Happy Monday! Today’s post for T1 Diabetes Cure- Global Headquarters revisits the discussion of Corporate Governance. What is it and what does it mean for donors? Read Associate Editor’s Nick Masercola’s latest blog to find out:
Now that the chatter of the ADA conference has died down, we here at the JDCA want to talk about one of the biggest impediments to aligning funding towards a Practical Cure.
And trust us; it’s not what you think.
If you have made a donation to one of the big diabetes charities, how could you tell where your money has been placed? Your first thought is probably to check the website, but you’d be wrong. In fact, you have absolutely no way of tracking your individual donation. Given that, you might ask if there is a way to see the overall spending of a charity in a year?
Actually, it’s almost impossible to track where your money goes, and how it’s spent. Why? Because the non-profits are not held to the Corporate Governance standards that a publicly traded company are held to.
A publicly owned company (like Facebook or Google) must actively report on its financial earnings and expenditures throughout the year. Why? Because these companies work for stockholders, who are motivated to get a return on their investment. In order for stockholders to see if the business is operating in a manner they agree with, they are given quarterly and annual updates on its progress, strategies, investments, and expenditures.
Non-profits do not have to do this.
In fact, the top four diabetes charities are all lagging behind tremendously when it comes to informing donors of their financial standing. None of the big four (JDRF, Joslin, ADA, DRIF) have quarterly reports, and much of the information available is obscured and difficult to find. For instance, finding Joslin’s financial information necessitates the use of a third-party charitable organization data provider.
This is a major problem, because while non-profits don’t have stakeholders, they do have donors. If people donate ten dollars or 10 million, shouldn’t they have the right to know where and how their money was spent? Was it put towards an educational program in elementary schools, warning children of the dangers of type 2 diabetes? Was it helping to fund the next “walk for a cure”, and the large expenses that go along with such an event? Or was it put into RD for the artificial pancreas?
Even when information is provided, it’s in a high level and cumbersome manner. Non-profits/charities fill out a 990 to report their finances, which is such a dense packet of information it’s usually only used for the IRS. On the other hand, for-profit companies file SEC reports, which provide information in a simpler format so that people other than accountants can grasp what’s going on at the company.
While this is all an issue, the biggest problem is that it leaves donors with no way to evaluate charities, and doesn’t leave charities themselves with much information for self-evaluation. If you work a job–any job–someone is keeping track of your work, reviewing your actions and ensuring a quality performance. Heck, I’m an associate editor, and I guarantee you this blog post passed through someone else’s hands before it went on Facebook to double-check the facts and the writing. Why don’t we hold these companies to the same standard? How else are we going to hold them accountable for what they spend and the results it gets?
Now, this doesn’t mean that we can penalize a company by setting unrealistic goals for them. But with more transparency and reporting, we could clearly see where our donations are going, and if we disagree with what’s been done, have the ability and knowledge to raise our voice and make improvements.
For a more in-depth look at our research and conclusions in this area, please take a look at our report, “ Utilizing Corporate Governance to Align Agendas”, and “Improved Governance Begins with Frequency, Timeliness, and Notification”. Stay tuned for another eye-opening report later this week.
If you have any questions or just want to get in touch, come speak up here, on Facebook, or send us an email at info@thejdca.org.
Until next time.
Nick Masercola
Associate Editor
info@thejdca.org
