March 03, 2014

Dishonesty by People in Positions of Trust Is Eroding Public Confidence

The growing scale of self-serving and dishonest action in both public and private institutions is severely testing the trust and confidence of Americans. Nonprofit organizations, government agencies, the courts, corrections systems, corporations, and political leaders have all seen more abuses of money and power these days than in decades.

At a time when growing inequality already strains the social fabric, it is all the more worrisome that our society has been weakened by the corruption of people in a vast array of high-profile institutions. The basic American belief in fairness is now being undermined by the unchecked avarice of some in positions of trust.

And that is a huge problem for philanthropy: It’s not just the loss of trust in nonprofits that is so potentially damaging. We all depend on public institutions to assure us a reasonable quality of life and to tend to the neediest. But if Americans begin to see public agencies as corrupt, how can we expect people to support them? If officials are seen as out for themselves, who can we credit as serving the common good? Who would we trust with our tax dollars and our charitable contributions? Who would we depend on for justice?

Our deteriorating circumstances can be quickly characterized by some startling data.

Compared with the early 1970s, Americans who have a “great deal” or “quite a lot” of confidence in institutions, has fallen, some by more than 50 percent, including banks, newspapers, medicine, and, of course, Congress—now at a low of 10 percent. Religion, the Supreme Court, schools, organized labor, and the presidency have all seen confidence ratings fall by 25 percent or more.

And following a precipitous drop over 10 years ago, the most recent study found that over a third of Americans have “not too much” or no confidence in nonprofits.

Interestingly, the very few institutions that actually gained respect include the military and, since polling started including them in the early 1990s, the police and the corrections systems, now find themselves faced with new and spreading corruption scandals.

First, the Navy scandal: Two officers and a senior investigative agent have been arrested for taking bribes and kickbacks from contractors; others may be implicated. A long series of grave misconduct charges has been leveled at senior military officers for abusing their positions and accepting illegal gifts. With his confidence as shaken as that of many other Americans, Defense Secretary Chuck Hagel has demanded an investigation of “moral character and moral courage” in the military.

The police, too, have experienced problems in recent years, and numbers seem to be mounting. Ten Atlanta officers were charged or found guilty of using their badges, guns, and positions in service to drug-dealers. Three D.C. police officers were arrested for child pornography, prostitution, pandering, and theft. A Kansas City officer was charged with coercing women into sex to avoid arrest, and Tulsa has had to settle a police corruption and cover-up case for hundreds of thousands of dollars.

The courts and the criminal-justice system also face scandals. Over 20 corrections officers in two state-run Maryland jails were arrested for corruption, including racketeering and drug- and money-laundering conspiracies. Similar cases occurred in Hawaii and Texas.

In D.C., the chief administrative law judge was brought up on ethics charges, and over 100 District staff members were accused of filing false claims for unemployment, safety-net payments, and tax refunds.

Before those of us in the nonprofit world point fingers, let’s look at our own organizations. A popular Philadelphia sports figure is accused of diverting thousands of dollars from the Special Olympics while the founder of Cape Cod’s Touched by Angels is found guilty of embezzlement and fair-labor violations.

In October, The Washington Post reported on internal financial corruption in over 1,000 nonprofit organizations in the face of charities’ efforts to minimize or bury incidents, in some cases without criminal complaint or serious recovery efforts. In the aggregate, millions upon millions of donated and other dollars disappeared from all kinds of charities, often without any public disclosure. All of this has moved government officials in seven states and Congress to call for investigations.

Still more nonprofit corruption was exposed when CNN headlined a Center for Investigative Reporting and Tampa Bay Times report  on fundraising, chronicling the fact that officials of the 50 most abusive charities enriched friends and cronies by spending under 4 percent of donations on direct needs.

For example, the Kids Wish Network reportedly used nearly $110-million in contributions to pay solicitors and spent $4.8-million more on the charity’s founder and his own consulting firms—while spending under 3 percent of revenue on sick kids. Our nation’s key charity leaders declined to condemn these practices.

And this litany of confidence-busting problems doesn’t even begin to speak to unpunished Wall Street corruption and heinous abuse by corporate America, be it by pharmaceutical companies, chemical storage facilities, or unscrupulous manufacturers. Nor does it speak to the illegal acts and abuse of authority by state governors, recently indicted and otherwise, to the pay-to-play favoritism of congressional and other campaign-contributing lobbyists or to the crimes and moral lapses of elected officials around the nation.

And all of this costs us—in and beyond the nonprofit world. The growing lack of trust is holding back the broad-based and more equitable economic improvement needed to sustain democracy.

So what can be done? Nonprofit executives must take leadership; they must condemn corruption and abusive practices wherever they are found, starting with charity itself. They need to help the public better understand what is at stake and demand that the authorities vigorously root out and punish corruption in all sectors of our society, especially those that are expected to protect public safety and security and those that provide for the neediest.

Charity executives must lead in demanding that government personnel, corporate management, and nonprofit peers be held to a reasonable standard of behavior and that corrupt conduct be prosecuted with a steely determination.

We need to help restore morality across our institutions so that Americans can once again be confident of honesty and fair treatment without facing third-world corruption.

Mark Rosenman is emeritus professor at Union Institute & University.