Non-transparent ESFNA! By LJD, Senior Consultant
“Correction does much, but encouragement does more,” said Johann Wolfgang von Goethe. There is unhealthy fundamental problem with the Ethiopian Sport Federation in North America (ESFNA) Executive Committee: the lack of transparency. To the surprise of nearly everyone, the Executive Committee is not defending its reputation, although it is intensely engulfed with rumors and critics. For instance, it has not yet attempted to invalidate media reports of embezzlement against some of its members. It also has not yet disclosed its members’ biographies to nullify the accusation that it is infiltrated by the puppets and thugs of Sheikh Al Amoudi. Consequently, sorting rumors from facts has been impracticable to its staunchest supporters. Moreover, the Executive Committee justification for reversing the invitation of Judge Birtukan is due to its concern about losing its section 501 (c) (3) status does not stand public scrutiny. In other words, the ESFNA astonishing stance against sharing information about itself fully and completely — such as publishing its Executive Committee bios, posting its tax returns on its website, revealing funds its member teams raise, etc. — is stirring fierce discussion, wild speculation, juicy gossip, and suspicion among the Ethiopian communities that there is a likelihood of embezzlement and infiltration triggered by a lack of simple preventative controls built into its operations.
Being concerned regarding the plight of hearsay and censure against the ESFNA, and out of a sense of duty to demonstrate how similar organizations as the ESFNA conducts business transparently, accountably, and effectively, and a genuine, heartfelt wish to strengthen it, I analyzed the Jewish Federation of North America (JFNA), one of the best section 501 (c) (3) organizations in the United States, and benchmarked the analysis against the ESFNA. Note that since the aim of benchmarking is to have ideas that can be utilized to enhance current practices of organizations, using the JFNA as the benchmark is not like sizing up David against Goliath.
According to http://tutor2u.net/business/strategy/benchmarking.htm, “benchmarking is the process of identifying “best practice” in relation to both products (including) and the processes by which those products are created and delivered. The search for “best practice” can take place both inside a particular industry, and also in other industries (for example – are there lessons to be learned from other industries?)”
Furthermore, “The objective of benchmarking is to understand and evaluate the current position of a business or organization in relation to “best practice” and to identify areas and means of performance improvement. Benchmarking involves looking outward (outside a particular business, organization, industry, region or country) to examine how others achieve their performance levels and to understand the processes they use. In this way benchmarking helps explain the processes behind excellent performance. When the lessons learned from a benchmarking exercise are applied appropriately, they facilitate improved performance in critical functions within an organization or in key areas of the business environment.”
Based on published information of both organizations, I carried out the benchmark. To set standards for the benchmark, I first analyzed JFNA’s mission statement, market positioning for the future, financial resource development, and leadership. Next, I then compared the standards with ESFNA’s mission statement, market positioning for the future, financial resource development, and leadership. Finally, I pinpointed areas where the ESFNA needs to enhance its controls — transparency, accountability, and effectiveness.
Contrast between JFNA and ESFNA
Even though both the JFNA and the ESFNA are both section 501 (c) (3) organizations they are strikingly different in many ways. For instance, in recent years, Forbes ranked the JFNA among the top section 501 (c) (3) organizations in the USA, whereas the ESFNA has never been ranked. The size of the organizations is also different. The JFNA represents “157 Jewish Federations and 400 Network communities, which raises and distributes more than $3 billion annually for social welfare, social services and educational needs.” On the other hand, the ESFNA represents 27 soccer teams. It earns most of its revenue during its annual event. It donated about $155K for famine relieve, scholarship, and so on in the last 28+ years.
Another difference is “protecting and enhancing the well-being of Jews and Jewish communities in North America, Israel, and around the world” is one of the main objectives of the JFNA. In contrast, the ESFNA’s objectives are “Bringing Ethiopians together to network, supporting the business community, empowering the young by providing scholarships and mentoring programs, primarily using soccer tournaments, and cultural events as a vehicle.” Furthermore, the ESFNA has never disclosed its future market positioning such as its plan for financial resource development except for its anticipation of adding three more teams on its roster. Whereas, the JFNA has stated its future market positioning that it “is looking toward the future with a new positioning for the Federation movement and a special focus on donor mobility.”
Transparency awareness of both organizations also differs considerably. The JFNA leadership appears well versed about the importance of running a business transparently because it publishes a detailed annual report, including leadership biographies. To the contrary, the ESFNA leadership seems unaware about the importance of running a business transparently because it does not have an annual report. The bios of the leadership have never been disclosed. Only those involved with their local soccer team can obtain copies of financial statements upon request via their local soccer team. It does not post its tax returns on its website, although the tax returns are already public information to those who know where to locate them (on www.guidestar.org, for example).
Observations about ESFNA
1. Mission Statement: Its mission statement is focused and well stated; however, it is ineffective. For example, it has not issued statements about the murder of a young Ethiopian, Ali Ahmed Mohammed, in WASHINGTON – D.C.
2. Scholarship: Although providing scholarship as a form of financial aid is one its objectives, it only awarded $25K in last 28+ years. To put it differently, in the last twenty-eight plus years the average annual scholarship it awarded was $925.
3. Famine Relieve: It pledged $100K to famine relief efforts in Ethiopia. Then, it presented the first installment of the pledge $50K to Catholic Relief Services. But the donation details and status of the remaining pledge are undisclosed.
4. HIV/AIDS: It disclosed in 2004, its HIV/AIDS program collected $10K in Seattle, Washington. Though, based on the information available on its website, it appears it is still looking for an organization that can best use the funds since 2004.
5. Flood Donations: It donated $20K for flood victims of the Omo region of Ethiopia. However, details of the donation, including address, and date are undisclosed.
In conclusion, given the above facts, the ESFNA is long overdue for taking a revolutionary stance against its lack of effectiveness and transparency. To boost its effectiveness, it should consider finding ways to protect Ethiopians in North America and around the world as does the JFNA “protecting and enhancing the well-being of Jews in North America and around the world.” It should also commence allocating more funds for scholarships. To evolve its consciousness of transparency, it must realize a lack of transparency and accountability increases risk factors of rumor and misappropriation. Mitigating the risk factors is easy if the ESFNA board wants to run its organization transparently. For instance, promptly disclosing and publishing financial statements, details of fund raising, status of unused funds, biographies of Executive Committee, and selection of leadership based on competitive process can mitigate the risk factors. Consequently, I believe encouraging the ESFNA to start taking actions to enhance its controls is reasonable. I also think, seeking the disclosure of its future profit and loss distribution among its leadership team is sensible. However, whether the net profits the ESFNA has generated for the last 28+years were material, large enough to matter, the call for an audit, questioning where the money is, is trivial, I argue. I also argue, without considering the time the ESFNA member teams spent to get ready for the tournament, they may be struggling to cover their costs of managing their team with the donations they receive from their community, and the money they receive from the ESFNA. To illustrate, the ESFNA Tax Returns which I obtained from www.guidestar.org indicate its net profit (loss) for year ended 2006, 2007, and 2008 were $(65K), $(50K), and $99K respectively. Assuming the ESFNA averages its profit (loss) among its Board to help it pursue its goals; each Board’s three years average profit (loss) share was $(592). (Oh, by the way, I have data which I might use to prove that most ESFNA vendors lose money.)
Lastly, instead of calling for an audit and reporting the ESFNA to governmental agencies, I suggest we should consider strengthening our local team by getting involved in its activities and donating our fair share. Then, we should press for change and encourage the ESFNA to implement the advice of this article via our local team. Will the local teams be able to persuade their Executive Committee to radically take a stance against transparency?
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