THE BLOG
08/30/2013 05:26 pm ET Updated Oct 30, 2013

Noble Causes, Ignoble Means: When Executives Live Well Off Non-Profits

A self-described "visionary" (at least according to his own web site), college president Evan Dobelle is now under intense scrutiny for his lavish spending at Westfield State University, an otherwise obscure local state school in western Massachusetts. He sought notoriety for this school, though not necessarily through publicity like this. He had racked up high-roller expenses at European and Asian hotels, clothing stores, and limousine services. He had been slow to reimburse his institution for his personal share of travel expenses. He extended his luxurious living to colleagues and students on trips where he spared no expense. And he has brought this conspicuous consumption to campus, with an elegant new building and a costly celebrity speakers series.

He argued to the Boston Globe that he is cultivating unprecedented recognition and pride to a little known school - and that he could defend each expense item's ROI. But now the Massachusetts Attorney General and his Board of Trustees will need to be convinced, as they investigate this latest public embarrassment for otherwise money-strapped and scrutinized state higher education.

All too often, we read about heads of non-profit institutions living well at the expense of their benefactors - and compromising the very causes they are espousing. President Dobelle's predicament reflects now common patterns and moral lessons when not-for-profit executives are thrust into the limelight as a result of the widened gap between their flagrant spending and the ideals of their enterprise. The press feasts on the irony, hypocrisy, and arrogance of leaders who abuse their mission, ostensibly as business-as-usual - only to then wake-up suddenly remorseful for their behavior when headlines appear. What is most fascinating is not that executives routinely abuse the trust of those who depend on their leadership but their lack of self-awareness until public revelations drive home the obvious.

Evan Dobelle was able to spend whatever he wished because he had no one to answer to. He initially had access to the credit card of a separate foundation established to provide scholarships and educational support for Westfield. When the foundation realized the extent of his charges - and how Dobelle had crossed the line between what was necessary and excessive, what was business and personal, and what was modest versus brazenly extravagant - he was cut off from this account. So, he turned to a subordinate to use her corporate credit card on his behalf.

Corporate credit cards, especially in the hands of a chief executive, are virtually an honor system - they create a self-approving fait accompli. All members of an organization, including and especially its leadership, need the ongoing checks-and-balances of an independent conscience, with the authority to question and stop a practice before becoming a pattern. Simply having to ask in advance is an important deterrent to abuse.

It is all too easy to rationalize where the line is drawn between professional and personal expenses - what is good for the institution and what is strictly self-indulgent. For some, the temptations are simply too great. Dobelle justified, at least to himself, that the nature of his role demanded a particular quality of life, and that somehow opulence would project dynamism. The blurrier the line the more the executive is likely to push it towards a broader legitimation of a lavish lifestyle. Ambiguities need to be clarified or will be inevitably exploited. The executive cannot unilaterally define the difference between the professional and the personal.

And Dobelle had a well-publicized prior addiction to materialism - he had been fired at the University of Hawaii system as its president for misusing funds for his own benefit and was given a lucrative settlement to leave before the end of his contract. And there was no sign of repentance or personal learning. Westfield should have researched this in advance (simply by googling Dobelle) and either made a different hiring decision or formalized upfront what would constitute appropriate expenditures and the ramifications of misbehavior.

Heads of non-profits receive what they believe are modest salaries, and that it goes unsaid that they can make up some of their loss through other means. Dobelle saw himself as the Steve Jobs of higher education, only without the income and the access to corporate perks. A subsidized lifestyle could easily be rationalized as just deserts for the self-sacrificing non-profit leader. And the higher the aspirations the easier it is to rationalize profligate spending - and conflate the person with the cause.

Symbols matter. Even though Dobelle's indulgences were a fiscal drop in-the-bucket even for a small academic institution, its symbolism resonates with the press and public. They see the gap between a scrappy college trying to serve its students and an executive with astronomical hotel and limo bills that make good sound bites, tweets, and headlines. They see delusions of grandeur from an educational leader who claimed to "channel Horace Mann" as self-righteous claims of someone manufacturing a persona.

Perhaps this is the ultimate moral lesson from this latest scandal in non-profit leadership: We get what we deserve. When hype is believed, when trustees fail in their fiduciary responsibilities, and when we think we have a larger-than-life savior riding into town to elevate the organization to spectacular new heights, a rude awakening inevitably unfolds when both leader and public are shocked by revelations they should have seen coming.

Jay A. Halfond is on the faculty at Boston University and a Research Fellow at Bentley University's Center for Business Ethics.