The United States Supreme Court declined to hear an appeal of an ADA case from a famous pizza company, thereby upholding the Ninth Circuit Court of Appeals. The court case revolved around whether the website of the company needed to be ADA compliant. The Ninth Circuit required the pizza company to make its website compliant with the ADA. The plaintiff in the case was visually impaired and couldn’t navigate the company website. The pizza company argued there were many alternative methods of ordering a pizza, ranging from voice activated applications to text messaging. In the end, the court disagreed with this analysis. I can clearly sympathize with the company as this will be an additional operating cost in a very competitive industry. Nevertheless, the digital world is becoming more and more prevalent as a “workplace”. Look at the growth of Amazon as an example. From a purely humanitarian (and now legal) basis, the Supreme Court got this one right.
We Interrupt Our Coverage….
This blog is normally used for commentary on not-for-profit management issues. However, today I am going to make a shameless plug for two of my books, both of which can be found on Amazon:
The Gospel Of James And Other Gems of Eastern Christianity: Pearls Of Great Wisdom From The Eastern Church – August 3, 2019
This is an anthology of my writings for my former parish website and adult education classes. Most Western Christians know extraordinarily little about Eastern Christianity. Very few people understand its vibrant and rich history. This book brings Eastern Christianity alive, discussing a wide range of topics germane to the religious world today.
Living The Eastern Christian Faith: A Guide for Byzantine Christians – July 2, 2019
This is a small workbook useful in a four- week adult education course on Eastern Christianity.
I am also in the process of editing and developing textbooks for management courses in conjunction with a great publisher. More on that later. Stay tuned.
Digital Disaster As Cyber Attacks Spread
As if operating an NFP entity is not tough enough, a whole new challenge has appeared on the scene. Recent coordinated cyber-attacks on over twenty Texas cities show how vulnerable municipal governments and NFP entities can be to ransomware attacks. The targets of these attacks have generally been small rural towns not having the sophistication or budget to secure their information processing systems. Sadly, this description could apply to many smaller NFP entities as well. Put another way, the next round of targets could be your NFP organization. Hospitals have already been targeted, so it is just a matter of time before other NFPs are. This is an appropriate time to make sure your systems are backed up and your disaster recovery plans are up to date. Board members and trustees, it is your responsibility to make sure your organization is protected against these attacks. Could your organization survive such an incursion? How long would it be before business would grind to a halt? How would regulators view a data breach of medical records or the inability to provide services your organization is contracted to perform? These are all questions your executive director needs to provide answers to. Waking up one morning and finding your organization’s systems have been hacked or shut down due to ransomware is not what wise trustees or directors do.
Baltimore
In the middle of the back and forth between the President of the United States and officials from Maryland and Baltimore about the fiscal management of Baltimore, critical issues are not being openly discussed. Three months ago (before the current political nastiness started) I authored an article about the accounting and auditing issues Baltimore had encountered. The article was written from a clinical perspective, analyzing some of the deficiencies in Baltimore’s internal controls. The lack of an appropriate control environment was the gravest. The link to the article is: https://wordpress.com/block-editor/page/mark-koscinski.com/534
Crisis Management in an NFP
The Roman Catholic Diocese of Wheeling-Charleston, West Virginia recently announced its former bishop has been sanctioned by the Vatican. The bishop was accused of sexual and financial misconduct. I will leave the sexual misconduct issues to others, but I do want to look at the financial misconduct issues purely from an NFP management perspective.
As part of the sanctions, the bishop was ordered not to live in the diocese. Effectively, this means he will need to leave the State of West Virginia since the Wheeling-Charleston diocese encompasses the entire state. He has been prohibited from conducting public religious celebrations and will need to make restitution. [1] That sounded good so far, but I was waiting for more.
Any organization facing a crisis needs to do three critical things: fix the problem, prevent the problem from reoccurring, and be transparent. While the Vatican fixed the problem by removing the bishop from office and instituting new internal controls in the diocese there was no discussion of how this particular person was selected to be a bishop, why the Vatican took so long to respond to warnings,[2] and what it is going to do to prevent this from happening again. In short, its response seemed dramatic but lacked essential elements of proper management. Perhaps the Vatican made nal improvements it did not announce. Even so, that would fail the transparency requirement. Constituencies are forgiving but they like to know this won’t reoccur. The bishop’s successor has already been criticized as being a good man but not the right person for the job.[3] I can only wish him luck.
Lest anyone should think this is an isolated incident, the Vatican also reinstalled a major archbishop (effectively equivalent to an Eastern Orthodox patriarch) in India who also had been accused of financial mismanagement. In this case, the major archbishop entered into a real estate transaction that resulted in an inexplicable loss. There were no reasons given what the result of the Vatican investigation was. As a result, there have been major protests against his reinstatement. [4] All this could have been avoided if the Vatican followed simple principles of management.
Not-For-Profits everywhere,
let this be a lesson. Remember:
fix the problem, make sure it doesn’t reoccur, and be transparent about
how it occurred.
[1] https://www.americamagazine.org/faith/2019/07/19/pope-francis-issues-disciplinary-measures-bishop-bransfield Accessed July 25,
[2] https://www.americamagazine.org/faith/2019/06/12/explainer-how-could-bishop-bransfield-misuse-funds-years-without-raising-red-flags Accessed July 26, 2019
[3] http://whispersintheloggia.blogspot.com/ Accessed July 25, 2019
[4] https://cruxnow.com/church-in-asia/2019/07/24/catholic-priests-in-india-protest-cardinals-return/ Accessed July 21, 2019
The Power to Regulate is the Power to Destroy
Lyft Inc. (Lyft or the Company) has been on the receiving end of several lawsuits lately. As its stock price has plunged after its initial public offering (IPO) a class action lawsuit has accused the Company of securities fraud. This lawsuit has garnered far more attention than the second, the subject of this blog. The second lawsuit challenged Lyft’s compliance with the American Disabilities Act (ADA). In response to this lawsuit, Lyft had denied it is subject to the ADA. Its court filings claim the Company is really a technology and not a transportation company. Critics of Lyft have argued it could subsidize its drivers to make their vehicles ADA compliant, or it could find more driver who already own ADA compliant vehicles. Both suggestions are more easily said than done.
Lyft has lost approximately $2.0 billion in the last three years. It lost a further $1.1 billion in the first quarter of 2019. To put this in perspective, the IPO raised $2.3 billion. You do not need an MBA to figure out the Company’s ability to take any action is severely constrained in the short run, especially since its IPO is being challenged. The prospectus said the Company expects loses to intensify as it tries to bring new products to market.
While I am a proponent of the ADA, I am reminded of the famous quote from Daniel Webster and Chief Justice John Marshall, “the power to tax involves the power to destroy”. In modern America, we all need to understand the power to regulate is also involves the power to destroy. I am in no way an expert in this industry, but I do understand the economic concept of the short and long run. I hope the ADA matter can be settled in a way that does not unduly burden the company in its fight for survival in the short run while providing for the ADA in the long run. That would be a win-win situation.
Congratulations to Stitches!
I have worked at several charitable organizations. Perhaps the one I have genuinely enjoyed the most is being faculty advisor to Stitches, the student craft and crochet club at Moravian College. One of my students asked if I would be the advisor at the beginning of the 2018/2019 academic year. I knew extraordinarily little about crocheting, so I was surprised when I was asked.
Not knowing what to expect, I showed up at the first meeting. I was surprised with what I found. The club members meet once a week to crochet articles for a hobby. The students crocheted many hats and scarves for residents of a local women’s shelter. This is a wonderful thing in itself, but there is another significant benefit of being a member of Stitches.
After a little time to chat at the beginning of the meeting, the students get down to work. A restful quiet set in, rarely punctuated with conversation. Watching the students create beautiful garments of vibrant color, I was reminded how much the world misses and needs such periods of quiet. We are constantly bombarded with noise and outside stimuli. Having time like this is a healthy break from the busy routine of our lives.
The Moravian Chapter of Omicron Delta Kappa, the national leadership honor society nominated Stitches for the Quiet Commitment Award this year. This was particularly apropos for Stitches. Congratulations to the officers and members of Stitches! I am proud to work with you, and I look forward to next year.
I want to give a special thanks to Susan Hornak, who donated crocheted blankets and yarn throughout the year to the club. A special thanks goes to Shelby Lawson of Lawson Accessories, who provided an internship to one of the students and took an interest in the club. You both made a difference.
Disabilities and Websites
A disabled person recently sued Playboy because its website did not conform to ADA requirements. Many people chuckled when they heard this. I too used to chuckle when I heard things like this. Years ago, I was an executive officer at a large bank. I chided the head of the branch network because the drive-up ATM machines had braille plaques installed. Making light of the situation, I said “Don, why on earth should we have braille at ATM windows? Blind people don’t drive.” Don looked at me sorrowfully and said, “Mark, suppose a blind person is sitting in the backseat on the driver’s side?” My condescending and insensitive attempt at humor comment left my mouth like a major league baseball pitcher’s 95 mile per hour fastball and came back to me like a 120 mile per hour line drive off the bat of a slugger. Hopefully, my understanding of and my sensitivity to these issues has significantly improved over the years.
The internet is becoming increasingly critical to daily life. Think how much we use it. We pay our bills with it. Our children do their homework with it. Those are only two small examples of how the internet has changed our lives. There are elements of society that have been denied this life changing tool. For example, courts have ruled blanket internet bans as a parole condition is a violation of constitutional rights. The New Jersey State Supreme Court ruled blanket bans interfere with a necessary tool for living. Even as early as 2010, the Pew Research Center reported 82% of all Americans used the internet to access governmental services and information in one year. Justice Kagan of the U.S. Supreme Court noted the use of Twitter by the current president of the United States. Anyone without the internet arguably is being denied participation in the political process because his or her information is being limited.
The internet has been a game changer for the those with disabilities. You can shop by the internet now. You can video conference with your friends and relatives. You can even earn a college degree online if you have the time and inclination. The feeling of being completely isolated from the world if you have a mobility disability can be somewhat alleviated by internet usage.
The Center for Disease Control reports there are 61 million disabled people in the United States. This equates to one in every four adults. Of these 13.7% of all adults have difficulty walking or climbing stairs. 6.8% of all adults have problems doing chores on their own. 5.9% have difficulty hearing. In short, businesses that design their websites not considering the disabled are not taking advantage of a vast untapped market. Businesses should look critically at their websites to make access for the disabled a major priority. Who is not looking to grow their sales and businesses? Ignoring this segment of the marketplace seems foolhardy. Capitalism and “doing the right thing” are clearly aligned on this issue.
Sources (Accessed May 21, 2019):
https://www.cdc.gov/ncbddd/disabilityandhealth/infographic-disability-impacts-all.html
Americans with Disabilities Act (ADA) and Web Accessibility Requirements for Video
https://www.nj.com/politics/2017/03/nj_supreme_court_tosses_total_internet_ban_for_sex.html
https://www.reuters.com/article/us-usa-court-socialmedia-idUSKBN19A1ZB
It Can’t Happen to Us, Can It?
Cybersecurity has become a critical issue for all organizations. A few examples can underscore the just how serious this threat has become. The military has set up the Cyber Command, a unified combatant command to defend the United States against cyberattacks from foreign powers. The Securities and Exchange Commission has also taken great interest in this area. Public companies are required to report any material breaches of their critical information systems, analyzing the legal, financial and reputational consequences of such actions.
Somehow, the message about this threat has not filtered down to some governmental entities and not-for-profit (NFP) organizations. An amazing example of poor internal controls is unfolding in Baltimore, Maryland. As this blog is being written, the city’s information systems have been held hostage for the last nine days. There doesn’t seem to be any end in sight to the problem either. The city’s email and critical billing and payment systems are at a standstill. Baltimore has been reduced to receiving checks as payment. One can only imagine the accounting nightmare this will cause after everything is sorted out.
What is even more amazing is the city suffered a previous cyberattack. Chillingly, that attack disabled the 911 system over a weekend period, putting people’s lives in danger. The city had to revert back to manual processing of 911 calls. One would have thought this would have been a clear warning about the dangers of the situation.
Many NFPs are also in the same situation. They don’t understand or don’t have the resources to take preventive action. Even worse, some stick their heads in the sand and say they are too small to warrant attention from hackers. Nothing could be further from the truth. The information systems of one of my clients, a small church, was hacked with ransomware. Church management wisely chose not to pay the ransom and proceeded to restore their information systems. Sadly, not only was there inadequate protection against hacking, but there was no backup. They were forced to redo all transactions for the year. Fortunately, the volume of transactions was not immense, and the church was able to recreate its records. Yet, it took a lot of effort that could have been deployed elsewhere. After all resources at most NFPs are in short supply.
Cyberattacks on governmental agencies and NFPs are on the rise. Is another catastrophe such as what happened in Baltimore required for everyone to take notice of this threat?
Congratulations MOCEANS CIL!
I would like to congratulation MOCEANS CIL (MOCEANS) on holding its Annual Meeting on May 16 and the election of new directors. The organization has made incredible strides in the last year and is on its way to another successful year under its current leadership.
Congratulations is also due to the organization for another gala event held in April 2019. For more information about the gala, and the possibility of donating or volunteering for a worthy cause, please see the MOCEANs website at http://www.moceanscil.org. This is the second year the gala has been held. It is a new venture to raise community awareness of MOCEANS and to raise unencumbered funds for the organization.
MOCEANS, like many other not-for-profit organizations receives grant money from the federal and state governments. In the “fee for service” environment, government agencies limit the amount an organization can charge for its services. Citizens will appreciate the parsimonious attitudes these agencies espouse, but it does make the delivery of services by NFPs that much more difficult. It always seems resources and funds are in short supply at an NFP. This is why fundraising, in whatever form, is critical to the success of an NFP. Hopefully, events like the gala will continue to grow. Contributions to MOCEANS tax deductible. Please consider donating to a worthy cause. Information about donations is available at http://www.moceanscil.org.
Mark Koscinski CPA D.Litt. 