The Blessed Use of Tainted Money

by Hank Goldstein of member firm The Oram Group

Nonprofits have long struggled with the provenance of money. Gifts flowing to environmental groups can be especially fraught. Do you take money from a polluter? Or do you renounce him for his evil ways? And do you keep raising money from your base either way? For some groups there is no choice but to reject “tainted” money. But others – including the biggest names in tree-hugging – National Audubon, Environmental Defense Fund, and now it comes to light, Sierra Club have taken the King’s shilling and in essence, many would argue, become the King’s man.

During the time he headed Sierra Club, Carl Pope, one of the best known environmentalists in the country took $26 million from oil, gas and energy interests and told no one. “Runners shouldn’t smoke, priests shouldn’t touch the kids, and environmentalists should never take money from polluters,” John Passacantando, a former director of Greenpeace who is now an environmental consultant, said in an interview with The New York Times (published February 14th).

But the other view is perhaps best expressed by the old Southern preacher who when confronted for taking tainted money to fix the church roof replied: “tainted money? T’aint enough!” The failure to disclose is Mr. Pope’s real sin. It’s an embarrassment to Sierra Club’s board (who supposedly didn’t know) and to the new CEO who came on in 2010 and took two years to ‘fess up. It may Sierra a few donors; about that I’m not so convinced. Sierra is pretty much in the center for environmental stuff. Greenpeace is an outlier on one end and other (not to be named here) groups are little more than PR blankets for the dark side.

This sad episode once again demonstrates the fragile relationship between a nonprofit board and management: the board is utterly reliant on management to provide information – not only on operations but especially on policy as well. I love jumping on boards because so many trustees have mastered the art of sleeping standing up with their eyes open. But not in this case – unless it turns out that any of Sierra’s board did know but covered up. No one has said that yet as far as I know. I’ll stay tuned. As should we all.

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