of decisions had to be made.  (For instance, should city boards consisting of grassroots leaders – dues paying officers – have one delegate each on the state board, or should there be proportional representation?)

ACCE has also established an advisory council – consisting of nonprofit and civic leaders with experience in management, oversight, and training issues – to guide ACCE in developing a viable organization with the strengths that ACORN lacked.

Amy Schur was heartened by the help the organization has received.  She meets with a transition oversight committee every week – setting up operations.  The group has been highly engaged and helpful.

“I’ve been amazed,” she said, noting that in a time of crisis, you have to reach out to your friends and supporters.  Many people shared “a desire to help ACCE succeed.”

In a previous post I offered a long list of doubts about whether ACORN was likely to succeed.  Subsequent events – related to New York ACORN’s split – have reinforced those doubts.

I have few doubts about ACCE’s prospects for success.  I have been impressed by what I’ve learned about this grassroots group.  The bottom-up structure, commitment to democratic principles, and focus on local neighborhoods are great strengths.  The leadership is committed to developing more robust tools for financial management, governance, and training for staff and boards.

I believe ACCE will prove its effectiveness as an independent organization giving voice to low- and middle-income Californians.

ACCE is a 501(c)(4) organization: a nonprofit public benefit corporation incorporated in California on December 8, 2009.  A separate affiliated organization, a 501(c)(3), the Community Empowerment Education Fund, was incorporated on the same day.

(The image is a photograph of the building that houses ACCE’s Los Angeles headquarters.)

Previous posts in this series:

• Fourth post: California ACORN Was Unified in Deciding to Break Away
• Third post: California ACORN’s Choice: Stay with ACORN or Go It Alone
• Second post: Simmering Dissent Within ACORN Preceded Break Up
• First post: The Birth of ACCE: First Post in a New Series

Post #4 – When the decision finally came to break away, California ACORN leaders reached a consensus – without discord or dissent.

• “The level of controversy had become a significant distraction for us,” said Schur, who said members raised the idea of forming a new organization at a statewide board meeting in Oakland in October.  (“California ACORN breaks off into new nonprofit group,” Kate Linthicum, Los Angeles Times, January 13, 2010)

In reading this LA Times’ account of the founding of Alliance of Californians for Community Empowerment, I was intrigued by the reference to the October 2009 board meeting.  Roughly three months had elapsed between the meeting of the state board of ACORN and the launch of ACCE.  That is not a lot of time to reach a decision to break away, and then do everything required to get a new nonprofit up and running.

Furthermore, I would have expected thorny disagreements about severing ties with the national organization.  Wouldn’t community leaders who had been affiliated with ACORN for many years be resistant to leaving?

When I sat down to interview Amy Schur in February, I anticipated hearing that at least a faction of loyalists had opposed the proposal to split off from ACORN.

Instead, I learned that while these engaged activists had invested much of themselves in California ACORN, they reached consensus about breaking away without protracted disagreement.

Amy Schur advised me that these community leaders (all volunteers – “They don’t get a dime”) put in a huge number of hours every week – in addition to jobs and families and everything else in their lives.  Many, she told me, say that “ACORN is like their second family.”

“It was extremely painful,” she said of the decision to break away. “It took a while to get there.” But the state board, she, and other staff members all came to agree that leaving ACORN and going it alone was best.

When I asked about dissenters, she replied that there was a “united front.”

“The work on the ground,” kept the group the group focused on what was most important: serving ACORN members.

“It speaks well to the principles we’re grounded in,” she said of the unanimity about continuing the organization’s work in low- and moderate-income communities.  “It is a tribute to ACORN.”

“We never strayed from our mission.”  She suggested that Wade Rathke should get some credit for that steadfast focus.  Leaders are in neighborhoods, not in board rooms.  They remain grounded in principles important to them.

“We worked very hard to keep our organization democratic,” she continued.  “I think it helps significantly when it comes to making difficult decisions.”

As it turned out, the decentralization of ACORN – alluded to in September 2009 as a reason California ACORN offices wouldn’t close – ensured a smooth transformation of the organization into the Alliance of Californians for Community Empowerment (much as Illinois ACORN transformed into Action Now).  Those offices (now ACCE offices) stayed open, of course.

Democratic decision-making and autonomy at the chapter level, plus an unwavering focus on neighborhoods, made the break from ACORN – and birth of ACCE – possible.

(The image is a photograph taken in a small community in San Luis Obispo County by ghindo via Flickr.)

Previous posts in this series (after an interview with Amy Schur):

• Third post: California ACORN’s Choice: Stay with ACORN or Go It Alone
• Second post: Simmering Dissent Within ACORN Preceded Break Up
• First post: The Birth of ACCE: First Post in a New Series

Post #3 – As ACORN’s continuing turmoil encumbered the California chapter, an alternative – breaking away – became more compelling.

On September 19, 2009 – just over a week after the first of the undercover videos had been released – P.J. Huffstutter and Kate Linthicum reported in the Los Angeles Times (“ACORN scaling back or shutting down in many cities”) that ACORN offices across the country had been shut down; cities without an ACORN presence – where there had been one before – included Chicago, Salt Lake City, Atlanta, and Omaha.

There was no ACORN office in Chicago because Illinois ACORN had broken away from the national organization nearly two years earlier and been transformed into Action Now.  Madeline Talbott, the leader who had initiated this transformation, offered an above the fray perspective on the continuing turmoil roiling ACORN.  While empathizing with ACORN’s leaders (her former colleagues), she expressed a sigh of relief at not being stuck in the mess that ACORN was still mired in.

“I’m so relieved not to be part of the organization anymore, and so sad because they are trying to clean things up.”

At that point California ACORN showed no signs – at least publicly – of bolting from the national organization.  Amy Schur (lead organizer of California ACORN at that time; now executive director of ACCE) expressed confidence that California ACORN’s 12 offices would remain open, remarking for the Times’ report that membership had increased and funding was stable.

Membership and funding were closely linked for ACORN because, as Ms. Schur explained to me when we spoke on February 2, individual membership fees were a primary source of funding.  Active members of California ACORN, including all community leaders serving on city and state boards, paid dues of $10 a month.  Many members, she told me, had their dues deducted automatically.  So this was a reliable source of operating revenue.  (And much more significant than the federal dollars that Congress cut off following the hidden camera controversy; she advised me that in 2008 only 7% of California ACORN’s funding – money for foreclosure prevention – was from the federal government, while the figure for ACORN nationally was roughly 10%.)

During our interview, she noted that at ACORN (a national organization with state chapters) some functions were centralized, while others were left to the states.  She described this division as “an interesting mix,” while noting, “There was tremendous autonomy around program,” for the states.  Each chapter’s elected community leaders set the direction of the organization and its activities.  Every city with an active ACORN chapter had a board; representatives of each board sat on a state board.

In speaking with the Times in September, she had pointed to this decentralized structure as ensuring that turmoil for ACORN in one part of the country would not inevitably lead to trouble elsewhere.

“Our organization is under attack,” she was quoted in the Times’ September 19 report.  “But we’re going to come out of this just fine.”

Whether or not Amy Schur and California ACORN activists had already begun to consider breaking away at that point – they might have noted wistfully that their former colleagues from Chicago were no longer weighted down with ACORN baggage.

This was, in any case, only nine days after release of the first surreptitiously filmed video. By the time of ACORN’s October 2009 state board meeting – as the repercussions from that episode continued to play out – the situation had become “a huge distraction,” Amy Schur told me.  She also mentioned the national organization’s financial crisis and the “brand damage” ACORN had suffered.

Whatever reasons there might have been to stay, the reasons for breaking away had grown more compelling.

Previous posts in this series (after an interview with Amy Schur):

• Second post: Simmering Dissent Within ACORN Preceded Break Up
• First post: The Birth of ACCE: First Post in a New Series

Post #2 -  Amy Schur describes years of discontent with Wade Rathke, which preceded Illinois ACORN’s split from the national organization; California ACORN followed two years later with the launch of ACCE.

“As is often the case at nonprofit groups, one act of a wrongdoing can be a symptom of other problems at an organization.
Acorn has been grappling with questions about the role of Wade Rathke, an exceptionally able and charismatic organizer who founded the charity in 1970 and recruited a talented cadre of young and loyal organizers, many of whom, along with Mr. Rathke, have worked for the organization throughout its entire history. That loyalty is impressive — but it also caused big problems when the organization faced serious challenges.”  (Pablo Eisenberg, “After an Embezzlement, an Advocacy Group Seeks to Regain Trust,” Chronicle of Philanthropy, October 2, 2008 [Subscription required])

When I spoke with Amy Schur, I learned that what Pablo Eisenberg referred to as ACORN’s “grappling with questions” about Mr. Rathke’s role actually began a number of years before May 2008, when the first controversy broke into public view.  Ms. Schur, who has spent more than two decades working for ACORN, was for several years one of ten senior organizers on the Management Council (a group that Mr. Rathke established to advise him).

The portrait of Wade Rathke that emerged from our conversation is consistent with other accounts, such as Mr. Eisenberg’s.  While Mr. Rathke was a talented organizer with the vision to build a powerful national organization, he was arrogant and “increasingly” (a word Ms. Schur used repeatedly in discussing Mr. Rathke’s flaws) he embraced with unshakable certainty “a belief that he knew best” – whatever the situation.  Unilateral decisions – without regard for the views of others, including the experienced organizers who comprised ACORN’s Management Council – became more frequent.

By 2006-07, there was “growing unhappiness among a broad swath of senior staff” at ACORN.  Concerns focused on a “shrinking of decision-making” – with a Management Council that lacked authority – and on “a lack of clarity and transparency,” especially regarding finances.

Amy Schur and others within ACORN organized their own conference in San Francisco to discuss their concerns.  Seventeen senior staff members from across the country attended.  Mr. Rathke was apparently not pleased.  Ms. Schur describes him as coming to regard her as “a threat.”

“He accused me –” Amy Schur begins in answer to a question, and then she stops abruptly and begins again.  “I’ve always had a problem with people who abuse their authority.”  She continues, “For whatever reasons, I didn’t hesitate to speak out.”

Pablo Eisenberg picks up the story here: “Questions about who should set the organization’s agenda were not limited just to the role of organizers and the board. Wade Rathke sought to put the national organization in control of operations of the group’s affiliates. For example, the organization’s bylaws gave him the power to appoint the head organizers of both local and state affiliates.
While local boards technically had the authority to overrule his appointments, they rarely did, according to senior staff members. They say Mr. Rathke refused to accept the decision of the board of Acorn’s Los Angeles affiliate to appoint Amy Schur, widely considered by Acorn insiders as one of the organization’s most capable organizers, as its head organizer. As a result, Ms. Schur left the network. Her departure prompted another highly respected organizer, Madeline Talbott, director of Illinois Acorn, to pull her organization out of the network.”

Amy Schur had devoted 21 years of her life to ACORN – stretching from Chicago and Detroit to San Jose and Los Angeles.  She led California ACORN during an era when its presence grew from two cities to the whole state.  She had also served as ACORN’s national campaign director.  At the end of 2007 she left ACORN or, more precisely, as she told me, “I was pushed out.”

In relating her experience with ACORN, Amy Schur mentioned her work in Chicago with well-known community organizer Madeline Talbott.  (I gathered, though this inference may be mistaken – my notes do not confirm my recollection – that Ms. Schur may have regarded Ms. Talbott as a mentor.)  Ms. Schur’s comment, made in passing, suggested that Madeline Talbott was an exceptional organizer.

At any rate, I suggest that Madeline Talbott may have served as role model more recently.  In press reports this week, New York ACORN is characterized as following California ACORN’s lead in breaking away from the national organization to go it alone.  (”ACORN’s powerful New York chapter left to form the NY Communities for Change on Monday, following the lead of the California state chapter, which in January became the Alliance of Californians for Community Empowerment with 48,000 members.” – Matthew Bigg, Reuters, February 22, 2009) But (as Pablo Eisenberg’s comments suggest) Madeline Talbott was the trailblazer.  The former head of Illinois ACORN, she split off the chapter (”ACORN scaling back or shutting down in many cities, ” P.J. Huffstutter and Kate Linthicum, Los Angeles Times, September 19, 2009) to found Action Now at the beginning of 2008.  California ACORN followed (under different circumstances) – with the launch of ACCE – two years later.

Editor’s note: Madeline Talbott also has the distinction of being featured in “ACORN,” a scary McCain-Palin campaign video.  “Obama … moved to Chicago, became a community organizer … met Madeline Talbott, part of the Chicago branch of ACORN … was asked to train the ACORN staff …”

(Image of Action Now protesters in front of Chicago’s National City Bank.)

Previous post in this series: The Birth of ACCE: First Post in a New Series

Post #1 of a series – An interview with Amy Schur provided insights into the launch of the Alliance of Californians for Community Empowerment.

The announcement that California ACORN, a state chapter of the national organization, had decided to split from ACORN and form a new organization, ACCE – the Alliance of Californians for Community Empowerment, began by paying tribute to the thousands of Californians living near the poverty level who have “leveraged their significant numbers with coordinated grassroots organizing to achieve victory” in political battles over several decades as members of the California chapter of ACORN.  The statement by Amy Schur praises ACORN and its new leadership, acknowledges the national organization’s past mistakes, objects to attacks by ACORN’s political enemies, and then pivots:

“Nevertheless, those of us who have been working with ACORN in California believe that we can’t wait any longer to be in full control over our destiny.  The leadership and staff that were working with ACORN in California made the decision to break off from ACORN and launch a new organization here in California called Alliance of Californians for Community Empowerment (ACCE). The organization will work to advance the mission of organizing and empowering low-income communities, and launch a statewide, multi-year campaign to win key policy changes that will break the cycle of continuous fiscal crisis in the state of California and cuts that hurt ordinary people and their communities.”

I suggested in my initial post on this announcement, “The decision to step away was clearly pragmatic – based on a clear-eyed assessment of how to sustain the level of effectiveness of the group’s community organizing activities throughout California.”  I have no reason to reconsider this assessment; the controversies ensnaring ACORN – represented as three strikes against the organization and, as Amy Schur put it, “a huge distraction” – just weren’t going away, providing ample reason to consider splitting off and starting anew.

But there was a history of simmering dissent within ACORN that preceded the first strike (the May 2008 revelation of the embezzlement and cover-up).  There had been rumblings among senior staff over the increasingly imperious control that Wade Rathke (pictured above) – ACORN’s founder and leader for nearly four decades – wielded over the organization.

On February 2, I interviewed Amy Schur – former lead organizer of California ACORN and now the executive director of ACCE – about the decision to launch ACCE, the history that led up to it, and challenges for the new group going forward.  I followed up my initial post on ACCE with a series on ACORN, beginning with three controversies that enveloped the national organization.  While these posts established a backdrop and offered perspective on ACORN nationally, they diverted us from ACCE.  Now I will circle back and begin (in this second series of posts) to look at the ACORN story from the point of view of the California chapter that has transformed into the Alliance of Californians for Community Empowerment.

ACORN’s presence in California goes back nearly two and a half decades – first in Oakland and Salinas – followed by expansion throughout the Bay Area and then Los Angeles.  Amy Schur led California ACORN during this era of growth.  What she had to say provides many insights into the schism that developed within ACORN and the problems it has struggled to put behind it.

My February 5 post is the prequel to this series.

(Image from a YouTube video of Wade Rathke, ACORN founder, on Fox News.)

The headline in Molly Hennessy-Fiske’s report – “Success of new Martin Luther King Jr. hospital could hinge on board’s makeup” – in Monday’s Los Angeles Times illustrates the premise of the article.  Nonprofit governing boards have critical oversight responsibility.  All eyes will be on the yet-to-be-appointed board as the new MLK Hospital is launched.

The UCLA-Los Angeles County partnership to resurrect Martin Luther King Jr. Hospital (featured last week in LA Philanthropy Watch) creates a new nonprofit organization to be headed by a 7-member board of directors.  Why the attention on this board?  Because (although this is only implicit in the article) the failure of the former MLK Hospital is widely regarded as a failure the old regime – when responsibility for oversight rested in the hands of the Board of Supervisors.

“I just hope the authorities can step back and do what’s right for the hospital and not the various constituencies,” the Times quotes Jim Lott, an executive with the Hospital Association of Southern California.  The implication is that in the bad old days the Supervisors were too responsive to “various constituencies.”

J. Eugene Grigsby, who heads the National Health Foundation (an LA-based nonprofit), warned, “The biggest potential pitfall will be political interference from the Board of Supervisors.”  He suggested that undue influence by the Supervisors would threaten the prospects for success of this new venture.

The partnership agreement includes this provision: “The nonprofit corporation will have an appointed governing board of seven members — two each appointed by Los Angeles County and the UC president and three jointly appointed by Los Angeles County and the UC president. Board members cannot be current officers or employees of the county or UC and must have at least 10 years of experience in health care or a related field.”

This formula restricts the influence of the Supervisors over the hospital by granting governing authority to a new board, restricting the number of board members that the Supervisors can name outright to 2, positioning UC as a counterweight to the County, and spelling out the “10 years of experience” qualification.

Supervisor Zev Yaroslavsky (pictured at the recent HomeWalk 2009) suggested, “There’s no reason MLK Hospital can’t provide the same quality of care the best hospitals in town provide, and it starts with the management.”

I agree.  And that success will begin with selection of the board.

What’s the matter with this picture?  The headline is from a front page report (in this morning’s Los Angeles Times) by Alan Zarembo  (whose stories I’ve linked to a number of times).

Let’s make some distinctions.

1. An entrepreneurial individual starts a private company and makes a fortune.  That’s an inspiration and fulfillment of the American dream.

2. A CEO makes a fortune while leading a public corporation, while investors lose big time as the company’s stocks plummet after the CEO has cashed in.  The Board of Directors – supposedly responsible not to a handful of top executives of the corporation (no matter how smart and hard-working these execs are), but to the shareholders – goes along for the ride.

That’s not an inspiration, that’s not the American dream, that’s a nightmare and a failure of the marketplace.

3. An entrepreneurial individual launches a nonprofit, which receives most of its funding from the state, and becomes rich – in large part because of “side deals” between his for-profit businesses and the nonprofit organization he heads.  The nonprofit’s Board of Directors – apparently – goes along for the ride.

That’s unseemly, even if – to highlight two quotes from the Times‘ story – “there is no bright line for what constitutes reasonable compensation” (according to a senior attorney in the Attorney General’s office) and, “If you have good lawyering and you are very brazen, you can work around things” (a Pace University law professor).

Putting aside questions of nonprofit governance, let’s take a moment to consider – from the standpoint of a voter and taxpayer – the transparency of the State of California’s funding and activities.

We should expect some sunlight on this issue – without having to wait for Alan Zarembo’s next expose months from now on another wayward nonprofit organization.  Or, at least, we should make Mr. Zarembo’s muckraking easier.

Does the State of California or (if funding funnels through California counties) the County of Los Angeles have a list of all nonprofit organizations receiving public funding, the reasons for the funding, and the amount of taxpayer dollars going to these organizations?  That list, if it exists, should be available on the Internet in an accessible form.  I haven’t been able to find such a list.  I guess I’ll have to keep looking.

“To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual.” – IRS.gov

An audit of Tarzana Treatment Center (the largest drug rehabilitation center receiving public funding in Los Angeles County) concluded that the nonprofit paid hundreds of thousands of dollars more than legally allowed to lease buildings owned by executives and board members last year, according to a story by Alan Zarembo in Friday’s Los Angeles Times.  An attorney for Tarzana said that the organization was unaware of federal rules restricting payments of tax dollars to benefit insiders in such transactions.

The audit was ordered by county supervisors following an earlier story (by the same reporter) of unusually high compensation levels for executives at Tarzana Treatment Center and lucrative financial arrangements that appeared to pose clear conflicts of interest.  LA Philanthropy Watch featured a link and comments about the story last June.

Earlier in the week, Raja Abdulrahim of the Times reported on another instance of a nonprofit behaving badly in the case of a UCLA surgeon accused of using funds – from a research charity that he founded – to support personal business ventures and his medical research.  The California Attorney General filed suit last Wednesday against the physician and five officers of the nonprofit L.B. Research and Education Foundation.  The online UCLA Newsroom provides an account of a conflict between the physician and the university dating back to at least 2003 and evidence of wrongdoing that led the UC Regents to ask the Attorney General to file suit.

In each instance, if the reports are accurate, directors appear to have lost sight of their duty to assure that charitable assets were devoted to the charity’s mission, and not used to enrich individuals.

This is a follow-up to a previous post about an issue (initially reported on  – in a way that thoroughly confused me – by the New York Post), which was subsequently explained by Ben Gose of the Chronicle of Philanthropy.

Mr. Gose reported this week in a Chronicle News Update that a federal grand jury “ruled that a $4-billion endowment that is owned by the Starr International Foundation was not improperly seized from a fund set up to pay bonuses to employees of AIG.”  He concludes that this makes it less likely that the foundation will lose control of its assets, which AIG wished to use for executive bonuses.

Thanks to Mike Burn’s Nonprofit Board Crisis blog for alerting me to this report.

The photo is by mindy_g at Flickr.

The July 2 Los Angeles Times suggests that a conflict between the leadership of the Autry National Center of the American West (created when the original Autry merged with the Southwest Museum of the American Indian in 2003) and supporters of the Southwest Museum resembles “a cowboys-versus-Indians’style faceoff….”  The Autry would like to expand in Griffith Park and – as with all development in the park – is facing major opposition; in addition to Los Feliz neighbors and conservationists who emphasize open space, Mount Washington neighbors advocate rehabilitating Southwest’s original home and expanding the exhibition space there – rather than moving artifacts to an expanded Autry.

This merger has never been accepted with equanimity by Southwest Museum supporters and the feud shows no signs of abating.