May 9, 2011

No Business like Non-Profit Business

Marc Comtois

Over the weekend, the ProJo editorial board pointed to the apparent dichotomy of non-profit organizations enabling their directors and board members to profit with significant sums of money:

Recently, Blue Cross Blue Shield of Massachusetts parted ways with its chief executive, Cleve L. Killingsworth, but not before handing him an $11 million severance package. Bay Staters rightly howled; an investigation by Atty. Gen. Martha Coakley is now under way.

Amid the uproar, however, another questionable practice came to light. Blue Cross and other nonprofit health-care insurers have been paying their board members — and well. Last year, annual payments ranged from around $20,000 to more than $80,000 per board member, according to The Boston Globe. They are, in effect, subsidized by taxpayers. In almost no other charity in the state are board members paid at all. In fact, the tradition is for members to contribute money of their own to the organizations they serve. Usually, it is regarded as an honor to “give back.” And, truth be told, members benefit financially, if more indirectly, from the personal ties they cultivate with fellow local movers and shakers on boards.

Hopefully, the ProJo will turn their resources to looking at the same institutions in Rhode Island (instead of relying on Globe reporting) over and above a single story on the new head of BC/BS Rhode Island. That aside, they make a good point:
Whatever happened to just plain knowing better? Amid the search for personal status and enrichment, the purpose of nonprofit organizations seems increasingly lost. This is especially ominous in health care, where rising costs are a signature domestic crisis of our time. Yet nothing can change if attitudes do not change first. The sense of entitlement that has developed among some health-care insurers urgently needs reversing.
The noblesse oblige they're pining for is missing in many more non-profit sectors than just health care. This is no surprise, though, as the term "non-profit" is more a tax classification than a philosophical one. As more people--especially politicians--realize this, there will be increasing support for asking them to "contribute more" (pay more taxes) to the communities who purportedly benefit from their presence.

ADDENDUM: Of course, we don't have to rely on just the ProJo. Last month, WPRI's Ted Nesi confirmed that the board of BCBSRI is not compensated.

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Why does it seem to come as news that "non-profits" (they now prefer "not for profits") are extremely generous with insiders?

I would have thought that PBS had taught them everything they needed to know about the inner workings.

Posted by: Warrington Faust at May 9, 2011 12:57 PM
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