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Markkula Center for Applied Ethics

They Owe Us More: Award Season Brings New Scandal to the Nonprofit Sector

Grammy Awards

Grammy Awards

Joan Harrington

AP Photo, Julio Cortez

Joan Harrington is the director of Social Sector Ethics at the Markkula Center for Applied Ethics at Santa Clara University. Views are her own.

It’s awards season and a good time to ask how the nonprofits that hand out the awards are doing. The Grammys are awarded in a ceremony run by the National Academy of Recording Arts & Sciences. The Oscars are awarded through the Academy of Motion Picture Arts & Sciences. These are nonprofit organizations, and are exempt from paying federal taxes. That means, as it does with all nonprofits, that the public pays more in taxes so that these organizations don’t have to. Are they acting in the public interest? With respect to the Recording Academy, it appears not.

“The Recording Academy is imploding a week before the Grammys. Here’s what we know,” was a recent headline in the Washington Post. What we learned is that the chief executive, Deborah Dugan, has claimed that she notified the Academy’s human resources department in December of her concerns about a number of issues including conflicts of interest within the board of trustees, sexual harassment, and irregularities in voting with respect to the awards.

Soon after, she was placed on administrative leave, based, according to the Academy, on a complaint by an employee. Dugan then claimed retaliation and filed a complaint with the Equal Employment Opportunity Commission in which she also raised the issue that she was paid significantly less than the previous CEO who, according to tax documents, had total compensation of over $1,800,000 in 2016. The median salary for chief executives of nonprofits nationwide in 2016 was just over $123,000, according to Charity Navigator.

All this comes after the Recording Academy was challenged by artists and others for its lack of diversity and inclusion, which led to the formation of a task force made up of representatives from the music community. In December 2019, that task force released a report making 18 recommendations for change.

This type of scandal is terribly damaging to the organization itself and the people involved. But with nonprofit organizations, the public is also a stakeholder and has a right to transparency and accountability from the nonprofit. Let’s hope that the Board of Trustees, who is ultimately responsible for the well-being of the Academy, understands its responsibility to all of its stakeholders.

Jan 30, 2020

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