Nonprofit Board Crisis

Nonprofit Sued for Tainted Money

Here's one of those really tough positions. I regularly quote the phrase that "the only thing wrong with tainted money is there 'taint enough of it." Normally I apply this phrase when referencing taking money from questionable sources. So what's more questionable of a source than Madoff? Especially when a recipient knows (or should have known) that the rewards were suspicious.

Getting Mr. Madoff's money back is the job of Irving Picard who is seeking this money from one of the "not-so-innocent" recipients of Madoff, Jewish Association for the Aged according to the Wall Street Journal. I believe that Mr. Picard will have to make the case that the recipient board of the Association guessed something was not right or at least should have known the returns were too good to be true. And as a consequence, could have to give the not-real profits back.

Of course Mr. Picard's job is doubly icky given he is trying to take something back from an organization which is trying to use the money for a good cause. But as we are learning, using ill-gained money for a good cause doesn't always wipe-away the illness of the money.

Nonprofit Board Audit Committee

Most nonprofit boards are aware that one of the recommendations for nonprofits that came out of Sarbanes Oxley was an independent (from the Finance Committee) Audit Committee.

But awareness and action are two different things and subsequently action can take on a number of varying characteristics as well. And of course, not every nonprofit requires an audit. Audit requirements are mostly dictated by a nonprofit's funding source, particularly federal and state and/or budget size.

From my experience the most common independent Audit Committee is more of a Task Force put into place towards the end of the year when around the time that an auditor is selected. This Task Force then works with the Auditor to understand and oversee the audit process, to understand audit findings and recommondations (if any) and finally, to report to the Board on the results of the audit. But wait, there's more! An Audit Committee can also support the board in executing its fiduciary responsibility to manage the nonprofit's risks and ensure good policy is in place for this purpose.

If you would like to explore more considerations around the Audit Committee, Sarbanes Oxley and risk management, check-out Guidestar for a good introduction.

Nonprofit Boards Governance Versus Occupy Wall Street Governance

Is clear more-or-less designated governance aka nonprofit boards better than group leadership aka Occupy Wall Street governance? Answer: it's different. And someone at the Wall Street Jounal not specifying nonprofit governance, thought enough to write on the subject.

Nonprofit Best Practices

I've about had it with this idea that "best practice" is whatever the writer or speaker says it is.  I believe that to get the label "best practice" a practice has to earn it -- it has to be objectively tested and proven to be effective and produce postive outcomes.  How many of the so-called best practices are there that you believe meet this test? 

Meanwhile, there are lots of consultants, just like me, who have theories and experiences about nonprofit governance, management and planning etc. and we have some reason to believe they may be effective and produce positive outcomes and maybe we even have testimonials but until these are tested objectively, they are not best practices -- promising maybe; good practices as have been applied, maybe.  Beyond that, no, not best practices.

Nonprofit Boards in the Arts

The National Committee for Responsive Philanthropy is at it again identifying opportunities for positive change in the funding world.  This time the target of change is funders of the arts with research citing that most of the big money is going to the big arts institutions which are mostly serving the white wealthy and not benefiting emerging arts groups who serve more diverse audiences.

Well, yes and of course!  I would offer first that once upon a time, these "big" institutions were the emerging arts groups.  That said, while these big institutions are sucking up the money and perhaps the funders attention (for all kinds of reasons probably starting with who sits on the boards of the funders and arts institutions) I'm thinking that maybe the first responsibility to respond to more diverse audiences lays in the hands of arts institutions who can also embrace and foster emerging arts groups in the process.  I'm not saying this isn't happening either as I don't have the data but maybe for this story, there's more to the story. 

Nonprofit Board Strategizes To Increase Drops in the Pot

Kudos to the Opportunity Finance Fund (OFN) board/staff for developing a strategy that includes corporate partnering, redistribution of the wealth, possibly helping stimulate the economy and, providing a bit of additional resources to the organization.

OFN "works with nearly 200 community development financial institutions nationwide that, in turn, lend that money to entrepreneurs, small businesses, and community groups that are creating jobs".

As you have likely seen in the press this weekend, OFN has hooked up with Starbucks to focus on stimulating local economies and jobs.  The company has thrown-in $200,000 of its own money to two nonprofits plus $5 million to the Create Jobs for USA campaign (kind of hokey to me but if this is what it takes...).  And there is one more piece to this puzzle.  Starbucks is also waging a campaign to get its customers to each give $5 to the cause in return for which each will get a wristband with the word "indivisible".

All together, this has the potential to be a win for communities, a win for Starbucks' PR, and a win for OFN, especially if, as is hoped, other retailers like McDonalds join-in.

Good going OFN!

Nonprofit One Cookie At-A-Time

If you are as old as me (60 in December) you may remember a bumper sticker that more-or-less asked what would happen if the military had to depend on bake sales for its budget.

Interestingly, Cookies for Kids Cancer is doing something similar starting-up by organizing families and friends to bake 96,000 cookies to generate $420,000.  The group has gone on to create and market a book on how to conduct bake sales as a fundraising method.  This too should remind those of us who are a bit older of The Grassroots Fundraising Book written by Joan Flanagan or similar work by Kim Klein (who is still out on the road training on this stuff). 

The one thing that did give me pause from the Cookies people was a quote in the Washington Post article that once piece of advice: "not to price the cookies — these aren’t commercial transactions, but a way for people to donate".  I'm hoping this still means that a suggested offering should be identified because otherwise this begins to look like the heavily subsidized Panera model and I'm not convinced that has proven anything from a sustainability strategy.

Anyway, the military has not gotten to this place yet but I imagine there is still hope.

Nonprofits Get Nod

As nonprofits struggle to attract what money is available, an important shout-out is given by one fairly wealthy donor who announced his million-dollar gift to a group he founded to work with the homeless in NYC.

I will avoid all the things that could be said about the origins of the money and the unequal distribution of wealth in the first place and more importantly thank Mr. Layton for his acknowledgement that "The government can do certain things but, at this point, you need more of the nonprofit sector creativity to move the ball forward."

Yay nonprofit sector! See the Wall Street Journal for the article.

Nonprofit Foundation Developed by ForProfit Why?

Independence Blue Cross, a Philadelphia-based for-profit insurance company announced today that it was forming a grantmaking foundation to, what appears to me, to be about consolidating a variety of already established grantmaking activities.  But according to the Philadelphia Inquirer, the company wants to "raise its profile as a donor to health-related programs". 

I think the good news is that it plans to add $1 million in new annual spending.  But, if you ever have doubts about why a business does philanthropy, note that the extra money will go to grants that "improve (health-care) access, quality and driving down cost".  This is an insurance company after all. 

Nonprofit Exhibits Great Advocacy

The National Committee for Responsive Philanthropy, a philanthropy "watchdog" is stepping-up and publicly opposing a proposed acquisition of ING by Capitol One on the grounds that the public good would be harmed (Washington Post).

I don't really have an opinion on this matter although the facts presented by both sides leads me to believe that NCRP appears to make some good points worthy of regulator consideration.

Instead what I'd like to hold up is that NCRP is demonstrating what any nonprofit has the potential to do and that is educate while advocating for its constituents or simply put, achieving mission by playing the "game" recognizing that the rules of the game have been layed out by those in power and the nonprofit sector just has to play a long to ensure its outcomes occur.  This is very powerful and effective stuff and worthy I believe of every nonprofit board's consideration.

Nonprofit boards - get active!  There is all kinds of stuff going on that is affecting your constituents and public policy work could make a huge difference -- likely in some cases, more than direct service.