On December 7th, I read Gabriel Arana’s piece, “Why the Country’s Largest Minority-Journalism Group May Close,” on Huffington Post. In short, the article highlighted not only the National Association of Black Journalist’s (“NABJ”) financial meltdown. It also underscored NABJ’s secretiveness, poor leadership, and seeming lack of ethics in dealing with its financial crisis. And it all got me to thinking about how many black organizations—e.g., churches, HBCUs, professional societies, fraternities/sororities—are managed or mismanaged.
Given my research on National Pan-Hellenic Council (“NPHC”) organizations (for NPHC leadership visit HERE; for Council of Presidents visit HERE), I decided to do some half-hearted research while I watched the Golden State Warriors one night. What I discovered was alarming. First, I went to see what the financial records of the NPHC, Incorporated, sort of the black “Greek” United Nations, looked like. Having spent the past year working on an empirical study of about 3,000 NPHC organizations’ 501(c)(3) charities and (c)(7) entities, I was curious as to what NPHC’s 990 Forms looked like. What I found was only a record of NPHC having filed 990 forms for 2005, 2006, 2008, 2009, and 2010. Second, I went to the IRS website to see what NPHC’s status was. NPHC also had its 501(c)(7), tax-exempt status revoked on May 15, 2015 (see HERE using EIN 52-1730952). While these facts in isolation wouldn’t leave me alarmed, in the aggregate, they are startling. What is even more problematic is that they fit into a larger picture that either spells gross mismanagement of finances or embezzlement.
NPHC and NPHC Organization Leaders: Funny with the Money
Four years ago, I attended my first Association of Fraternity and Sorority Advisors’ (“AFA”) Annual Meeting. At the NPHC Question and Answer Session, what was odd was that NPHC leadership could scarcely answer one question posed by student affairs professionals. One question was striking: “What do you do with the dues you assess collegiate councils?” Various leaders took turns at answering, but none of the answers were straightforward. Being a lawyer, I tried a more direct follow-up. Again, the responses were quintessential circumlocution and obfuscation. All that the leadership could muster was an insistence that student affairs professionals tell their collegiate counsels to send in their checks. I don’t believe that question was posed the following year, though I did pose some questions that were not answered. Then, last year, NPHC leadership did something novel: they refused to take questions from anyone who wasn’t a student affairs professional. It was a bizarre rule, because except for me (I’m a law professor), there would hardly be any non-student affairs professionals in the room who would have questions. I later learned that the rule was crafted to keep me from posing questions. Then this year, anyone could pose questions, but the questions were pre-screened, using index cards. Nonetheless, a couple of student affairs professionals stood-up and posed their questions. Both referred to what NPHC was doing with the dues it was collecting—again, circumlocution and obfuscation was the response pattern.
This series of events had me thinking about a project I’ve been working on with Dr. Matthew Hughey—Phi Beta Sigma member and Sociology professor at UCONN—a book on NPHC organizations and racial uplift. Largely it’s a positive book about NPHC organizations and their civic activism, community service, public policy, and philanthropic work. This later area is peculiar. So, part of the book comes from an empirical study I’m working on looking at IRS data on NPHC organizations’ giving. There are roughly 3,000 entities to potentially investigate, but when my coauthors and I received the IRS data-set, maybe about 10% of that 3,000 actually reported anything to the IRS via 990 Forms. My main coauthor, an economist who studies non-profits, said that it shouldn’t seem that unusual, given that many of these entities may raise so little money that they don’t need to submit a 990 Form. But only 10% are raising enough money to report? I did a quick check of a few cities around the U.S. on the IRS website to see the status of various NPHC organization chapters’ non-profits. Quite a few, a surprising number to me, had lost their non-profit status. What does that mean? I don’t know, but in the grand scheme of things, it seems deeply problematic.
All of this seems to fit within a broader narrative about NPHC organizations, leadership and their management of their organizations’ finances. Over the past several years, almost half of NPHC organizations have had major financial scandals with regard to their national leadership, usually the national head. Alpha Kappa Alpha Sorority was embroiled in numerous litigation—McKinzie v. Alpha Kappa Alpha (Ill. Cir. Mar. 13, 2006), Redden v. Alpha Kappa Alpha (N.D. Ohio filed Mar. 28, 2009), Shackelford v. Alpha Kappa Alpha (Ill. Cir. Ct. Sept. 3, 2009), Daley et al. v. Alpha Kappa Alpha (D.C. 2011), Purnell et al. v. Alpha Kappa Alpha (Ill. Cir. June 4, 2010), Alpha Kappa Alpha v. McKinzie (Ill. Cir. Ct. 21 June 2013)—around the apparent embezzlement on the part of its national head. Zeta Phi Beta Sorority had to deal with Stark v. Zeta Phi Beta (D.D.C. 2008). Alpha Phi Alpha Fraternity grappled with Mason v. Alpha Phi Alpha (Ga. Super. Ct. July 25, 2012), and Phi Beta Sigma had to watch as its former National Treasurer was sent to federal prison (see United States v. Davis).
With the exception of the Davis case, at the heart of the cases was a similar pattern of behavior. First, you had people in positions of power—i.e., national heads—embezzling organizational funds (and/or engaged in financial conflicts of interest and/or riding roughshod over organizational budgets for their personal aggrandizement). Second, other powerful people—i.e., organizational leaders—largely remained silent. Third, there was intra-organizational secrecy—that is the financial crimes were hidden from most members. Fourth, those rank-and-file members who dared speak-up and tried to force the organizations to divulge critical information to its members were (and some are still) demonized, ostracized, and/or sanctioned. The latter is the most fascinating part to me. In these instances, leaders would try to corral members, admonishing them that suing, taking to the media or social media, was not the proper way to handle such matters. Rather, in fraternity or sorority business meetings is where such issues needed to be addressed. However, in such meetings, leaders would use procedural mechanisms—i.e., Robert’s Rules—to circumscribe pertinent discussion or outright get individuals who were seeking answers off the microphone.
Broader Organizational Context: Money Matters
To put this issue in context, let me pose two hypotheticals:
Hypothetical I: Assume that black sorority has had two national heads at Time 1 (national head A) and Time 2 (national head B). During both administrations, national head A and national head B both had the same senior aid, sister J. During her term in office, national head A embezzles $500,000 from black sorority. Her crimes are never discovered, and then her term expires. Sister B is elected national head B of black sorority and embezzles $250,000 from black sorority. Her crimes are discovered, and she is removed from office. National head A comes to her defense at the board meeting where national head B’s ouster takes place, arguing that major sorority initiatives will be harmed if the national head B feels forced to spill the beans on past national heads of black sorority. Sister J goes on to become a staunch defender of national president B even after her ouster. At Time X, Sister C runs for national head of black sorority, and sister J becomes the campaign manager for Sister’s C’s campaign. Sister C is the leading favorite to win the office of national head. National head A endorses Sister C’s candidacy. Do you think this spells trouble sorority? Do you think national head A was the first national head of black sorority to steal from the sorority? Would you be excited to see national head C sitting on the Council of Presidents…with sister J as her senior advisor?
Hypothetical II: National head of black sorority embezzles $300,000 from black sorority. She’s caught and had her membership suspended. Sister D, a member of black sorority, is a board member on black sorority’s education foundation. Sister D embezzles $100,000 from the education foundation. She’s caught and had her membership suspended as well. The expectation was that the now former national head and sister D would pay-back what they stole. No effort is made by black sorority to recoup the money. Many black sorority members demanded a forensic audit to get a full accounting of what was stolen. The new national head refused to do so out of fear that various leaders within the sorority would be criminally prosecuted. Is this full accountability, a model for undergraduates? Is this full transparency?
Broader Organizational Context: The Avoidance of Effectively Tackling Hard Problems
Financial mismanagement and embezzlement like hazing and membership retention and engagement and any other issue you see within NPHC organizations is simply a symptom of deeper issues within these organizations. In essence, NPHC organizations, on average, have failed—certainly in modern times—to be high reliability organizations (“HROs”). An HRO is an organization that has succeeded in avoiding catastrophes in an environment where accidents can be expected due to risk factors and complexity. The characteristics of an HRO are (1) preoccupation with failure (even small failure are seen as indicia of bigger problems); (2) reluctance to simplify interpretations (embracing complexity and building diverse teams to tackle problems); (3) sensitivity to deviations from what is expected (focusing not only on the big picture but also on operations0; (4) commitment to resilience (embracing the reality of mistakes and failure); and (5) ensuring expertise is utilized at every level.
Furthermore, within NPHC organizations, they spend a lot of time maintaining the status quo. They find it perplexing that undergraduate members defend “tradition” in the context of hazing, but in NPHC organizations daily operations, many leaders do just the same. Even where NPHC organizations perceive themselves as tackling big issues, their scale is off. What I mean is that an organization may perceive that it has addressed 90% of an issue on a scale from 1-10. The problem is, however, that the nature and complexity—and, ergo, the range of solutions—may be on a scale from 1-100. As such, instead of tackling 90% of a problem, an organization may have tackled just 9%. In such scenarios, an organization may have only tinkered at the margins of a problem with the false confidence that they have been truly transformational.
Think about the following hypotheticals as examples of broader contexts in which NPHC organizations problem-solving could take place:
Hypothetical III: There is a prostitution ring that travels from region to region for black fraternity’s conventions. The prostitution ring involves sex-trafficking and underage girls. Most members at conventions don’t solicit the prostitutes, but it’s deeply problematic to some members. A couple of members highlight the problem to the national head, hoping for an intervention. National head is unresponsive to the concerns raised.
Hypothetical IV: Black fraternity has a homophobia problem. For one, it has a written policy that is arguably discriminatory toward gay members. Also, in a heated race for national head of black fraternity, one candidate’s surrogate engages in a whisper campaign against the other candidates, alleging that they are closeted-gay. He does this knowing that such a rumor will jettison the campaigns of those candidates. Concerned members of black fraternity see that written policy as, among many things, potential evidence against black fraternity in future antidiscrimination litigation. They also see the whisper campaign as unfraternal and damaging. They raise these concerns to the sitting national head. In response, he admonishes the members for raising such issues and has them sanctioned.
The above hypotheticals highlight something simple. First, NPHC cannot be extracted from the broader context of the organizations that comprise it. And many of those organizations have had considerable issues around financial accountability, ethics and transparency. Second, these financial management issues are not the root of NPHC organizations’ issues but rather a symptom of broader issues the organizations face with regard to the nature of leadership, problem-solving, and the desire to be truly transformational institutions.
The responses to this blog will be predictable. Many NPHC organization leaders and members will take this post as an attack. I can already hear the familiar response: “Why is he airing our dirty laundry?” “Why is he trying to be a destructive force within the NPHC community?” The problem with such responses is that they fail acknowledge that when an organization incorporates in a state and gains certain exemptions benefits from the IRS, much of their operations does, or should, become public. Even more, it’s perplexing that a person could see one who highlights a problem as the source of the problem rather than those who created it in the first place. Just as United States Supreme Court Justice Louis Brandeis noted: “Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.” Jeremy Bentham, noted legal philosopher, underscored these sentiments:
Without publicity, all other checks are insufficient: in comparison of publicity, all other checks are of small account. Recordation, appeal, whatever other institutions might present themselves in the character of checks, would be found to operate rather as cloaks than checks; as cloaks in reality, as checks only in appearance.
Indeed, contemporary jurists, such as the United States Court of Appeals for the Sixth Circuit’s Judge Damon Keith (and Alpha Phi Alpha member), have emphatically articulated these concerns—“Democracies die behind closed doors.”
The real question here is one of leadership, but: “Who are the accountable leaders?” NPHC’s national Constitution and Bylaws are instructive. Several groups of people manage NPHC generally and with regard to their financial affairs. First, there is the Council of Presidents: “There shall be a Council of Presidents, which shall have supreme authority on all matters related to the National Pan-Hellenic Council.” Constitution, Art. III, sec. 1. Second, there is NPHC’s national President: “The President [of NPHC] shall serve as Chairperson of the Executive Committee…present and approve all vouchers for expenditure of the budgeted funds…present all negotiated contracts for approval to the Council of Presidents…” Bylaws Art. II, sec. 2(a). Third, there is NPHC’s national Treasurer and Executive Director:
“The Treasurer shall keep correct and complete records of accounts, showing accurately the financial condition of the NPHC. The Treasurer will develop a budget and submit that to the Executive Committee. The final budget must have the approval of the Council of Presidents. The Treasurer will receive all revenues from the office of the National Executive Director and deposit all funds in the NPHC’s bank account or other depositories designated by the National Executive Director. Submit all financial records for audit at the conclusion of a fiscal year. The Treasurer shall furnish a statement of the financial condition of the NPHC at meetings of the Executive Committee or whenever requested by the Council of Presidents or the NPHC President and perform such other duties applicable to the office as prescribed by the parliamentary authority adopted by NPHC.” Id. at sec. 2(d).
The truly regrettable thing about all of this is that the responses from NPHC and the Council of Presidents will likely be predictable and ineffective. The most likely response is what you saw with NABJ—radio silence and lack of transparency. The next likely response will be communication with councils, vaguely informing them that the issue is being handled. The next likely response will be some basic articulation of prophylactic measures to address the issue. What won’t likely happen is NPHC councils and members being so outraged that they demand complete transparency and accountability. Nobody will be fired. Nobody will step down from their elected office. No audit will be produced. And no fundamental change will occur in how NPHC is structured or does business. For it to change, the nine organizations that constitute it would fundamentally have to change. I know enough—from being a member of these organizations and one of the few people to research the good and the bad associated with them—to believe that the leadership will become truly visionary and transformational. It’s not in the leaders’ best interest to do so; it’s monumentally hard work. And I am convinced that the members don’t want that kind of leadership, for the most part.
As I close, I think back on something NPHC organization expert and President of Dillard University, Dr. Walter Kimbrough, said to me. Despite our philosophical disagreements on a number of topics related to NPHC organizations, I once encouraged Dr. Kimbrough to run for national head, General President, of our fraternity, Alpha Phi Alpha. In response, he said, “What Alpha, like all NPHC organizations, needs is transformational leadership. They would crucify anyone who tried to be that.” I’ve often thought about Dr. Kimbrough’s remark, and my only quibble with it is that, for most part, even when given the option, I’m not convinced that most members of these organizations would even be willing to elect transformational leaders. It is because of this that I cannot help but to revisit an argument I made just a few years ago: maybe it’s time to disband NPHC.