Jane's Dilemma--Hiring the Development Director--Case Study

Jane’s Dilemma—Hiring the Development Director

“Thank you, and I appreciated our meeting,” Jane said, rising to shake Bernie Plotkoff’s hand. She would have preferred to avoid this customary gesture at the end of such a meeting, but she knew it would have been rude to do so. “I’ll be in touch soon, perhaps next week, about whether you were the successful candidate for this position,” she added stiffly, trying to conjure up a smile—which was a struggle, considering the circumstances.

Jane’s stomach knotted up, and she began to sweat profusely as she considered her options, none of which were attractive.

For fifteen years, Jane Doesky had devoted herself to making the A. K. Schwarzkin Charitable Foundation the best charity it could be. She was well-paid as the executive director of the organization, and the income was now much more necessary than when she was first hired, because her mother was in a nursing home, and she was making payments of $6,000 each month to the home. Mom showed increasing signs of developing Alzheimer’s, and Jane feared that this would necessitate having her moved to a unit that provided services to these patients, with a substantially higher monthly charge.

Jane had sacrificed her personal life, making herself available to the organization 24/7.  She had the usual number of crises during her tenure, but had always come through with solutions that were creative. Her colleagues in the general nonprofit community held her in high esteem for her integrity and leadership.

Now, it appeared that not only was her job on the line, but the continued existence of the charity was at risk. It was a perfect storm that had put her in this unenviable situation—a flagging economy, the trust of a friend and colleague that was violated, and the resignation of the organization’s dependable, long-time Director of Development and de facto chief financial officer, Myron Cohn, for “personal reasons.” Almost everyone knew what those “personal reasons” were by now, as the newspapers had had a field day documenting the financial scandal that had rocked the Jewish charitable community in general and the Schwarzkin charity in particular.

Cohn had fallen hook, line, and sinker for the Madoff Ponzi scheme, investing most of the foundation’s assets, lured by a promise of returns that were substantially better than the market. Doesky had trusted Cohn’s judgment, providing only cursory oversight over his financial management, recognizing that he had an exemplary track record and almost 20 years more experience than she had. Once it became evident that $30 million in Foundation assets were gone with virtually no chance of any recovery, Myron had submitted his resignation, content to retire to a comfy condo in Florida. Leaving Jane and the Foundation holding the bag. An empty bag.

Jane thought back to her meeting a month before with her board chair, Goldie Sharafsky, who had been livid after hearing about how much the Foundation had lost. She had summoned Jane to her own office, located in a posh, downtown office building adjacent to Rittenhouse Square in Philadelphia. Once there, she had provided Jane with a deftly-delivered ultimatum.  

“I’ll be frank,” Goldie had begun, closing the door for privacy, her tone of voice masking any cordiality that had usually been there whenever Jane was asked, infrequently, to meet in Goldie’s office. More often, meetings between the two were held over a casual lunch in one of the trendy cafés along Broad Street. Jane did not expect this meeting to be pleasant, but she felt blindsided by what followed.

“I’ve exchanged some telephone calls with the Foundation leadership, and we have come to a consensus on how to handle this unpleasant situation with the financial scandal,” Goldie began, her words measured. Jane did not take this as a good sign for what was to come.

“Your job is on the line here. Since the Foundation has taken such an unexpected hit from both the scandal and poor fundraising brought on by the tanking of the economy, everyone’s job is on the line, including mine as chair. One of our board members, I won’t tell you which mumser that was but you could probably guess, even suggested liquidating the Foundation. Others wanted to simply fire you and rebuild. Even your supporters are kvetching.”

Jane felt the blood rush to her head. But she said nothing. Maintain some control, she thought.

“I fought to keep you. I can’t find any justification for simply giving up,” Goldie continued. “So many people depend on our programs. And you have considerable talent that I think can work to our advantage as we try to recover from this debacle. I know Myron let you down, and God knows, I can understand why you let him have free rein over investment policy. But when push comes to shove, you are responsible and accountable for the results of all of the Foundation’s employees.”

Jane took a deep breath, waiting for the shoe to drop. It did.

“So, here’s what we decided. You have two years to rebuild the Foundation’s assets to a level that we feel comfortable funding our commitments, and you will be evaluated in a year and must demonstrate that you are making significant progress toward achieving that goal. If you can agree to do that, you can stay; otherwise, we will provide you with two months of severance pay, shake hands, thank you for your service over the years, and launch a search for your successor.”

Jane, speechless, shaken, simply nodded her head and left after exchanging the bare minimum of parting pleasantries.

Now back in her office, contemplating what was told to her in confidence by the third candidate she had interviewed that day for the vacant Director of Development position, her anxiety heightened as she considered what he had offered to her.

Bernie Plotkoff was a name well known to her. She was intrigued that he had applied for the vacant position although she granted him an interview more out of curiosity than any realistic expectation that she would actually hire him. He was the current Director of Development for the S.D. Leibman Foundation, the Swartzkin Foundation’s principal competitor for charitable donations directed to serving Jewish adolescent runaways and missing children. Both foundations had been established at about the same time, inspired by the disappearance of Chandra Levy in Washington, D.C. during the summer of 2001. At one time, the boards of both foundations had considered merging, but relations between the two organizations had soured during negotiations and both had gone their separate ways. The board chairs of both organizations at that time had once been personal friends, bonded by the shared trauma of separate, but similar, family tragedies involving young family members.

Yet following the breakup of the proposed merger, they were no longer on speaking terms. While this breakup appeared to be irreconcilable at the time, most board members and staff leadership, including Jane, judged that an eventual merger would be inevitable, particularly when economic times necessitated an end to competition for funds and programs that served essentially the same clients.

Jane had to admit that the Leibman Foundation was the more successful of the two, attributed for the most part to the aggressive fundraising tactics of the development director whom she had just finished interviewing as part of her process to find a successor to Cohn. “Aggressive” was perhaps too polite a word to describe Bernie’s fundraising reputation. The Leibman Foundation raised millions of dollars, including from some folks who contributed to both foundations.

The Leibman Foundation’s fundraising tactics were anything but low-key. It was among the first to enclose a check in its direct mailings that recipients could cash regardless of whether they made a contribution, instilling an additional level of guilt to make one. It was one of the few Jewish charities that enclosed a small prayer book or religious article such as a yamulke (a skull cap), which would make recipients who were religiously observant to be violative of Jewish law if they simply tossed the mail piece into the trash rather than having it undergo a ritual burial.

It was rumored that Leibman’s annual development budget included a line-item for the hiring of a private detective, and that Plotkoff utilized the services of shady Internet database businesses that sold information to anyone for a fee—information that most of us would assume would not be available publicly to anyone. This was part of what is called “prospect research,” what otherwise was a legitimate technique of fundraisers to learn about the capacity of donors and potential donors. As “refined” by Plotkoff, it was more akin to “spying.”

In short, the Leibman Foundation sanctioned whatever worked, kept constant pressure on giving, and held over-the-top lavish fundraisers that attracted giving that only minimally was provided because of the organization’s mission. And the grand conductor of the fundraising strategy was Bernie Plotkoff, looked upon with undisguised disdain by many of his colleagues, most of whom were secretly envious of the results he recorded for his employer.

Prior to the interview, Jane had no evidence to think that he did anything overtly illegal, although it would not have come as a surprise to her if he routinely crossed the line of ethical conduct without a second thought. If he did so, she would have attributed it to being a zealot for the cause, and she wouldn’t have expected that he violated professional ethics for his own personal gain. Now that she had finished her interview with him and heard his pitch, she had second thoughts about her judgment about both his ethics and his allegiance to following the letter of the law in pursuing his craft.

What Bernie had offered her was communicated quite directly, and he didn’t make any effort to veil his proposal in euphemistic references to make it appear less distasteful to her. She was shocked by his brazen chutzpah, and she felt even a bit insulted that he would trust her to keep his offer in confidence.

He offered to leave the Leibman Foundation for Cohn’s position, giving two week’s notice. He would want his current salary that he received from Leibman, plus a 10% raise. He would want an unvouchered expense account of $20,000 annually and a company car. On top of that, he would expect an annual incentive bonus of 2% of the amount he raised. He would guarantee that he could increase the Foundation’s fundraising income by 100% in the first year, and make up most of the losses from the Madoff financial scandal by focusing particularly on donors who had the capacity to participate in planned giving.

What gave Jane even more pause was what he told her would be his strategy for achieving these lofty goals, and when he disclosed that, Jane didn’t doubt his ability to come through and save her own job as well as keep the foundation viable for many years to come.

Bernie intimated that he had on disk all of the fundraising records of the Leibman Foundation, including all of the prospect research files and history of giving for 10,000 donors, about four times the number of donors that were in the Schwarzkin fundraising database. Hire him, and he would integrate that disk into the fundraising operations of the Schwarzkin Foundation. Even without this database, his contacts alone would result in millions of dollars in additional donations to the Foundation. And with this database and the files that came with it, the Schwarzkin Foundation’s future would be cemented, and its major competitor for donations, the Leibman Foundation, would be crippled. Within a year or two, the Leibman Foundation leadership would be begging for a merger, so the integration of the database files and the end to destructive competition between the two organizations would come to an end. So, while his plan might be somewhat on the shady side, all of the money raised would be going to a cause both organizations support, so in the long run, what would be the harm?

As Jane contemplated how difficult it might be to find another job in this economic environment, she considered the pros and cons of Bernie’s proposal.

Discussion Questions:

1.     What are Jane’s options, and what are the pros and cons of each option?

2.     Should Jane report the offer she received from Bernie to anyone within or outside of her organization?

3.     How much should the fact that Jane needs to maintain her income to support her mother’s nursing home costs factor into her decision? Discuss any conflict between Jane’s ethical responsibility to act in the best interests of the organization and the need to serve her own interests, and how such a conflict should be resolved.

4.     How much does the fact that these two organizations are likely to merge sometime in the near future factor into her decision?

5.     Discuss the ethics of each of the fundraising strategies used by Bernie Plotkoff.

6.     Discuss what is appropriate with respect to prospect research and what are some of the prospect research techniques that might cross the line of acceptability, even if they are effective.

7.     Discuss the pros and cons of paying fundraisers based on the amount they raise. Why do almost all organizations that represent fundraisers have ethics codes that consider compensation based on the amount a fundraiser raises to be unethical?  

Note: This case originally appeared in “The Nonprofit Management Casebook: Scenes From the Frontlines.”