Nonprofit Ethical Case:

THE DEVIL WEARS PRADASocialite is Served - with Justice

Beatrice DuncanAlyssa PerezJenny Shen

NPA 601: NONPROFIT ETHICAL LEADERSHIPFall / 2017Prof. Marco Tavanti. Ph.D

Summary

Foundedin1958,HelpersCommunityInc.(formerlyknown,untillastyear,astheHelpersoftheMentallyRetarded)hasrecentlybeenputunderscrutinybyTheSFChronicleforsolicitingcharitablefundsin

thefashionbusiness,butnotdirectingthosefundstotheircharitablemission.JoyVenturiniBianchihasbeenalongstandingfigureamong

thecity’seliteandsolicitsdonationsfromfashionicons,philanthropistsandpoliticiansforherorganization.TheSFChronicleinvestigationrevealedthatindeedfundswerebeingmishandledand

notgoingtothecausetheyadvocatedfor.

MeetJoy!

Whatdoyouthink?Issheguiltyormisunderstood?

Let’sGettotheFACTS• Theorganization:HelpsCommunityInc.

$6millioncharity• JoyVenturiniBianchi,ExecutiveDirector

annualcompensation:~$200,000• Shopsforluxuryclothing,resellsatHelper’sCommunity’s“boutiques”

• Gavelittletonothingtocharitablecausesforoveradozenyears

• liveslavishlyamongcityelitesandattendsred-carpetgalasandfashionevents

• Bianchiwaspushedoutoftheorganizationmid-2017• Organizationisnowtryingtoactuallydogoodandworkbehindthecause

Compliance

• Thisorganization’sBoardofDirectorsfailedtoestablishappropriateproceduresinensuringcomplianceforbothoftheirlegalandethicalpolicies.

• ConflictofinterestwasaregularpracticebythefactthattheExecutiveDirectorasavotingmember,shewasabletoapproveherownpersonalfinancialexpenditures.

• LackofcompliancebytheBoardofDirectorsandtheExecutiveDirectorregardingtheirfundraisingactivitiesandacceptanceofpubliccontributions.

• Nolegaladvisorsonrecord.• FailedtocomplywithFederal,Stateandlocaltaxrequirements.

IndividualResponsibility

• TheunethicalabusesperpetratedbytheExecutiveDirectorofHelpersCommunityInc.createdasensationalscandalandthenewsmediaexposedthisunethicalbehavior.ThiscaseisindicativeofhowtheheadofthisorganizationlackedadeepcommitmentandadherenceofHelpersCommunityInc.missionandvision.

• Themismanagementoftheorganization’sfinances,anineffectiveoperationalstructure,conflictofinterestandlackofaccountabilityfromtheDirector’sperspective,violatedthetrustofthosemembersofthecommunitythatmostneededtheservices.MaybeJoyVenturini Bianchishouldnotbetheonlyonetobesingledout.Duringhertenuredidshedemonstrateinexperienceinrunningawell-establishednonprofit?Whatwereherclearperformanceobjectives,andstrategicdirection.

• Perhapsalongtheway,JoyVenturini Bianchifeltmorecomfortablebeingpartofthecommunityofpowerfulmoversandshakersandpoliticalscene.Alwaysneedingtobeinthelimelightofthesocialscene,shelostherethicalprinciples,moralvaluesandjudgment.

OrganizationalResponsibility

• Therewasalackoforganizationalstructure.Thechainofcommandfordecisionmakingwasloose,ifexistentatall.ThislackofadistributionofpowerallowedJoyBianchitocontinuewhatshewasdoing.

• Somedonorsstruggledwithconcernsanddoubts.Whentheseissueswereraised,theywereneverresolvedbyorganization.Somedonorsstoppedsupportingtheorganizationaswell.

• Failuretoprotecttheorganization’sreputation,whichledtoadamagedcredibilityoftheirservicesandlackoftrustbythegeneralpublic.

• TheBoarddefendedtheorganizationalongsideJoy.Theorganization’ssmallboardconsistedofthedirector,Bianchi,andalongtimefriend.TheBoardmayhavebeenill-informedandignorantoftheirspecificrolesintheorganization.

• ExecutiveDirectorsandotherhigh-levelleadersofanorganizationtendtofeelasenseofentitlementtowardsanorganization.Thisishealthywheninthebestinterestofthemissionandvaluesoftheorganization.However,thiscouldalsocreateanexcessivefalsesenseofindividualperceptionsofentitlement,likeinthecaseofJoyBianchi.

• TheorganizationhadalackofaccountabilityacrosstheBoard.Thestaffandvolunteersmaynothavehadclearandsufficientunderstandingoftheirroles.Thereisalackofunderstandingofthisaccountability,beitfinancialoradministrative,asrequiredinspecificroles,allacrossthesector.

SystemicResponsibility

StakeholdersAnalysis• DirectConsequences

–Donorsfeelbetrayedandthereisalackoftrust.–Peoplewhoaresupportingtheorganizationareseenascomplicit,evenifnot

–KeydonorspulledtheirfundingoncetheSFChronicleinvestigationwaspublishedanditwilltakealotofworkonbehalfofHelpersInc.toearntheirtrustback

–ThecommunitythatissupposedtobeservedbyHelpersInc.isbeingneglected

• IndirectConsequences– Potentialdonorsshouldaskquestionsandasktoseedocumentationfromtheorganizationtomakesureeverythingmakessense

– Fashionindustrysuffersastereotypethatpeoplewhoareinterestedinfashionareself-interestedandnothingelse

– EntirenonprofitsectorsuffersfromabusesofpowersuchasJoy’s.– LackoffaithintheAttorneyGeneral’sOfficeandIRSfornotinvestigating

“Mouse Couture”

AlternativeSolutions

•Needtohaveawebsiteatleastbecauseitpromotestransparencyandaccountability.•Alwaystrytoavoidfriendsbeingontheboardtogether,whenpossible.Ifnotpossible,makesuretherelationshipremainsprofessionalbyallowingabalanceofpoweramongtheboard.Morethanjusttwopeopleshouldbemakingandcheckingdecisionsinanorganization.Createasmanychecksandbalancesaspossible.•Aremedywouldbetohireaconsultant,apologize,andagreetopaybackallofthemisusedmoney.Additionally,Joyshouldtakeapaycutandhelppaybackthemoneyowedforcharitablepurposes.•Thiswentonforalongtime,soifsomeonegrowssuspicious(previousemployeesanddonors)theycouldandshouldfileacomplaintwiththeIRSandAGOffice.

Questions1)Personal(Leadership):–WhatwerethebestqualifiedcharacteristicsthatJoyVenturiniBianchipossessedastheExecutiveDirector?Inwhatwaysdidshehaveintegrity?

1)Organizational(nonprofit)–WhatactionsshouldhavebeentakenbytheBoardofDirectorstoaddresstheunethicalpracticesexposedbytheSanFranciscoChronicle.

1)Systemic(sectors)–Anorganization’sleadersoftendevelopsasenseofentitlementtotheorganization.Whendoesitbecomeunhealthyfortheorganization,andhowdowekeepthisincheck?

4)EthicalTheory(perspective)–Consideringthatthestakeholders

camefromfairlywealthybackgrounds,howdoesthatchangeyourperspectiveinthisincidentasanethicsissue?

–WhichnormativeleadershiptheorybestappliestoJoyBianchi’sleadership?Howdidtheadoptionofthistheoryallowhertocastshadows?

5)Stakeholder(perspective)–SinceBianchi’sdeparture,HelpersCommunityInc.hasdisbursed$1millionworthofgrantstoseveralBayAreanonprofitsservingtheelderlyanddisabled,butisitenoughtogainbackthetrustoftheirlostdonors,orisittoolittletoolate?Doyoubelieveinthesincerityoftheirdesiresfora“newdirection”asanorganizationconsideringthatPeggyBachecki isstillrunningtheboard?(stakeholder)

ResourcesforNonprofitsinaSimilarSituation

• LegalCorps- Freelegalcounselhttp://legalcorps.org/nonprofit-organizations• NonprofitResourceshttps://www.nonprofitready.org/• HowtoCreateaFreeWebsite:http://www.webs.com/• Schnackenberg,Andrew&Tomlinson,Edward.OrganizationalTransparency:A

NewPerspectiveonManagingTrustinOrganization-StakeholderRelationships.SAGEJournal:JournalofManagement42,no.7(March10,2014):1784-1810.Retrievedfromhttps://doi.org/10.1177/0149206314525202

• PropertyTaxExemptionInformationforNonprofitOrganizations.CaliforniaStateBoardofEqualizationPresentation:http://www.boe.ca.gov/info/VirtualSeminars/nonprofit_prop_tax_exemption.html.

References• LessonsfromtheHelpersCommunityCharityScandal(2017,August9).[Editorial]TheSanFrancisco

Chronicle.• OnHelpersCommunityInc.CharityWatch(2017,August18).[Editorial]TheSanFranciscoChronicle.• McCambridge,Ruth.(2017,March13).AnotherSocialEnterpriseSwallowsNonprofit- ThisTime,in

SocialiteSanFrancisco.NonprofitQuarterly. Retrievedfromhttps://nonprofitquarterly.org/2017/03/13/another-social-enterprise-swallows-nonprofit-time-socialite-san-franisco/.

• Spotswood,Beth.(2017,August10).JoyVenturiniBianchiFiredFromCharityAfterChronicle’sMajorExpose.SFist.Retrievedfromhttp://sfist.com/2017/08/10/joy_venturini_bianchi_gets_fired_fr.php.

• Sweeney,Katie.(2016,April15).HauteSecrets:JoyVenturiniBianchiSharesHerFashionableGuidetoSanFrancisco.HauteLiving:Secrets.Retrievedfromhttp://hauteliving.com/2016/04/haute-secrets-joy-venturini-bianchi-shares-her-fashionable-guide-to-san-francisco/607136/.

• Zinko,Carolyn,deSa,Karen,&Dizikes,Cynthia.(2016,December3).AfashionableSanFranciscocharity’suglyreality.TheSanFranciscoChronicle.Retrievedfromhttp://www.sfchronicle.com/bayarea/article/A-fashionable-San-Francisco-charity-s-ugly-10657999.php

• Imageretrievedfromhttps://sf.racked.com/2013/4/9/7678179/step-into-joy-bianchis-stunning-helpers-house-of-couture