Nonprofit Board Crisis

Nonprofit Board Has One Employee: Maybe

There's a general rule of thumb that is supposed to help a board discern its emplorer role in relationship to its employees: the board has one employee.  Usually this means that only the exec and none of the employees reports to the board. 

But what happens when a nonprofit founder, now serving as COO (a mystery in itself) decides that the exec is a problem?  This story from the Las Vegas Journal Review provides some insight.

My take-away -- what exactly was the board thinking?

Nonprofit Book Review: The Non Nonprofit

If you believe that a former for-profit executive turned nonprofit founder and executive has something to say about how you can improve your nonprofit's success, then you may be interested in hearing what Steven Rothschild has to say. 

The Non Nonprofit  (Jossey Bass, 2012) offers seven principles (kind-of like other management improvement authors who have come before Mr. Rothschild): 1) Have clear and appropriate purpose; 2) Measure what counts; 3) Be market driven; 4) Create mutual accountability; 5) Support personnal empowerment; 6) Create economic value from social benefit; 7) Be learning driven. 

To illustrate his seven principles Mr. Rothschild tells stories about a number of nonprofits.  And true to Jossey Bass style, there are helpful questions at the end of each chapter (which paralell the principles).

Should you purchase The Non Nonprofit?  Maybe not if you already know AND practice these principles.  I'm willing to admit that while most nonprofit execs actually do know these principles, they may not all fully implement what they know (e.g. being market driven).  If The Non Nonprofit can help in this regard, maybe the book is worth picking-up.

 

Nonprofit News

With the consolidation and corporatization of the news media, one hope was that nonprofit web news sites could pick-up the slack.

The Project for Excellence in Journalism has released an analysis of this field and found that nonprofit news does not necessarily mean nonpartison.  The study of 46 sites launched after 2005 and across the US found that: roughly half of these sites produced clearly idological news coverage.  And, in general, the more ideological sites tended to be funded mostly or entirely by one parent organization, to be less transparent about their funding sources and to produce less content. 

Sites with a mixed or balanced perspective tended to have multiple funders and revenue streams, greater transparency and more content.

Strikes me that the latter group is consistent in every way with the all the better results-focused nonprofits.  Nonprofit boards may want to consider this criteria (balanced perspective, multiple funders and revenue streams, transparency and more offerings/results) when considering sustainability and results-focused strategies.

Nonprofit Boards and Political Engagement

The Center for Political Accountability and the Zickilin Center for Business Ethics Research of the University of Pennsylvania's Wharton School created an index to rate companies in the S&P 100 for the quality of political disclosure and accountability policies and practices.  According to the index, fifty-seven of the S&P 100 have adopted board oversight on speding and politicies/practices related to political spending (or they bar spending corporate cash on politics altogether). 

You are likely seeing some if not lots of messages about how nonprofits should engage their constituents in thinking about the candidates and how the nonprofits themselves might ensure that the candidates are thinking about their issues.  This is good I believe because nonprofits, continuing to fill the void between the interests of the for-profit sector and the mandates of the government, frequently serve constituents not otherwise represented or communicated with about the political issues the candidates are addressing. 

This reality combined with the CPA-Zicklin index story move me to ask: isn't it time for your board to review what is permissible as a nonprofit (and a lot is) around political engagement and, how the board will both strategize and monitor such engagement?  Once again, much is riding on the results of this next presidential election. 

Nonprofits and Status Quo

I just read a brief The Conference Board Review "sounding" by Kathy Clonninger, the CEO of the Girl Scouts of the USA. The copy was from Ms. Clonninger's book: From Tough Cookies: Leadership Lessons from 100 Years of the Girl Scouts (Wiley) 2011.

The theme and title of the article: The status quo has got to go!.  Ms. Clonninger reflects on what caught her attention to begin a process of institutional change needed to address a number of external variables potentially affecting the future of the organization. 

I believe that the article was not however as much about the process as about the responsibility for execs (and their boards) to constantly be aware of changes and shifts, internally and externally, that could affect achievement of mission.  Point made.

Also not the focus of the article but a point which is a curiosity to me is the reality that the leader-manager most admired by Peter Drucker (management guru for those who don't know) Frances Hesslebien, retired from the Girl Scouts in 1990.  Ms. Clonninger joined the Girl Scouts in 2003.  Ms. Clonninger notes that it was only two months after she joined as exec that a Council meeting of CEO's and board chairs (700 from all over the country) were chanting in unison, "The status quo has got to go!"

Hm....so only 13 years after one of the most acclaimed corporate Execs in the country retired and status quo had set in? 

Hm....

Nonprofit Board Investment Lessons

2011 was a bad year for nonprofit investors (what with Madoff and all).  But a bad year for some doesn't mean that other boards will learn anything. 

Despite the incredible refusal by some nonprofit boards to understand the prime principle behind the duty of care (prudence or at least, make decisions as though the nonprofit were your own business) there are still many willing to offer counsel and ounces of prevention.

Take Dr. Ethics (Michael McMillon)who is willing to step up and offer guidance in his own treatise which all nonprofits with any money to invest should consider.  By the way, I'm a strong proponent of supporting that nonprofit boards with money to invest should first look in their front yards at the local community foundation.  Community foundations are in place to serve and protect your investments and donations to these institutions can benefit you and other nonprofits well into the community.

Anyway, do check-out what Dr. McMillan's investment advice.  By listening and acting appropriately, you may be able to preserve your institution into the future.

Nonprofit CEO Pay

The numbers appear and are BIG!  According to the Dayton Daily News, the retiring CEO of the Dayton Hospice got a $1.3 million (incentive) deferred compensation payout for her departure.  She also got her paycheck which is $318,246 plus a bonus of $62,246.

Whoa, or is it a whoa?  Clearly this one percenter got a lot of money but is that the issue -- it's a really large sum of money?  Right answer: yes, it's just sticker shock and this CEO did a whole lot to earn her check.  After all, she kept her hospice from being eaten by the for-profits (it's a quality of care issue) and she made this hospice worth $59 million (net assets).  What more could a board want and that's what the Dayton Hospice board says.   And when a board sets compensation, they are mindful of what everyone else will be saying and of what they determine is justified. 

So, should we be up in arms that there are jobs at nonprofits that put people in the 1%?  Not at all, would that more of us were there.  This example is about someone who did what she said she would do and she should be rewarded.

Nonprofit Duty of Care to Extremes

One of the fiduciary duties of a nonprofit board is care.  Care bascially, like its title, means at minimum that a board will do what it can to ensure that the nonprofit is wise with its resources in pursuit of mission.

The Wolf Trap folks (you know, fancy nationally known performing arts center near Washington, DC), via their executive, have taken care to a new level.  The issue is the protection of the organization's name, or at least one of them.  It appears, that in some small community not that geographically close nor a venue big enough to confuse with Wolf Trap, another nonprofit is using one of Wolf Trap's names.  The name, The Barns, will not likely confuse the other nonprofit's audiences, but Wolf Trap must exercise its duty of care and thus, it is suing to ensure that the use by the other folks ceases.

Duty of Care in Extreme?  Sister organization against sister organization?  Here's the Washington Post story. You judge whether this is "right". And while you are at it, perhaps you can recruit Judy Collins or one of Wolf Trap's other big name performers to share the wealth and show up for a benefit at The Barns -- and no, not Wolf Trap's The Barns.

Nonprofit Board Member

What might be the characteristics of the ideal nonprofit board member?

The Alliance for Children and Families (alliance1.org) offers an answer to this question in an article about Lutheran Social Services of Wisconsin board member John Grace.

"John has depth of knowledge, breadth of experience, passion for the work, and a strong intellect that guides our thinking for effective service and plannning for a strong future......John walks effortlessly between management, the community, and the world at large--all of whom recognize his expertise and respond to it to better shape systems."

So there you have it.....

Nonprofit Board Diversity

And the survey says: diversity (gender, region of residence, professional functional area (eg accounting), culture and ethnicity) is among one of the top four areas needing improvement for nonprofit boards.

This data comes from a survey of 350 execs and senior managers who participated in executive education programs at the University of Notre Dame's Mendoza College of Business a group I would judge may be a bit more enlightened that the average nonprofit exec (suggesting that they are pursuing academinc education and may well have had a conversation on this matter) but let's suggest that this 350 are an indicator of the broader nonprofit pool of execs.

In that case, for those valuing diversity on board, the best answer: consider adopting a multilevel structure that creates opportunities to involve more individuals in varying roles.  Next, recruit using other means that your board members -- afterall, the folks they know have characteristics that are likely just like them.  Another problem for achieving divversity goals: boards without or not enforcing term limits.  In the survey, 25% of the boards don't enforce their term limits.

And, still on the matter of diversifying, creating an outer "friends" group as a feeder body comprised of donors, volunteers and or serving on committees or task forces can help diversify in the long run.

Nonprofit board diversity is not that difficult but it requires intentionality and commitment and a real appreciation of the many benefits to the organization to pursue.