Season 2, Episode 9: Ministry mistakes

REAGAN_STATE OF THE UNION
STATE OF THE UNION CHEERING, APPLAUSE, GAVEL

Members of the Congress, I have the high privilege and distinct honor of presenting to you, and wishing to him a happy birthday, the President of the United States. [APPLAUSE]

SARAH SCHWEINSBERG, REPORTER: February 6th, 1985. Ronald Reagan had been sworn in for a second term just two weeks before. At 9 p.m., he addressed the crowd gathered in the legislative chamber.

REAGAN_STATE OF THE UNION
REAGAN [3:15] I come before you to report on the state of our Union.

ANNA JOHANSEN BROWN, REPORTER: Part of Reagan’s speech focused on the role of volunteers in communities, and how they contributed to American society. And at the end of his 40-minute address, he highlighted one woman’s work.

REAGAN_NOW THERE IS SOMEONE
REAGAN [37:15] Now, there’s someone else here tonight, born 79 years ago. She lives in the inner city, where she cares for infants born of mothers who are heroin addicts.

SS: Her name was Clara Hale. But people called her “Mother Hale.” One senator described her as “magical” or having a “saint-like quality.” In 1969, she started a home for infants born already addicted to drugs.

REAGAN_NOW THERE IS SOMEONE
REAGAN She helps them with love. Go to her house some night, and maybe you'll see her silhouette against the window as she walks the floor talking softly, soothing a child in her arms. Mother Hale of Harlem, and she, too, is an American hero.

AJB: Hale House became a haven for abandoned children.

NBC THEME
[0:01-0:06] Theme

AJB: In 1985, NBC’s Bob Dotson featured Clara Hale in “The American Story.”

HALE_HELLO PRECIOUS
DOTSON [0:56]

HALE: Hello precious, hello angel.

DOTSON: Hundreds of such children have been saved by Clara Hale, a woman who faces life with antique courage.

HALE: All of them don’t have to die, because some of them have the determination to live. I’m just glad that I’m able to do something for them.

MUSIC - Fluorescence

AJB: For decades, Hale’s name was legendary. Then, it became infamous.

I’m Anna Johansen Brown.

SS: I’m Sarah Schweinsberg.

AJB: And this is Effective Compassion.

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Ad spot

SS: This episode is about non-profits that take a wrong turn … and the lessons we can learn about accountability, transparency, and the value of help that has an expiration date.

SS: Hale House won applause from politicians and celebrities alike. In the 1990s, singer Karyn White came to visit the kids there.

WHITE_SINGING
SINGING

WHITE_INTERVIEW
White - interview [0:17] Being a mother really makes me love more, care more, and just feel like every child is beautiful and I want to help in any way I can...These children here are so precious, so innocent and they’ve started out, they’ve had a rough start.

AJB: In the 60s and 70s, people didn’t realize just how many consequences there were for the unborn children of drug addicts. It wasn’t mainstream information, that kids would be born with physical and psychological consequences because of their parents’ behavior. So Hale House was a bit countercultural.

Clara Hale cared for the infants as they went through withdrawal, and the fevers, trembling, and vomiting that came along with it. She hired psychologists, chiropractors, and therapists to help the children as they grew up.

SS: Over the next 20 years, Clara Hale cared for more than 800 children. She died in 1992 at the age of 87. That’s when her daughter, Lorraine, took over Hale House.

MUSIC - Upward Bound

AJB: Lorraine Hale and her husband, Jesse DeVore, operated Hale House for 10 years. And almost at once, people started to complain.

SS: In 2001, reports began to circulate that Hale House was neglecting children. It wasn’t licensed to house that many kids, and it didn’t have enough staff to take care of them. Some mothers said they hadn’t been able to visit their kids for months on end.

Then investigators started looking into the organization’s financials.

AJB: Jesse DeVore had written a letter to donors asking for funds. He said if the organization didn’t get more cash, the children would be without food and diapers. But at the same time he wrote that letter...Hale House had $10 million dollars in an investment account.

Employees reported that at one point, they overheard DeVore calling the children “cash cows.”

SS: Lorraine Hale began diverting checks marked “to care for the children” into a personal bank account. She invented fake board members and used them to authorize fake expenses. She used thousands of dollars to bankroll DeVore’s failing theater company and install a jacuzzi at their home.

AJB: All told, Hale and DeVore embezzled more than $1.7 million dollars.

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AJB: In 2001, prosecutors indicted the two on 72 counts of fraud and booted them from the organization. They pleaded guilty and promised to pay back hundreds of thousands of dollars to the charity in return for no jail time.

SS: Lorraine Hale died in 2013 at age 86. Hale House limped along under a new name for a few years. It eventually faded into an educational center run by a different nonprofit.

So … what went wrong?

FIKKERT_THE CHARACTER
FIKKERT [0:57] The character of the leader does affect the organization.

AJB: This is Brian Fikkert, founder of the Chalmers Center and author of When Helping Hurts. We talked to him a couple of episodes ago. As the leader of a nonprofit, he has a front row seat to the traps that can so easily trip up those who head ministries and nonprofits. And on one level … he says we shouldn’t be surprised.

FIKKERT_WHEN IT SAYS
FIKKERT [13:37] When it says in Genesis chapter three that the fall happened, that we would embrace that that really did happen. And that the fall has impacted every square inch of the cosmos, including our individual hearts.

AJB: That means leaders, too.

KIRBYJON_NUMBERS 6
KIRBYJON CALDWELL [26:07] Numbers 6 and 11, God says circle the city. And when they marched around the 7th time on the 7th day, God said shout! [shouting] And watch this, as soon as they shouted...the Bible says the walls of Jericho came tumbling down! [cheering]

SS: Kirbyjon Caldwell pastored a megachurch in Houston: Windsor Village United Methodist Church. It was the denomination’s largest church with more than 18,000 members. Caldwell was a spiritual adviser to presidents George W. Bush and Barack Obama. He spoke at prayer meetings and prayed at inaugurations.

KIRBYJON_BUSH PRAYER
CALDWELL Bush prayer [0:50]

SS: But in 2018, he was accused of selling fake Chinese bonds to investors. Three and a half million dollars worth. The bonds were real, but they were antiques, not recognized by China’s current government and so not worth the fortune Caldwell promised.

AJB: For years, Caldwell maintained his innocence. In interviews…

KIRBYJON_THE BONDS
AUDIO [1:33] The bonds are absolutely legitimate, I have proof of that.

AJB: ...and from the pulpit. Here’s a clip from his 2018 Easter Sunday sermon.

KIRBYJON_EASTER SERVICE
AUDIO [0:00] So as you know, I’ve been in the news lately. [laughter]

5:00 Just for the record, from my mouth to your ears, I am not guilty.

AJB: Church members believed him wholeheartedly.

KIRBYJON_HE IS A MAN OF INTEGRITY
AUDIO [1:59] He is a man of integrity. He is a man of integrity and we believe that the truth will come out.

I don’t believe those allegations are true. I know Kirbyjon Caldwell, he is an honest, ethical man.

SS: But in March 2020, as the evidence piled up, Caldwell pleaded guilty to wire fraud and defrauding investors. He was sentenced to six years in prison.

MUSIC - How It’s Made

AJB: So what do we do when trusted leaders fall? More importantly, how can we avoid being taken in by nonprofits or leaders that might not be so trustworthy? Brian Fikkert says we first need the right expectations.

FIKKERT_SO OFTEN WE SET UP
FIKKERT [14:05] So often we we set up our leaders on a pedestal, we we treat them like they are uniquely sanctified are something that sin doesn't happen to them. And that puts them into sort of a quandary because they can't admit weakness. They can't say I'm struggling with X, Y, or Z because they're expected kind of problem, this facade of it's all okay.

SS: Ministries need to give leaders the freedom to admit fault.

FIKKERT_WE HAVE GOT TO CREATE
FIKKERT [14:49] We've got to create that kind of environment first of all, and then secondly, look for signs is this person resting is this person resting on weekends, is there a Sabbath rest as part of their rhythm? I know most leaders struggle with being a workaholic. And in it, I struggle with that, quite frankly...And so you look for signs, I have some staff right now who are looking at me and saying, Brian...Are you resting properly? We see that you're under a lot of stress. Are you exercising? Are you spending time in the word? Are you going for a walk?...And so I've got people around me watching me. And that's what our leaders need, are people watching them. And then accountability partners, who is getting in your face and asking you what's going on.

SS: Leaders need board members and accountability partners who don’t just do whatever the leader says. They need to be independent and confident enough to challenge strong, charismatic leaders. Because without that, leaders slip.

AJB: There are a lot of temptations and pitfalls when you’re in charge of an organization. A lot of ways to fudge things, especially when it comes to finances.

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For example, you’ve probably heard the “100 percent” promise before. That’s when a nonprofit says that 100 percent of all donations go straight to helping people...so if you give them money, it won’t be used for administrative costs, or fundraising campaigns, or executive salaries.

SS: Smile Train was one of the first nonprofits to popularize that phrase. It started in 1999.

SMILE TRAIN AD
AUDIO [0:25] Using the teach a man to fish model, we empower local doctors to perform cleft lip and palate repair surgery in their communities.

SS: The nonprofit has performed more than 1 million surgeries for people all over the world. Doctors repair cleft lips and palates, helping children eat, speak, and breathe more easily. Smile Train is still wildly popular, and it actually gets top ratings from multiple charity trackers. So it is doing a lot of things right. But it still ran into trouble.

AJB: Right from the get-go, Smile Train promised that 100 percent of donations would go to help people. None of those funds would be used for administrative costs. But in its early years, Smile Train spent 34 percent of its cash budget on overhead costs. How is that possible? Well, let’s talk financials.

MUSIC - Dramedy Zoology

SS: Nonprofits get donations all the time. Some have no strings attached: Here’s a check, you can use it for whatever purpose you choose. Those are unrestricted funds. Other donations have stipulations. The person giving the money wants it used for a specific purpose, a specific part of the ministry. Those are restricted funds … and they can’t be used for just anything.

AJB: In 2005, Smile Train performed a fiscal audit. The numbers showed that 99 percent of its funds were unrestricted. The people who gave that money hadn’t set a specific purpose for it. So, according to Smile Train’s philosophy of “100% of donations go directly to helping people,” all of that money should have gone to doctors and kids. None of it should have been used for overhead costs.

SS: But in 2006, Smile Train did some money juggling. It shifted $51 million dollars into a temporarily restricted fund, and said that money had been earmarked to cover overhead costs all along. It insisted the donors who gave those funds wanted them used for administration and salary and fundraising, and Smile Train just hadn’t classified the money correctly.

AJB: But there’s no written record of those donors saying that. In fact, one of the donors has the money listed as going to Smile Train’s “general program” … not overhead costs.

Smile Train’s co-founder, Brian Mullaney, later left the organization after a flurry of controversy and accusations of financial mismanagement.

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SS: At this point, you might be thinking...okay, so people who have lots of money are prone to fraud. But Brain Fikkert says it’s not just the well-off.

FIKKERT_I DO THINK
FIKKERT [6:34] I do think that the magnitude of the ministry can add to the problem. But my word, we're all prone to sin, I don't, I don't need big things to happen for me to be prone to sin, I'm pretty good at sinning even in small, small situations.

AJB: You know what they say about the love of money.

SS: Many high-profile leaders of massive organizations have fallen because of that temptation. It’s a pitfall that snares leaders at all levels and people of all kinds.

AJB: But there’s another major theme that crops up in cautionary tales like these. Many organizations fall because of sexual indiscretion.

In 2018, the anti-poverty charity Oxfam came under fire for just that. The group had sent aid workers to Haiti after the 2010 earthquake that devastated the island.

MUSIC - Nose to the Grind Stone

SS: It took years for the reports to surface: Nine Oxfam staff members had been soliciting earthquake survivors for sexual acts.

HAITIAN SOT
AUDIO [0:11] speaking not English

SS: Haiti banned the entire organization from operating in the country. Celebrities who once endorsed Oxfam pulled their support. The UK threatened to pull $50 million dollars in funding. Oxfam had to lay off staff to cope with the drop in donor support. And organization officials apologized left and right.

OXFAM_FROM THE BOTTOM OF MY HEART
AUDIO From the bottom of my heart, forgive us. Forgive Oxfam…[1:18] And I’m really inviting anyone who has been a victim of abuse by anyone in our organization to come forward...I want them to come forward and for justice to be done for them.

OXFAM_I AM DEEPLY ASHAMED
AUDIO [0:01] I’m deeply ashamed about Oxfam’s behavior that everybody, the 25,000 staff and volunteers, are compromised by this...and to everybody I do apologize.

AJB: The Oxfam scandal centered on just a small handful of people. That’s true of many cases like this, where the whole organization gets pulled down because of the failings of a few. And sometimes we might wonder...aren’t these just examples of personal, individual failings?

SS: That’s part of the story. But it’s not the whole story. In Oxfam’s case, reports began to surface that the nonprofit knew about the abuse, but, at best, failed to report it properly...and at worst, intentionally covered it up.

AJB: Brian Fikkert says cases like these are an indication of systemic failure...a flawed organizational structure and culture that enabled those actions.

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FIKKERT_THE PROBLEM IS THAT
FIKKERT [1:01] The problem is that many organizations don't have proper accountability measures in place. And...oftentimes, our organizations tend to separate our work lives from our personal lives, when in fact, in reality, they're all connected, right? And what's happening in our families, spills over into our work.

AJB: He says board members need to get in the leaders’ faces, ask questions, and look at the whole picture.

FIKKERT_WHAT IS HAPPENING YOUR MARRIAGE
FIKKERT [4:58] What's happening your marriage What's happened? Your family? What's happened your spiritual life? How can we support you? boards don't do a great job at that. But it's absolutely essential for the leader to thrive and then for the whole organization to thrive.

SS: Remember back in Episode One? We talked about organizational structure, how the systems you put in place and the vision you set affect the entire nonprofit. Ministries need good structure and accountability to avoid personal failings...and they also need good vision and practical action steps.

AJB: That affects a nonprofit’s daily operations. An organization may be healthy, transparent, and accountable...but it also needs to put its resources in the right place.

Some organizations see a legitimate need and want to help with that. But sometimes they don’t pick the best strategy to get there.

MUSIC - Pathfinder

ABC_TOM’S SHOES

AUDIO [0:00] Finally tonight, our person of the week. He’s built a multi million dollar business by getting people to buy his shoes. And now he’s trying to change the world by giving them away and getting celebrities like J-Lo to go barefoot.

SS: That’s audio from an ABC report in 2011, talking about Toms. If you’ve ever paid attention to shoes before, you’ve probably seen a pair of these. Everybody loves Toms: The simple canvas slip-on shoes that come in every color and pattern known to man.

AJB: Contrary to what you might expect, they were not invented by a guy named Tom. Nope, his name is Blake Mycoskie. He used to be on the reality TV show the Amazing Race. On a polo trip to Argentina, he saw dozens of kids without shoes. If their feet got cut or scraped, they could easily get infected. Or they could get parasites like hookworms.

TOMS_I WANTED TO HELP THESE KIDS
AUDIO 0:35 I wanted to help these kids get shoes, and I didn’t want to make it hard to keep track of. So I said we’ll sell a pair and give a pair.

AJB: He called it “shoes for tomorrow.” Hence...Tom’s.

TOMS_WHEN YOU ARE PUTTING THAT SHOE
AUDIO 1:00 When you’re putting that shoe on a child’s foot, it’s a really personal intimate experience that you’re sharing with that child. Seeing the joy on these children’s faces really touched me.

SS: Mycoskie designated April 8th as “One Day Without Shoes.” Celebrities like Jennifer Lopez, the Jonas brothers, and Kristen Bell jumped on board.

TOMS_I AM GOING BAREFOOT
AUDIO [0:00] I’m going barefoot for one day without shoes...to raise awareness about the impact a simple pair of shoes can have on a child’s life.

SS: People like the idea that they can buy something for themselves to benefit other people. It’s compelling. But the shoe-drop model has a number of drawbacks.

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AJB: First, it’s a handout model. And handouts tend to create dependencies. If someone is receiving material goods without any strings attached, they may come to expect those donations and build an unhealthy reliance on them.

SS: Second, it doesn’t get to the main question of why these children don’t have shoes in the first place. It’s fixing a symptom, but not the root cause. Here’s a business owner in Uganda, Teddy Ruge, talking about Toms in Africa.

TOMS_SHOES ARE THE LEAST
AUDIO 2:36 Shoes is the least of our worries, really guys. We’re worried about malaria, we’re worried about getting jobs, we’re just worried about having electricity in the village...What it does is actually put people who are creating shoes right out of business.

AJB: One study published on the Social Science Research Network showed that used clothing donations had a negative impact on the clothing industry in Africa. Over a 20 year period, the donations were responsible for a 50 percent drop in employment in that industry.

Giving things away is sometimes necessary. But it shouldn’t be a default strategy.

SS: And the buy-one, give-one model isn’t a bad idea. It just needs a few safeguards. Brian Fikkert actually likes the concept.

FIKKERT_AND SO I DO NOT HAVE
FIKKERT [7:45] And so I don't have so much a problem with that sort of buy one get one thing, I think the issue is what are you getting?

[8:28] What is the thing that you're releasing out into the field? Are you releasing just some material resource that's going to be hurled out there? Or are you actually releasing something that's going to be empowering, relational...

[7:52] And so, for example, what if you bought a pair of shoes, and that released money to pay for highly relational staff who are walking hand in hand, with low income people, I'd be all in on that.

MUSIC - Everyday People

AJB: After a couple of years in operation, Toms started to run into some problems with its iconic shoes. First, they were easy to duplicate. Other companies created knockoffs--like the Skechers brand, “Bobs.” Skechers donated two pairs of shoes for each one sold.

People started to wonder if Toms shoes were worth the $50 to $80 dollar price tag...or if the donated shoes were having a real impact. So Toms hired some researchers to do an impact evaluation study.

SS: The researchers focused on 1500 children in rural El Salvador. They wanted to test the impact of Toms shoes on the economy, on school attendance, health, and aid dependency. In other words, did the shoe donations hurt local shoe sellers? Did they help the kids stay healthy and walk to school more consistently, and did they increase the kids’ dependence on outside aid?

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AJB: When the researchers studied the impact of shoe donations on local shoe vendors, they concluded that there was a negative impact on local shoe sales, but overall, it was actually pretty small: Local shoe vendors sold one fewer pair of shoes for every 20 that were donated.

SS: When the researchers studied the impact of Toms shoes on the kids, they found that all the children loved the shoes and wore them a lot. And there was at least a little evidence that they spent more time outside after getting the shoes...instead of watching TV.

AJB: But overall, there was no impact on the childrens’ physical well being. The shoes didn’t benefit their overall health, or their foot health like Toms hoped. And another not-so-great result: The kids who did receive the shoes were significantly more likely to state that “outsiders should provide for the needs of my family,” instead of answering “my family should provide for its own needs.”

SS: In response to the study, Toms did decide to make some changes. To try to cut down on dependency, the company began giving shoes to kids as rewards for school attendance and performance. And over the years, Toms has actually moved away from the buy-one, give-one model. In 2019, it announced a new system: For every $3 dollars the company makes, it gives $1 dollar away. It might be less concrete, but it gives it flexibility to support a whole host of causes the company wants to get behind, like distributing clean water and eyeglasses, and decreasing bullying and gun violence.

MUSIC

AJB: At the end of the day, there’s no silver bullet, no surefire way to fix this problem or that problem. Organizations are free to experiment, create new strategies, try new things. But it’s also important to keep an eye on their accountability...both for the organization’s staff and financials.

SS: And there are a few core principles that generally lead to effective strategies, strategies that break cycles of poverty and need. Donors or volunteers or outside observers should keep those principles in mind when getting involved with a ministry. Here’s how Brian Fikkert puts it.

FIKKERT_AND SO THROUGH
FIKKERT [17:31] And so through that lens, you can start to look at ministries and say, are they doing that? Are they discovering the assets and the gifts of people who are materially poor? Or are they simply dumping material resources into low income villages around the world? You can start to look at, are they including the poorest full participants in their own improvement? Are they simply imposing strategies from the outside?...And so there are there’s principles...that can form the lenses through which you start to examine ministries and start to say, do I see this happening here?

AJB: Next time on Effective Compassion, we’ll visit a few ministries working with the homeless...but using very different philosophies.

MEGHAN POWELL-FILLER [8:02] The ultimate goal is to move them from shelter into permanent housing as quickly as possible.

SS: That’s next time on Effective Compassion. I’m Sarah Schweinsberg…

AJB: And I’m Anna Johansen Brown. Effective Compassion is produced by the creative team at WORLD Radio. Our producer is Leigh Jones, our audio editor is Paul Butler, and our podcast engineer is Rich Roszel.

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