Moving Our Money

While the official Bank Transfer Day has come and gone, it took our household a while to find time to move our accounts out of a big bank and into a small, more accountable institution.  Brooklynites have several choices for community banks and credit unions and it’s worth exploring your options.

We ended up joining People’s Alliance FCU, which allows membership to anybody who lives in Brooklyn (among others).   The woman who helped us open accounts said that they’ve been getting a lot of new business in the last few weeks, which was great to hear.

If like us you didn’t quite manage to dump the big banks by Nov. 5, take heart – it’s always a good time to move your money!

Big Bucks and OWS Nonprofit Inc.

Woke up the other day to a WNYC story about OWS’s finances and the headaches that come along with collecting bigger pots of money for social good.

It will be important for OWS to keep its eye on the developing media narratives about how the movement deals with it’s money.  Accusations of financial impropriety or corruption would be devastating to the movement, so the application of direct participation and total transparency in financial matters is absolutely key.

However, another idea about OWS’ financial management that seems to be getting some traction is the creation of a 501c3 nonprofit entity.  From the WNYC transcript:

Perhaps the most telling aspect of the protest’s evolution is the debate over whether Occupy Wall Street should apply for 501(c)(3) status and officially become a nonprofit. Wylie Stecklow, an attorney working with the protesters, is examining the issue with other lawyers. One advantage of nonprofit status, he said, would be that it wouldn’t lose the 7 percent of each donation that currently goes to the Alliance for Global Justice, the nonprofit in DC that acts as the occupation’s fiscal sponsor. The downside, said Stecklow, is that nonprofits cannot get involved in political elections.

One protester, Elaine Brower, argued that becoming a nonprofit would require that the occupation have stability and a core team in place. Occupy Wall Street has neither.

And then there are those who oppose nonprofit status for entirely different reasons. As one protester argued, Occupy Wall Street is supposed to be a revolution. What kind of revolution, he fumed, applies for nonprofit status?

While this last point is offered as a closing zinger, the repercussions of nonprofit incorporation on a non-hierarchical social movement with revolutionary aspirations are actually worth thinking about.

First of all, I don’t know whether 7% surcharge on donations is a competitive rate for fiscal sponsorship, but if it becomes a problem, the movement is certainly capable of either seeking out better terms elsewhere or renegotiating with AFGJ as funds continue to flow in.  This should not be the principle consideration in deciding whether OWS pursues a 501c3.

It’s important to consider that AFGJ is doing more than just processing donations.  The service that the fiscal sponsorship provides is to provide a buffer between OWS and the financial reporting and IRS-related reporting requirements that an independent nonprofit would have to deal with itself:

So what does the Alliance for Global Justice do for Occupy Wall Street (OWS)? Essentially we collect and process their donations and pass the money on to them as a project of the AfGJ. In IRS parlance we take “responsibility for all financial and programmatic matters” of OWS. We are responsible to include their financial reporting as part of our own when we file our annual tax return, which for non-profits is called a form 990. We are accountable legally and financially to prove that all expenditures by OWS are within the IRS’s tax-exempt rules. If the IRS audits us, we will have to show supporting evidence of the numbers we report. Occupy Wall Street’s obligation to us is to provide the accounting and receipts we’ll need for the IRS and to not jeopardize our tax-exempt status through any actions of theirs.

What would it mean for OWS to take on these obligations for itself?  Certainly we would become formally independent from AFGJ, but at the same time would would have to develop new ties.  The GA would have to reach consensus on hiring an auditing firm and completing 990 tax forms.  There will be serious consequences if that consensus is not reached.  Fiscal sponsorship allows the movement a degree of distance from these issues, and thus an added degree of focus on all  of the issues which we, as participants, actually want to pursue.

In some cases, groups seek out nonprofit status in order to accept grants from philanthropic foundations.  However, many of these foundations are either extensions of the very corporations OWS is fighting against (big banks, for example), or represent the familial dynastic wealth of robber barons and other 1%-ers.  Even in the unlikely scenario that these organizations decided to support some activity associated with OWS, it seems incomprehensible that OWS should want to put itself in a position where it was beholden to report and justify its actions to fit the priorities of these institutions.

The biggest point, however, is raised in the WNYC piece by Elaine Brower.  A 501c3 would require OWS to create a board of directors that took over a governance and oversight role for the movement.  Such a move would immediately undermine the direct and non-hierarchical model that has been OWS’ hallmark thus far.  This is an extremely problematic and divisive proposal in terms of goal-setting for the movement.

Moreover, the concentrated financial decision-making power wielded by a board of directors runs contrary to the model wherein financial matters publicly and transparently.  It may be that OWS has to revise its policies around use of funds now that its dealing with a bigger pot of money, but that doesn’t mean that it should hand over ultimate financial authority to a central body.

As somebody who was worked in the nonprofit sector for my entire adult life, I have a lot of love and sympathy for all the folks that build and operate these organizations, providing much needed services that our government now refuses to provide because we are making way for more missiles and lower taxes on the 1%.  That said, the nonprofit model is not without flaws.  For all the good work that many nonprofits do, the sector as a whole has sometimes been charged with draining the life force of public activism and directing it toward the business of fundraising institutional management.  With a few ritzy exceptions, this is not the fault of the people who run nonprofits.  They’re doing their best to navigate the difficult system and circumstances in which they find themselves.

There are issues that still need to be worked out within the horizontal structure of the Occupy movements as well (see my last post, for example), but this system has demonstrated so much power over the past several weeks that I think we should put in a bit more time refining before we go looking to trade it in.