Unitus, We Stand; Divide Us, We Fall

“He that is of the opinion money will do everything may well be suspected of doing everything for money”—Benjamin Franklin, 17th-century social entrepreneur and co-founder of the United States.

This, in a nutshell, is the apprehension driving many of the critics and critiques of Seattle-based Unitus, a nonprofit that on July 2, 2010, unexpectedly abandoned its microfinance work in favor of a yet-to-be-named new poverty alleviation mission.  The almost instant blowback came on July 9, 2010 in the Chronicle of Philanthropy with phrases like “decision to wind down its sole program shocked. … Is [there] a more sinister reason lurking behind the positive spin…? The announcement …came just before the long July 4th weekend which to some observers calls to mind a ‘bury the news’ ploy used frequently by for-profit corporations.”

By all accounts, Unitus will not be winning any PR awards for deftly handling the media relations rollout of its decision. But handling the media with the tin ear of a British Petroleum executive is not the same as fouling the Gulf Coast. Ineptitude in media relations does not constitute nonprofit malfeasance. If it did, most nonprofits would be in jail.

What truly matters is what can be learned from Unitus’s storied history as a leading microfinance institution and its recent change of mission. There is much to consider.  While this blog raises a number of policy concerns and even goads Unitus in places, in my view Unitus has earned the benefit of the doubt. The overarching story here is that microfinance increasingly finds itself on the sharp edge of making money by providing a public service. Like for-profit HMOs who finance healthcare, but make it hard to access the care; or for-profit energy companies who power our lives, but pollute them too; or for-profit automakers who build job-creating plants in local communities, but later close them down—microfinance will no longer operate in an unexamined vacuum.

Nonprofit leadership is, first and foremost, about trusteeship. A nonprofit board holds in trust the donor dollars received, the social capital of its brand, the human capital of its staff, and the unwavering responsibility to defend the mission to which all the organization’s stakeholders have committed themselves.

The concerns, broadly summarized, are that Unitus acted capriciously and without due care for the handling of charitable donations, that windfall profits from the recent SKS IPO are linked to the decision to fold, or that some ill-considered organizational behavior is being, if not covered up, then badly explained. But suspicion and rumor are not facts. No hard evidence substantiates any of these concerns. Moreover, without question, the Unitus leadership has historically been motivated by a public interest steadfastly devoted to poverty alleviation. That is my view.

This is why the World Bank’s Consultative Group to Assist the Poor, the State of Washington Attorney General, or some other external agency should review the circumstances surrounding the Unitus decision to terminate its 10-year commitment to microfinance. An independent agency with the skills to conduct a financial and legal audit will put to rest the untoward rumors, clear the air, and re-establish the Unitus brand.

Nonprofits and for-profit social enterprises alike put forward three fundamental and intertwined cases to garner financial support: One, the organization is working on a pressing problem that needs solving or improving, in this case poverty. Two, the organization has a theory of social change and problem solving, which works and even works uniquely. Three, the organization’s leadership team and staff are talented, imbued with integrity, dedicated to the mission, and effective. Let’s examine each in turn.

To examine these questions, read Jonathan Lewis’s full story on Unitus, which was first published as a blog in serial form at Social Edge.

Read more stories by Jonathan C. Lewis.