Partisan attacks on the Clinton Foundation obscure the real problems of how it is executed

By Philip Hackney, Louisiana State University and Brian Mittendorf, Ohio State University

In the midst of hyper-party disputes over presidential candidates, criticisms of their charitable efforts have been highlighted.

Criticism from the Trump Foundation involves clear violations of long-standing rules and customs of private foundations.

It is difficult to understand and criticize the Clinton Foundation, due to its size, multi-organizational network and variety of programs.

Some critics have made extreme claims that the organization exists only to enrich its founders or that it is part of a large criminal enterprise. Others refer to issues of government ethics, with accusations that Hillary Clinton became involved in payment plans for playing at the State Department, exchanging favorable treatment for donations.

Finally, there are those who make the statement, often quoted but incorrect, that the Clinton Foundation spends less than 10 percent of its resources on charities (spends close to 90 percent). However, hidden among that partisan noise, there are legitimate concerns that deserve further examination.

And although Clinton no longer plays a role in the management of the foundation, she is intimately connected with the organization. And for good or for bad, his achievements and ethical failures, as well as the efforts to correct those defects, are reflected in her and her candidacy.

From our review of the organization and research experience of nonprofit organizations, we believe that all valid criticism points to a problem exhibited by many charities: lax government. The problems are not usually legal. On the contrary, they raise issues of ethics, management and messaging.

Who are the donors

All organizations charities that depend on the general public to make donations are entering into a de facto association with their donors.

Although some may think that all donations are good donations, any charity that has found this link with donors knows that it is important to make sure that their donors do not send an antithetical message to their mission.

In the case of the Clinton Foundation, relying on business partners, foreign donors and foreign governments brings the issue to the fore. That some of the governments that are donors have policies that go against the mission of the foundation increase the stakes. Although this is a major problem for politicians associated with charities, it is a matter that everyone should consider.

While these questions can not be completely eliminated, establishing and communicating proactively a clear and coherent policy can alleviate concerns. So far, the Clinton Foundation has been reactive, shifting its policy toward foreign donations as circumstances change: first allowing donations from various sources, then agreeing to limit foreign government donors, reopening the door and then allowing donations of only specific countries, and then agreed to ban such gifts in full.

It is this more recent decision, if strictly enforced, the best opportunity to quell concerns of public perception.

Who has influence

A problem that affects Many nonprofit organizations have the board and leadership made up of friends, family and business associates.

Such a circumstance, although it is natural at first given the connections of those involved, creates an organization that is at risk of mixing charitable efforts with companies and personal efforts. To combat this possibility, it is essential to establish a culture and controls to ensure that the organization is distinct from the people involved in it.

A review of Clinton Foundation officials and their affiliates over time reveals a long-standing group of Clinton allies and partners. Some are accused of mixing charitable activities with personal connections. Such mixing concerns are particularly notable given that a major activity of the organization has been to convene an annual meeting of business and government leaders to pledge support for a variety of causes.

To her credit, Chelsea Clinton made great efforts to take outsiders to leadership positions at the foundation and to conduct internal operations audits to ensure separation between her activities and the interests of the people within her.

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The fact that some experts were irritated by such efforts should confirm their importance. Unless these efforts have a high priority, it is likely that the organization and its founders will continue to be persecuted for similar accusations.

Conflicts of interest

Conflicts of interest represent a broader concern that arises whenever decision makers for a charity can do so under other external pressures.

These pressures could be friends, commercial interests, political objectives, etc. To avoid these problems, an organization should establish procedures to identify such potential conflicts and work to ensure that even one's appearance does not exist. This is certainly a high bar, but it is worth aspiring to do.

At the Clinton Foundation, the potential for conflict is inevitable. The political activities of its founders, the business and governmental influence of its donors and the mating activities it carries out open the door. This has led to accusations and speculation about pay-for-play agreements in which donors to the foundation expect or are promised access or other favorable treatment by the Clintons.

Although they are still unproven allegations, like many of the criticisms of the Clinton Foundation, they highlight how even the appearance of a conflict can generate concern. The documented cases are the foundation's relationships with donors Frank Giustra and Laureate University, each of whom also had commercial interests that intersected with the decisions of the State Department. Interestingly, most of the conflicts identified so far do not involve significant non-profit legal issues. ethics instead.

Even if such decisions are not really conflicting, the organization should do everything possible to eliminate its appearance. The policies that segregate the duties and decision-making power go a long way. For example, a nonprofit organization could ensure that those who decide on programming are different from those who interact with donors and that the firewall solidifies as part of the culture. That way, even if a donor tries to pressure the organization or its representatives to take certain measures, that pressure does not reach the decision makers.

These problems led to an ethics pact between the foundation and the Obama administration over Clinton joining the State Department that put strict limits on activities that could create the appearance of a conflict. However, the lapses in ensuring that it was followed, highlight the critical nature of preventing future violations.

Consequences of the dragged mission

Many organizations expand their mission over time. This can make an organization quickly become a disaster if it is not done with much foresight. When an organization faces public scrutiny, an expanded mission puts the leaders of an organization at risk about their choices and motivations.

With the Clinton Foundation, the "slow progress of the mission" has been substantial. It began as an organization to raise funds for the Clinton Library and, over the years, has added HIV / AIDS, climate change, healthy children, economic development, earthquake relief in Haiti and a variety of other initiatives for blending. It has also employed a variety of approaches, from negotiating lower drug prices to establishing hybrid for-profit / non-profit investments to promote growth.

The proliferation of programs and tactics leaves the organization open to criticize their motives. As an example, the Clinton Global Initiative (CGI), while innovative in its broad approach of bringing together influential donors with causes and organizations in need of funding, has also expressed concern about mixing commercial and charitable interests.

While these changes in the mission do not imply legal problems for the Clinton Foundation, they hinder its purpose. And, if it is not elaborated in a way that includes all the constituents of the Foundation, put at risk the goodwill of the organization.

These concerns have not gone unnoticed, as the organization announced the end of CGI in an effort to alleviate concerns about its unintended consequences.

The final result

The questions surrounding the Clinton Foundation have a final impact on the presidential elections?

That we do not know. But we can say with confidence that the elections and the questions you have raised will have a lasting impact on the foundation itself. The organization recently announced preliminary plans to reorganize and reduce the size in case Clinton is elected president.

And, if a President Clinton comes out of the elections on Tuesday, we suggest that he look at how the foundation is reorganized as a sign of the seriousness that she will assign to effective government and the maintenance of public trust.