The Goodwill Scandal—What the Hell Happened and What it all Means

Retail is tough. The margins are narrow. Sales dip in January. Rents in Toronto are high. Donations are not what they used to be. Goodwill faced these problems and more. They tried to make it work, but couldn’t. It’s hard.

That could have been the tsk-tsk sad story we’ve been following this week. But it’s not. Because what Goodwill did after they determined they were in the drink was, from any number of perspectives—management, communications, human resources or common decency—incomprehensible. So it’s not sad. It’s indefensible.

After spending $29 million on $28 million in revenue from grants, donations and sales last year, the Goodwill leadership pulled the plug, walked away and tried to cover their tracks, leaving their marginally employed workers and discarded clients locked out, cold and disbelieving. Accountability has taken a holiday at Goodwill and no one is talking.

Micheal Levitt, Vice Chair

To guess at whether the finances were well or poorly managed is moot. They were clearly not managed at all. The board has much to answer for, including the question of whether they are just plain ignorant.

Michael Eubranks, Chair

Former Board Chair, Michael Eubranks is Senior Vice President at the LCBO and, by all accounts, a capable man. The bio on the website of the Canadian Club Toronto, where he is a board member, boasts of his many accomplishments.

Former Vice Chair, Michael Levitt, is the Executive Director of Humber River Family Health and has had “a successful record in the not-for-profit sector since 2007,” according his bio on the clinic’s website.

Mark Trachuk, Treasurer

Former Treasurer, Mark Trachuk, is a partner at Osler law firm. His bio on the law firm’s site notes, somewhat ironically in light of recent events, that Mr. Trachuk “has particular expertise in corporate governance matters, has written and spoken extensively on corporate governance issues, is an experienced public company director, holds the ICD.D designation from the Institute of Corporate Directors and is a Six Sigma Greenbelt (Shulich).”

CEO, Keiko Nakamura, who was fired from the Toronto Community Housing Corporation (TCHC) by Rob Ford in 2011 and hired by Goodwill in 2012, is now, deservedly or not, holding the bag for the entire mess.

Decisions—callous decisions—were made and actions were taken. In addition to individual members of the board each deciding to jump ship in a time of crisis, the organization decided not to speak publicly about events, pulled down their website to impede scrutiny, hired a PR firm to keep a lid on the fiasco and locked up their stores with not so much as a minute’s notice.

Those were all acts of commission. Who made them, and how, are not known.

But it’s the board of directors—the entire board of directors—who should be hanging their heads in shame over this injury to civil society. Their behavior, as it stands today, is shocking and cowardly. They owe anyone who is listening, especially the employees and clients of Goodwill, an abject apology, a down-on-your-knees repent of their poor oversight.

Goodwill is, of course, not the only charity in Canada being poorly managed by boards made up of so-called leaders of the private and public sector, puffed up from the hubris of “giving back,” with no more comprehension of what’s needed to lift masses of people from poverty or cure other social ills than a tree stump.

Many charities have lost sight of their missions entirely. They do not judge their success on their progress in ending poverty, curing cancer or whatever it is their mission, but on how much money they raise and how they can keep expenses down in the hopes of getting a four-star rating from self-appointed charity rankers like Charity Intelligence who had their own charitable status revoked in 2012. (Click here for a refresher.)  It is a short-sighted strategy that entrenches poor management and the resulting poor mandate fulfillment.

Trust in charities is diminishing. The international NGO sector, with morale at its lowest and fundraising costs at their highest, and buffeted by reports like the American Red Cross’s Haitian spending scandal exposé earlier this year, has citizens putting their resources into starting their own charities instead of supporting existing ones.

And it’s not all about money.

Manipulation by charities is growing. Cancer charities and publicly-funded hospitals—which raise hundreds of millions of dollars a year in donations, despite having socked away hundreds of millions more in investment funds —find new ways to exploit people’s intimate fears and make money from onsite donut franchises to fund complex research that holds only notional hope for a relatively few people instead of investing in the prevention programs they know will benefit many more.

The figures for cancer research worldwide are, at once, astounding and unknowable because no one can keep a tally. The U.S National Cancer Institute has received CAD $35 billion in research funding from Washington over the last five years. A total of CAD $498 million was invested in cancer research in Canada in 2013. Last year alone, one cancer research charity in the U.K. raised CAD $1.2 billion.

The Goodwill fiasco—and the damage it has done to vulnerable people—is one demonstration of a widespread malaise of disconnection in the nonprofit and charitable sector, a sector that represents more than 8% of Canada’s GDP and employs two million people.

Groups receiving public funding and private donations need to step up their game and be held accountable. Not just for their money, but in view of their missions.

And there will be plenty of opportunity in the months and years to come. Because the Goodwill story is not the last story of poor leadership and disregard in the nonprofit sector—not by a long shot.

Gail Picco is a strategist who has worked in the nonprofit sector for 25 years, most of which as President of Gail Picco Associates. She is the author of What the Enemy Thinks, a recent novel set in the nonprofit sector, and is Chair of the Board of the Regent Park Film Festival. Prior to starting her own company, she worked in a shelter for assaulted women and children for eight years. HHer upcoming book of non-fiction, Cap in Hand:  How Charities Are Failing the People of Canada and the World will be released by Civil Sector Press on January 20, 2017.