Nonprofit Board Crisis

Nonprofit Alumni Board Members Want Another Term

It's pretty common to many nonprofit boards of directors to have board member terms of three years, to permit up to two terms, and, to enable a board member who has termed out to be re-elected after a year off following the end of their second term. 

This practice is common and often by-law codified for it provides a renewal break for a board member who has completed their service and provides the possibility to recruit new "blood". 

Meanwhile, from a bit of research I have found that it is not so uncommon that some of these retired members are actually willing to return to serve another two terms.  What I can't find however is whether these board members just have to express their intent and poof, they have a new term OR they express their interest and must go through the exact same screening other candidates for a seat must endure.  The only reference to what folks do do about this is to "screen" for how active this candidate is in the organization during their year break.  Besides this, nothing more.

Anyone with other experiences, thoughts or policies - please let me know.

Nonprofit Boards and Bylaws

Bylaws are the baseline rules of the road for a Board although in my consulting experience I can say I haven't met many boards where all members have been introduced to, had read, and/or always adhered to the content. 

Sad as this reality may be, it tends to be the reality that bylaws are referred to in times of difficulty and at that point, at least one board member has read them -- the one who has issues with the way life at the board is proceeding.  Good practice all around?  I'm not thinking so.

One, and only one, of the contributing factors to why bylaws may be so unapealing is how they are written, legalese rather than plain language.  This does not have to be!  And if I were making a more friendly governance world, the governance committee would determine what they want to say in the bylaws and then, and only then, would I pass my draft by a nonprofit attorney who would be asked one thing: ensure that what I have prepared does not violate any state or other governmental rules.  No more or less would I ask. 

Bylaws - the rules - do not have to be gobbledy-gook and more importantly, could serve all members as an ever-ready reference guide, after of course, each member gets introduced to the bylaws when first they are seated as board members.

Nonprofit Board Against Board

You may have to read the Dana Point Times article yourself to truly make sense of this contentious situation between two nonprofit boards.  The drama includes making a questionable (at least according to one of the boards) long term lease; kicking some members out of the "club" in what seems like an attempt to diversify the gender if not ethnicity of the board; and shenanigans over locking out the new lessor. 

You just don't get more bizarre than this -- or maybe you do.  Feel free to forward to me any stories you find at this level of incredulity.

Nonprofit Stage of Development

I've talked about the three-legged stool paradigm before: nonprofit sector fills the void where there is no common public benefit or demand and no financial incentive for for-profits.    The other day I heard a nonprofit professor cite how nonprofits are commonly the testing laboratory for an idea or service and if it meets enough needs gets picked up by the public sector and, if it becomes in hot demand, gets monetized and sold by the for-profit sector.

This paradigm, though I'm not 100% in agreement, might then be stretched to wonder: is true nonprofit maturity the point when what is offered becomes monitized and is taken up by the for-profit sector?  What would the implications on organizational stages of development be? 

Nonprofit Board Lessons From San Francisco Arts Commission

A recently released audit report of the publicly funded San Francisco Arts Commission offers some insights for nonprofit boards.

The San Francisco Chronicle, which reviewed the findings, reported that both the newly ex-Executive and the current Commissioners failed to provide oversight to the Commission, and that such failure resulted in irregularities in grant programs, the improper use of administrative money and the creation of a hostile environment for the Commission's employees.

Reactions to the audit findings generally focus on how long it took for Commissioners to identify and stop the problems the audit identified.  Interestingly, Mr. Johnston, the current Commission President said: "there is a weakness in the system: The commission relies on the director to inform it of what is going on."

Nonprofit Boards?

 

Nonprofit Board Dysfunction

My associate, Prof Gene Fram (Policies vs. Paperclips), suggested I take a look at this article, about signs of a dysfunctional board, he found on Chron.com.  The article's author proposes there are 10 signs: lack of confidentiality, conflicting agendas, lack of order, lack of respect, hostile environment, secret meetings, personal and political agendas, lack of trust, dominating members, and non-participating members.

After a thoughtful review, I have reached a conclusion: maybe.  Maybe these behaviors are signs that something is seriously wrong with this board.  Unfortunately, I am not totally convinced.  Dysfunction for me suggests that business can't get done and results can't get accomplished.  Perhaps some business is more challenging and sometimes few results are achieved but for the most part, I believe quite a few of these situations can and do exist in many nonprofits but business does get done and results do get accomplished often thanks to the sheer will of the few who are not trapped by these situations.

Are there steps to avoid all of these signs?  Perhaps.  Many of these behaviors (many are behaviors) can be nipped in the bud with a good chair who, well, chairs.  A strong governance committee can probably manage most of the remaining behaviors.  This committee can ensure that recruitment and selection processes root out "risky" candidates and that expectations are clear, written, comprehensive and in each member's hand.  Annual assessments of individuals and the whole board can be helpful. Also, consider asking Candidates to serve on board committees or work groups before full board service. 

Meanwhile, the selection of a chair matters.  And more importantly, the behavior of the chair, as I stated, to be chair, really matters. 

All boards have dysfunction (like folks who don't come to meetings).  These conditions and behaviors do not have to mean the board is dysfunctional.

Nonprofit Board Officers Steal From Their Nonprofit

As part of an investigation into the use of public money funneled by New York City Legislators to nonprofits, the New York Times cited many cases where beneficiaries of these funds included the donating public servant.

In the case of the latest find, it's not so clear, other than friendship, what the legislator had to gain, but two board members of the recipient nonprofit skipped away, 'till now, with more than $30K.

Bad board members going way beyond failures of the duties of care and loyalty.  Bad rest of the board for not having and/or not enforcing policies that would prevent such behavior.

Tsk, tsk, tsk.

 

Nonprofit Financing Strategy

The Green Bay Packers, a publicly owned nonprofit (a Christian Science Monitor description but of course, except for member-owned nonprofits, the majority of nonprofits, strictly speaking, are publicly owned), has initiated an innovative financing strategy that will pay for improvements of its field and stadium.

Now we have to admit some givens as does the article: the Packers have a tremendous brand recognition and fan loyalty.  This alone is worth, well, the $22 million the Packers are trying to raise.  But, other than brand and fan loyalty, the Packers aren't really offering much more than any nonprofit might be able to offer were it to do the same thing.

To do something similar, aside from the legal stuff, a nonprofit would want to be strongly positioned in the minds of its constituents as extremely positive and producing great results.  And even if it wasn't producing great results, proving that it was trying really hard (think about those high school or local teams that come in last place but attract fan loyalty). 

There's a number of lessons to be had in this Green Bay Packer example. 

 

Nonprofit Outreach on a Grand Scale

Talking about going to scale?  If your nonprofit or nonprofit coalition/association is not quite sure how to reach prospective constituents, how about this approach in the Wall Street Journal describing the efforts to be conducted by a private Roman Catholic organization.  Yes, this effort requires a bit of scale (35,000 donors) but the potential multiplier impact is huge.

Nonprofit Executive Grounds for Dismissal

I have one sub-specialty in my consulting practice some think daring and others think otherwise.  I get asked by nonprofit boards to help determine if they should keep their executive.  Often, when I am called, board members usually already know the answer but prudence steps in and members want to be sure, really, really sure.  And often enough, after going through a painstaking process to fully understand the situation and develop a recommendation, the board can wish their executive bon voyage.  By the way, the most common reasons: trust and fit.

I speak of this topic because my Associate Dr. Eugene Fram (Policies vs. Paperclips) sent me a link to an editorial from the Register Guard.  The editorial is about the firing of the President of the University of Oregon.  What most interested me was that the rationale for the firing was summarized as follows: the former President had many occasions of "arrogance, defiance and violations of trust".

Poor performance and illegal activities may be cause for a dismissal but successful shared leadership involves so much more.