Nonprofit Board Crisis

Nonprofit Board Composition

A question about nonprofit board composition composition.

What happens when a nonprofit board does not have representatives of those it serves as board members to be effective in providing valued and desired services? 

 

 

Nonprofit Board Micro Manages

Three reasons for why/when a nonprofit board micro-manages:

1) The organization is in its infancy or juvenile stage of development without paid employees leaving the board to focus on the delivery of services as its primary task.

2) Paid staff are perceived as doing the work badly, usually because they (the exec) is not communicating well (telling results) or not achieving the results the board expects.

3) the board doesn't trust staff.

Familiar?

Nonprofit Board Bullying

A nonprofit board has one employee: its executive. 

Most frequently thanks to term limits (which I firmly endorse), it is not unusual for some portion of the board to not have been present or a part of the process in hiring the current executive.  And, it is also possible that "new members" may not have a fondness for the executive especially if when they begin their terms, their are multitudinous issues.  Of course they might have done their homework before agreeing to join and/or their recruiters may not have been very good about sharing all the facts.  Or maybe it's just about personalities. 

But, particularly in these times, one very bad behavior I have seen is board bullying.  Some of the new "savior" board members take-on the position that the exec is just not right for the times and should be replaced although no one actually says this outright (although they may be correct).  Sadly, many boards do not have strong evaluation programs in place; haven't been measuring for results; and/or, have just never understood what is really going on (see my 7 Warning Signs).  Most important, board polite often gets in the way of board direct & honest which can get in the way of open communications of expectations and satisfaction.

Executive bullying, often evidenced by setting up hoops to jump through, is not healthy for anyone or the organization.  Examples? The board requests more reports with more detail to be provided in shorter time-frames and then never accepts these as good enough and asks for more or different.  Or suddenly the board is meeting in executive session, a lot, and then barely communicating the outcomes (likely because there weren't any).  Ah, it can get ugly and eventually the exec gets tired and all the distractions mean that nonprofit production is significantly down. 

Sound at all familiar?  For sure, there are better ways to do business.

Nonprofit board and exec relationship

Nonprofit board management is not always easy from the board's and exec's perspective. One thought that has occured to me is how the nature of the relationship between the exec and the board (individually and collectively) can make the relationship more or less challenging.

I'm thinking that this relationship comes in three forms: transactional, engagment and passionate partnership; and relational. I think the easiest and most productive of these to manage is the engagment and passionate partnership. The most challenging and unsatisfying for the exec. can be either the transactional or relational.

The transactional is all business and on many levels is really simple: what's the results and here's a matter, vote on it, but there's no "real" relationship between the two parties and there can be "so what's" to this but I am equally confident that there are execs that would say this is really great. The relational is just that: relationship focused and often times gets too fuzzy to be helpful to anyone. I'm thinking the optimal relationship is a balance of the three types of relationship and maybe at different times for different purposes.

As a nonprofit board member or exec, does any of this analysis relate and if yes, in what way? I would welcome hearing from you.

Nonprofits Not Providing Enough Charity Care

The State of Illinois is "challenging the property tax exemptions of some of its best-known hospitals", according to the New York Times saying they should pay more because they are not providing enough charity care.  And, All three of the hospitals the state is focusing on provided free and discounted medical care that ranged from 0.96 percent to 1.85 percent of patient-care revenue, according to the revenue department. The state also said that each one had been operating as a “for profit” business when the state’s Constitution says that “only charities are entitled to a tax exemption.”

And the hospitals, instead of offering to up the ante are saying to the state that it just doesn't understand how much charity care they are giving because the state's definition of charity is so narrow.  In fact, the hopitals "are preparing a lobbying push that would seek to redefine the qualifications for tax exemptions. The new definition would go beyond just charity care and expand to include patients’ unpaid debts, costs of medical care not covered by Medicare health insurance for the elderly, Medicaid coverage for the poor, as well as direct costs that teaching hospitals pay to train doctors and conduct research."

Clearly, at least in the eyes of the state legislators facing serious financial challenges, hospitals are not doing something right and I'm thinking it could be more than just the definitions. 

Nonprofit Board Unaware

Yes, this board claims to be unaware.

An audit conducted by the State revealed mismanagement of hundreds of thousands of tobacco grant monies.  The audit cited the nonprofit's former president as having "inappropriately used $200,000 for personal loans, to pay off the IRS and decorate her personal residence.  Two other employees received personal loans as well according to Newsobserver.com.

And the board says "it was unaware of the embezzlement of funds and the payment schemes described in the audit while also claiming it was presented with complete financial reports and annual audits but that certain information must have been withheld".

Uh, board, you want to stay with your story?  Then, let's start by getting rid of your auditor if true and next, think about some new procedures and training for board members so everyone knows better about what signs might indicate something's not right.   Puleaaase......!

 

Nonprofit Board Well Intentioned But Badly Governing

There's a bruhaha stirring down in the Philadelphia area over a college athlete who accepted a small grant from a private foundation.  The athlete must sit out a couple of games as a consequence.  According to NCAA rules, "it is impermissible for benefits to be provided to a student-athlete by someone other than a legal guardian or family member".  The grant to this student qualifies as impermissible.

But what about the foundation?  They didn't know better?  Is it not a responsibility of a foundation to have in place policies to ensure its decisions are within the rules of whatever sphere it operates in?  Is this not indeed one of the characteristics of good governance?  I certainly believe so.

See the rest of the story in the Philadelphia Inquirer.

Nonprofits: Results; For-profits: Debt?

If you go to a for-profit culinary school your best prospects for the future are a low paying job (maybe) and lots of debt.  If you go to a nonprofit or public culinary school, your prospects for the future are....? 

This is my take-away from a Christian Science Monitor article about for-profit career schools.

I certainly understand how a public or nonprofit education could be more affordable but are the results, getting the job of "dreams", enhanced by going to one of these schools over going to a for-profit career school?  Does mission make that much of a difference or is it more than that?

What's your thought?

Nonprofit Boards Rarely Oust Execs For Results

A lead story in the Wall Street Journal today was about Yahoo's board firing its CEO "after growing impatient with the lack of a turnaround" and "underperforming".  Essentially this firing was about not achieving results. 

The Yahoo board has been discussing the problems at Yahoo for a year but this firing came, unexpected for the CEO, after the outside directors (non-employees or stakeholders) completed a two-week audit and determined "a change at the top was the only way to turn things around".

Now, how many nonprofit boards do you know have fired their execs for "failure to achieve results"? 

 

Nonprofit Board Chair: Ick!

I recently met a gentleman who is totally fed-up with board governance.  He served as chair of a modest sized nonprofit for 3 years following his first three-year term and accepting the position after no one else would.  His current take-away: "I'm never serving on a board again, I would sooner clean the toilets - anything but board service".  When probed a bit he shared how there was a huge need for solutions but no one liked his.  No one else had any better ideas and no one wanted to help. 

Bottom line: governance matters when it works.  One needs the right people on the bus and, of course, passion!