March 27, 2003 - The Chronicle of Philanthropy: Thailand RPCV Thomas Tighe's Direct Relief International holds nonprofit world's first "shareholder" meeting
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March 27, 2003 - The Chronicle of Philanthropy: Thailand RPCV Thomas Tighe's Direct Relief International holds nonprofit world's first "shareholder" meeting
Thailand RPCV Thomas Tighe's Direct Relief International holds nonprofit world's first "shareholder" meeting
Read and comment on this story from the Chronicle of Philanthropy on Thailand RPCV Thomas Tighe's Direct Relief International which recently held the nonprofit world's first "shareholder" meeting. The issue of accountability is especially timely now, given the recent controversies over whether nonprofit groups are abiding by donors' intent. Several charities, including most prominently the American Red Cross, were criticized by members of Congress for planning to use a share of donations made in the aftermath of the September 11 terrorist attacks on other projects, rather than spending all of the money on people affected by the tragedy.
The organization's "shareholder meeting," which was advertised locally in newspapers and on radio, may have been the first such event in the nonprofit world. The daylong event allowed donors of all sizes to learn about the group's accounting; prod Mr. Tighe to consider changes that might make Direct Relief more efficient; hear from health-care providers in Ghana, India, and Peru about how the materials, which are donated by drug and medical-supply companies, are being used; and tour the group's warehouse near the Santa Barbara airport. Read the story at:
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Medical-relief charity holds first "shareholder" meeting to inform donors -- and gain visibility
By Ben Gose
Santa Barbara, Calif.
Standing before a crowd of about 200 people at a Doubletree resort here, the chief executive officer plowed through the fine print of his organization's financials, occasionally referring to year-to-year comparisons projected on a screen to his left. The same scene is playing out at thousands of for-profit corporations this time of year, the traditional season for shareholder meetings.
But the CEO at this meeting was Thomas Tighe, who runs the nonprofit group Direct Relief International, and he was on stage only because he thought holding the meeting was the right thing to do, not because it is required by law.
Annual meetings in the corporate world ensure a level of accountability to shareholders, the owners of the company. Before taking the top job at Direct Relief, which last year shipped drugs and medical supplies worth $66-million to health facilities in 60 countries, Mr. Tighe was chief of staff at the Peace Corps, which has its own form of accountability. Mr. Tighe regularly trudged to Capitol Hill to be grilled by legislators about Peace Corps expenditures and program effectiveness.
But the nonprofit world has no such equivalent. Charities are required to do little more than make an audited financial report available upon request.
To Mr. Tighe, that requirement seems insufficient, especially since the "buyer" of philanthropy is not the "consumer." Donors often must rely on meager reports from the charities themselves to try to determine whether their money is being wisely spent.
The issue of accountability is especially timely now, given the recent controversies over whether nonprofit groups are abiding by donors' intent. Several charities, including most prominently the American Red Cross, were criticized by members of Congress for planning to use a share of donations made in the aftermath of the September 11 terrorist attacks on other projects, rather than spending all of the money on people affected by the tragedy. The Red Cross and some other organizations aborted their plans to divert the money after the public outcry.
Direct Relief had another reason for holding the meeting beyond accountability. It is seeking publicity as it tries to secure more financial gifts from around the country, since its current pool of donors is largely local.
The organization's "shareholder meeting," which was advertised locally in newspapers and on radio, may have been the first such event in the nonprofit world.
The daylong event allowed donors of all sizes to learn about the group's accounting; prod Mr. Tighe to consider changes that might make Direct Relief more efficient; hear from health-care providers in Ghana, India, and Peru about how the materials, which are donated by drug and medical-supply companies, are being used; and tour the group's warehouse near the Santa Barbara airport.
"You are a nonprofit's version of a shareholder," Mr. Tighe told the audience, during his opening speech. "I hope it will become clear as the day goes on what your investment has earned." (One donor, smarting from stock-market losses, caught up with Mr. Tighe during a break and joked that he'd gladly increase his contributions if the CEO could promise him that he'd continue to receive a zero-percent return.)
Applying the language of business to the nonprofit world is hardly new -- "venture philanthropy" was all the rage during the late 1990s. But venture philanthropy has been criticized by some as a poor model, since a common goal of venture capitalism -- cashing out through an initial public offering -- bears little resemblance to the incremental progress sought by the nation's charities in battling problems like hunger, disease, and poverty.
The "shareholder" approach, on the other hand, suggests that donors are partners in the operation, and can play a role in helping shape long-term strategy.
Paul Shoemaker, executive director of Social Venture Partners, a foundation in Seattle that uses the venture-capital approach, says Direct Relief and other groups need to be cautious as they engage donors. Donors might flee, he notes, if a nonprofit group subsequently decides to close the door on open access.
"The key is that you have to be very committed to working that way with your donors," he said. "If you're not and you start, it'll be a disaster when you stop."
The Direct Relief session lacked the fireworks that are on display at some of this year's corporate meetings, where disgruntled investors are demanding answers from companies whose stocks have plunged. But the meeting wasn't a scripted press event, either.
Ralph Kuon, a Peruvian-American surgeon in Los Angeles who for more than a decade has organized medical missions to the impoverished Ayacucho region of Peru, sat at the head table with Mr. Tighe. He said his missions would have been impossible without the supplies provided by Direct Relief, but he also offered suggestions for improvement.
He urged the group to try to send requested items, including painkillers and pediatric medicines, in its packages bound for Peru and other countries, rather than relying solely on unpredictable donations from drug and medical-equipment companies to fill the boxes. And both Mr. Kuon and a donor in the crowd wondered if the group could help more hospitals and health clinics by shipping drugs that are technically past their expiration date but nonetheless still effective.
Mr. Tighe didn't shrink from the questions. He said Direct Relief refuses to ship drugs within six months or so of their expiration date, given the ethical controversy over companies "dumping" expired drugs in developing countries. (The group's shipments, which generally are carried via ocean freight, can take months to arrive at their destination.)
He also said that the group lacks a license for handling narcotics, and that its budget for buying drugs and other medical equipment, although tripling in the past year, remains a paltry $50,000. But he acknowledged that the group needs to find a way of better aligning what it ships with the specific needs of hospitals and clinics. "If we've messed up, we want you to tell us, so that we can fix it, rather than sitting behind our desks," he said.
'Not Humanitarian Zorros'
A dozen Direct Relief supporters came here from Los Angeles, about 90 miles away, and a handful flew out from Connecticut, but the majority of those who attended the meeting were from this coastal resort town or nearby locales. Vale Laraia, a Santa Barbara resident who has made small donations to the group for the past three years, likes the fact that Direct Relief officials have longstanding relationships with indigenous health-care providers. "They're not humanitarian Zorros who come to help and then leave," she said.
Ms. Laraia, who also helps organize fund-raising events for the charity, said she came to the meeting to get a better idea of how the various parts of Direct Relief -- the medical companies that supply the goods, the local staff members, and the health-care providers outside the United States -- all fit together.
"Hearing the stories of the clinic directors was so inspiring," she said after the morning session. "I had an 'aha' moment there. It's going to allow me to tell a more specific story to my friends," whom she hopes to persuade to contribute to Direct Relief.
That kind of reaction pleased Barry Kravitz, a former teacher-turned-money-manager who contributes about $10,000 a year to Direct Relief.
He had urged Mr. Tighe to hold the meeting. "I suggested to Thomas that what donors need to feel is a sense of equity, of connection," Mr. Kravitz said.
Mr. Tighe said he didn't think annual meetings should be a requirement in the nonprofit world, but he noted that Direct Relief had good reasons for holding one. The organization is eager for publicity, as it tries to expand its pool of donors beyond Santa Barbara. "We're tapped out in this community," said Richard D. Godfrey, a former chairman of the group's board of directors.
Direct Relief, ranked No. 165 on The Chronicle's most recent Philanthropy 400 list of U.S. charities that raise the most from private sources, offers an appealing story for those who want to stretch their philanthropic dollar. The organization was founded in 1948 by two Santa Barbara residents, William Zimdin and Denis Karczag, who worked from their homes to send medical samples and other items to help relatives and friends in Europe who were struggling financially after World War II.
Today, the vast majority of the group's donations -- some $65.6-million in 2002 -- are contributions of medical supplies and drugs from companies like Becton, Dickinson and Company, Johnson & Johnson, and Merck. Those donations give Direct Relief a vast reach even on a modest operating budget ($2.4-million in 2002). Mr. Tighe can claim, as he did repeatedly at this month's meeting, that every dollar given to Direct Relief generates a 27-fold return in wholesale material assistance provided to hospitals and health clinics.
That's the kind of statistic that appeals to donors like Mr. Kravitz, who focus on the bottom line. "When I was an educator, I taught about 500 students," he said. "As a financial adviser, I've helped maybe 1,000 people. My donations to Direct Relief have helped tens of thousands of people."
But for those who like to see firsthand how their donations are helping individuals, Direct Relief may have less appeal. Except for the occasional site visit, even the organization's staff members don't see the people who are benefiting from the donated supplies.
"It's challenging," conceded Anthoula Randopoulos. "We can't point to a particular person and say, 'This is who we are helping.'"
The shareholder meeting, however, did allow donors to hear stories from the front line. Vivian Ashame Oku, a midwife in Ghana, runs a health clinic at Mokota Island in Lake Volta, an area in which women received no prenatal care before the clinic was built in 2001. Using supplies provided by Direct Relief, including prenatal vitamins and an exam table, Madame Oku and her staff have been able to identify women with obstetric complications, cutting the number of maternal deaths.
"The only resources I get are from Direct Relief," said Madame Oku, one of two beneficiaries who flew in to participate in the meeting.
Dhananjay S. Kelkar, who also flew in for the meeting, is medical director of a new 450-bed hospital in Pune, India, which in the past two years has received operating tables, birthing beds, an anesthesia machine, respirators, and surgical supplies from Direct Relief.
"You are helping people who you may never see," Dr. Kelkar, a surgeon, told the crowd. "It's a wonderful thing because your compassion goes beyond your eyes."
Bringing People Together
Some participants said the biggest benefit of the meeting was simply bringing the disparate forces behind Direct Relief together.
Kurt Schroeder, a Los Angeles resident, began putting together packages of toys and other items for young patients at a hospital in Laviv, Ukraine, in the mid-1990s. In July 2001, after the hospital asked him to try to obtain equipment that would allow it to perform cataract surgeries, Mr. Schroeder sent out a mass e-mail to friends, one of whom steered him to Direct Relief.
In the past two years, Direct Relief has provided the hospital with equipment used in eye surgeries. (Mr. Schroeder, meanwhile, has raised $2,500 for Direct Relief. The organization asks recipients of materials who can afford to do so to make a financial gift; Mr. Schroeder exceeded the $1,700 requested of him.) However, the cost of the lenses needed for cataract operations remains a hurdle because Direct Relief does not provide them. But Dr. Kelkar, the surgeon in India, told Mr. Schroeder during a break that he could show him how to obtain such lenses cheaply.
"That's going to be a huge help," Mr. Schroeder said. "I wouldn't have learned that if I hadn't come here today."
The meeting featured two presentations by an investment-relations vice president at Becton, Dickinson, a maker of medical supplies. Mr. Tighe seemed a bit miffed that no other companies showed up, saying "it would have been nice" to have had greater turnout from businesses.
Direct Relief managed to keep the cost of the meeting low, aside from the airfare required to bring the overseas health workers to the session. It rented the meeting room at a subsidized rate of $150, charged $35 to everyone who stayed for lunch, and received free time and space from local radio stations and newspapers to advertise the event.
The cost of lunch may have sent some people home early -- at least half the crowd ducked out before the meal. The group is "struggling through," Mr. Schroeder said in the early afternoon. "No corporate shareholder meeting lasts all day."
When the meeting wrapped up at 4 p.m., much of the audience moved on to a reception at Direct Relief's offices and 36,000-square-foot warehouse. Mr. Tighe had to skip the reception to catch a flight to Seattle, where he would repeat his presentation the next day to a group of donors there. Though visibly nervous about how the meeting had been received, he remained energetic to the end, and vowed to hold another shareholder meeting in 2004, even though it entailed so much work.
"This was a like a 200-person board meeting," he said.
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