Nonprofit Board Crisis

Nonprofit Policy of Gender Inequality #NonprofitBoards

It took collective bargaining, just now, May, 2022 for US Soccer Federation women to get the board to agree to pay equal to that of men.  In an era when we all should be evolving versus devolving, yes, my opinion and belief, there are daily if not hourly reminders that this is not the case.  That the Federation board had to go to the mats to "give" this recognition that at very minimum, if "it's just business" women are of equal economic value to men!  No kudos go out to this Neanderthal group of "owners".  They have done what was "just business" and will likely profit it from it quite well going into the future.  And to think that nonprofits in my opinion are "supposed" to espouse values for ensuring "better off" for their constituents.  Ah, but not if you are not male according to this board of Neanderthals. But is THIS board alone in the Neanderthal boards of nonprofits - free of bias and inequality despite whoever may be the beneficiaries of the organization's resources?  I think not 😢

From 1440 Daily Digest - (a 5 minute read of the news of the day provided impartially - just the facts) is the following newsbrief on this settlement (https://refer.join1440.com/mikeb)

 

 

Landmark Equal Pay Deal

Soccer players representing the US men’s and women’s national teams will receive the same pay and prize money for the first time under historic agreements with the US Soccer Federation. The collective bargaining agreements, announced yesterday, end a years long fight over compensation. The deal comes three months after the women’s national team reached a $24M settlement for an equal pay lawsuit against the federation.  The agreements also require unequal payments from the World Cup to be pooled and shared equally among members of both teams, beginning with the 2022 Men's World Cup in Qatar. For comparison, the men's national team received $9M from FIFA for finishing 11th in the 2014 World Cup, while the women's national team received $2M for winning the 2015 World Cup. No other nation is believed to have a revenue-sharing provision. The agreements run through 2028. See the full terms here. The women’s team has won four World Cups, six Olympic medals, and eight CONCACAF Gold Cups. The men's team has won seven CONCACAF Gold Cups.

 

Of The People? #NonprofitBoards

If we consider what is the nature of nonprofit boards, that is, who they are, the short answer is generally that they are the citizens who have identified and want to solve a "problem" that the government or private enterprise has not embraced at least to solve.  These people with this purpose then are provided the right to collect tax-free (to the org and the donor) money and pursue their mission.  Nonprofit board accountability, except if they break the law, is to themselves and the folks to hold them to purpose is the community they serve.  Enforcement regarding purpose and mission: uh, kind-of squirley.

So, it shouldn't be a surprise that a story about a private school "legitimately" located on tribal lands and privatized in theory with the tribe's ok and serving tribal members (at some time in history) should, despite being out-of-control (do read the article), should be in a conflict over ownership with the school board saying it is legit and just missed a few steps in oversight and two tribes having voted the board off the institution to be replaced no doubt with folks that would better represent the tribe's interests.  So far, again perhaps not a surprise given American history, that the tribes are being told that they have no authority to fire the board of the institution despite that they are the very citizens meant to be served by the school.  Now, given the process of how board members come to be board members, I think tribal members could use that process and change board members and then perhaps sell the school to the tribal council where it would in the end have the control AND ownership meant for "the people".  I'm confident that by-laws have a way to facilitate a change.  Clearly the "system" is not going to stand up and be helpful.  All this to remind us that nonprofit boards are "surrogate" owners - it is the taxpayer that is the real "owner" of a nonprofit.

Here's the story.

Documents Indicate Tribes Have No Firing Power Over St. Stephen’s Staff, Board

Published on May 17, 2022May 17, 2022  in Wind River Reservation/News

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By Clair McFarland, Cowboy State Daily

The tribal governments of the Wind River Indian Reservation lacked the authority to oust the school board of St. Stephen’s Indian School last week, publicly available documents suggest.

While the Intertribal Business Council can ask federal agencies to take over other tribal organizations, there seems to be no language allowing it to fire the private school’s top officials as it did last week, according to public documents.  

After an independent U.S. Bureau of Indian Education report alleged sexual misconduct, drug use, fraudulent and improper behavior by top school officials, the Intertribal Business Council on May 9 announced its vote to fire the school’s board, superintendent, two principals and a meals supervisor.  

The council, which is comprised of the executive boards of the Eastern Shoshone and Northern Arapaho Tribes, also announced that it would be turning the school over to the control of the federal BIE. 

But public documents indicate that the tribal governments don’t own or control the school – and therefore aren’t capable of firing its elected board or employees.    

St. Stephen’s Indian School belongs to a private 501c3 nonprofit organization, the St. Stephen’s Indian School Educational Association.  

Registered in the state of Wyoming, the nonprofit group’s founding documents placed an elected school board in charge of the school’s operations.  

The board members are elected by members of the school district, that is: any parent of a student or resident of the Wind River Indian Reservation who attends at least one school board meeting a year or who expresses a wish in writing to become a member of the district.  

The most recent election was held in March.  

From Church To School 

St. Stephen’s Mission, a church, transferred the school in 1975 into the control of the nonprofit group, which a 2016 school financial report deemed a “local community group.”  

The association remains active today, according to documents filed with the secretary of state’s office.  

A law known as the “Indian Self Determination and Education Assistance Act,” which passed in 1975, the same year the St. Stephen’s nonprofit organization was incorporated, gives the federal government the right and in some instances the obligation to fund organizations controlled by “Indians.”  

That law also states that those in control of the organizations, such as school boards, will determine their policies and direction.   

“Parental and community control of the educational process is of crucial importance to the Indian people,” reads the act.  

Although the act specified a possible $10,000 fine and two-year prison term for embezzlers of federal funds to American Indian organizations, it does not appear to authorize tribal governments to fire leaders of a private organization.   

Federal law does allow for a process called “retrocession,” in which a tribal government may ask the federal government to take over another tribal organization. In that event, the federal government may take over operations within 120 days.  

However, the statute does not specify that tribal councils themselves can fire elected school board members in a private organization.  

Private Lands 

The St. Stephen’s Indian School site is also private, according to Fremont County land records  

Fremont County’s map system shows that 37.83 acres, which contain an elementary school, high school, a classroom building and outbuildings are owned by the nonprofit organization.   

This land was turned over to the St. Stephen’s Indian School Educational Association in 1999 by the St. Stephen’s Indian Mission, which still owns 287 acres of land next door.  

The U.S. Bureau of Indian Affairs has constructed buildings on the school’s plot with its own funds, even placing a plaque on the high school building that reads: “Owner: Bureau of Indian Affairs.”  

The BIA public affairs office did not return a voicemail requesting clarification.   

The BIE, likewise, did not return an email requesting more information.  

Policies 

Some portions of St. Stephen’s Indian School’s policies are missing from the school’s website, but the majority are still are available.   

“The board has those powers which are expressly granted to it by the (nonprofit) association,” reads the policy, “and also those powers which may be reasonably implied.”  

A later section of the policy that defines the board’s relationship with the tribes states that the school board “desires to maintain the best possible working relationship” with both tribal councils – Arapaho and Shoshone – and that it should communicate with the tribal leaders.   

There may be more governing information within the school’s bylaws. However, neither the school, the Northern Arapaho Tribe, nor the school’s attorney, Mark White of Riverton, had agreed by 4 p.m. Tuesday to allow a Cowboy State Daily reporter to view the bylaws.   

The Eastern Shoshone Business Council spokeswoman told Cowboy State Daily in an email that she did not have the organization’s bylaws.

The spokeswoman also said the Eastern Shoshone Business Council’s chairman, John St. Clair, would not be available for comment until Wednesday.

The chairman of the Northern Arapaho Business Council did not respond to questions posed to his spokesman by Tuesday afternoon.  

Numerous school board members and school personnel declined to comment.   

Blakke Bertram, acting superintendent for the school, dispatched a Monday press release stating that the school, BIE, and intertribal council are “working hard” to address all policies to prevent the alleged misdeeds from “happening again.”  

“We ensure to our community that our staff will conduct themselves with professionalism and in best practices in helping our students” learn safely for the nine days remaining in the school year.

Staff Removed

The BIE’s report alleged drug use and sexual misconduct on the part of former Superintendent Frank No Runner and elementary school Principal Greg Juneau.

The Intertribal Business Council announced May 9 it had fired

No Runner, Juneau, high school Principal Matt Mortimore and meals supervisor Pattee Bement, along with the school board, in the wake of the report’s release.

The FBI is looking into the allegations, according to a spokeswoman for the U.S. Attorney’s office in Cheyenne. 

Nonprofit Transparency Matters #NonprofitBoards

Just how much does philanthropic transparency matter?  And, would a board of more than three people help change public perception?  These are just two of my questions raised from an investigative article by the AP and Aaron Morrison on the Black Lives Matter Foundation.  To help ensure some bias by the reader, the title of the article is "Black Lives Matter has $42 million in assets".  Yes, I do believe that in a supposedly objective article about a start-up nonprofit that has done some very impressive fundraising there is slipped-in throughout the article little "things" that perhaps not intended but do support questions of "outsiders" or even antagonists who might in-turn call for investigations or affect folks who might otherwise be donors.  Would that reviews like this however be conducted for all nonprofits of size no matter their political or social interests.  This is not of course what Guidestar of the other rating groups provide and I believe that unfortunate.  I could alternately imagine research group that dug in like Aaron Morrison for say, the top 3000 nonprofits perhaps based on 1000 a year and started over every 5 years.  What might we learn.

Meanwhile, if there are three possible fails by BLM Foundation, my take are that they are:

The board is only comprise of 3 folks, certainly legal and certainly smart folks but 3 just does not ensure the kind of objective fiduciary oversight necessary for a nonprofit of this size.  And yes, I know, the Gates Foundation only had the two Gates' and one more and there too I would pose: limited oversight on behalf of the public which as a reminder, what Fiduciary Duty is all about.

A second area of concern is who the organization has used for its consultants.  Now as a consultant I will acknowledge that relationship generally trumps everything else - consultants are learners at the highest level so if they don't know something they will find it out.  But this small board has shared its wealth with a very close knit group of folks while credibility comes from objectivity and the future of the organization and fundraising may depend on expanding its network.  At the same time I acknowledge, you go where you have trust and confidence, first.  Still, optics matter.

Finally, transparency - tell everyone an donors what you are doing, all the time.  Tell them results not activities.  Tell them what it costs.  In the end, more support comes through the door.

Meanwhile, kudos to the board for taking the long view in terms of building an endowment.  Endowments are far more sustainable in the end than the never ending turntable of fundraising.

 

NEWS

AP Exclusive: Black Lives Matter has $42 million in assets

AARON MORRISON, Associated Press

May 16, 2022Updated: May 16, 2022 9:21 p.m.

 

 

NEW YORK (AP) — The foundation started by organizers of the Black Lives Matter movement is still worth tens of millions of dollars, after spending more than $37 million on grants, real estate, consultants, and other expenses, according to tax documents filed with the IRS.

In a new, 63-page Form 990 shared exclusively with The Associated Press, the Black Lives Matter Global Network Foundation Inc. reports that it invested $32 million in stocks from the $90 million it received as donations amid racial justice protests in 2020. That investment is expected to become an endowment to ensure the foundation’s work continues in the future, organizers say.

It ended its last fiscal year – from July 1, 2020 to June 30, 2021 – with nearly $42 million in net assets. The foundation had an operating budget of about $4 million, according to a board member.

The tax filing shows that nearly $6 million was spent on a Los Angeles-area compound intended for use as a campus for a Black artists fellowship.

 

This is the BLM foundation’s first public accounting of its finances since incorporating in 2017. As a fledgling nonprofit, it had been under the fiscal sponsorship of a well-established charity, and wasn’t required to publicly disclose its financials until it became an independent, 501(c)(3) nonprofit in December 2020.

The tax filing suggests the organization is still finding its footing: It currently has no executive director or in-house staff. “It comes across as an early startup nonprofit, without substantial governance structure in place, that got a huge windfall,” said Brian Mittendorf, a professor of accounting at Ohio State University who focuses on nonprofit organizations.

“People are going to be quick to assume that mismatch reflects intent,” he added. “Whether there’s anything improper here, that is another question. But whether they set themselves up for being criticized, I think that certainly is the case because they didn’t plug a bunch of those gaps.”

The BLM movement emerged in 2013, after the acquittal of the neighborhood watch volunteer who killed 17-year-old Trayvon Martin in Florida. But it was the 2014 death of Michael Brown at the hands of police in Ferguson, Missouri, that made the slogan “Black lives matter” a rallying cry for progressives and a favorite target of derision for conservatives.

When foundation leaders revealed the windfall of donations in the aftermath of protests in 2020 over George Floyd’s murder at the hands of Minneapolis police, local chapter organizers and families of police brutality victims reacted angrily. Until then, the foundation had not been transparent with the most devoted BLM organizers, many of whom accused national leaders of shutting them out of decisions on how financial resources would be allocated.

In a recent AP interview, BLM co-founder Patrisse Cullors acknowledged the foundation was ill-prepared to handle the moment. The tax filing lists Cullors as an uncompensated founder and executive director. She resigned last year.

For all the questions raised about its oversight, the BLM foundation’s tax filing shows its stewards haven’t squandered donations. Nearly $26 million, or 70% of its expenses in the last fiscal year, were grants.

Twelve chapters, including those in Boulder, Colorado, Boston, Washington, D.C., Detroit, Los Angeles, Gary, Indiana, and Philadelphia, received pledges for grants of up to $500,000 each. The family foundations created in honor of Trayvon Martin, Oscar Grant and George Floyd each received contributions of $200,000.

The Michael O.D. Brown: We Love Our Sons & Daughters Foundation, run by Michael Brown Jr.’s mother, Lezley McSpadden, was approved for a larger grant of $1.4 million. McSpadden is happy to have the BLM foundation’s support, a Brown foundation representative said.

“This 990 reveals that (the BLM foundation) is the largest Black abolitionist nonprofit organization that has ever existed in the nation’s history. What we’re doing has never been done before,” said Shalomyah Bowers, who serves as the foundation’s board secretary.

Earlier this month, the foundation announced Bowers as one of three members of its board of directors. He serves with board chair Cicley Gay, a communications professional with more than 20 years of experience in nonprofit and philanthropic organizations, and D’Zhane Parker, a member of BLM’s Los Angeles chapter whose work focuses on the impact of mass incarceration on families.

To get here, the foundation has relied on a small grouping of consultants, some of whom have close ties to founders and other BLM organizers. For example, the tax filing shows the foundation paid nearly $970,000 to Trap Heals LLC, a company founded by Damon Turner, who fathered a child with Cullors; and $840,000 to Cullors Protection LLC, a security firm run by Paul Cullors, Patrisse’s brother.

Bowers, who has previously served as deputy executive director, is founder and president of a firm that received the lion’s share of money spent on consultants in the last fiscal year. Bowers Consulting provided much of the foundation’s operational support, including staffing, fundraising and other key services and was paid more than $2.1 million, according to the tax filing.

The foundation’s reliance on consultants is not unusual for newer nonprofits, Mittendorf said. But having clear policies around business transactions could reduce any appearance of impropriety, he said.

The tax filing indicates the foundation has a conflict-of-interest policy. And Bowers said the last BLM board approved the contract with his firm when he was not a board member.

The foundation will launch a “transparency and accountability center” on its website to make its financial documents available for public inspection, Bowers said.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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AARON MORRISON

Nonprofit Board Membership #NonprofitBoards

The following Jolt News contribution raises a few interesting (to me) questions that I will comment on as you read.  I must first admit ignorance over what is a Certified Volunteer Administrator (I could guess) or equally important, who it is that does the Certifying.  I just don't know so if this sounds like a useful credential you might check-it out.  I am way past acquiring credentials so....

Meanwhile, the author begins their article discussing why people join boards.  I must admit that my experience and sampling does not quite line up with the author's.  Yes, there may indeed be those who do join for these reasons but I would pose that this is the minority excepting that being asked by an acquaintance is often a piece of the puzzle.  I would further pose that the "difficulty" in finding folks to serve has more to do with a failure to effectively look preceded by a good conversation by the board about who is the desired type of folks to meet the board's needs.  That said, let's review the author's thoughts on joining a board.

 

Seven questions to ask yourself if you’re thinking about joining a nonprofit board

Posted Tuesday, May 10, 2022 4:07 pm

Mary Beth Harrington, CVA

By Mary Beth Harrington, CVA

In my day job, I help nonprofits be more effective and sustainable.

My areas of focus are working with nonprofit boards, developing effective leadership, and ensuring that the organization has a strong volunteer management program. If those three elements are in place, most organizations can be sustainable to continue to support their mission.

Of those three areas though, the one where I spend the most time is with the board. Too often, people join nonprofit boards for the wrong reasons, including:

• They are “ordered” to do so by their employer and therefore consider their board time as an extension of their work.
• To gain political capital in their community and see their time on the board as short-lived with no real investment in moving the organization farther.
• Because a friend asked them to do so and resent the time expense.

In all these scenarios, the person who is missing is the one who believes in the organization’s mission and is willing to move the organization forward. Those types of board members are hard to find.

What Does It Take?

Serving on a nonprofit board can be a rewarding experience but is also time-intensive and demanding. If you think that serving on a nonprofit board means going to a meeting once a month, you would be wrong;  there is a lot more to it than that.

If you have been asked to serve on a nonprofit board or are considering applying for a board position, there are some things you should ask yourself before you start. These questions are also good to ask during a board candidate interview – yes, boards should interview candidates before asking someone to join (and we have not even started to talk about background checks and contacting references!) (yes of course, an interview is a standard that must be followed - who does the interviewing - that's a more important question).

Question #1 – Are you passionate about the mission of the organization, interested in moving the organization forward and also what type of volunteer work is of most interest to you?

As a member of a nonprofit board, you must be committed to an organization's mission before deciding to join its board of directors. Boards can have a significant impact on an organization, but unless the organization is small (we call that emerging) and with little or no staff, the work of the board is not your typical volunteer work.  I disagree with this distinction.  The work of a board, no matter the size or stage of development, is governance.  Members may also choose to serve as volunteers and in the early stages, this may be THE resource available.  But volunteering is not governance and not the work of a board.

If you prefer a more hands-on volunteer opportunity, board service might not be the best way to get involved with an organization. Still true.

Question #2 – How much time are you willing to devote to the work of the board?

Directors are legally required to fulfill their fiduciary duties, which requires a considerable time commitment. The amount of time varies by organization, but simply planning to attend meetings is not sufficient.

Board members must review financial statements, meeting materials, and prepare for and attend committee meetings on a regular basis. (I usually spend a minimum of 20 hours a month doing the board work for the organizations on which I serve)?  It really depends on the organization's complexities.  There really is no fast rule.

Question #3 – How do you feel about fundraising?

One of the primary responsibilities of the board is to ensure that the organization has adequate financial resources to conduct its mission.

Many organizations require board members to make a personal contribution and/or solicit funds. Be prepared to make connections and introductions to donors, attend fundraising events, and send thank you notes.

"Required" is an agreement between members.  Fundraising may be one of the terms of understanding agreed to pre-joining or agreed to as a group.  The organization in and of itself can not "require" anything.

Question #4 – Do you like working on a team? How do you feel about meeting and working with people from different professional and social circles?

Nonprofit board members must work together to build consensus and govern an organization. If you work better alone board service might not be right for you.

Additionally, what we call “high performing boards” comprise a mix of professionals to bring a variety of viewpoints to a discussion. I have often been told “oh our board gets along very well, we never argue about anything.” That sounds, to me, like a board that is not moving forward. There should be discussion and debate during board meetings, it is respectful and not antagonistic, but board members should disagree on occasion.  I concur with the final statement.  What is "high performing" is an intriguing question and who is to judge more intriguing.  In my opinion, policy, planning and evaluation using prudence via risk reduction and prevention and ensuring compliance (and knowing what is this) is pretty much the job of governing.

Question#5 – Do you understand the roles and responsibilities of being a board member?

Board members have a number of obligations — including those that are legally sanctioned?— to an organization.

For instance, did you know that you can be legally responsible for covering the expenses for an organization if fraud occurs?  This is really too vague of a statement and really are simply understood via the fiduciary duties of care, obedience and loyalty and executed through policy, planning and evaluation.  Yes, there are legal implication but again, what falls under the umbrella of fiduciary duties.

Question #6 – Is there an opportunity for you to make a difference?

Identify your role on the board. Do you bring financial expertise? Community connections? Before joining a board, ask yourself whether you feel that your work on the board will make a positive impact on the organization.  OK

Question #7 – Do you feel comfortable with the overall health of the organization?

Board members have a legal obligation to the organization they govern. If you are not confident the organization is managed well, either by the executive director or the current board members and believe your association with the organization could put you at risk, it may be time to take a step back.  Hm - this is assuming that you have participated as a board member raising your issues and generating conversation and action.  Worrying about one's own risk first kind-of raises the question we began with - incentive for joining the board.

Serving on a nonprofit board of directors is a wonderful opportunity and one that should be open to more people in our community (too often boards will recruit someone because they served on another nonprofit board).

Mary Beth Harrington, CVA (Certified Volunteer Administrator) lives in Tumwater. She travels the country speaking at conferences and to individual organizations articulating issues facing nonprofits. Send your ideas to her at  MaryBeth@theJOLTnews.com

Boy Scouts Board - No Admittance of Guilt, No Apologies!!! #NonprofitBoards

It's Sunday for many who read today's blog.  I mention the day of the week because for Christians, this is a day of reflection about faith.  The Boy Scouts was founded on christian faith principles.  But over 70 years and contrary to fundamental christian principles, the board and those it hired failed to live up to those principles and instead did great harm to thousands of individual members.  Meanwhile, a "settlement" of the Boy Scouts USA sex abuse case is soon to reach another milestone.

An institution's Board whose mission is about building leaders and supporting youth development has over 70 years silently sanctioned and covered-up the misdeeds of their troop leaders.  There is a financial "settlement" agreement pending a judge's decision whereby a shitload of money, MOSTLY COMING FROM INSURANCE COMPANIES, will be rendered.  The National organization will be in some stage of bankruptcy.  The organization, according to NPR will still not necessarily settle and could appeal.

Still, no board member has come forward to apologize nor acknowledged its failings.  These actions are the least the organization's current and previous owners could do.  But they have not.  Here's NPR's latest update.

A ruling is expected soon in a bankruptcy case involving the Boy Scouts of America

May 6, 20225:10 AM ET

Heard on Morning Edition

WADE GOODWYN

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Thousands of former scouts who were sexually abused are expecting to share in a settlement worth billions of dollars.

A MARTINEZ, HOST:

Just a warning here - this story contains graphic descriptions of sexual abuse. Over a period of seven decades and across the nation, the Boy Scouts of America have faced repeated accusations of sexual abuse. More than two years ago, the organization was hit with hundreds of lawsuits from former Scouts who say they were sexually abused by Scout leaders. A Delaware judge will soon rule on the Boy Scouts of America bankruptcy case. It would provide more than $2.7 billion to over 82,000 claimants.

Here's NPR's Wade Goodwyn.

WADE GOODWYN, BYLINE: Seventy-year-old John Sakowicz went on his first Boy Scout overnight trip with his good friend, Patrick Quinn, back when he was 12 years old in 1965. Instead of a lovely night in the outdoors, it was an unimaginable horror.

JOHN SAKOWICZ: I was abused. I was raped, anally penetrated when I was 12 years old. I was a student at an elementary school in New City, N.Y.

GOODWYN: Both boys say they were brutally raped by the Boy Scout leader. Sakowicz's friend Patrick was so devastatingly traumatized, he drank himself to death as fast as he could, dying of liver failure at the age of 18. Sakowicz, too, has never really recovered.

SAKOWICZ: I had been accepted to Johns Hopkins University, attended the first semester, survived a suicide attempt, dropped out of college for the next three or four years. And my life has been very disrupted by that early childhood trauma ever since that time.

GOODWYN: If the settlement proposal is approved, the National Boy Scouts of America would provide a little less than 10% of the $2.7 billion settlement to the abuse victims. Two hundred fifty local Boy Scout councils would provide more than half a billion dollars, and the two largest insurance companies, The Hartford and Century Indemnity, more than $1.5 billion. Finally, the Church of Jesus Christ of Latter-day Saints will provide a quarter of a billion for claims involving the church.

ADAM SLATER: I mean, I handle a lot of sexual abuse cases. This one is just on another level, again, because of the national scale and how long it went on.

GOODWYN: Adam Slater is a founding partner at Slater Slater Schulman, which is representing more than 14,000 Boy Scout victim survivors. Ken Rothweiler, Slater's colleague, is also on the Boy Scout case.

KEN ROTHWEILER: We were satisfied with the trial because we thought it went well for the survivors' group. We're hopeful that almost any day now we're going to get a decision from the court.

GOODWYN: Lawyers for the Boy Scouts of America declined to talk on the record before the judge's ruling but appear mostly satisfied with the proposed settlement.

SAKOWICZ: I will have myself a good cry.

GOODWYN: John Sakowicz says he'll be remembering Patrick Quinn back before that terrible night in 1965 when they went on their first Boy Scout trip.

SAKOWICZ: Through every day of this proceeding, I've remembered my friend Patrick. You know, this is a case that brings closure and justice to survivors. But I know one kid, at least, who did not survive.

GOODWYN: The ruling by Delaware Judge Laurie Selber Silverstein will probably be soon. The case is then expected to be appealed to federal court.

Wade Goodwyn, NPR News, Dallas.

Creating Prospective Board Members #NonprofitBoards

Has your board faced challenges in member recruitment?  The following might be a solution.

 

 

Montana State University students serve on local nonprofit boards 

MAY 5, 2022

 

 

 

BOZEMAN — Eleven Montana State University students spent the academic year serving on the boards of local nonprofit organizations as part of the MSU Leadership Institute’s Boardroom Bobcats mentorship program, which is completing its sixth year.  

The Boardroom Bobcats program selects MSU students and matches them with local nonprofits, where they serve as non-voting board members. In addition to regular board meetings, the students undertake specific board projects and participate in professional development training hosted by MSU’s Leadership Institute to develop lifelong leadership skills. The program provides students with nonprofit sector experience and mentoring. In return, the participating nonprofits’ boards gain valuable student perspectives. 

Tyler Noyes, a student double majoring in agriculture business and agriculture education in MSU’s College of Agriculture, participated in the program this academic year. 

“Serving with the Montana Farm Bureau has not only been beneficial to my course of study in agriculture but has helped to establish a relationship with an organization that is committed to the agriculture community and industry,” Noyes said. 

Program participants for the 2021-2022 academic year, listed with their major, hometown and the nonprofit they’re matched with, are: 

• Owen Burroughs, microbiology and political science, Bozeman, Bridgercare.  
• Amir Darabi-Noferesti, mechanical engineering, Bozeman, Montana Freshwater Partners. 
• Darby May, social studies broadfield education, Evergreen, Colorado, Crescent Montana. 
• Tyler Noyes, agriculture business and agriculture education, Toston, Montana Farm Bureau Federation. 
• Calvin Servheen, industrial and management systems engineering, Missoula, Prospera Business Network. 
• Hailey Sinoff, political science and sociology, Truckee, California, Mountain Time Arts. 
• Lizzie Tobias, business management, Bozeman, Heart of the Valley Animal Shelter.  
• Madison Wambeke, music, Whitefish, Intermountain Opera Bozeman.  
• Holly Watson, public administration, Livingston, Livingston Food Resource Center. 
• Jonmichael Weaver, mechanical engineering, Los Alamos, New Mexico, Warriors and Quiet Waters.  
• Vanessa Zamora Moreno, psychology and business management, Bogota, Columbia, We Are HER. 

The program made its debut in 2016 with support from a $5,000 seed grant from MSU’s Outreach and Engagement Council. For more information about the program, visit montana.edu/leadership/boardroombobcats.html. 

MSU students who are interested in serving as a Boardroom Bobcat during the 2022-2023 academic year are encouraged to fill out an application before the deadline on May 23 at 5 p.m. Applications are available at https://forms.gle/sPssYdPL1t3dW6ND8. 

Contact: Heather Winslow at heatherwinslow@montana.edu or 406-994-7279 

Replacing Your CEO #NonprofitBoards

CEO's are retiring in droves - at least that's the assessment by the Chronicle of Philanthropy and there's much evidence that this is a reality.  For boards, meet the next challenge - the one challenge it is said that is the principle responsibility of a board - it's the way mission get's accomplished.  So check-out the following Chronicle article to explore the dimensions of the departure reality and some of the considerations and impact on nonprofit boards.

Large Numbers of Nonprofit Leaders Are Stepping Down — and the Competition to Find New Ones Is ‘Fierce’

By Jim Rendon

MAY 3, 2022

Felecia Hatcher began thinking about leaving the group she co-founded, the Center for Black Innovation, back in 2019. After the birth of her second child, she wanted to find a way to travel less and still help young Black entrepreneurs. But then the pandemic hit, and her thinking changed. “There was no way I could leave then,” she says.

The group had to make drastic changes, like turning its popular Black Tech Week into a virtual event. She and her husband had to care for a 1-year-old and were homeschooling their 6-year-old, adding more responsibilities. Mounting deaths from Covid-19 forced Hatcher to think about her own mortality. “If these are my actual last days, how do I want to spend them?” she asked herself. “What are the things I can put aside, and what are the things that are really hard that I could be approaching differently?”

The murder of George Floyd changed things, too. Suddenly corporations that had ignored her organization just months earlier were now knocking down the door to work with it. It only added to the emotional weight she was carrying.

In February 2021, she got two job offers. That spurred her to finally act, but it wasn’t easy. “There were many difficult conversations. [The center] was something I founded, and I was the face of it,” she says. “It was very hard.”

Last May, she started her new position as CEO of Black Ambition.

Hatcher isn’t alone. Experts report that many nonprofit leaders across the country are leaving their jobs, turning over at a remarkable rate.

“We’ve been around for 26 years, and I haven’t seen anything like this,” says Gayle Brandel, CEO of PNP Staffing Group, a nonprofit executive search firm. Some executives are leaving because of burnout or problems adapting to the remote work environment, she says. Others are taking the opportunity to move up to bigger organizations. Younger executives can now vault into leadership positions.

All this churn has pushed salaries for nonprofit leaders up as much as 30 percent over the last two years, Brandel says. “As salaries keep increasing, the competition between nonprofits is fierce,” she says. “It’s an opportunity for a good executive to really be able to get the rewards that he or she wants.”

While no one has data on the turnover in the past year, nonprofit associations in New York, New Jersey, and California report seeing higher levels of leadership turnover than in past years. The same is true for organizations that provide services to and advocate for nonprofits across the country, including Independent Sector and the American Alliance of Museums.

The numbers can be striking. More than 30 of the 142 health and human-services groups in the Columbus, Ohio, area have lost their leaders or will soon, says Michael Corey, executive director at the Human Service Chamber of Franklin County.

Some leaders are getting ready to retire and likely delayed their exits because of the challenges posed by the pandemic. Now that things are stabilizing, they feel more comfortable handing the reins over to new leaders.

Many groups that provide housing and services to people with disabilities, mental illness, or substance-abuse problems were founded 20 or 30 years ago, and their founders are starting to retire en masse, says Tom Ryan, the former CEO of Fulton Friendship House, which provides those services in central New York. It merged with another, larger group after he left — one approach some smaller groups are taking to leadership turnover.

Some executives are leaving because of burnout. Others are taking the opportunity to move to larger groups.

Museum directors stayed on during the pandemic because it was such a tough time for those organizations, says Laura Lott, CEO of the American Alliance of Museums. This January, 15 percent of the museum directors the alliance surveyed were not sure their institutions would survive. Many leaders who might have left in 2020 or 2021 delayed their departure and are leaving now. They spent two years fighting to keep their institutions from failing and their staff from getting sick and even dying, Lott says. “After two years of being nonstop, people need a break,” she says. “It’s created a group of folks who I’ve heard just say, ‘I don’t want to be a CEO anymore.’”

In the Memphis area, a lot of nonprofit leaders have left or are thinking about it, says Kevin Dean, the CEO of Momentum Nonprofit Partners, which provides training and services to groups there. Like many other Americans, nonprofit leaders are rethinking their priorities and wondering why they have put themselves under so much pressure. “I think we had a lot of unrealistic expectations for executive directors and CEOs of nonprofits,” Dean says. “They have to bear the burden of fundraising and human resources and accounting — and the potential wrath of their boards and foundations.”

 

The changes wrought by the pandemic and the push for equity mean that some nonprofits are fundamentally different organizations than they were in 2019. They might provide different services, driven by emergency needs like food or health information or cash; most groups incorporated remote work in ways they had never considered; and many are incorporating diversity and equity into their missions. The protests for racial equity in 2020 also changed many groups’ and employees’ perspectives and expectations.

In some cases, those monumental changes require new leaders with different skills and visions, says Dan Cardinali, the outgoing CEO of Independent Sector.

“In some ways, it’s an incredibly healthy response to both an opportunity and a set of challenges,” Cardinali says. “It is disruptive and, in the short term, inefficient. In the middle and long term, I’m hopeful that it will be actually a profound accelerator in our ability to be a force for the common good, for a thriving and healthy country.”

Long Searches

Finding a new CEO in this environment is no easy feat. Some nonprofits report that search firms have turned them down because they are so busy. Salaries are up and incoming leaders may be weighing several job offers, leaving organizations to compete for talent.

Some groups are struggling to meet high salary demands. But often they are not willing to hire someone who would accept a lower salary but that the organization might have to train, says Doug Sauer, the former CEO of the New York Council of Nonprofits, who recently retired after 42 years with the group. He says he wasn’t a seasoned leader when he started but that many groups now lack the patience to develop a leader’s skills. They have a “what are you going to do for me today mind-set,” Sauer says. When boards approve big pay packages for CEOs, he says, it creates questions of equity for those who are not executives.

A big increase in salary was just one of the challenges that the Mothers’ Milk Bank Northeast faced in its executive search. In late 2020, the board realized the group had outgrown its founder and hired consultants to help it determine how best to move forward, says Jen Riley, the organization’s board chair. In time, the board found a new role for its founder.

The skills the organization required in a leader were unusual for charity executives. The group is a nonprofit, but it generates revenue from its milk. It works with volunteer donors and processes the milk according to FDA guidelines. The organization’s new leader started in January, but it wasn’t easy to find someone with the right expertise.

 

In January 2021, the milk bank hired an interim CEO because it knew that the search would not be quick. The staff was overworked and fatigued, Riley says, and some left because of the leadership change. The interim leader was able to keep the organization running and strengthen ties to other organizations while the group searched for a permanent replacement. But challenges remained. “She wasn’t able to smooth over every bump, and it was hostile at first,” Riley says. “It was tough for her.”

The group searched for a new CEO from March until October. Despite the length of the search and the services of a search firm, the board committee had only seven candidates from which to choose. Three were quickly eliminated and one dropped out, leaving only three strong ones to choose among.

When it came time to consider salary, the board committee realized that it had likely been underpaying its previous CEO. To hire its new leader, the organization had to increase the salary by about $60,000. That was on top of the cost of the interim CEO, consultants, and search firm.

“Our budget is not balanced,” Riley says, although the search is not the only reason for that. “It’s been very costly. ”

‘Boards Should Never Settle’

It’s not unusual for groups to bring in an interim leader when a CEO leaves. Some tap a board chair or another top executive to take over while the board conducts its search. And sometimes — as in the case of Mothers’ Milk Bank Northeast — it is an outside professional. Jan Cohen, a consultant, just finished her 19th interim director job in March. The shortest lasted just 10 weeks. The longest — 17 months.
Having an interim director takes pressure off a board to find someone right away. “When boards panic, they settle,” she says. “And boards should never settle.”

An interim director who isn’t angling for the permanent job can be more objective, and board members may be better able to trust the interim leader’s assessments. “I’m a neutral person just trying to help the organization move forward now,” Cohen says.

 

She has learned that sometimes outgoing directors gloss over problems or mistakes. The first thing boards should do with a new interim director is dig into the organization. She meets one-on-one with staff to understand any problems or issues. It’s not a time to pursue new strategies or make big changes, Cohen says; it’s an opportunity to get everything running as smoothly as possible.

Getting operations in order can make the nonprofit more competitive in hiring a new chief executive, says David Harris, managing partner at Interim Executive Solutions. If the organization is running smoothly, that may help attract a talented leader in a competitive job market where candidates may have more than one offer, he says.

Jennifer Caballero is trying out the interim CEO role for the first time. She had been the board chair of the California Association of Museums and the marketing director at the Skirball Cultural Center. When the association’s longtime leader announced her plans to leave, Caballero realized that she, too, wanted to do something different. In March, she left her job to become the association’s interim director.

“It appealed to me,” Caballero says, “because it had a beginning, a middle, and an end — and some professional growth.”

In Demand

The current turnover frenzy has created many opportunities for people of color to either move into positions of leadership for the first time or move to a leadership role at a larger organization. “Leaders of color, we are the folks that people want,” says Sharyanne McSwain, COO of Echoing Green. “When C-suite positions open, I think boards are definitely coming out saying, ‘Hey, we need a leader of color for this particular institution.’”

Almost daily, Ana Marie Argilagos, CEO of Hispanics in Philanthropy, fields requests for recommendations for Latino candidates for leadership positions. Sean Thomas-Breitfeld, co-executive director of the Building Movement Project, also gets calls from recruiters seeking candidates of color for leadership posts.

That is a big change. Studies show that leaders of color tend to run smaller organizations that do not receive as much funding as those led by whites and are more likely to receive restricted grants. Leaders of color are often paid less than their white peers.

In April, Thuan Nguyen became CEO of AVID, a nonprofit that trains 80,000 teachers a year to better serve students. The thing is, he didn’t want the job — at least initially. The board brought him to the organization in 2016 with the idea that he would take over and often nudged him that way with promotions. But he always made it clear he never saw himself as the face of an organization. During the pandemic, however, he led the arduous effort of moving the group’s huge in-person trainings online. That experience, one that has led to burnout among many directors, changed his mind about leadership.

He says he missed more nights of sleep than he got in 2020. The organization faced the real possibility of failing — its only funding comes from putting on events. But as hard as the experience was for Nguyen, he realized it was more difficult for the staff. They worked so hard because they believed in the group’s mission. Nguyen’s desire to make the organization as valuable to teachers as possible, combined with the dedication shown by the staff, made him want to lead.

Nguyen is one of a small number of Asian American nonprofit leaders. He says he never thought much about the importance of that before. But that, too, may be changing. When the group announced his new role, he got a letter from someone who had attended the group’s conference who is now a successful teacher. She told him how his leadership role helped her to feel like she belonged.

“I still don’t know how to respond to this person because it was such a kind message,” he says. “It was a perspective I never really thought about.”

Nguyen, however, is well aware of the challenges leaders of color face. It was important to him to do market research to understand what he should be getting paid and set the bar high.

“That was one of the first messages that I sent to the board when it came to my evaluation, compensation, or any of those components,” he says. “I would not accept the role for less than, because it was important for anyone else that came after me, as well as just being a model for others stepping into the role.”

Dangers and Possibility

Experts worry there could be hidden dangers for leaders of color who take the helm.

 

“I’m concerned that folks will make a jump into these institutions that aren’t necessarily built for us,” McSwain of Echoing Green says. “They say they want a leader of color, but then they do nothing for their inclusiveness. They do nothing to support that leader of color. They just know that for purposes of the website and pictures, we need to have a person of color.”

She says leaders in those positions may be expected to represent all Black people or to fix longstanding racial inequities within an organization.

“There’s opportunity,” says Thomas-Breitfeld of the Building Movement Project. “In that opportunity, there can often be peril as well.”

Some nonprofits report that search firms have turned them down because they are so busy.

One study his organization conducted found that leaders of color thought they were sometimes brought in to replace a white leader who had failed to address issues of racial equity within an organization. Those new leaders are often expected to clean up other problems as well.

Other observers hope this is the beginning of a major shift in the nonprofit world.

If in this time of great leadership upheaval, groups are seeking out leaders of color and properly supporting them, nonprofits may finally begin to look and act differently. “This is a huge opportunity for organizations and the sector as a whole to better reflect the diversity of our country and, even more importantly, the communities that nonprofit organizations seek to serve,” says Anne Wallestad, CEO of BoardSource.

For the M.J. Murdock Charitable Trust, the qualities it was looking for in a new leader were determined in large part by the foundation’s decision to be open about its next steps.

 

Steve Moore, the departing CEO, encouraged the foundation to think about where it wanted to go in the next decade. In June 2021, he decided he would retire in 2022. As part of that transition, the foundation decided to listen to its grantees before deciding what kind of a new leader it would look for.

Grantees said they wanted someone who would continue the group’s practice of funding the operational growth and development of the organizations it supports — something that few foundations do. Grantees were hoping for someone with both business and nonprofit experience and a pool of candidates that reflected the diversity of the Pacific Northwest.

The group’s incoming CEO, Romanita Hairston, has worked at a nonprofit, at the trust as a program director, and at Microsoft. She is also a Black woman. “Romanita has been on a trajectory of growth and thoughtful intentionality in the way that she interacts and leads wherever she’s been that demonstrates a kind of competency that is just really encouraging, refreshing, and inspiring,” Moore says.

Hairston knows she is different in many ways from most foundation executives, who tend to be older, male, and white. She is a Black woman and a mother.

She says the trust was not looking for a Black person for the role and that that would not be a good place to start a search. When she thinks about issues of diversity and inclusion, Hairston says she starts from being human. Being Black, a woman, and a mom are all parts of her identity. Hairston says she doesn’t want to have to overemphasize any one element of her identity because it’s all of them together that will allow her to be an effective leader for the trust. “All of those things have helped me to be a bridge builder and an ambassador,” she says, “to sit at tables as a person with this unique point of view and to really create connections that others might not see because of their history and their experience.”

Emily Haynes contributed to this article.

A version of this article appeared in the May 1, 2022, issue.

We welcome your thoughts and questions about this article. Please email the editors or submit a letter for publication.

Why Board Diversity Makes A Difference #NonprofitBoards

While nonprofit boards continue to struggle understanding and fulfilling their roles governing, the push for diversity, equity and inclusion must parallel the work needed to ensure nonprofit success.  Toward this end it becomes helpful to recognize when the lack of diversity has been demonstrated as a failure to board success.  As pointed out in Governing, one such example is Transit Boards.

Transit boards are predominantly comprised of white males.  Tradition and lack of thought are likely the main contributors to this reality.  But please read this summary of the recently released research on the "so what" of this reality.  

THE FUTURE OF WHAT’S HAPPENING NOW

There’s a Big Difference Between Transit Boards and Riders

A new study finds that many transit boardmembers are not representative of their constituents who ride bus, subway or rail. Too often members are old, white and male and don’t use transit much or at all.

May 2, 2022 • 

 

Jake Blumgart

 

When Cam Hardy began attending board meetings of the Cincinnati-area Southwest Ohio Regional Transit Authority, he quickly noticed that the people in charge of the agency did not use transit.

“They were extremely out of touch,” says Hardy, president of the Better Bus Coalition. “Very white, very corporate and very resistant to change. Just cutting this and that [transit service] without really analyzing why a route might not be working.”

This is not an unusual dynamic, a new study from TransitCenter shows. The advocacy and research group studied transit agencies across 11 cities — Cincinnati not among them — and found that their boards were not representative in terms of gender, race or geography.

 

Across the cities studied, an average of 75 percent of riders lived in the central city while those jurisdictions only received 40 percent of board appointments. In some of the nation’s biggest cities disparities were far greater. In New York, 88 percent of riders live in the city but only 18 percent of board seats go to their representatives. In Philadelphia, 71 percent of riders are urban residents but they only get 13 percent of board seats.

In some of the smaller cities studied — New Orleans, Richmond and Savannah — suburban areas enjoy board representation even though they either don’t pay into the system or receive service.

“The people who are riding the system the most don't have the highest representation on the system,” says Jessica Cruz, lead author of the TransitCenter report. “You have people [in charge] who are not using the system every day or speaking for the needs of suburban folks versus the [majority of] transit riders.”

 

TransitCenter also studied racial and gender representation and found that transit boards were unrepresentative in these categories as well. Of the 11 cities covered, nonwhite residents comprised 63 percent of ridership but only 36 percent of boardmembers. Women were just 30 percent of boardmembership while making up a little over half of ridership.

Cruz notes that while board leadership are not usually overseeing granular decisions, they do set broader policy for their agencies. They oversee budgets, labor agreements, fare standards and the hiring of the CEO.

For Hardy, Southwest Ohio Regional Transit Authority’s board was obviously out of touch with the average rider. For one thing, all their meetings took place on weekday mornings. Hardy isn’t a full-time transit advocate; he has a day job as a paralegal too. Most of his comrades were also working when the meetings were held, so they could rarely attend.

After years of advocacy and organizing, Hardy and other members of the Better Bus Coalition have won changes. They got half of the meetings changed to evening hours, so work-a-day residents can attend. There are now regular bus riders on the board, who can speak to their lived experiences on the system.

They pushed for benches at bus stops, even raising funds for the infrastructure themselves when the board balked. The Better Bus Coalition also helped push a transit levy in 2020, something that policymakers had been unable to secure since 1972.

“We were able to successfully get it passed through a lot of being on the ground, a lot of relentlessness, and a lot of shaming and holding people accountable, particularly on that board,” says Hardy.

Cruz and her co-authors argue that it is essential for advocates to both pressure the board and to build relationships with them, just as the Better Bus Coalition has. They cite an early 2021 campaign in Los Angeles where advocates successfully convinced the L.A. Metro’s board to restore pre-pandemic service at a faster rate than originally planned. Cruz attributes their victory to a tight relationship with Los Angeles councilmember and boardmember Mike Bonin, who championed their cause.

Winning allies and securing friendly appointments may be an easier lift than changing the jurisdictional composition of transit boards, as governance norms can be rooted in laws and agreements established decades ago. As Hardy and his colleagues found, making the board more of a known quantity for riders is a strong start.

“The first step towards making boards more accountable is making them more visible,” says Gian Claudia Sciara, assistant professor of community and regional planning at the University of Texas, Austin. “Having riders understand what the board is, who's on it, what kinds of decisions they're impacting. Changing the structures will involve legislation: first you have to build momentum.”

Advocates acknowledge that having suburban and ideologically diverse representation on transit boards is important. In an era of partisan polarization around transportation policy, it can be important to have boardmembers who can speak on transit’s behalf in spaces like state legislatures that tend to be dominated by conservative, white and non-urban political forces.

In Philadelphia, for example, Republican power broker Pasquale “Pat” Deon has been the head of the board for almost a quarter century. Although he doesn’t live in Philadelphia, his ability to maneuver on SEPTA’s behalf in the GOP-dominated state capitol is widely praised.

“It’s necessary to have more conservative-leaning board members to have tougher conversations in Harrisburg,” says Yasha Zarrinkelk, with Transit Forward Philadelphia. “When I say diversity, I mean a spectrum of individuals who bring different voices to the table. Unfortunately, right now SEPTA’s board skews heavily one way.”

In Cincinnati, the transit agency board by some measures grew less representative since Hardy began his advocacy. After winning the long-sought transit levy, Hamilton County got a majority of seats on the board and the city’s representation was reduced from seven to five. But the board today is in other ways more representative: It includes bus riders for the first time, and is more responsive to advocate pressure.

“When I say a bus rider, I'm saying somebody that depends on the service, not someone who can just snap a selfie or two on the bus,” says Hardy, about the transit-using appointees. “Someone who needs it to work, just like thousands of riders across the city. We're experts at this. This is something that we know. This is our system. And we still have a long way to go.”

Board Fiduciary Duty Fail While Exec/Founder/Owner Seeks Compensation #NonprofitBoards

Debt and ownership are two big challenges for nonprofits - particularly those in the group home "business".  Parents or caretakers most often want to secure arrangements that will safeguard their care-recipient's long into the future - a future often without them.  More often than not caregivers rally together and acquire properties under a nonprofit banner to secure these futures.  What happened with these group homes introduces a different strategy - one more common to for profits particularly in the nursing care business.  In that business it is most common for the owner-operator to acquire property under one entity and lease that property integrating property costs into the overall cost of care or alternately singling out the cost of "rent" and billing for that.

In the following story, this is the same approach but done under the aegis of a nonprofit with the "owner" (clearly not the board) now wants the value of the property back.  It is unclear what type of conversations the nonprofit board ever had about the eventual arrangements but clearly the end result is not looking optimum for either the supposed owner and the nonprofit not to mention the care recipients.  For shame on the board for not clarifying all this at the earliest beginning of the nonprofit!  This board has groslly failed its fiduciary duty of care and must now identify an unlikely win:win resolution.  In my opinion this board has seriously failed in its fiduciary duty of care and IF board members are also related in some way to the exec, duties of loyalty and obedience.  And that monthly rents were being paid to the founder/executive/owner, there is not obligation on the part of the nonprofit but clearly there is a title challenge.  Were I board, I'd be seeking full ownership of the title and seriously argue against any severance or separation agreement with the exec as there has been more than enough gain on her and her family's part.

Here's the CT Mirror story that provides a more in-depth profile.

IA CT group home director wants to cash in on her state-funded properties

State ethics officials ruled the ownership structure for the group homes was a “direct conflict of interest” under Connecticut law

 

by Andrew BrownApril 24, 2022

 

For nearly four decades, Malcolm and Margaret Winkley have run a pair of nonprofits in Connecticut that serve individuals with developmental disabilities.

And over the course of those 40 years, the husband and wife used their authority over the two organizations — and the taxpayer money they received — to amass millions of dollars’ worth of real estate.

 

As the founders and directors of Brian House Inc. and Adult Vocational Programs Inc., the couple helped decide where to house dozens of people who were in the nonprofits’ care, and they frequently arranged for those individuals to move into group homes they personally owned.

Between 1983 and 1990, the Winkleys licensed eight different houses along the lower Connecticut River Valley, in Haddam, Chester, Lyme, Deep River and East Haddam.

Audits, contracts and other records show the couple held the titles for those group homes, while the nonprofits used state and federal funding to pay the taxes, insurance and mortgages on those properties.

That arrangement was specifically called out in an ethics opinion in 1999. State officials ruled the setup was a “direct conflict of interest” under Connecticut’s laws, and they argued it allowed the couple to use their authority over the nonprofits “for their own financial gain.”

Even so, state officials never required the Winkleys to change the ownership structure for the group homes, and they allowed the couple to retain control of the properties as the state paid off all of their mortgage loans.

Now, as Margaret Winkley prepares for retirement, she is looking to cash in on those taxpayer-funded investments by selling off the homes and other related properites.

We, as a state government, should not be in the business of allowing folks to profit in the millions like this.

STATE REP. MICHELLE COOK, D-TORRINGTON

Officials with the Connecticut Department of Development Services said Winkley, who took the operations over following her husband’s death in 2017, sought the state’s permission in 2019 to sell the eight group homes back to the nonprofits she runs.

 

The agency rejected that plan, however, because it would have required the state to pay for those properties for a second time.

“They were expecting to have (the state) pick up the cost,” said Kevin Bronson, the agency’s spokesperson. “DDS has not heard anything since.”

The state’s denial was a setback, but according to communications reviewed by the Connecticut Mirror, it has not stopped Winkley from exploring other avenues to a sale.

An email that was sent to the nonprofits’ employees last October shows Winkley — who also goes by Peggy — announced plans to donate three of the properties back to the organizations.

At the same time, she and the nonprofits’ boards of directors floated a proposal that would free up the five other houses that Winkley still owns by moving roughly 28 residents out of those homes.

“The administrative leadership team is currently assessing the needs of the individuals, planning for potential moves into more supportive or in some cases less restrictive environments,” the email said. “The team is exploring options for opening additional homes to replace the remaining homes owned by Peggy Winkley.”

The three houses Winkley donated to the nonprofits are worth roughly $1.1 million, according to appraisals. Meanwhile, the properties she held onto are estimated to be worth well over $2 million, according to property records reviewed by the CT Mirror.

‘Extremely problematic’

Winkley, who is 73, argued that she and her family should be allowed to profit from the other homes, which have doubled in value in recent decades.

“I kind of look at it as a win-win,” Winkley told the CT Mirror in an interview. “I believe that the state of Connecticut has done very well with Brian House and the Winkley family.”

“I know that we’ve saved Connecticut a ton of money,” she said. “So the citizens of Connecticut can be, you know, kind of grateful that we have been part of helping the disabled.”

Still, Winkley and the staff at the nonprofits insisted that no final decisions have been made regarding the five group homes she owns. And they argued that any decision that is made will be based on what is best for the nonprofits, their employees and the current residents of those homes.

“Although there is not an actual timeline for when we’ll be moving the individuals out (if we decide to) of Mrs. Winkley’s homes, I can assure you that it won’t be any time in the near future,” said Michael Boileau, the nonprofits’ chief financial officer.

“Mrs. Winkley won’t sell any of her properties until the individuals are out of the homes. She has been in this game for almost 40 years and would not pull the rug from under the vulnerable population we serve,” he added. “Serving these individuals has been her passion; she dedicated a lifetime to it.”

If the other properties are sold, it would further reduce the number of group homes available in Connecticut at a time when the state is already struggling to find enough housing and care for people with developmental disabilities.

 

State lawmakers and disability advocates are confused about why the state allowed the Winkleys to personally own the properties for decades, and they are deeply concerned about how a potential sale could affect the people who are currently living in the group homes.

Rep. Michelle Cook, who has been a member of the Connecticut Legislature's Human Services Committee for 14 years, called the Winkleys' ownership of the homes "extremely problematic," and she said she intends to speak with legislative leaders, Gov. Ned Lamont and Attorney General William Tong about the family's plans to sell the homes.

"We, as a state government, should not be in the business of allowing folks to profit in the millions like this," said Cook, D-Torrington. "That is just unconscionable to me when you recognize that all of the folks in these homes could feasibly be on the street if they are not successful in relocating them."

"This angers me," she said.

Deborah Dorfman, the executive director for Disability Rights Connecticut, said she was surprised that DDS officials allowed the situation to get to this point, in which the state could potentially lose several group homes.

"It's very, very troubling that this has happened and this is ongoing," she said. "It's sounds like they are just allowing it to happen even when there was an ethics finding."

Pioneers

The Winkleys got their start in the group home business around the same time that Connecticut and other states began to move people with developmental disabilities out of centralized institutions and back into their communities.

 

Financial records show the Winkleys formed both nonprofits in 1983. Brian House was set up to serve as the group home operator, and Adult Vocational Programs, or AVP, was used to coordinate day programs, which allow individuals to gain employment in their communities and learn job skills.

The Winkleys were “pioneers” in creating private group homes in Connecticut, the nonprofits' staff said, and the couple offered some of the first opportunities for people to move out of the large state-run institutions, which were often criticized for their poor living conditions.

But from the start, the nonprofits and the Winkley family operated in tandem. The nonprofits were in charge of caring for the disabled individuals, but the Winkleys made the decision to personally own the properties where those people would be housed and cared for.

One by one, the family purchased the eight colonial, cape and split-level homes and transformed the properties into group home settings.

“The Winkley family moved five times in total, living in four of the homes while they were renovated, furnished and licensed, and moving out as residents and staff moved in,” the nonprofits’ website explains.

That setup allowed the nonprofits to get their start, but it also starved the organizations of any long-term financial resources they could use to help fund their ongoing operations. That was something the state ethics office warned about in 1999.

"Rather than having the private provider buy these homes and build equity by paying the mortgage, the executive director and his wife retained ownership and built equity for themselves," state ethics officials explained.

 

Up until last year, Brian House and Adult Vocational Programs didn’t have any hard assets of their own, outside of the furniture in the homes and the vans that are used to shuttle residents around.

The two nonprofits received millions of dollars in revenue from the state in past years, but according to the annual audits, they couldn’t even qualify for a line of credit from a bank on their own.

Winkley, who currently collects an executive salary of more than $137,000 per year, said all of the homes were purchased under her and her husband’s name because of the financial realities they faced in the early 1980s. The banks, she claimed, wouldn’t lend to the nonprofits.

The family backed the loans and opened the homes, she added, as a “favor” to the state.

“We were helping out the state of Connecticut. We weren’t having influence over anything. We were just doing what they asked us to do,” Winkley said. “The state wasn’t willing to buy these houses. The state wasn’t willing to put down the deposits.”

Related parties

The group homes aren’t the only examples where the Winkleys intertwined their personal affairs with the nonprofits.

The audits for the two organizations are filled with other mentions of “related party transactions.”

The audit reports highlight, for instance, how the two nonprofits posted the collateral for a private loan that enabled the Winkleys to buy a 2,737-square-foot office building in Haddam.

The couple rented that office space back to the organizations for $43,884 per year, according to the annual audits. The nonprofits also paid the taxes and insurance on the property.

That business deal started in 1987, according to Winkley, and continued until roughly a year ago, when the nonprofits’ employees were moved out of that office and the building was put up for sale for nearly $350,000.

Winkely said she was uncertain whether she would share any of the proceeds from that sale with the nonprofits.

"You know, I don't know," she said. "I hadn't really thought of that."

"The office is empty. There is nobody there," she added. "So what am I going to do with it? It doesn't make sense to keep it empty and vacant. So I'm going to sell it."

The Winkleys also have a long-running arrangement in which the individuals who are served by the nonprofits work at another property the family owns in East Haddam. That work primarily involves the disabled individuals cultivating vegetable gardens, which the nonprofits operate as part of the day programs.

 

But it also includes those workers landscaping the grounds, shrubbery and flower gardens surrounding the Winkleys’ personal residence, a 4,410 square-foot colonial-style home that was first built in 1786.

That relationship was not disclosed in the annual audits for the nonprofits prior to 2019, and when it was finally recognized, the auditors noted that it was an informal business deal.

“AVP does not pay rent for the use of the property, but in exchange, maintains the property at no charge,” the audit said. “No value has been assigned to this arrangement.”

More recently, that historic home has been transformed into a side business for one of the Winkeys’ sons, who rents out part of the 15-acre estate as a wedding venue and event space for corporate retreats.

Photos on Facebook show the company, Smith Farm Gardens, began hosting weddings and events at the property in 2018. The company's website boasts about the gardens, flowers, orchards and "expansive lawns" the work crews maintained.

But according to the audits, the wedding business didn't start paying the nonprofits for those landscaping services until the 2020 fiscal year.

Winkley argued it has been beneficial for her family's personal property and their finances to be interwoven with the nonprofits.

“Brian House needed the Winkley family to survive,” she said. “They wouldn’t have been in business. It wouldn’t have existed without the Winkley family.”

“We’re a family that has high moral standards. We have high ethics,” she added. “And again, the state of Connecticut is lucky to have us.”

'Grandfathered in'

Connecticut has laws and regulations that are meant to prevent the executives, directors and owners of private group homes from enriching themselves off the public money they receive.

The legislature passed laws, for instance, that limited the amount of taxpayer money that can go toward executive salaries at private group homes. DDS also has a special ethics committee, which is supposed to police business deals for potential conflicts of interest.

But according to state officials, none of those rules prohibited the Winkleys from owning the eight group homes that state taxpayers financed.

In fact, a state contract from 1995 shows Connecticut officials specifically authorized the nonprofits to pay for the eight homes using state funding as long as the family only charged for the taxes, insurance and monthly mortgage costs on those properties.

 

The Winkleys relied on that contract for decades as they used government funding to pay down their loans and build up millions of dollars in equity in the eight properties.

That contract remained in force even after the Connecticut Office of State Ethics denounced the arrangement in 1999 and encouraged state officials to prevent similar conflicts of interest in the future.

“The state basically gave their blessing. We were grandfathered in,” said Boileau, the nonprofits’ chief financial officer. “The state never had any complaints about anything.”

The 1995 contract spelled out specific rules for the eight group homes and how they would be paid for. The agreement ensured the payments to the Winkleys would shrink once the mortgage loans for those properties were paid off, which happened in 2014.

Yet one question was not addressed in that document: Can the Winkleys sell the homes and profit from the state-funded properties?

Winkley suggested there is nothing prohibiting her from from selling the five homes that she retained control of. And she argued that her family deserves the proceeds from those properties, since the state prevented them from earning any extra profits in the past through rent.

“All they paid for these homes was a pittance,” she said. “I think that, you know, the state has had a pretty good bargain there.”

The issue, according to Winkley, comes down to a question of fairness.

“What is fair? That’s what I wrestle with,” she said. “I want to give back. I want to give back more than I take.”

An ongoing shortage

The potential loss of five group homes could seriously affect dozens of individuals and families who are currently on a waiting list for state support.

That statewide backlog has persisted for years as the demand for state-licensed group homes and other facilities outpaced the available spots in those settings.

At the end of last year, state records show hundreds of developmentally disabled individuals in Connecticut either weren’t receiving any state support or were in need of additional resources.

Of that group, DDS estimated that roughly 290 people would like to find an opening in a group home or another shared-living arrangement.

Christina Hall, who is in line to replace Winkley as next executive director of Brian House and AVP, said the information that was shared with the nonprofits' staff last October gave the false impression that they had already decided to move residents out of the Winkleys' five remaining group homes.

Hall said the nonprofits are exploring “more desirable” living arrangements for the more than two dozen residents in those homes. But she said those considerations are being made based on the needs of those individuals, not Winkley’s retirement plans.

As a result, none of the residents in Winkley's five remaining group homes have been informed that she is considering selling the properties.

“I don’t want to concern people unnecessarily, or let them think it’s going to happen tomorrow,” Winkley said. “We would inform people and give them enough notice.”

In the meantime, many of the homes are undergoing significant renovations and repairs, including the replacement of at least two septic systems.

All of that work, according to an internal email, is being paid for through the nonprofits' new line of credit.

What Does it take for a Board To Just Go Away? #NonprofitBoards

Elon Musk has taught a lesson to the Twitter Board that maybe isn't so surprising to for-profits.  Musk affirmed that when the going gets tough or there's a lot of money on the table - the board will opt to leave.

In the world today, or at least in the US philanthropic world, boards are struggling, even more since Covid, to figure out how to make their nonprofits truly sustainable.  But when I say "figure out" I don't really think that there's as much thought being given this dilemma as I would like to present.  Of course, sustainability has become a really huge challenge to nonprofits both in the short and long-run pictures.

I recently learned that one organization that has been trying a variety of strategies to achieve sustainability but is currently dependent on one donor who is footing pretty much most of the bill, is now faced with a reality that the one donor has decided to call it quits.  No more money.  The board's reaction: ok, I guess that's it.  Rather than consider what were the alternatives, they threw up their hands and in a fairly short fashion will have closed-down the shop.  Lesson: a total loss of money, unlike Elon Musk's situation will indeed make a board go away.  So much for passion for mission I pose.

I know of other boards when faced with a similar situation agreed it was determined to make mission go on and members began looking for a partner who would work with them to fund a sustainability strategy that would keep services going at the level they were.  In this scenario money or lack thereof still played a role in moving the board on but at least they were committed to not letting the work go away.

Finally, there the college whereby the board said, we aren't doing this anymore - we are out of funds and hope.  The alumni rose up and said to the board, they were correct, they weren't doing this anymore - the alumni will pick-up the ball and make it work.  Five years later, the college is indeed working and the first board has gone away replaced by those who have done and are committed to doing the work.

The Twitter board proved that their passion was money, not Twitter nor what Twitter might or could be.  Nonprofit boards, face this dilemma, more in the reverse but the outcome, the decisions if not driven by mission, can result in a fail that maybe is just not necessary.  One lesson: recruit and/or do the work to ensure your board is passionate and will do more than stand-by and not behave like John Belushi's Animal House fraternity brothers who stayed behind after  "when the going gets tough, the tough get going".