Nonprofit Board Crisis

Whole Board Resigns to Rebuild #NonprofitBoards

As this story made it to NPR you have likely heard that the entire board of Seattle's ACT Theater has resigned except for the thee officers.  They have apparently taken this step based on an intent to re-create a board that is optimal for the welfare of the theater and presumably under the assumption that the 'till today composition and structure would not advance the Theater forward.  Interesting premise following an article by a counterpart that called these boards "broken" and needing reconstruction.  

I must admit that there is indeed a lot about nonprofit boards that calls for correcting.  I don't know about this approach as solving the problem but it might.  More importantly, the board must really ask what is broken, why and what are the approaches for correction.  Is mass resignation and then recomposing from the inside and heavily driven by staff (what ACT is doing) the answer?  And then does this redoing approach correctly or successfully address the first question to be asked: who's theater (aka nonprofit) is a nonprofit anyway?

Here's the NPR story.

Why the entire board of Seattle's ACT Theatre just stepped down

BY

 

 Mike Davis

AUG 15, 2022 at 9:22 AM

A Contemporary Theatre — Seattle’s ACT company — has announced that its entire board of trustees has voluntarily stepped down.

The only exceptions are three positions required by law — the chair, secretary, and treasurer.

This board overhaul is the result of three months of “deliberation and difficult conversations,” according to ACT’s Artistic Director John Langs. He said the changes are meant to bring the board more in line with the goals of the theatre.

The change was sparked when board members read an article in American Theatre Magazine by Michael Bobbitt titled "Boards are broken, so let's break and remake them." Bobbit is Langs' counterpart at the New Repertory Theatre in Watertown, Massachusetts.

In the article, Bobbitt argues that nonprofit boards are broken, and need to be dismantled and rebuilt. He notes that most boards don’t represent the communities they serve, and points out the tension between creative vision and fiduciary responsibility. That further raises questions around who should direct a theatre's creative vision — board members or artistic staff?

Langs said ACT board members then decided to reevaluate their hierarchal structure and dissect inequalities within the board.

“The question we asked most pointedly was: ‘If you can do this all over again, what would you have done differently?’” Langs said. “And from there, we prepared a roadmap through a committee of governance and a couple other key board members and staff members collectively to talk about what we could do. And the outcome of that meeting was: We have to disrupt the status quo.”

Now that the Board has voted, and members have resigned their positions, ACT is ready to rebuild the board from the ground up. Langs said a new committee comprised of executive leadership, representatives selected by staff, representatives selected by artists, and the three remaining trustees will lead the new selection process.

ACT plans on creating a new board with 12-15 members. This group will not use the former “committee” structure. Instead, all trustees will be involved in all aspects of board responsibilities to provide fiduciary oversight, strategic guidance, and risk management.

Once a new board is in place, the three remaining trustees will step down and re-apply for appointments if they wish to resume their positions.

“What is happening at ACT is the result of unprecedented collaboration between the ACT Trustees and ACT’s world-class staff leadership over multiple years," Dr. Eric Bennet, board chair, said in a statement. "Given that there’s no blueprint for this type of organizational equity and change to draw from, this has meant answering fundamental questions together to chart our path forward. The ACT Board’s restructuring is about trusting that, through equity, we’ll be a more vibrant, thriving theatre and able to bring audiences the most authentic contemporary work.“

Nonprofit Boards Establish Salaries #NonprofitBoards

Nonprofit boards, hopefully, establish what is to be the salary of their executive.  I say hopefully as I do know of situations where execs have just approved their own raises and that, to me, is a violation of the principles of who is responsible.  That said though think about what it means for an organization when the boards approve salaries for their exec that are 8 times higher than the hourly workers.  For shame?  Where are the donors or would they too agree that this is fair and in the best interest of the worker and the patient?  Take a look here.

The average nonprofit hospital CEO takes home 8 times more than their hourly workers, Lown Institute finds

By Dave MuoioFeb 14, 2022 04:50pm

Executive Compensationnonprofit hospitalsLown InstituteWorkforce

Hospital size, type and location all play a role in the pay discrepancies between nonprofit hospital workers and their top executives, according to a Lown Institute analysis that found CEOs receiving up to 60 times more than staff. (Getty/zest_marina)

CEOs of nonprofit hospitals are compensated, on average, more than eight times more than the hourly employees without advanced degrees working beneath them, according to a Lown Institute analysis of nearly 1,100 hospitals published Thursday in Health Affairs.

 

 

The differences varied widely across hospitals, with CEOs at the 50 nonprofits with the tightest pay gap earning about twice as much as their average worker and the 50 CEOs at the other end of the spectrum taking home about 26 times more than their average worker, according to the researchers. Among the latter group, the single highest-paid executive received more than 60 times the average pay of their hospitals’ hourly employees.

 

WEBINAR

A Member-Centric Approach to Prepare for the Unwinding of the Public Health Emergency

Sponsored by SameSky Health

This webinar is focused on helping health plans that serve Medicaid enrollees prepare for the unwinding of the PHE. SameSky Health will share new research that will help attendees understand member perspectives on the PHE, and what they want from their health plans. SameSky Health will also highlight the steps health plans can take to minimize Medicaid coverage losses.

Register Now

“While such glaring chasms in pay are not unique to hospitals, the pandemic has triggered the question of whether executive compensation should be part of the broader discussion about equity within our health care system, especially as minorities and women are often the employees at the lower end of the wage spectrum,” researchers affiliated with the Lown Institute wrote in Health Affairs.

“Moreover, the impact of hospital employee wages goes beyond the individual. Since hospitals are often the largest single employer in their region, the salaries they pay their workers may have a significant impact on the financial stability and income security of the entire community,” they wrote.

Hospital size, type and location were each found to broadly factor into a CEO’s compensation.

RELATED: Major nonprofit hospitals' community spend falls millions short of tax break savings, report says

For instance, CEOs running hospitals with fewer than 50 beds as well as those with 50 to 99 beds received about six times more than their average hourly worker. The pay rose to a 10:1 ratio for those running hospitals with 200 to 399 beds and 14:1 for those running hospitals with 400 or more beds—findings the researchers said fall in line with prior data suggesting CEOs have an incentive to increase the volume of patients, and thereby the incoming revenue, their hospital sees.

The CEOs’ pay ratios were slightly smaller than the overall average for those at non-teaching hospitals, slightly above average at “minor” teaching hospitals and greatest among “major” teaching hospitals, the researchers found.

Urban hospitals also tended to have a higher pay discrepancy than rural hospitals, as did hospitals in certain aid-Atlantic and New England states over those in the Midwest or on the Great Plains.

 

Still, the researchers noted several cases where different hospitals paid their CEOs far different amounts despite being of similar size or type, being in the same city and paying their hourly workers roughly similar wages.   

The researchers conducted their analysis among 1,097 nonprofit hospitals included in the Lown Institute Hospitals Index.

To review pay equity across workers and CEOs, they pulled 2018 data from the IRS' 990 forms, the Centers for Medicare & Medicaid Services and the Bureau of Labor Statistics. CEO salaries were calculated on a per-hour basis, while hospital employees with advanced degrees such as doctors or nurses were excluded from the comparison.

RELATED: Report ranks 10 most cost-efficient hospitals in the U.S., identifies $8B in potential Medicare savings

The researchers cast the pay discrepancies alongside a decadeslong trend of escalating revenues and the adoption of more administrative staff and corporatized boards that followed. Hospital boards today compare the compensation of their CEOs not to other community-based nonprofits but to their for-profit publicly traded hospital CEO peers, who themselves are compared to leaders in the largest industrial and financial companies trading on Wall Street, according to the researchers.

“As hospital policies and culture have become more aligned with big businesses, hospital executive compensation has swelled, mirroring the climb in CEO wages across all of corporate America that began in the late 1970s and continued despite the Great Recession that began in 2008,” they wrote.

With COVID-19 disparities front of mind, the researchers said the public, policymakers, regulators and, particularly, hospital boards should reconsider how these CEOs should be paid and what areas of their duties should be tied to payment incentives.

“For example, CEOs could be rewarded for improving clinical outcomes, patient safety and racial health disparities,” the researchers wrote. “They could be rewarded for being good stewards of public monies by improving cost efficiency. The complexity of the job should also be considered, not only based on the size of the hospital or system but also the hospital’s patient mix and financial cushion. Currently, hospitals with a wealthier and well-insured patient mix tend to pay their executives the most, although arguably hospitals that care for more publicly insured or uninsured patients and have chronically thin ma

Changes In Governance #NonprofitBoards

 

I believe the following Gig Harbor Now article about coming changes in the construct and processes of city advisory boards to be worthy of some consideration by nonprofit boards everywhere.  And no, I am not suggesting every board should adopt every element but instead should ask the questions about proposed changes and in light of a broader question, "what are the problems being addressed?"  Of course, as anyone who reads this blog knows, I am not a fan of using the term "board" when applying the principles to any structure other than governing bodies.  That said, do review the following to consider possibilities and implications for your board.

Some uneasy about changes to city advisory board procedures

POSTED ON AUGUST 12TH, 2022 BY: VINCE DICE

SHARE THIS ARTICLE: 

    

Changes to procedures for the city of Gig Harbor’s advisory boards and commissions are drawing criticism from a city council member and some volunteers who serve on those advisory panels. 

The changes involve how members of the advisory boards are selected and how they communicate with one another and with the city council.

Previously, a Gig Harbor City Council committee interviewed applicants for city advisory boards. The selected candidate would then be appointed at a subsequent meeting of the full council.

That process was improper, city staff members told a recent council study session. Gig Harbor was the only city with a council-manager form of government in Pierce County that was appointing advisory board members in that manner. 

Classifying members of advisory boards 

Members of the advisory boards are considered “appointed officials,” City Clerk Josh Stecker and City Attorney Daniel Kenny explained at a June 30 council study session. In code cities that share Gig Harbor’s council-mayor form of government, state law says the mayor should appoint such officials. 

Upon noticing the discrepancy, city staff proposed eliminating requirements for a council committee interview process for prospective members of advisory boards. The council voted on July 25 to instead specify that members of such boards should be appointed by the mayor and confirmed by the council.

Council member Jeni Woock was the only member to vote against the change.  

Woock objected to removal of the language requiring a public interview of advisory board candidates. Those interviews were posted online, providing an opportunity for the public to listen in.  

“Just because we are changing the way that these applicants are appointed and confirmed does not mean that we need to limit transparency,” Woock said at the July 25 council meeting. 

Woock related a conversation she had with a constituent about the issue. She said the constituent remarked that “obviously, the city is trying to hide something.” 

A review of the city’s YouTube channel showed that the council’s Board & Commission Candidate Review Committee had 15 meetings in 2021 and 2022. Combined, the 15 meetings were viewed a total of 67 times. The most views for any individual meeting was 13; one meeting was not viewed by anyone. 

Separation of powers

Mayor Tracie Markley promised to keep the council and the public involved in the appointment process.

“I have every desire to be transparent with our citizens,” Markley said at the July 11 council meeting, during the “first reading” of the proposed changes. “I want to make that very clear. This will come before (the council) with your input being included into how people will be chosen for these advisory boards.”

Staff members framed the issue as a matter of separation of powers during a June 30 council study session. Study sessions are for discussion, and no formal decisions can be made at them.

By including language requiring public interviews before the mayor makes an appointment, the council infringed on the executive branch’s prerogatives.

The council “just can’t require the mayor to take certain steps to appoint people,” city attorney Kenny said at the June 30 study session. “Council’s power here is, it can refuse to confirm any appointees.” 

Advisory board communications 

The other change impacts how members of these boards and commissions communicate with one another, with other boards and with city council members. 

The changes — incorporated in a new Article V of the city’s Council Guidelines  document — funnel such communications through a city staff member, typically from the city clerk’s office. The staff member “will serve as the liaison between the Advisory Board and the City Council, other Advisory Boards and City staff.” 

The document goes on to say that city council members “should not attempt to influence or persuade Advisory Board members on matters referred to the Advisory Board. Similarly, Advisory Board members should not reach out individually to councilmembers to seek direction or guidance.”

The guidelines also restrict advisory board members from inappropriately “represent(ing) themselves as Advisory Board members” to the public unless they’ve been authorized to do so.

Finally, the changes say that advisory board members shouldn’t communicate with one another on official business outside of meetings. 

Avoiding ‘serial meetings’ 

Stecker told city council members and members of advisory boards that the communications changes are intended to avoid inadvertent violations of the state Open Public Meetings Act. 

OPMA requires that meetings of government boards be open to the public, with limited exceptions. 

The clause restricting advisory board members from talking about public business outside of meetings is an attempt to avoid “serial meetings.” The council guidelines document describes serial meetings as: “when a majority of members have a series of smaller gatherings or communications that results in a majority of the body collectively discussing board matters, even if a majority is never part of any one communication.”

Such a serial meeting would be a violation of the OPMA, likely inadvertently. 

Funneling communications through city staff is intended to help staff members stay on top of what the advisory boards need. 

Advisory board members have reservations 

Some members of advisory boards have expressed reservations about the guidelines in recent meetings. 

The parks and arts commissions, for instance, often work on the same projects. Instead of communicating directly with each other, those commissions will work through a staff liaison. 

At recent meetings, parks commissioners used words like “regimented” and “onerous” to describe the guidelines. 

“You can’t talk to anybody. This is the feeling you get when you actually read the (guidelines) document,” Parks Commission member Georgina Armstrong said at that board’s July 6 meeting. 

Stecker responded that the council drove the “philosophical intent” of the changes. Some have concerns that advisory board members could “represent themselves inappropriately, saying ‘this is the position of the city, this is the position of my board.’” 

“I don’t think it (the guidelines document) is intended to be onerous at all,” Stecker said. 

Charities Win But Customers Don't #NonprofitBoards

When representatives of various nonprofits came to speak as to why their utility should be allowed to increase its rates 3 times, were these folks really representing the will of the board?  It's clear that their advocacy on their organization's behalf clearly benefitted the nonprofits but not so much the consumers who will see significant rate hikes.  And really: why should a quasi public organization be given money away in the first place?  It's a case of the taxpayer paying themselves but of course public service activities may always be this, But a utility?  Really?  Anyway, this idea eastern public media article on this subject raises all of these questions and more.  Bottom line, did the boards really send their execs off to kiss*** in exchange for getting donations.  Isn't there something morally reprehensible about this to begin with?  Where's this commission either - not concerned about the interest of the public although this is hteir job.  Bad governance!

Giving back? Charities laud Columbia Gas in $212 million rate hike case

 

Columbia Gas is seeking to triple a fixed monthly distribution charge from $16.75 to $46.31. [Kathiann M. Kowalski / Eye on Ohio]

AUTHOR

Kathiann M. Kowalski/Eye on Ohio

PUBLISHED August 2, 2022

 

 

This article is provided by Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism in partnership with the nonprofit Energy News Network. Please join the free mailing lists for Eye on Ohio or the Energy News Network, as this helps provide more public service reporting.

Central Ohio’s LifeCare Alliance is a lifeline for tens of thousands of seniors and medically challenged residents. The Columbus-based charity delivers meals and healthcare to people who need help staying in their homes due to age or other issues. Those people are especially vulnerable to inflation and high energy prices.

“We have a lot of people who either do not have air conditioning in an old house or they can’t afford to turn it on,” LifeCare’s president and CEO Chuck Gehring told NBC News in June as a heat wave baked the region. “A lot of them won’t turn it on because they’re afraid if they can’t pay their bills they’ll get evicted.”

Gehring took a different tone just days earlier when he spoke at a June 9 hearing in a case where Columbia Gas wants the Public Utilities Commission of Ohio to allow a $212 million rate hike. Gehring praised the utility for both its charitable contributions and its benevolence toward clients on utility disconnections.

In response to questions from attorney Angela O’Brien of the Office of the Ohio Consumers’ Counsel, Gehring said that for many of LifeCare’s clients, how much they owe matters less than whether the gas gets shut off, and in that regard Columbia Gas has been a valued partner. “We support Columbia Gas and all that they do in the community here,” he said.

Gehring was not the only nonprofit leader to praise Columbia Gas as it asked regulators to let it triple a fixed monthly distribution charge from $16.75 to $46.31. Officials for the United Way of Central Ohio, the Children’s Hunger Alliance, the Ohio Energy Project, Besa, and the Community Shelter Board also voiced thanks and support for the utility at the June 9 hearing.

None gave direct answers when O’Brien asked if they support the higher charges or inquired how the rate increases would affect the vulnerable populations they serve.

“I can’t speak to that,” Besa founder and CEO Matthew Goldstein said, “but what I can speak to is how Columbia Gas is that strong community partner and how they show up in this community with the nonprofits that have already spoken.”

The Ohio charities’ display of gratitude before state utility regulators raised alarm bells for Dave Anderson, policy and communications manager for the Energy and Policy Institute. A 2019 report by the nonprofit utility watchdog group documented dozens of cases in which charities that got donations from utility companies took political action favoring the companies.

“The main concern is that utilities like Columbia Gas use charitable giving for political and regulatory influence,” Anderson said. “And I think this is a great example of that.”

Close ties

Columbia Gas serves about 1.4 million customers in central and eastern Ohio. Its parent company, NiSource, owns utilities in five other states.

Nonprofits that testified in support of Columbia Gas in its rate case spoke about receiving financial gifts from the utility or its parent company. They also shared examples of how company employees volunteered their time to help causes.

“Columbia Gas is … proud of its support of community partners through financial contributions from the NiSource Charitable Foundation, a corporate foundation separate from Columbia Gas,” said Eric Hardgrove, director of state communications for NiSource. He added that customer dollars are not used to fund its donations. Ohio law would generally bar that use in any case.

The NiSource Charitable Foundation dispersed nearly $7.5 million in charitable donations in 2020, according to extracted data from its IRS filing. Sophia Fifner, the foundation’s executive director, declined to provide the full Form 990 report to the Energy News Network before the IRS posts it online, although federal law generally requires that returns be provided in response to requests.

In 2019, the most recent year posted, the 501(c)(3) gave $200,000 to the United Way of Central Ohio. Another $12,720 went to the LifeCare Alliance.

In addition to donations and volunteer time, data from the Accountability Project and other sources show the utility also has some personal relationships with various nonprofits:

• NiSource executive vice president Donald Brown is a former board of trustees chair for the United Way of Central Ohio. 

• Columbia Gas program manager Ryan Stredney is on the board of the Ohio Energy Project.

• NiSource’s vice president for strategy and risk operations, Brett Radulovich, is on the Children’s Hunger Alliance’s regional advisory board. 

• Ellen Macke, director of government and public affairs for Columbia Gas, is a Besa board member. 

• A retired NiSource vice president, Carl Levander, was on the board of LifeCare Alliance through late 2020.

• Darnita Bradley, now with JobsOhio, was a manager of government affairs and economic development at Columbia Gas for 20 years. She was a trustee at the Community Shelter Board from 2010 through 2019.

Appearance of influence

Critics cautioned that the charities’ support for utility rate hikes could backfire on them and their organizations’ clients.

“We appreciate the work of charities. But it is awkward and unhelpful for consumers when charities receiving donations from Columbia Gas show up to testify in support of the utility at a PUCO hearing on Columbia’s $212 million rate increase filing,” said Merrilee Embs, spokesperson for Ohio Consumers’ Counsel Bruce Weston.

“The charities’ testimony in support of Columbia Gas at the PUCO could give the unwanted appearance that a utility’s charitable giving is connected to utility influence,” Embs said. “No one involved should want even the appearance of any strings attached to the utility’s good initiative to support charity.”

The charities’ praise for Columbia Gas also troubled Sunrise Columbus member Joseph Glandorf, who also spoke against the utility’s rate hike at the same hearing where the nonprofit leaders spoke. “I wonder: did they come here of their own accord, or did Columbia ask them to?” he asked.

In an emailed statement, LifeCare’s director of strategic communications Tricia Strahler said Gehrig stands by his testimony. Echoing points and examples from it, she said NiSource has been a strong partner and worked together with LifeCare “to help ensure that those most in need do not lose their utility service in their time of greatest need and greatest stress.”

“I can honestly say that in my 21 plus years at LifeCare Alliance, not once have we gone to Columbia Gas on behalf of a client, and had the gas shut off for non-payment,” Gehring said in the statement.

Ohio law prohibits utility shutoffs when customers have certain medical conditions and give notice. Otherwise, Columbia Gas shut off customers’ gas more than 59,900 times from June 2021 through May 2022. That number was the highest reported by all gas utilities in Ohio this past year.

None of the other five nonprofit organizations responded to follow-up questions from the Energy News Network. NiSource’s Hardgrove would not say whether the company communicated with the nonprofits about the hearing beforehand.

However, emails among representatives of NiSource, the strategy firm Shumaker Advisors, and the Columbus Recreation and Parks Department apprised the parks department in advance about the June 9 hearing.

“I also look forward to meeting you in person next week. Thank you again for your support and partnership!” wrote Columbia Gas’s Macke.

Parks director Bernita Reese testified at the June 9 hearing about Columbia Gas’s good works. Fifner at the NiSource Charitable Foundation also is one of her former work colleagues.

A 2021 study in the Quarterly Journal of Economics concluded that nonprofits that got corporate funding were more likely to comment on rules the donor companies also commented on. Compared to other nonprofits, the corporate-funded nonprofits’ comments also were closer in content to those made by the donor companies. And regulators’ remarks on final rules were more similar to those of the companies when recent grantees submitted comments.

Ideally, regulators should be aware that companies engage in strategic philanthropy. “At a minimum it would allow regulators to weight input taking into account its independence of lack thereof,” said Raymond Fisman, one of the study authors and a professor of behavioral economics at Boston University.

Members of the public also can “put pressure on legislators to impose greater transparency on the process,” Fisman suggested.

Rate case continues

Columbia Gas is requesting a 27% increase in its base rate, which covers the cost of delivering natural gas to customers but not the fuel itself. NiSource’s Hardgrove said that Columbia Gas has not increased that rate in 14 years, and most customers would pay about $10 more per month.

But those bills have steadily risen as riders increased ratepayers’ bills. An infrastructure replacement rider started out at about $0.31 per month in 2008. The rider now costs $12.91 per month. A capital expenditure program rider started in 2018 was initially $3.51 per month. Residential customers now pay $5.91 monthly.

Fuel costs for customers have also risen. Columbia Gas’ standard choice plan price of $1.56 per hundred cubic feet in May and June is four times the 39 cents that plan’s customers paid during those months in 2018. Some customers are in community choice aggregation plans or shop around for other natural gas suppliers.

On July 28, Columbia Gas asked the PUCO to reschedule the case’s evidentiary hearing to October 18, in order to allow more time for settlement discussions. However, there’s a big gap in some of the parties’ positions.

PUCO staff has recommended a smaller revenue increase ranging from $35.2 million to $57.6 million per year, while the Office of the Ohio Consumers’ Counsel has said the increase should be only about $10 million.

Columbus resident Tiffany Pinto was unswayed by the charities’ testimony in June. As the final speaker at the hearing, she talked about how the rate increase would affect her as a customer and a donor.

“I contribute to some of these organizations,” Pinto said, “and as a ratepayer, I will have less money in my disposable income to support these organizations.”

Copyright 2022 WKSU. To see more, visit WKSU.

Don't Be the Board's Babysitter #NonprofitBoards

 

This blog is essentially me ruminating on a variety of subjects about the nonprofit sector, principally, nonprofit boards and governance (yes, read Dave Renz if you need be reminded of the difference between boards and governance).

To a great extent, John Hagan, the author of the following Stanford Social Innovation Review article is a ruminator - one who is uber creative and generating far more outputs than I at this stage of my 40-year consultant career.  But that's ok - Mr. Hagan has a knack to be envied - so do envy him.  The following article by Mr. Hagan raises some interesting questions about opportunity cost as applied to each of us as well as many of the challenges being an Exec of a nonprofit.  

Before urging you to take a read, I would like to quibble over the content of Mr. Hagan's 1st paragraph where he enumerates his activities as a nonprofit exec.  My quibble: I don't question his accuracy but I do question why.  Why was he doing the work of the board rather than supporting the work of the board.  And now comes the admonishing of all boards: it's your board - organize your own board and committee meetings.  Take your own minutes.  Make your own agenda.  A nonprofit is YOUR organization on behalf of the public.  Execs have a clear job and it's not being your babysitter.

Now, onto the article.  And, thanks Mr. Hagan.

 

The Upside of Nonprofit Burnout

Two years ago I quit my nonprofit CEO job. I’ve just had the two most productive years of my career.

By John Hagan Aug. 1, 2022

I kept count. In 11 years, as CEO of a mid-sized sustainability nonprofit, I planned and attended 55 consecutive board meetings. I planned or attended another 243 myriad committee meetings (Finance and Administration, Development, Programs, Executive Committee, Governance Committee, and Councilor’s meetings). Is there such a thing as being too well governed? I once calculated that staff time devoted to just one board meeting cost $17,688.48 (in 2019 dollars). Was my job to figure out how to solve the global sustainability challenge or only to keep 20 board members happy and engaged?

At age 63, I quit my reasonably well-paying, “important” nonprofit leadership job. Because I cared deeply about the organization and its mission, I gave the board enough lead time to find and hire a qualified CEO, a critical position in any nonprofit.

Why would I quit when I could have ridden off into the sunset on my own timetable?

Like a lot of my peers in the nonprofit sector, I was burned out. This is not a COVID-19 story; my decision came a year before COVID. COVID became a pandemic on top of an existing epidemic of burnout. The question for me was: Are those of us in the social sector using our accumulated skills and intellect wisely, or are we caught up in an inefficient nonprofit industrial complex that seems more about keeping donors happy than solving problems? Time is just too short.

First, quitting is not quite the right word. It sounds defeatist. I did what author and behavioral economist John List calls optimal quitting in his new book The Voltage Effect. Optimal quitting is a kind of quitting when you realize there is an opportunity cost to continuing to do what you are doing. A term invented by economists, opportunity cost is the difference between what you will accomplish if you keep doing what you are doing vs. what you might accomplish in an alternative future. Of course, we can’t know the future. But we can imagine a different future, if we make time to imagine it.

Second, I know what many nonprofit staff are thinking: “I’m burned out too, but I need the paycheck. I have to play the game.” Most articles on nonprofit burnout offer advice to the nonprofit employee, as if it’s somehow their fault. It’s not. This article is directed to funders, boards, and other CEOs. It’s your responsibility to redirect what you’re asking of your staff. They are in the trenches every day trying to make the world a better place. It’s up to you to create a nonprofit workplace where staff have time to think about the problems they are trying so hard to solve.

Since I quit two years ago, I’ve had the two most productive years of my career. I’ve formed a new organization (I’m the sole employee right now) with a mission that aligns with what I think needs to be done to solve the climate problem—building broad relationships of trust across our political and cultural divides. I published a report with a lobsterman on the feasibility of reducing greenhouse gas emissions by electrifying Maine’s 4,600-lobster-boat fleet. I launched a new project with the timber industry to understand how forestry can help counter climate impacts on bird populations. I formed the Intergen Climate Group comprised of younger and older generations to learn how to work together, rather than separately or at odds, on the climate crisis. I even co-authored an article for SSIR with my 15-year-old colleague about what we learned from working together. I’ve raised over $500K in support from foundations for my new work. This was the “opportunity cost” John List was talking about.

Especially for people in the last third of their career, say age 50 or older, it is often too easy to just keep doing what you are doing. We get comfortable. Our job title becomes our identity. We become conservative—risk-averse. We lose sight of the question ‘What is it that I am really good at? What am I still capable of?’ An economist might say ‘what’s my competitive advantage in the marketplace of ideas?’ But a more honest question would be ‘what makes my heart sing?’ Likely, the two are the same.

By age 50 you know this about yourself. We rarely consider opportunity cost, and even less so as the years tick by. But as List explains in The Voltage Effect, the more time you sink into what you’re doing now, the more time you are missing out on life’s most precious resource—your inspiration and your gift, whatever that might be. It is never too late to take the fork in the road. But you can’t take the fork if you can’t see the fork.

Traveling too fast for too long leads to burnout. Driven by well-educated, well-meaning boards that do not ask hard questions (of themselves) about the root cause of the problems their organization is tackling, nonprofit staff are drowning in servicing the board, balancing budgets, growing revenue, doing financial gymnastics to deal with misguided funder overhead caps, and looking “good” externally so even more revenue can be raised to … continue not solving the biggest challenges of our time.

Early in my tenure as CEO I felt challenged. I was learning new things about running an organization. I was learning how boards functioned. I was learning how to be a leader, often through mistakes made and lessons learned. I was growing. But there is a difference between being challenged and being stressed. Being challenged is a positive experience. Being stressed is a counterproductive one. What can start out as good (a challenge) can transmogrify into bad (a stress). Knowing when the line is crossed from good to bad can be hard to see in the moment. For me, it was the recognition that “this is not challenging anymore. This is a waste of my particular talent.” The opportunity cost became clear as day.

Some stress is just a part of life. But when we are chronically stressed, we lose our problem-solving ability. In addition to the physiological toll on our bodies, we have no time to think. As Johann Hari writes in his new book Stolen Focus, “As a species, we are facing a slew of unprecedented tripwires and trapdoors—like the climate crisis—and, unlike previous generations, we are mostly not rising to solve our biggest challenges.” Here we are, facing the most complex problem in human history—how to “fix” the one atmosphere 7.9 billion people depend on—and we are too stressed to figure it out?

We’ve gotten to the point that if we don’t feel stressed we assume we’re not working hard enough. But only when we force ourselves to slow down can we see what we are distracting ourselves from—what really matters. Think of the hours we lose each day to what Hari calls “cognitive switching,” when we have to move from brush fire to brush fire, from email to email—all of which robs us of the unfragmented time required to really understand an issue. We’re awfully busy, but are we making a difference?

From an ROI (return on investment) point of view, this makes no sense. Donors and funders and boards, ask yourselves why are our problems not really getting solved? Hold yourselves accountable. Don’t make the staff run even faster on a rat wheel going nowhere. Yes, we win some battles, and our communications departments are masterful at marketing them, but we’re losing the war. Nonprofit staff, from the CEO on down, need time to understand and solve the problem their organization exists to solve. Instead of setting goals around growing revenue, how about a new idea to solve a big problem? We have a distorted sense of what matters in nonprofits. We need a cultural change that starts with nonprofit boards, and anyone or any organization that funds the nonprofit sector. I know foundation staff who are just as stressed. It makes me wonder where the ultimate origin of this insanity is coming from.

Andrew Barnes, CEO of a thriving trustee company in New Zealand had an outrageous idea on his flight from New Zealand to Qatar—cut his staff’s work hours from five days to four days a week, but with the same pay. He followed through. After the change, weekly productivity stayed the same as a five-day workweek. A staunch capitalist might conclude, “if you can produce as much in four days as you can in five then you are under-delivering in five days!” Of course, such logic is flawed. It’s the amount of downtime that causes the increase in productivity. As Barnes says in his 2020 book The 4 Day Week, “… as the global population grows, the middle-class swells and pressure on resources intensifies, there is an urgent need to change—in quite an extreme way—how we work, if we are to get the best out of people and commerce, and begin to relieve the strain on ourselves and our planet.”

More recently, Anna Coote, Aidan Harper, and Alfie Stirling, in their book The Case for a Four Day Week, make another data-driven case that a four-day workweek would deliver a range of social, environmental, and economic benefits. In February, 2022, California legislators even introduced a bill to redefine the workweek from 40 hours to 32.

The 20th-century mantra was “time is money.” Coote and her coauthors argue that time is more precious than money. Many of us in the nonprofit sector could make more money if we really wanted to, but we can’t make more time. Perhaps our 21st-century mantra should be “time to think is more precious than money.” Give people time to develop a real solution to a problem, and revenue will follow. Too many nonprofits have this backward—grow revenue first, then we’ll solve the problem. It’s too easy to create an illusion of success with successful fundraising.

This article is not advocating for a four-day workweek. That is not the point. The point is, we do not have time to truly think about the problems we are working so hard to solve. We should take one day a week, say our fifth day, just to think, to read, to talk to someone we wouldn’t ordinarily have time to talk to so we can get a different or fresh perspective on the problem we’re trying to solve. Boards and funders, ask nonprofit staff if they have the time they need to truly understand the problems they are tackling. And recognize they may be reluctant to tell you the truth. You enjoy a power differential that you may or may not be aware of. If you create the “space” for them, they will see solutions they could have never seen otherwise. You can create that culture.

For me, writing foundation proposals is now a joy because I see it as an opportunity to test new and exciting ideas for solving some of the most complex problems of the 21st century. For the first time in my 30-plus years in the nonprofit sector, I submit proposals early because, by design, I allocate plenty of time to think through the ideas and present them in writing. I have no pressure from a board to “grow revenue” at the expense of thinking just one coherent thought about how to make the world a better place.

Remember Aesop’s tortoise-and-hare fable? If we want to win the race, the first thing we’ll need to do is slow down.

Read more stories by John Hagan.

Family on Board #NonprofitBoards

If you had any goals to diversify your nonprofit board, one place to begin is with identifying who is family.  Yes, you heard me correctly.  I have over my 40 years of consulting encountered many boards that are comprised of family members, mostly of the founder.  Bill Gates, are you listening?

Well, I don't think this is a great or even appropriate practice but what follows is a good Tallahassee Democrat article on the subject.  Enjoy and take to heart.  

Family members on same board is recipe for conflict of interest | Notes on Nonprofits

Alyce Lee Stansbury

Notes on Nonprofits

 

View Comments

 

I have been thinking about this question: “Is it a good idea to have related family members serve together on the same nonprofit board?”

I will state up-front I am not in favor of related family members serving on a board at the same time because it can create a conflict of interest, the appearance of a conflict of interest, and other pitfalls.

According to BoardSource, a “conflict of interest” exists when a board member, officer, or management employee has a personal interest that is in conflict with the interests of the organization, such that they may be influenced by this personal interest when making a decision for the organization.”  IRS guidelines 

In most cases, there are no legal restrictions or Internal Revenue Service prohibitions for related family members to serve together on a nonprofit board. 

The IRS defines “related” board members as those related by blood, marriage, or outside business connections. Blood relations include mother, father, brother, sister, son, daughter, grandmother, or grandfather. Marriage relations include spouse, son or daughter-in-law, and mother or father-in-law.

Two or more business partners serving on the board, while collectively owning 35% or more of a for-profit company, are considered related. Co-workers that have a superior — subordinate relationship at the same company are considered related. Former spouses are not considered related. 

No state prohibition

State laws vary on the acceptance of related board members. Florida Statute 496 requires all nonprofits registered to solicit funds in the state to adopt a conflict-of-interest policy and submit it to the department with the annual registration statement. There is no mention of related members being prohibited from serving together on the board. 

Requirements for quorum 

The IRS does require 501(c)(3) public charities to have at least 51% of the voting members of the board of directors be unrelated to ensure a quorum of unrelated directors can be achieved. For example, if a nonprofit has 7 board members, two of whom are married, the overall balance is acceptable. If only 4 directors can attend a board meeting, and 2 of the 4 are the related directors, a quorum cannot be achieved. 

Pitfalls to avoid 

Allowing related board members requires a high level of due diligence to avoid various pitfalls that can result. Examples include: 

• If the related board members function as a unit, the result can be like having one board member with two votes. 
• Voting independently is a hallmark of a director’s duty of care. If one family member does not carefully review board materials in advance, they may choose to follow the decision of the other member. 
• If a related family member is upset with the organization, they may abandon their responsibilities to the nonprofit. This is also a failure of the duty to care, and resignation would be a better option. 
• If related members resign due to a disagreement with a board decision, or move away, the board is faced with filling two unexpected vacancies at once. 
• Family relationships can sometimes create an awkward and difficult dynamic for other board members. For example, boards may be reluctant to deal with a non-performing or problematic board member when a family member is serving with them. This can result in frustration among participating directors who may resign rather than remain on the board where the inactive or problem board member is allowed to stay. 
• If a related family member becomes as officer, especially President or Chair, the balance of power of their combined membership over other board members is enhanced. This may discourage unrelated directors from serving in a leadership role. 

Considerations before serving  

Related directors may bring different strengths and interests to the board and feel capable of meeting the elevated responsibility of serving together.

It is common for grassroots nonprofits to start with multiple family members serving on the board to help launch the organization. Once the organization is established, they should gradually be replaced with diverse community representatives to guide the next phase of growth.   

Every nonprofit should carefully consider if having related family members strengthens the board’s abilities or weakens them.

If effective members are related, and their presence and expertise improve the board’s functioning, steps must be taken to disclose the relationship and avoid the potential pitfalls. However, if the related board members lack impartiality or don’t make an equal contribution to the work of the board, selecting a more diverse board is recommended.  

Notes on Nonprofits is produced by Alyce Lee Stansbury, CFRE, President of Stansbury Consulting, and includes nonprofit news, resources, best practices, and answers to reader questions. Send your feedback and questions to notesonnonprofits@gmail.com. 

Moving Towards Modern Governance #NonprofitBoards

The following learnings was offered by Diligent (the board portal folks).  While this set of learnings was directed to public sector boards, I think you will find them equally pertinent for nonprofit boards.

4 Steps Councils Can Take Towards Modern Governance

2 March, 2022

Theresa Sintetos

Tags:

 

Government

 

Through our interactions with public governing bodies, we’ve learned a few things: Good governance is dynamic—it can look a little different from one organization to the next. Yet, there are a few modern governance principles that hold constant.

1. Re-examine your community’s structure and priorities.

When you join a local government council, you’re inheriting a community structure (i.e., an existing set of rules, roles and processes that govern the council and the broader community). New members must get up to speed quickly on necessary processes and protocol, but they can also offer a fresh perspective on how things could be done better. Council members should not be afraid to re-examine or challenge the current processes that are in place and ask, “Can we be doing this a better way?” Keeping a close eye on the effectiveness of your current community structure and any established priorities will allow your council to more precisely pinpoint areas of improvement.

2. Focus on council composition and development.

Local governments that support the principles of modern governance align council member skills with long-term strategy; they see diversity of all kinds as an advantage, not a requirement. However, executing on these principles is where many councils fall short. Modern governance councils must work to identify gaps, understand the skills and perspectives required to answer the needs of the community, and recognize any potential conflicts of interest.

3. Improve visibility around key risks and opportunities.

It’s not enough to simply identify key risks—councils must then design the dashboards, reporting frameworks, and info-gathering networks that allow them to monitor these risks and identify red flags. A modern governance product solution ensures that local government councils remain aligned with their goals with strategic progress tracking, that they practice strong transparency, and that they stay in compliance with open meeting laws and regulations.

4. Avoid easy cyber mistakes.

Council members are notoriously guilty of using text messaging or personal email to share sensitive information and materials. For public boards, discussing board business outside of scheduled meetings not only violates open meeting laws, but puts the public’s information at risk. Local governments that practice modern governance do not make these mistakes; they centralize council and management collaboration, using role-based authorizations to view certain council materials, allowing for a level of privacy while also ensuring that the public has easy access to required information.

Key Takeaways

As difficult as the pandemic has been, it’s provided multiple opportunities for local boards to reground themselves in modern governance practices that allow them to meet the needs of their communities. Technology will play an important role in driving security, engagement and trust.

Nonprofit Boards and Strategic Thinking #NonprofitBoards

I generally offer that nonprofit boards execute their fiduciary duties doing the following activities: policy, planning, and evaluation.  Additionally, an earlier BoardSource study suggested that nonprofit boards are most effective when they have three types of conversations at board meetings: fiduciary, strategic and generative.

Most consultants believe that one of THE most important planning tasks is strategic planning which is informed by fiduciary issues and strategic "issues".  Dr. Fram, in his weekly blog has pulled from the McKinsey shelves to offer the following questions about if and how a board engages in strategic discussions if not full planning processes.

So, from Dr. Fram, material I think might be helpful to use with the board.

• How well do board members understand the mission dynamics? In terms of nonprofit experience, management has a better understanding of the mission’s environment. As a result, management needs to be proactive in educating board members about the dynamics involved. This can take place at meetings, retreats or engaging outside experts to interact with board members. Where it is possible and appropriate, management should invite board members to join them at local or regional conferences.

• Has there been enough board-management debate before a specific strategy is discussed? “Board members should approach these discussions with an owner’s mind-set and with the goal of helping management to broaden its thinking by considering new, even unexpected, perspectives.” During these debates management should provide information on key external trends affecting the mission. It also needs to review: strengths and weaknesses of staff talent to achieve the mission, the abilities of the nonprofit to differentiate itself and to increase services to its clientele. All of this can keep the organization from perpetuating the status quo—providing small budget increments and keeping current clients satisfied, not seeking growth.

• Have the board and management discussed all strategic options and wrestled them to the ground? Nonprofit board members and their managers may not be used to having high-quality discussion like these. To provide bases for these types of conversations the board must view management as a set of peers with different responsibilities. “Creating a participative, collaborative dynamic while maintaining a healthy tension is critical.”

“Developing strategy has always been complex—and becomes more so with a board’s increased involvement, which introduces new voices and expertise to the debate and puts pressure on management teams and board members alike to find the best answers.”

* http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/tapping-the-strategic-potential-of-boards

Free Nonprofit Board Resource #NonprofitBoards

Does your Governance Committee or do your board officers have questions about what your board can and maybe should be doing?  Here's a FREE resource that walks folks through the steps and you don't have to read this sequentially and there's no obligation and most content applies to most nonprofits.  And, it's free - curiously so.  

First Time Directors on Boards #NonprofitBoards

I found the following Fortune.com article on the experience of and how to receive newbies to a nonprofit board most insightful.  I needn't say more but that this is important reading for board chairs and governance committees.

 

First-time directors face social pressures as boards diversify July 29, 2022

It takes courage to walk into a room filled with relative strangers, especially when those strangers have deep familiarity with one another, speak the same shorthand, and behave according to an unspoken code of conduct.   But scores of new board directors have summoned the confidence to enter these rooms in recent years. And with boards increasingly prioritizing diversity—gender, race, and even work experience—their recruits are more likely to be people without directorship experience, says organizational psychologist Laryssa Topolnytsky, a partner at the talent and consulting firm Heidrick & Struggles.  This sea change presents a unique opportunity to devise new guidelines during the introductory period, which is an underappreciated yet critical part of the onboarding process. Several consultants and organizations, like the National Association of Corporate Directors, offer excellent certification and training programs, says Topolnytsky, who heads her company’s CEOs and boards consulting practice in the Americas. But she pushes new directors to go deeper, building awareness of the group dynamics and culture well before their first board meeting.  New board members should strive to forge strong interpersonal relationships from the outset, she says, and understand the values and motivations of fellow directors so that they’re comfortable enough to disagree during meetings “and make the best decisions as a group.” “At that level of corporate achievement, you’re going to run into some big personalities,” Topolnytsky says. First encounters with powerful, even legendary, executives can be exciting. But they can also be stressful, particularly if the company is in crisis. Boards meet far less often than executive teams, she notes, which makes it harder to build trust quickly.  Here’s some of the advice she shares with board novices:  • Confirm that the board is inclusive. New board members from underrepresented groups might ask themselves two questions: How open is the board to someone like me, with my unique skills? And is this board choosing me because I’m underrepresented or because of my expertise? Have conversations with the head of the nom/gov committee or the board chair to gauge the level of inclusivity. (The vast majority of boards, especially at large companies, do understand why boards should be diverse, Topolnytsky underlines.) • Do research. Turn to online resources and your search firm to get a sense of your fellow board members—and what makes them tick. Beyond LinkedIn, seek out press interviews and videos, such as Ted talks. These are the places to get “rich” information, says Topolnytsky. “Are they succinct? Are they more effusive? Do they have causes they care about?” • Book one-on-ones. Proactively set up meetings with all members, especially those you haven’t yet met, ideally before the first board meeting. Continue to meet regularly. Topolnytsky reccomends setting up at least one meeting before and after every group board meeting for the first year. The onus to integrate with fellow board members shouldn’t just fall on newcomers. Board chairs and committee leaders also have a duty to become well acquainted with new directors and understand what they have to offer, Topolnytsky says. One tip she gives chairs is to look over the meeting agenda and pinpoint areas where new members can lead a discussion and flex their subject matter expertise, rather than expecting them to force their way into the conversation—if at all.  Peter Gleason, CEO of the NACD, says that expectations have changed for new directors. In the past, “people would take their time, sit and listen for several board meetings before they jumped into the conversation,” he tells Fortune. “You don’t have that luxury anymore.” It’s worth noting that for new directors from underrepresented backgrounds, there’s also a risk to being a polite, quiet observer during their debut. “Research shows that for some underrepresented groups, that could fuel the unconscious bias that some people might have” about their merits, Topolnytsky says. In other words, speak up early.  Lila MacLellan lila.maclellan@fortune.com @lilamaclellan