Posted by: Martin Fox | May 2, 2011

Three Cups of Tea fraud impact on NGO’s

Unfortunately, the Greg Mortenson (Three Cups of Tea) fraud is impacting the nonprofits working in the developing world – impacting villagers who need the help the most. This article is a cross-post from the Wall Street Journal.

Martin Fox with the Center for Global Leadership – accelerating the global ripple.

The Big Spill Over ‘Three Cups of Tea’
Nonprofits working in the developing world are now under intense scrutiny; a revamp in charity ratings


Beth-Ann Kutchma
Rye Barcott has found it harder to raise money for his work in Kenya after questions were raised about author Greg Mortenson.

Former Marine Capt. Rye Barcott heads up a grass-roots nonprofit to help slum dwellers in Kenya. Like other charismatic do-gooders with an interesting story to tell, he has written a memoir to promote his charity and the idea of grass-roots development work. Late last month, he kicked off a 26-city book tour, visiting stores, campuses, businesses and churches as the launch of an ambitious effort to expand the donor base for his group, Carolina for Kibera, which runs a health clinic, a soccer program and other community services in Nairobi and is based in Chapel Hill, N.C.

Mr. Barcott is following a template fashioned by a man whom he once considered a hero, Greg Mortenson, author of the best-selling memoir “Three Cups of Tea” and the head of a $20 million-a-year charity for schools in Pakistan and Afghanistan. Mr. Barcott now considers Mr. Mortenson an unfortunate liability.

Instead of using the book tour to just celebrate Carolina for Kibera and its 10th anniversary, Mr. Barcott finds himself questioned at many appearances about allegations that Mr. Mortenson’s memoir contains false passages and that Mr. Mortenson’s charity has mishandled millions in donations. Many people are scrutinizing Mr. Barcott’s organization as never before. He worries that potential funders will shy away.

“It alters the conversation in a way that is not helpful,” said Mr. Barcott.

The questions over Mr. Mortenson and his charity, the Central Asia Institute, first arose on the television program “60 Minutes” two weeks ago. “A lot of it we feel is unfair and innuendo,” said Anne Beyersdorfer, a spokeswoman for the institute. “Everything is in good order,” she said of the organization’s finances.

Associated Press
Author Greg Mortenson (left)

Grass-roots nonprofits across the country now find themselves under intense scrutiny because of the Mortenson scandal. Many are considering going to new lengths to demonstrate to potential donors that they are on the up-and-up. All are bracing for an impact on giving. Many foundations and wealthy donors now are cautious because of “reputational risk” if they give to an organization that falters.

The scandal is the talk of the nonprofit community—though many won’t talk about it on the record. More extensive auditing is likely to result, according to Jim Zoiklowski, founder and president of BuildOn, a nonprofit that runs afterschool programs in American cities and builds schools abroad.

“Anything like this out there in the media can shake stakeholder confidence,” he said. “It’s going to elevate the scrutiny, elevate the expectations.”

Several groups that rate charities are rethinking the way they assess organizations, and others are working hard to get the word out about their rankings. Charity Navigator, one of the largest charity-watch sites, gave Mr. Mortenson’s institute four stars—its highest rating—but now has a large “donor warning” label in red for the group, with links to the recent stories.

Charity Navigator, which currently rates about 5,500 charities, is “in the midst of revamping our rating system,” said president Ken Berger. The new approach, set to roll out in July, will look not just at financial information but at a group’s performance in relation to its objectives, he said. Applying the new test to the Central Asia Institute, he found that instead of four stars, it received zero.

In recent years, the Better Business Bureau’s Wise Giving Alliance, which reports on about 1,300 charities, has not given the Central Asia Institute a passing grade, because the group did not provide all the financial and other information the Alliance had requested, said president H. Art Taylor. But the persistent problem has simply been that “not enough people check charities out before they give money,” he said.

Mr. Barcott’s group, which is affiliated with the University of North Carolina, has audits every year in both the United States and Kenya, he said. Its financial reports, going back to 2002, are posted on its website. The group has won large donations from the Bill and Melinda Gates Foundation, Nike and others, and has seen donations rise from about $47,000 in 2002 to just under $1 million last year.

Yet its track record is overshadowed, at least for now, by the Mortenson saga. Some people on Mr. Barcott’s tour have questioned Carolina for Kibera’s finances, others its programs. Some have questioned the veracity of Mr. Barcott’s memoir, “It Happened on the Way to War.”

“I have no doubt about every detail in the book,” he said.

Public skepticism was an undercurrent as Mr. Barcott’s tour swung through the South this week. People at readings and talks asked him about the scandal, and giving was down. At a fund-raiser Monday night in a high-rise club overlooking Atlanta’s posh Buckhead neighborhood, Mr. Barcott gave an impassioned talk about the charity and showed slides of slum life. Few in the wealthy crowd of about 70 people gave more than $1,000, said Mr. Barcott. A man told him that he had read and promoted Mr. Mortenson’s book and that now he felt ashamed.

On Wednesday, Mr. Barcott flew to Louisville, Ky. At a meeting with college students, he was questioned by Army Lt. Col. Tarpon Wiseman, a professor of military science at the University of Louisville. The lieutenant colonel had been a big fan of “Three Cups of Tea” and had recommended it to many of his cadets. Now angry with Mr. Mortenson, Lt. Col. Wiseman said he became frustrated with Mr. Barcott’s book, because the first 50 pages reminded him of Mr. Mortenson.

“I looked him directly in the eye and said, ‘Is this all true?'” Lt. Col. Wiseman said he asked Mr. Barcott.

Mr. Barcott insisted it was. Mr. Barcott and others working in nonprofits are going to have to expect this kind of questioning as part of how they raise money, Lt. Col. Wiseman said.

“That’s probably just the landscape he is going to have to endure from now on,” he said.

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