THE BLOG

Trust and Corruption

03/05/2014 08:46 am ET | Updated May 05, 2014

Mark Rosenman is emeritus professor at Union Institute & University and a frequent contributor to PhilanTopic. He lives in Washington, D.C., from where he drew many of the examples of national problems cited below.

Self-serving and dishonest actions in both the public and private sectors are severely testing the trust and confidence of Americans. That's a problem for nonprofit organizations, government agencies, the courts and criminal justice systems, corporations, and political leaders.

It's a much more significant problem, however, for our larger society. Are we destined to slide further toward the pernicious levels of corruption so prevalent in other parts of the world? Can the fabric of our own society -- already strained by growing inequality and faltering values -- hold as it is weakened further as some public and private officials scramble to profit, legally and otherwise, from their positions? What happens when the fundamental American belief in fairness is undermined by corruption and declining confidence in the institutions we all rely on?

Make no mistake, confidence in our institutions is declining. Since the early 1970s, those of us who have a "great deal" or "quite a lot" of confidence in institutions has fallen dramatically - in some cases by more than 50 percent, including banks, newspapers, medicine, and, of course, Congress - now at a low of 10 percent. Confidence in religion, the Supreme Court, schools, organized labor, and the presidency has fallen by 25 percent or more, while fewer than 25 percent of us have a "great deal" or "quite a lot" of confidence in big business.

Charitable organizations don't fare so well, either. Following a precipitous drop more than ten years ago, a survey found that over a third of Americans have "not too much" or no confidence in nonprofits. Meanwhile, Congress has fallen to an all-time low of 10 percent.

Interestingly, the few institutions that have shown gains in public confidence include the military and (since polling on them started in the early 1990s) the police and the criminal justice systems, but now they face new and spreading corruption scandals.

While the military is the most respected of American institutions, a series of recent incidents is beginning to take a toll. They include a bribery scandal involving two Navy officers and a senior agent with the Naval Criminal Investigative Service, and a series of misconduct charges leveled at senior military officers for abusing their positions and subordinates, and accepting illegal gifts. With his confidence as shaken as many Americans, Secretary of Defense Chuck Hagel has demanded a broader investigation.

Police departments around the country have also experienced problems in recent years, and the number of incidents seems to be growing. Ten metro Atlanta police officers and others in D.C. and Baltimore have been charged or found guilty of using their badges, guns, and positions to launder drug money or facilitate drug deals. In the District of Columbia, three police officers recently were arrested on charges of child pornography, prostitution, and theft. In 2012, a Kansas City officer was charged with coercing women into sex, while in November a Maryland police lieutenant was arrested on rape charges involving a minor. Just a few weeks ago, Tulsa settled a police corruption and cover-up case for hundreds of thousands of dollars.

The courts and criminal justice system also face scandals. In November, more than twenty corrections officer in two state-run Maryland jails were arrested for corruption, including racketeering and drug- and money-laundering charges. That case parallels a more recent case in Hawaii and a couple of older ones in Texas, including a case involving a district attorney who accepted cash for favors.

The chief administrative law judge in D.C. is alleged to have steered a contract and a job to friends and lied to investigators about it. A few years back, a tax office manager and co-workers there were convicted of stealing over $48 million in phony refunds, and just last week a Human Service worker pled guilty to stealing over $800,000 in false claims. Ninety other District staffers were charged in an earlier $800,000 unemployment fraud while on the job and another 14 Employment Service workers were arrested for fake claims totaling over $250,000. And just last week federal agents seized contract and procurement records from a suburban Washington public utility.

Before those of us in the nonprofit sector start casting stones, we should take a look at our own sector. In January, the leaders of a nonprofit charter school in D.C., including at least one of its board members, were accused of siphoning more than $3 million to private companies they had set up, all with the assistance of a senior public official at the D.C. Public Charter School Board. Last May, the founder of Cape Cod's Touched by Angels was found guilty of embezzlement and fair labor violations, while earlier this month a popular Philadelphia sports figure was accused of diverting thousands of dollars from the Special Olympics.

That's just the tip of the iceberg. The Washington Post has reported on internal financial corruption at more than a thousand nonprofit organizations, some in the face of charities' efforts to minimize or bury incidents. In the aggregate, millions and millions of donated dollars have disappeared from all kinds of charities, often without full public disclosure. All of this has moved government officials in seven states and Congress to call for investigations.

Still more corruption in the sector was exposed when CNN headlined a Center for Investigative Reporting and Tampa Bay Times report on "America's Worst Charities" that chronicled dozens of organizations run by people who had enriched their friends and cronies at the expense of the clients they were supposed to serve. One of those charities, the Kids Wish Network, allegedly used nearly $110 million in contributions to pay fundraising solicitors and steered an additional $4.8 million to the charity's founder and his consulting firms -- while spending less than 3 percent of its revenue on sick kids. Our nation's key charity leaders declined to condemn these practices.

Sadly, self-serving abuse can be found in all sorts of nonprofit practices. Cronyism and avarice at the top of many nonprofit organizations has allowed executive pay in the sector to soar, even as the wages of line staff stagnate, and the CEO compensation differential at some nonprofit organizations is as large as at high-profile for-profit corporations.

And this litany of confidence-busting problems doesn't even begin to speak to unpunished Wall Street corruption and heinous abuses in corporate America, be it by pharmaceutical companies, chemical storage facilities, or unscrupulous manufacturers. Nor does it speak to the illegal acts and abuse of authority by state governors, recently indicted and otherwise, to the pay-to-play favoritism won by congressional and other campaign-contributing lobbyists, or to the crimes and moral lapses of DC councilmembers and possibly its mayor.

All of this has taken a toll. Fewer than 25 percent of us have confidence in American financial corporations and their top managers. And that lack of trust is hobbling the broad-based economic recovery we so desperately need.

Fraud and corruption must be addressed if our essential institutions are to retain the support of most Americans. But, although we know that strengthening the institutions that enforce social and other contracts is important to restoring trust, there's not much of that happening.

What can be done? For starters, nonprofit leaders must step up and lead. They must condemn corruption and abusive practices wherever they occur -- starting with the nonprofit sector itself. They need to help the public better understand what is at stake and demand that the authorities vigorously root out and punish corruption in all sectors of society, especially those that are expected to protect our safety and security, and those that provide for the neediest among us.

More broadly, the nonprofit sector must lead in demanding that government personnel, that corporate management, and that nonprofit peers be held to a reasonable standard of behavior and that corrupt conduct anywhere is vigorously prosecuted. Without decisive action, many more of us will be caught up or swept under in the spreading eddy of corruption. And that's in no one's interest.

Versions of this piece also appear in The Chronicle of Philanthropy and PhilanTopic.

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