Ineffective Philanthropy in Asia
Because nonprofit organizations receive millions in donations and funding, it is important that nonprofits use their funds effectively to complete their mission. Unfortunately, many nonprofits working in developing countries purposefully do not spend enough funds on the intended purpose. A controversial example of an ineffective nonprofit in Asia is the Central Asia Institute (CAI).
Co-founded in 1996 by Greg Mortenson and Jean Hoerni, the CAI works in Asian countries such as Afghanistan and Pakistan to increase accessibility to education, especially for girls ("Central Asia Institute's History"). Greg Mortenson went on to write best-selling books titled Three Cups of Tea and Stones into Schools, detailing his experiences in encountering and eventually fighting poverty in central Asia ("CharityWatch Calls").
However, in the early 2010s, a scandal broke out surrounding Greg Mortenson and CAI's finances as multiple organizations and people, such as CharityWatch and John Krakauer, started investigating the charity. We constructed a timeline of events below to summarize. In 2009, CharityWatch began inspecting CAI and claimed that Mortenson misused the organization’s funds for personal gain and expenses ("CharityWatch Calls"). Subsequently, CharityWatch contributed to a 2011 episode of "60 Minutes," a Columbia Broadcasting System (CBS) program about prevalent issues in America. "60 Minutes" scrutinized the claims that Mortenson made in his book, alleging that half of the schools which CAI had supposedly built were empty, not receiving support from CAI, or not constructed by CAI (qtd. in "CharityWatch Calls"). Immediately after, prominent author Jon Krakauer released his own expose of Mortenson and CAI (Bullock 5). Krakauer also quoted a friend who worked with CAI on Mortenson's misdeeds to "60 Minutes".
"Greg uses Central Asia Institute as his private ATM machine."
-Friend of Krakauer (qtd. in "CharityWatch Calls")
Soon after, CAI attracted the attention of the Montana Attorney General's office, which prompted a comprehensive inquiry into CAI and Mortenson's financial activities. According to Montana Attorney General Steve Bullock's 2012 investigative report, Mortenson used about $2 million on charter flights, which CAI’s board approved of (Bullock 10). Additionally, while CAI was paying for Mortenson’s travel expenses for speaker events, Mortenson received money for travel costs from event sponsors (Bullock 10). For Mortenson’s books, CAI spent $3.96 million buying copies of Three cups of Tea and an additional $4.93 million on advertising (Bullock 8, 12). In 2008, he agreed to compensate CAI the same amount of money he earned from royalties on the books CAI purchased, but at the time of the investigation in early April 2011, he had not completed any payments (Bullock 9). The Montana Attorney General’s office and Mortenson reached an agreement stating that Mortenson must pay a total of $1 million to CAI and will not be allowed to handle CAI’s finances, among other conditions (Bullock 1).
Ultimately, due to Mortenson’s misuse of CAI funds, a disproportionate amount of funds were used for advertisement and furthering Mortenson’s career than actually promoting education in central Asia. For instance, in 2009, more money was spent on tours and gaining attraction in the United States than supporting schools in central Asia ("Central Asia Institute Accountability").
