Should the ESFNA Solicit Leadership from the Community?
August 30, 2013
This write up – which is dedicated to the founders of the Ethiopian Sport Federation in North America (ESFNA) – is intended to strengthen the Federation.
A board’s ability to govern, monitor and manage an Executive Committee (EC) actions and activities is critical for a success of an organization. The EC credibility with the board is essential to its ability to function effectively. While the ESFNA leadership team lacks basic leadership and communication skills, the organization’s reach has grown exponentially.
On the one hand, the ESFNA’s tax returns show that it spent about $1.4 million – 62% of its five years revenue from 2006 to 2011 – for travel, conferences and meetings. On the other hand, to participate in the ESFNA’s annual soccer tournament – its soccer clubs raise funds from their community, even though it might not be much. At times, the clubs get a negligible amount of funds from their Federation, about $900 per year from 2006 to 2011. The players pay for their own transportation and food, and they chip in to buy their soccer gear as needed.
The Federation’s Progress
The organization is significantly advancing in some areas, and it is keeping its status quo in others. To illustrate, the ESFNA heard one of the public calls to honor Judge Birtukan Mideksa for her contribution to bring democratic system of government in Ethiopia. And it extended its invitation on April 21, 2011 to pay her homage at its July 2011 28th anniversary in Atlanta, GA – which triggered its bankroller, Sheikh Al Amoudi collaborator of the TPLF/EPRDF, to cut ties with it. Though pretext for terminating the sponsorship was an email a board member of the ESFNA, Getachew Tesfaye, sent to his colloquies stating “it is what our leaders did to reverse the selection and the relentless effort by the PR office to maintain the status quo. The leadership is convinced that money will cure all. I disagree. My preference would be to return back this blood money.”
Since the ESFNA association with Al Amoudi ended and, by extension, the TPLF/EPRDF, the Federation has held two of its most successful soccer tournaments under the leadership of its President Getachew Tesfaye, a Nuclear Physicist, in which tens of thousands of Ethiopians across the globe congregated at Loos Stadium in Addison, TX in 2012 and at Byrd Stadium in College Park, Maryland in 2013 – even though the Federation remains non-transparent.
Some of the highlights of the weeklong events at the stadiums were the surge in the Ethiopians pride in their traditional clothing and display of patriotism in their flag. For instance, they flashed the stadiums with their untampered red, green and yellow flag “which stands as a symbol for Ethiopia which resolutely defended itself from Italian colonization at the Battle of Adwa.” Also the patriotic display of passion for the flag was exhibited in their clothing. They proudly rocked their flag dresses, skirts, pants, t-shirts, bandanas, tattoos, etc. Nobody guessed the Ethiopian flag would be so fashionable, particularly those who tampered with it.
For making the ESFNA 29th and 30th anniversary quite extraordinary, viva la the ESFNA fans, the media of the Ethiopian Diaspora and the Federation!!!
The Federation’s Organizational Behavior
“Organizational behavior is a field of study that investigates the impact that individuals, groups and structures have on behavior within an organization for the purpose of applying such knowledge towards improving an organization's effectiveness”, according to Wikipedia.
After the first year in office, most of the ESFNA EC members tragically fail to harness the full trust and collaboration of the Federation’s soccer clubs. For example, most Federation’s board members allege that the current president has not been able to inspire, to motivate and to unify the soccer clubs during his first term. As a result, team spirit between the board and the EC hit a new low at the 30th anniversary.
To prove their point: For the soccer players, there was no physician and medical kit during the 2013 games, due to lack of coordination among the EC. Volunteers who were assigned by the host team to help the EC during the tournament failed to show up thereof members of the EC blatantly violated the bylaws, which is a violation of fiduciary duty, by breaching internal control procedures under the watchful eyes of the board and the public – which was a hard blow to the individual’s reputation. Those board members who were observing the incident did not attempt to rectify – which was a blow to the Federation.
Obviously, the federation has been lacking leadership and/or ethical and moral standards which set the tone for trust, teamwork, respect for self and others with the soccer clubs. Between the federation board and the EC there have been a chronic interpersonal conflict that requires an analysis of how they have been working (organizational behavior analysis). The Federation’s board might consider reaching out to the community volunteers or paid expertise to get their organizational behavior analyzed.
For years, while showing solidarity with the Federation – its fans have been diligently encouraging it to run its business transparently – without successes. Though it has been in business for 30+ years, it has not yet developed systems, controls and standard procedures that would help its soccer clubs to effectively govern, monitor and manage the actions and activities of the EC.
Moreover, the EC has never made the organization financial records readily accessible to its board, let alone to the public. If lucky, a board member might obtain a copy of the Federation financial records after dealing with many unreturned telephone calls and email exchanges. The general public who has a desire to be informed about the finances of the Federation has to find its old tax returns, which are cumbersome for inexperienced eyes, on other company websites that are specializing in reporting on U.S. nonprofit companies such as GuideStar USA, Inc.
Since the Federation’s inception, a year has hardly passed without the soccer clubs alleging that the Federation’s resources were mismanaged by those who were entrusted with duties – the EC. This vicious cycle of allegation of misappropriation of funds by the EC has been heartbreaking and embarrassing for its fans resulting in negative publicity for the Federation. It makes one wonder why the soccer clubs have not been able to place controls and standard procedures to help them safeguard the Federation resources. For instance, some board members are calling for an inquiry into unacceptable practices at the 2013 venue in Maryland. They allege that key components of risk management, prevention and detection internal control procedures were compromised in a violation of the organization’s bylaws.
The Federation Mission vs. Culture
Although the leaders of the ESFNA soccer clubs lack basic communication skills and argue chronically, they sit around a table to plan their next annual soccer tournament to use it as a means to bring Ethiopians together. For most of them, drawing Ethiopians together is a matter of life and death, perhaps more important.
The culture of the Federation does not appear to mirror its mission – “Bringing Ethiopians Together” –because its culture of mistrust remains unchanged even though the organization’s reach evolved over the years. For example, the board and the EC appear they are deliberately ignoring their fiduciary responsibilities to establish and maintain the financial transparency of the organization.
While there is a term limit for the ESFNA EC, there is not term limit for its board. The EC carries on the tradition to keep the board at arm’s length about its actions and activities. It remains highly secretive about the business dealing it makes on behalf of the Federation. It continues to give the impression that individual performance is more important than teamwork. It persistently violates the bylaws and performs multiple unassigned roles in a highly compromising position – resulting in a negative public image. The public’s perception is that the ESFNA is corrupt and that the Federation lacks integrity.
The board and the EC ignorance and/or lack of awareness about their fiduciary duties, the EC alleged secretive and individualistic conduct, the Federation’s weak organizational and internal control systems, etc. continues to be the root causes of the Federation’s internal problems such as: contempt, mistrust, lack of leadership, etc.
Will the Federation be Cash Strapped?
It is alleged that the ESFNA board members have never reviewed the organization’s tax return, Form 990, prior to filing. If so, the board might have failed its fiduciary responsibility, duty of care, which requires a board member to read and review the financial and to ask questions about the content. If a board member does not have financial background, this task is daunting.
I analyzed the Federation tax returns for a period of six years, which I obtained from free services of GuideStar. And I noted that the Federation had $154,437 in its bank account as of December 31, 2011. I also noted its expenses were disproportionately higher than its revenues, for six consecutive years.
To illustrate, from 2006 to 20011, it held six tournaments in five states. And it reported $83,500 average loss per year. Given that the Federation reported $83,500 average loss per year for a six year period from 2006 to 2011, it might not be able to foot its bills in the near future unless its board puts a lid on expenses. Detailed income and loss analysis are as follows:
It reported profit from two of its venues: $99,402 (6%) profit of $1,648,000 revenue from the Washington, DC tournament in 2008 and $85,859 (20%) profit of $419,825 revenue from the San Jose, California tournament in 2010.
It reported a $64,521 loss from its Los Angeles venue in 2006, a $50,115 loss from its Dallas venue in 2007, a $117,200 loss from its Chicago venue in 2009 and a $102,164 loss from its Atlanta venue in 2011.
Disproportionately Higher Expenses than Incomes
The Federation’s soccer players and the board members have to pay for their own travel expenses when they participate in the Federation tournament and meetings. The only expense the Federation covers for the soccer players are for insurance and up to four hotel rooms per team; four to six players have to sleep in one room for seven days. Whereas it is alleged that the ESFNA’s previous ECs used to stay in an individual suite, and drove luxury rental cars ($8,293 in Washington, DC in 2008 and $6,297 in San Jose, CA in 2010) paid by the Federation.
Although the ESFNA does not cover travel expenses of its board and soccer players, it has been claiming on its tax returns that it spent about $1.4 million – 62% of its revenue for a period of five years – for travel, conferences, and meetings; to illustrate,
In 2011, 72% of the $292.042 revenue, which is $211,370, was claimed as travel expense.
In 2010, 38% of the $419.825 revenue, which is $158,521, was claimed as travel expense.
In 2009, 50% of the $354,235 revenue, which is $178,431, was claimed as travel expense.
In 2008, travel expenses were not claimed out of the $1,648,000 revenue. However, players related other expenses of $182,820 were claimed. By the way, the profit margin of the $1,648,000 revenue was only 6% since the related expenses were $1,548,598.
In 2007, 57% of the $491,591 revenue, which is $278,858, was claimed as travel, conferences, conventions, and meetings expenses.
In 2006, 83% of the $660,168 revenue, which is $546,582, was travel, conferences, conventions, and meetings expenses.
The federation general and administrative expenses of 2006 and 2007 also appear disproportionate to revenue; to illustrate:
In 2006, 16% of the $660,168 revenue, which is $106,732, was claimed as general & administrative expenses.
In 2007, 26% of the $419.825 revenue, which is $128,102, was claimed as general & administrative expenses.
In 2008, 0.49% of the $1,648,000 revenue, which is $8,009, was claimed as general & administrative expenses.
In 2009, 0.50% of the $354,235 revenue, which is $1,788, was claimed as general & administrative expenses.
In 2010 and 2011 general & administrative expense claim was not made.
Depending on the 2013 & 2012 profit margins and some unknowns the Federation could be in a stronger financial position than ever: To illustrate, eyeballing the public turnout of 2013 in College Park Maryland and comparing it with the Washington, DC actual tickets sales revenue of $850K of 2008 the tickets sales revenue percentage change might be exponential. Also eyeballing the public turnout of 2012 in Addison, TX and comparing it with the Dallas, Texas actual tickets sales revenue of $128K of 2007 the tickets sales revenue percentage change might be exponential. If these estimates are roughly correct, the Federation could be in a better financial position than ever.
In summary: The Federation is an institution which belongs to its players and, therefore, to Ethiopians. As witnessed in Maryland in 2013 and in Texas in 2012, the Federation’s reach has been increasing exponentially although its leadership, organizational behavior, culture, controls, standard procedures and finances have not developed in proportion with its reaches. Most of its fans, those who have been engaged in its leadership for decades, might not have the proper experiences to lead, to manage, and to nourish it rightly. To solve its problems, the Federation is in need of your and its players fair share contribution of wisdom, knowledge, leadership, experiences and skills, so get to know your local team and its leadership to assess their situation and to make recommendations for changes as necessary and, by extension, the Federation’s; furthermore,
Given the potential of the Federation and the love the Ethiopian Diaspora is pouring into it to garner its financial support for its future, the soccer clubs (board) and the EC should be judged by what they did not do which is knowing the history of the sheer number of corruption allegation against the previous ECs – bluntly ignoring the call of their supporters to be transparent.
The formula to stop the vicious cycle of allegations of misappropriation of funds and to garner financial support for the future without crying Uncle Sheikh Al Amoudi is: transparency, collaboration, outsourcing events management and accounting functions, reaching out to the community to get volunteer or paid expertise (those who can help to analyze the organization behavior, establish financial transparency and create standard work procedures to improve the quality and accountability of the board and the EC.)
The Federation’s expenses, including travel, conferences, meetings, legal, Ethiopian day, printing and publications, general and administrative, office expenses, etc. appear disproportionately higher than revenue. To control resources, the board might consider obtaining detail analyses of expenses quarterly.
The board of directors might consider to request and review quarterly balance sheet and income statements, at least.
To install public confidence, without incurring additional cost – I encourage timely information about the Federation activities such as: annual reports, financial statements, tax returns, bylaws, etc. to be publicly available on the organization’s website to all who desire to be informed about the Federation’s operations.
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