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I was featured on the front page of the Philadelphia Business Journal

13 Feb

I was recently featured on the front page of the Philadelphia Business Journal, along with a full-page inside-the-back cover Q&A.

Eric posing for PBJ Profile 1-22-2016

The profile was under the category of “social capital.”  While it is ostensibly about me, it is really about the work that our firm does for the nonprofit sector.

The link to a PDF of the two pages follows:

Eric Fraint Profile in Philadelphia Business Journal 1-22-2016

Comments welcome.

Eric Fraint, President
Your Part-Time Controller, LLC

Fare & Square & Vision

30 Nov

A vision was recently realized.  What was the vision and who was behind it?  Read on.

The first nonprofit supermarket, named “Fare & Square,” opened in a “food desert” in Chester Pennsylvania on Saturday, September 28, 2013.  Chester, a city of 34,000 where one in three people live in poverty, had been without a supermarket for twelve years.

If you’ve not heard about this, I refer you to various news articles and videos.  See the citations below.

In this blog, though, I am interested in the vision that made this possible, and the man behind the vision.

The man is Bill Clark, executive director of Philabundance.  Philabundance is the largest hunger relief organization in the greater Philadelphia metropolitan area. It was founded in 1984 by Pam Lawler as a food rescue organization and later taken over by Scott Schaffer who expanded the organization’s operations.  Bill came in as executive director in 2001.

I can’t say for sure when the idea that has become Fare & Square first germinated, but various press stories have given credit to Bill for working on this for seven years.  I can say this, however: it has not been an easy seven years.

Along the way Bill had to overcome every imaginable obstacle.

To secure funding Bill had to cobble together a hesitant coalition of government, foundation, and private support.  He had to persuade his board that the plan was viable.  He had to win the hearts and minds of his staff that worried that the organization was straying too far from its food rescue origins.  The business model had to be developed.  Consultants and experts of all types had to be consulted.   A skeptical local community in Chester, who had seen too many promises in the past go bad, had to be wooed.  And ultimately, an executive director willing to risk his job, career, and reputation was required.

Team efforts are needed for grand visions to succeed.  In this case the team consisted of a strong board which gave the go-ahead, a highly motivated staff that did the work, funders who understood the potential, and a local community who appreciates the results.

At the center of all this was a man with a vision.  Bill Clark.

Fare & Square is still brand new.  The final chapters on this story have yet to be written.  But two things are eminently clear:

(1) thousands of people in the city of Chester will benefit greatly, and;

(2) none of this would have happened without a man of vision, Bill Clark.

Comments welcome.

Eric Fraint, President and Founder
Your Part-Time Controller, LLC

For additional information about Fare & Square, I refer the reader to the following links:

The Philadelphia Inquirer – http://articles.philly.com/2013-09-30/news/42505117_1_ninth-and-trainer-streets-west-end-food-center-grocery-store

The New York Times – http://www.nytimes.com/2013/11/24/opinion/sunday/an-oasis-of-groceries.html?_r=0

A video on Billmoyers.com – http://billmoyers.com/content/an-oasis-in-a-food-desert/

Philabundance website – www.philabundance.org

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BILL CLINTON FEELS YOUR PAIN

1 Sep

If you’ve ever had a complaint about nonprofit accounting rules, you have a friend in former President Bill Clinton.

In a recent article from the New York Times, the Bill, Hillary and Chelsea Clinton Foundation has come under criticism for mismanaging the foundation’s finances.

According to the New York Times article, “The foundation piled up a $40 million deficit during those two years [2007 and 2008], according to tax returns [IRS Form 990].”

In an open letter on the Clinton Foundation website, Bill Clinton indicates his frustration with accounting rules. He says:

“The New York Times recently reported that the Foundation ran a deficit of $40 million in 2007 and 2008 and $8 million in 2012. The reporting requirements on our tax forms, called 990s, can be misleading as to what is actually going on. Here’s why. When someone makes a multi-year commitment to the Foundation, we have to report it all in the year it was made. In 2005 and 2006 as a result of multi-year commitments, the Foundation reported a surplus of $102,800,000 though we collected nowhere near that. In later years, as the money came in to cover our budgets, we were required to report the spending but not the cash inflow… In other words, for any foundation with a substantial number of multi-year commitments, the 990s will often indicate that we have more or less money than is actually in our accounts.”

In other words, according to President Clinton, it’s not me, it’s the accountants.

There is a great deal of merit in President Clinton’s claim.

In a previous blog I wrote about The Single Biggest Problem With Nonprofit Accounting Rules. (See https://ericyptc.com/2013/01/20/the-single-biggest-problem-with-nonprofit-accounting-rules/)

The trouble making accounting rule in question is commonly known as FASB 116.

(FASB stands for Financial Accounting Standards Board. Several years ago the accounting rules were “codified” to make them easier to follow. Send me an email if you’d like the reference to the new rule number.)

This troublesome rule obscures, rather than illuminates, nonprofit performance. In our accounting practice we spend a lot of time helping nonprofit managements explain to their boards and to funders this quirk in their financial reporting.

Bill, if you are listening, call us. We have a New York City office!

Comments welcome.

Eric Fraint, President and Founder
Your Part-Time Controller, LLC
The NONPROFIT accounting specialists

Washington, DC – New York, NY – Philadelphia, PA

40,000 lives saved. And that was just last year.

14 Aug

Sometimes a seemingly simple observation, combined with the passion of a nonprofit entrepreneur, can lead to incredible results.

Consider the story of Eli Beer, a Jerusalem EMT.

As a teenager Eli drove an ambulance for two years.  He witnessed people dying while waiting for an ambulance to arrive, people who might have been saved if medical help could have arrived within 3 minutes instead of the usual 20 minutes that it took for a Jerusalem ambulance to navigate through the city’s notorious traffic delays.

What if, Eli reasoned, a network of trained volunteers could arrive on foot, or by bike, in just a few minutes, and stabilize the victim until the ambulance arrived?

This insight resulted in the development of the “ambucycle” and the formation of the nonprofit United Hatzalah.

Ambucycle

Eli is not a client of ours, but I wish he was.  Though I’ve never met him, he is just one more example of why I, and the rest of our team at YPTC, work with nonprofit organizations.

Listen to this inspiring story, as told by Eli himself, at TEDMED 2013.

Link to Eli’s TEDMED talk: http://www.tedmed.com/talks/show?id=47048

Comments welcome.

Eric Fraint, President and Founder
Your Part-Time Controller, LLC

In Search of the Holy Grail of the Nonprofit World

31 Jul

The single metric that will tell us how effectively a nonprofit delivers on its mission does not now and likely never will exist.

Despite our desire to measure impact, there are many things that simply cannot be measured, or are too costly or impractical to measure.

Quite frankly, even when outcomes can be measured, reasonable people can disagree about the interpretation of the data.

Take for example Peter Singer.

Mr. Singer’s Wikipedia entry describes him as “an Australian moral philosopher. He is currently the Ira W. DeCamp Professor of Bioethics at Princeton University and a Laureate Professor at the Centre for Applied Philosophy and Public Ethics at the University of Melbourne.”

In a recent TED Talk recorded in March 2013, Mr. Singer said that some charities are hundreds or thousands of times more effective than others.

To illustrate his point, he posed the following facts about blindness.

He says that it costs about $40,000 to train a guide dog and to train the recipient in how to work together.  However, it only costs somewhere between $20 and $50 to cure a blind person of blindness in a developing country if he has trachoma.

In other words, Mr. Singer says that you can “provide one guide dog for one blind American [emphasis added] or you can cure between 400 and 2,000 people of blindness.”

He adds “Providing a guide dog for a blind person is a good thing to do, but you have to think what else you could do with the resources…I think it is clear what the better thing is to do.”

If I were a blind person in America, I might have a serious disagreement about Mr. Singer’s interpretation of the data and his resulting conclusion.

His comparison itself is flawed as it poses a binary set of options: choose one, which is wasteful, or choose the other, which is hundreds of times more effective.

The comparison is further flawed as it compares apples to oranges: assisting a blind person by giving her a guide dog is not the same issue as curing blindness.

The several hundred blind people who receive guide dogs every year, as well as the hundreds, if not thousands, of people who donate to the nonprofits that make this happen, will have a sharply different opinion from Mr. Singer about the effectiveness of their philanthropy.

photo

[This graphic, taken from a TED Talk given by Mr. Peter Singer in March 2013, attempts to equate the relative effectiveness of providing guide dogs to blind people versus curing blindness caused by trachoma.]

The point is this: If a distinguished moral ethicist like Mr. Singer can make this mistake, what does this portend for the ability of the rest of us to come up with an objective metric, or series of objective metrics, to measure the effectiveness of a nonprofit, even when we have the data?

Like the Holy Grail, we are unlikely to find it.

PS  Make no mistake, I am not a nihilist.  As an accountant who makes a living helping nonprofit organizations, I believe in the power of timely, accurate financial and non-financial information, once analyzed and interpreted, to help power an organization toward superior results.  I just do not believe there is any single metric, or set of metrics, that will somehow make it possible to rate or compare nonprofits to each other in terms of their effectiveness.

Comments welcome.

Eric Fraint, President and Founder
Your Part-Time Controller, LLC

The Overhead Myth and the Bridge to Nowhere

26 Jun

The AICPA (American Institute of Certified Public Accountants) held its annual National Not-for-Profit Industry Conference last week in Washington, DC.  About 2,000 accountants from around the country selected from among approximately 60 sessions during the two-day conference.

In the afternoon of the second day there was a 75 minute session titled “What the Watchdogs are Watching.”  The featured speakers were Ken Berger from Charity Navigator and Art Taylor from BBB Wise Giving.

The timing of this session and the appearance of Berger and Taylor was fortuitous as it came just days after the release of their already infamous joint letter, written with Guidestar, entitled “The Overhead Myth.”  This letter is the latest salvo in the war against so-called overhead ratios to determine the effectiveness of nonprofit organizations.

There is much wrong with overhead ratios that I am not going to get into here.  Readers of my blog already know where I stand on this issue.  By chance, I posted my blog entitled “WHEN COMMON SENSE IS NOT SO COMMON: How misusing accounting data can lead one astray” just one day before The Overhead Myth letter was released.

In terms of full disclosure I should say that Dan Pallotta’s book, “Uncharitable,” is required reading for our staff and a copy is given to every new hire.  The book is also required reading for a class I teach at the Fels Institute of Government at the University of Pennsylvania.

What I found particularly interesting at the AICPA conference was not anything that Berger and Taylor had to say in their session (I don’t think they said anything that was not already in the public domain).  What was striking to me was the dearth of discussion during the rest of the two-day AICPA conference about what the overhead myth implies for the accounting community and the relevance of accounting standards for the nonprofit world.

To be clear, several of the conference sessions I attended during the conference mentioned The Overhead Myth letter.  I would say that the accounting community, or at least the session presenters, was by and large very familiar with the letter’s release.

But while the letter was mentioned and briefly discussed at several sessions, what was missing was any recognition (at least in the sessions I attended) of what the letter implies for the accounting world.

Specifically:  if overhead percentages are, in the words of the overhead myth letter, “a poor measure of a charity’s performance,” what does this imply about the countless hours of work spent by accountants at nonprofits everywhere, every day, developing the functional expense numbers that the ratios are based on?

If the information is a poor measure of a charity’s performance, are we all wasting our time developing poor information?

Are GAAP and IRS rules that require the reporting of functional expense information (i.e. program, fundraising, and management expenses)  irrelevant at best, and, at worst, not only a waste of time, but a misleading means by which to allocate scarce public resources among nonprofit organizations?

To put it another way, if accountants are building a bridge to nowhere, what does this imply about the time, money, and effort spent to build the bridge, and what does it portend for the travelers forced onto the bridge only to find it is leading them astray?

Comments welcome.

Eric Fraint, President and Founder
Your Part-Time Controller, LLC

Let us work together

23 Jun

This blog is right on point about how we should, and should not, attempt to help others.

It is written by Hayley.  She describes herself on her blog as “Medical Student, traveler, seltzer aficionado, reader, loser of pens. My name is Hayley and I created this blog to share my experiences with friends and family back home. I am the 2013-2014 Stanford-NBC Global Health and media fellow so I will be exploring the role of media in international health and development issues as well as sharing my thoughts and experiences.”

Here is the link to her blog:  Let us work together.

Comments welcome.

Eric Fraint, President and Founder
Your Part-Time Controller, LLC

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