The Political Economy of Non-Profits: Child and Disabled Labor in the United States

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By JP Miller

[Robert Gates, 22nd Sec. of Defense, is currently the head of the Boy Scouts of America (Wa. Post, 5/22/14).]

[A]fter ten years in the Army and another six at University, I wandered into many offices looking for gainful employment. I was not what one would call a corporate man and armed with only an M.A. in Political Science, my choices were nearly non-existent. Working for the Department of Commerce was a brief interlude as I had no real direction or permanent position and limited pay. Then, I happened to stumble upon the “non-profit” world out of sheer desperation. I simply answered an advertisement and after one interview was hired.  I felt good about being able to work in a wholesome environment, helping others. I felt like this could be a career. After a two year stint with the Boy Scouts of America (BSA) and less than a year with Goodwill Industries, I was totally disillusioned.

I discovered that a “non-profit organization” or “501.C” is simply a lie and a most insidious, Orwellian use of language. To tell what I discovered requires me to implicate myself in a sense. I went along with the program and was paid well for my misdeeds. Yet, being a new father and with a large family to support, I fought the urge to quit. So I had to be fired for reversing and doing the right thing.

A 501( c ) or non-profit organization is simply the same as any for profit organization except they are tax-exempt and recognized as such by the IRS. There are 29 variations of non-profits that range from churches to veterans organizations. I was employed by the BSA from 2001 to 2003 and Goodwill Industries during 2004. In the cases of the BSA or Goodwill industries, both are considered charitable organizations despite the fact that donations and monies earned are distributed among multitudes of professional employees as salaries. The funds are also used for dinners, parties and company cars. I have attended some of these parties which provide free alcohol, entertainment and sumptuous meals. The CEO or President of the organizations many subsidiary offices or in the case of the BSA, the Council President, are typically paid a salary that rivals that of for-profit businesses and in many cases exceeds that of the public or private business. While the President of each subsidiary office makes typically over $200,000 a year and the professional case workers or lesser executives make around $30,000 to $40,000 yearly, the most significant and most abundant labor force, which is made of the poor, children, uneducated, and disabled or displaced persons make a negligible wage. Thanks to a depression era law under the ironically named Fair Labor Standards Act (FLSA) of 1938, non-profits are exempt from paying minimum wage in the case of the disabled and are able to use child labor. There are over 1.5 million businesses in the US that are designated non-profit. I will have to use the above cases of the BSA and Goodwill Industries as examples because of my intimate knowledge of their practices.

The BSA is one of the largest, conservative, faith-based organizations in the world. They are a corporate juggernaut that thumb their noses at labor laws, commit thievery, act as racists, are admittedly prejudiced, practice misogyny, and misuse child labor for profit. The BSA does not admit children and adults who are atheists, agnostics, women, or openly gay. (Once I had to fire an adult who was gay and had been a scoutmaster for over 20 years) Nor, do they admit the poor or members of races other than whites by means of either not recruiting them, or elimination because of their inability to pay the costs of membership. That doesn’t stop them from counting these people on the rolls to inflate their recruitment numbers. Typically, the District Executive (DE) will add these children to the membership drive for one month during the annual round-up by means of information gained by earlier DEs and events,  and kept by staff for just that purpose. Unfortunately, the children and adults included have no idea they are scouts for a month.

Not only does the BSA use child labor year round to pay their own salaries and provide for the corporation that produces the goods for sale, they cook the books. Much of the money paid by children and their families is diverted ever so quietly into the pockets of the professional district managers and the top management. There is an unwritten code among the District Executives that provides bonuses paid by unwitting families. There are multitudes of scams and outright theft. Every event, from a car derby to a camping trip, has two sets of paperwork. One set is seen by the families, kids and adult scout masters, and the other seen by the District Executive (DE) and the financial executive, who skim off the top. All those kids, families, volunteers, and scoutmasters are simply paying the “professionals” bonuses. The money gained by these methods goes into a “rest and relaxation” budget and is used for luxurious trips to ski resorts, white-water rafting, political minded events, and even trips to strip clubs.

In my opinion, the most egregious fundraising practiced by the BSA is their “fundraising” using events where child labor is used as a means to sell products such as flavored and expensive popcorn to unwitting adults outside the doors of Walmart and grocery stores throughout the entire United States. Cub Scouts, Boy Scouts, Explorers, and their families, spend countless hours peddling goods for the BSA without making a cent. They are rewarded with cheap, Chinese made trinkets. The corporation that produces the goods reaps millions off child labor as does the BSA.

If the misuse of child labor and diversion of collected funds is not enough, one might also question the BSA’s political activities. Regularly, the state politicians make use of connections with the BSA to promote and fund themselves into office. In turn, the BSA councils use the politicians as recruitment tools and rely on them to bring thousands of dollars into the coffers of the BSA council. While I was a DE, the Governor and local politicians aligned themselves with the BSA just long enough to be able to point to their charity work or in the Governor’s case, call attention to himself as the civilian President of the State BSA offices, as elections neared.

The Boy Scouts and the District Executives sponsored and provided labor for a golf tournament for the Governor. His hangers-on and lesser politicians who rode his shoe strings into office came along to be seen with him. The tournament cost the local BSA council nothing and the entities and persons who contributed to the event will never know where their money went and for what. I don’t know, and don’t want to know, where all the donations and payments went. I’m certainly sure the top management and the then Governor of South Carolina know.

The BSA requires its District Executives to provide three money making activities annually. First, and the most obvious, is the annual donation drive. The DE visits families (who have already paid to join the BSA, sell products for the BSA and buy their goods sold by the BSA) to remind them of their need to support the council, which provides the scouting opportunities for them in the first place. Then there are the churches, The United Way, the schools, the corporations, the trusts, the mom and pop stores, veterans’ organizations, the rich and the famous, the poor and the infamous. No one is exempt from this money grab and incredible amounts of money are promised. The executive who brings in the most “promised” money is regaled with trips and a bonus. The competition is fierce and many executives create “promised” donations out of thin air to swell their totals. When collection time comes , if the DE can’t deliver the “promised donation,” then the promised money is a source of shame, begging, political pressure, and convolutions of invention and diversion.

The second and most despised activity required of the DE by the council is to visit schools, churches, civic organizations, and informal gatherings in order to recruit adults and children into the scouting fold. These are potential members and therefore potential profits.  Usually the DE or one of the existing adult scouts gives a speech to the audience telling them the benefits of scouting and the fun they will all have. But this can’t happen unless they pay for the membership, buy the scout uniforms and various patches and take over the work load of the DE. Recruiting adults is the hard part and the most lucrative. They are the ones who end up buying all the scouting equipment, pay for the camp-outs, sell the popcorn, and provide the labor for the council. Usually, the white schools are where the kids join and parents give into the begging of their sons and pay on the spot. Each kid that joins is given a trinket that is dangled in front of them like a carrot on a stick. Depending on how much money is paid in cash, the DE can skim some off and sign up the children and adults to a lesser period of time.

The obscure, rural, poor, and racially diverse membership drives are often at at black churches, and  usually amount to nothing since the costs are high and the opportunities for them are scant. I never once saw a Hispanic or Asian child or adult involved in any scouting activity. They are simply excluded because of language or most likely financial reasons. Despite the lack of racial and ethnic diversity among the scouts, the DE is able to acquire the names and relevant information of the attendees from the “recruiting” events for later use as inflation of their rolls. Not once did I see and African-American, Hispanic, Asian, or poor white kid at any of the events. Once, I did see an African-American troop that basically operated mysteriously, outside the normal channels with the council. They were self-sustaining and very well managed and completely segregated from the white troops. At least they didn’t get set up for the donation squeeze.

The third function of the DE is to provide programs and events for his or her district. Most importantly, the DE is there to collect the money from the scouts and their families to finance the event. From camping trips to parades to civic functions, these elements of scouting are encouraged and arranged by the DE. The labor, development and securing of money is done by volunteers and troops or scoutmasters. When enough funds have been collected to finance the event then the DE collects the money and presents it to the council. As I mentioned above, many DEs skim off the top by producing two sets of paperwork. It’s not unusual for the DE and financial executive to make a few hundred dollars in cash from each event. It is not unusual for DEs to brag about who made the most from an event. When there is an entire council event, the DE divides up the spoils.

I promised to tell how I was fired by the BSA. It was simple enough. After two years of watching all the above practices, I decided to do a little something about the exclusion of the poor and the minorities. After one foundation donated quite a bit of money to the council, an adult volunteer and I used half the money to set up a campaign to recruit and pay for as many of the excluded as I could at a large school event. I believe it would have worked if I hadn’t openly promoted the recruitment at the rural and black schools. So, thankfully, the council president fired me for this transgression, relieving me of my participation in this ethically challenged organization.

This is only an attempt to break down and bring to light the many scams, thefts, misdeeds, and utter indifference to integrity that the BSA brings to the non-profit arena in the US. Their racism, intolerance, and outright misogyny is another question that remains given their popularity and reverence by the public. Scouting is a worldwide phenomenon and a giant profit machine. The US BSA has holdings of over a billion dollars tucked away and a fund of $56 million just to fight molestation suits. Their annual profits are over $300 million and this does not include the immense amount of real property they own. Somehow, I can’t believe that Robert Baden-Powell had all this in mind in 1908.

My education about non-profits was just beginning.

My employment with Goodwill industries was another experience that taught me the value of a person’s labor and the value of that person seen through the eyes of a non-profit.  I was hired immediately when I mentioned that I was disabled. It turned out that the hiring of anyone disabled is used to promote Goodwill as a true and good charity – not to mention they are allowed to pay the disabled less than minimum wage. More on that later.

The first job I had with Goodwill was as a project manager. I had a crew of poor, homeless, disabled minorities that repackaged donated goods for placement in Goodwill stores. Everything seemed fine until we looked at our paychecks. Our hourly wage was less than minimum wage and certainly not enough to live on. I advocated for my crew and soon enough, the temporary employment of my crew was over.  Goodwill required me to fire them. Instead of firing me, I was promoted to a position as Veteran’s Case Manager and given a salary of over $30,000 a year. It was a comfortable job at the time, but my duties were vague and I spent many hours daydreaming.

Veterans would come to me or I would go to the Veteran’s hospital and recruit other disabled veterans to sign up. Then I would attempt to help them find employment and any social services they qualified for at the time. It became endless rounds of denied applications and promised help that never materialized. Eventually, Goodwill would hire some of the disabled veterans for menial tasks in their wide expanse of donation and retail stores. I was mindful of the fact that the disabled were being paid below the minimum wage and that the FLSA allows non-profits to hire disabled workers and pay them sub minimum wages. So, the few that were hired by Goodwill were disabled, poor, and dislocated persons who could legally be paid less than minimum wage. The Goodwill administrators knew all along that exploiting the disabled was legal – and was good business (profitable).

I worked less than a year for Goodwill. After I complained to other employees about the inability to perform my job and the exploitation of the ones that were hired, I found myself alone and on the edge with management. I quit before I could be fired.

Remunerations for Goodwill executives account for more than 30 million dollars annually with six and seven figure salaries, while disabled employees can make less than 5 dollars an hour. Goodwill claims “they are providing a service to the disabled who normally could not find employment”. “Labor groups and disabled Goodwill workers say the FLSA provision is a relic of an earlier time and Congress should change the law to require that all workers, including the disabled, are subject to the minimum wage” (Forbes, 7/30/2013). Reports are out there that many non-profits are using this loophole in the labor law to exploit workers. The Helen Keller Institute was pointed out as providing blind employees to Appleby’s and Barnes and Nobles that paid them at less than four and five dollars an hour. The BSA use child labor to amass huge profits while being protected by the FLSA loopholes that allow non-profits to work children a certain number of hours in “charity” work much like the Girl Scouts who sell cookies.

The labor laws of the US are antiquated and allow non-profits to exploit children, the poor, and the disabled while the CEOs make huge salaries and the corporation as a whole pays its semi-professional and professional employees more than adequately. Both the BSA and Goodwill industries are long established non-profits and huge conglomerates that generate billions of dollars in profits. Their monetary holdings are astronomical and secure behind the Labor Department’s and society’s disdain for the poor, children, minority populations, women, and disabled. This is part of what allows such abuses to continue. Many groups have called for the revision of these exploitative laws but so far the Labor Department has failed to neither move nor even recognize the depression era laws as problems. As it is, non-profits are safe behind their governmental protectors who include congressmen who take campaign donations from the 1.5 million ( 501) agencies and align themselves with them to aid in re-elections. Change is not likely to happen anytime soon and the exploited are not likely to have any relief as long as the “non-profits” make such profits.

JP Miller is a disabled veteran, journalist, and writer who lives in the Outer Banks of North Carolina beside the Atlantic Ocean. He has published short stories and political essays in The Literary Yard, The Southern Cross Review, The Greanville Post, Pravda, Countercurrents, and Cyrano’s Journal.

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