Nonprofit Board Crisis

Black Women Philanthropists #NonprofitBoards

So you say you can't find folks that are different than your all-white male and female for board service?  And, you don't ask non-white folks to contribute to your mission?  Well listen-up: you just don't understand and your biases are getting in the way.  Take a look at the following resources to learn how philanthropy has long been a part of black women's values and activities.

Nonprofit Executives Pen Guide for — and About — Black Women Philanthropists

By Nicole Wallace

THE BLACK WOMAN’S GUIDE TO PHILANTHROPY

Judith Batty, who is profiled in the guide, says it’s important to give money, but that isn’t enough. People need to share their skills as well.

Veteran charity executives Angela Dorn and Jocelyn Harmon have a message for the nonprofit world: Black women are philanthropists.

They say it’s a message that both nonprofits and black women themselves need to hear.

"Everyone has the misconception that to be a philanthropist, you have to give enormous amounts of money to a cause and have your name on a building," Dorn says.

To set the record straight, she and Harmon have written "The Black Woman’s Guide to Philanthropy," which details African-Americans’ long history of giving and reframes philanthropy as sharing one’s time, talent, and testimony — in addition to giving money. The guide discusses how black women can make their giving more strategic and why it’s important to give to organizations led by people of color. It also profiles 12 black women who are driving social change as donors, board members, and foundation leaders.

"We want this to be an uplifting, helpful tool for black women, especially during this time where the vitriol is so intense," Harmon says.

She also hopes the guide will change nonprofits’ mind-set. The worst stereotype that organizations hold is that "black folks don’t have money and don’t give. ‘They’re the recipients of our services; they’re not our donors,’ " Harmon says. "We’re leaving money on the table with that belief."

Not Being Heard

The guide, released today as part of Black Philanthropy Month, is a project of #BlackHer, an online platform Dorn and Harmon started last year to discuss meaty topics and empower black women to make a difference in their communities. The two women, who are both African-American, met working at a nonprofit. They bonded over their shared frustration that while they were looked to as proof of the group’s diversity, they very seldom felt heard.

"When issues came up that related to people of color, and black people in particular, we were surprised by the fact that we weren’t being listened to," Dorn says. It was maddening, she says, to want to make things better for everyone — "and certainly for black people" — only to be ignored. "We wanted to find a space where we could create and could be heard, and #BlackHer emanated from that."

The new philanthropy guide was sponsored by Giving Compass, an effort by the Raikes Foundation to provide information to donors who want to make their charitable donations more effective. Giving Compass will be publishing the profiles of black women to watch in philanthropy on its website as well.

Nonprofits often fail to ask people of color to give or to serve on boards. Donor Judith Batty, one of the women profiled in the guide, argues that both are important. She serves on the boards of Arena Stage, Girl Scouts of the USA, and the Levine School of Music.

"Giving money is critical, but it’s not enough to just give money," Batty says in her profile in the guide. "If you have skills that can help an organization grow or survive, it’s important to offer to share them to help the organization become stronger."

 

Nonprofit Board Diversity: Age #NonprofitBoards

Race, ethnicity and gender are not the only diversity "categories" challenging the composition of boards.  With a goal of nonprofit governance ensuring that the voices of those served are present, age is one more important consideration noting, in my experience, that most nonprofit boards are comprised of folks minimally in their 40s (yes, this is a subjective observation, not that I've taken a formal survey).  The reason that it's older folks tend to be who sits on boards ranges from "that's who has time and money" and "that's who has enough lived experience to have come to a place that board service represents their values" and other rationale I'm sure.  But I believe that having only older folks is as much a shortcoming as is having all white or all male members.  The following Observer article describes the situation and felt shortcomings by museums and offers at least one solution.

For Museum Boards, Age Diversity Is One of Many Issues—Could Nixing Trustee Dues Fix Them All?

By Mariana Fernandez • 08/14/19 8:00am

Over the past year, museums, and more specifically the people who serve on their boards, have come under unprecedented backlash for the incoherence between the values they represent and the institutions they are supposed to serve. Protests over the ethical impropriety of the investment boards of the Whitney Museum of American Art—most notably the involvement of Warren B. Kanders with the institution—as well as Museum of Modern Art in New York and the San Francisco Museum of Modern Art have called into question the prioritization of wealth over all other criteria when it comes to museums receiving funding.

But with major art institutions and the people who run them under a microscope, one issue not often questioned is the lack of age diversity on museum boards. According to a study conducted by the American Alliance of Museum’s Facing Change Initiative, only 26 percent of museum trustees are under the age of 50, compared with 43 percent of nonprofit trustees on the whole. Christina Carr, writing for AAM’s website, recently noted that “boards with a higher percentage of directors under forty are more likely to ask others for money, tend to be more engaged in governance, and demonstrate a higher level of commitment to and involvement with the organization.”

SEE ALSO: Artists Show Subversive Ways to Challenge Power in the Rubin Museum’s New Exhibition

More so than other nonprofits, ageism on museum boards is inherently financially based: with corporate and government funding in decline, boards serve not only as the institution’s primary governing body but also provide an increasingly crucial source of funding (often as high as six-figure annual donations to retain their seats). The two functions, as artist Andrea Fraser points out in her project, 2016 in Museums, Money, and Politics, are often at odds with one another and hinder board members from acting in the institution’s best interest.

Carr, who is a co-chair of the fundraising advisory board at the Smithsonian’s Arthur M. Sackler Gallery and the author of the blog NextGenPatron, believes a crucial step towards remedying the lack of age diversity among museum representatives would entail adjusting the monetary requirements required of board members so as to make board seats more accessible to younger prospective trustees. This suggestion brings up a novel idea: what if boards were relieved of their financial obligation all together? Fraser goes so far as to suggest designating separate boards for governance and for funding, a model that would—more realistically than transforming the entire financial basis of museums—provide a more democratized form of governance within institutions.

Some museums have already incorporated elements of a more representative model. In the spring, London’s Tate announced the appointment of 28-year-old Anna Lowe as Youth Engagement Tate Trustee, making her the youngest serving board member at a U.K. museum or gallery.

Fraser’s model envisions a system where those tasked with the museum’s governance are selected based on their alignment with the institution’s mission and their professional ability to fulfill it. It could mean potential boards made up of community leaders, staff members, and artists, who, no longer required to contribute a set amount of their own money, would inevitably constitute a higher level of age diversity.

Separating museum representatives from its primary financial donors could also be entirely impractical, but there is something to be said about these conversations beginning to rattle how museums think about their relationship to money, diversity and civic engagement.

Filed Under: Arts, Visual Art, The Whitney Museum Of American Art, Museum Of Modern Art, San Francisco Museum Of Modern Art, Andrea Fraser, Warren B. Kanders, Museum Board

 

https://observer.com/2019/08/museum-board-age-diversity-trustee-dues-money-obligation-eliminated/

 

 

Conspiracy!!! #NonprofitBoards

I just received this email and am disappointed.  This announcement makes me believe that maybe the conspiracy theorists aren't totally wrong on some things.  In particular, the thought that there is an real behind the scenes effort to squash truth-telling (aka the media) that actually that informs and supports rational decision-making.

   

A STATEMENT FROM GOVERNING READ MORE

MAGAZINE NEWSLETTERS PODCASTS EVENTS

SPONSORED: PAPERS SPECIAL PROJECTS STORIES

GOVERNING TO CLOSE

After 32 years, the magazine of record for state and local government will discontinue operations.

Governing magazine has told important stories for over three decades. Stories from and about state and local government – what Supreme Court Justice Louis Brandeis called America’s  laboratories of democracy. 

 

So it is with a very heavy heart that we’re announcing that Governing will be discontinuing publication this fall. For the past several years, Governing and our parent company, e.Republic, have made continued investments in the magazine, in governing.com and in the numerous events we host throughout the country. Ultimately, however, Governing has proven to be unsustainable as a business in today’s media environment. We will cease publication of the monthly print magazine after September, and we will be ramping down our web presence and the rest of our operations over the next few months. 

 

We are extremely proud of the work that Governing has done since it was founded in 1987. We have endeavored to cover the issues that matter most to states and cities and counties, and to do it with journalistic integrity and in a way that resonates with our readers in the public sector. Governing has the greatest readers in this business—men and women who have made it their life’s work to improve the lives of the people who live in their communities. It has been an honor to serve them, and to help tell their stories.

 

We know the great and important work of America’s state and local leaders will continue. The public arena has undergone tremendous financial, political and social change since we began publication 33 years ago. And states and local governments are again at an important time of upheaval. We have loved chronicling that incredible work for the past three decades, and we’re confident that the tremendous work of America’s state and local public servants will go on.

 

Signed,

 

Mark Funkhouser

Publisher

 

Zach Patton

Executive Editor

 

Elizabeth Daigneau

Managing Editor

 

August 7, 2019  

 

PS - if you have missed this source, take some time and go back  and look.  Now what do we have: John Oliver (and hey, he's damned good!)?

 

Nonprofit Board Skills #NonprofitBoards

Folks at the University of Notre Dame (Indiana) believe they have found a formula for getting all the folks who to date have been left off of nonprofit boards, onto these boards.  All the research continuing to be produced affirms that there are many voices left off of boards and as the WBST 2 article notes:

    People of all different races, gender, economic backgrounds, and areas of life depend on many non-profits nationwide. ...women (in particular) make up     50-percent of the population, but are under-represented when it comes to taking a seat on non-profit boards.  "There are voices that missing, there are     stories that aren't being told. There are perspectives and ideas that aren't being generated when these women aren't there," said Logan.

So, the University has developed a "boot camp" to help prospective board folks "boning up on their skills and (learn) what it takes and just having an opportunity to connect," and in the end, "change the game and empower women with the skills needed to be successful non-profit board members."

All well and good I believe but I have a big "but".  I say to myself, wait a minute, is it not the job of boards themselves to recruit and prepare recruits for service?  And what skills will Notre Dame be "boning up" such that there should even be a national effort (which is something this group wants to do as though there aren't now such efforts in many communities across the country)?

So, kudos to Notre Dame for identifying a strategy that may engage more of the un-engaged in Indiana.  And perhaps such a recruitment effort might have parts that can indeed be replicated elsewhere (so maybe a pamphlet might be produced?).  But really folks, nonprofit boards have this job - that is, to recruit and orient and where appropriate, strengthen the recruits.  And yes, I know boards have failed before but then they also weren't very conscious of their failings.  I think, thanks to BoardSource and the Support Centers, that is changing, rapidly.  And yes, there is much more to do.  So boards, rethink your diversity and get out there.  You do indeed need the voice of your constituents at your table, now!  And governance committees: you have to do business with the focus on ensuring everyone at the table is clear about how to participate well and has the appropriate resources.  But do we need another national program - um, maybe not.

Nonprofit Crises? #NonprofitBoards

How much a crisis is it when the executive director resigns literally without warning?  One answer: not so much when there is an emergency succession plan in place.  For the board and staff of a nonprofit, the sudden loss of an executive may very much feel like a crisis with the first activity being everyone wanting to know "what happened?"  Thus is the story for the Vashon Center for the Arts.  

From the media's point of view, there is certainly of cloud of mystery surrounding Friday night's unexpected resignation "for personal reasons" of the executive.  The chatter is alive by staff, board and volunteers.  But should the reason for the resignation matter?  Yes, if it has to do with the board or staff or condition of the Center (particularly if unknown).  An emergency succession plan should help determine in the immediate what next for the day-to-day but I believe the board owes it to itself to do some digging, forensic style if you would, to ensure that all is well for the Center and can go forward unimpeded by darkness.  Then of course, the board must review what must become its criteria for selecting the next exec.  Tedious and perhaps scary but all part of the steps to making or keeping a nonprofit healthy and productive toward mission.

Here's the article:

VCA executive director abruptly resigns

Kevin Hoffberg submitted his resignation Wednesday night, effective immediately

• By Elizabeth Shepherd
• Friday, August 9, 2019 8:48pm

Kevin Hoffberg, Vashon Center for the Arts’ executive director since June of 2018, resigned suddenly from his position with the arts organization on Thursday, Aug. 8.

Hoffberg had been in his post for 14 months. He is the second executive director to leave the organization since long-time executive director Molly Reed retired from her position in March 2017.

VCA issued a press release on Friday, Aug. 9, praising Hoffberg for his work at the organization, and saying he had left his position for personal reasons. It added that Allison Halstead Reid, who was named associate executive director of the organization in April, would serve as VCA’s acting director while the board evaluated how to best fill the executive role.

Hoffberg did not respond to requests for comments.

 

Hoffberg’s resignation was effective immediately. As of Thursday afternoon, he was no longer listed as a staff member on VCA’s website, and his LinkedIn profile listed the conclusion of his employment at VCA as August 2019.

VCA’s staff and board learned of the sudden resignation in two successive emails sent by Hoffberg, said Halstead Reid and board President John de Groen, who met with The Beachcomber on Friday morning. Both said that Hoffberg’s decision had come as a shock to them.

 

The first brief email, to VCA board members, was sent late Wednesday night. In it, Hoffberg informed the board of his decision to resign for personal reasons, and noted that he had cleared out his office and left his keys and cards in the VCA office. The second email, which landed in staffers’ inboxes at 8 a.m. Thursday, was also brief. According to Halstead Reid and de Groen, the email, in its entirely, said, “Dear Friends, I am sad and sorry to tell you that I have resigned from VCA effective today. Personal issues require my full attention. With great love and respect to you all, Kevin.”

Both de Groen and Halstead Reid said that they would not speculate about the reasons for Hoffberg’s decision but had been grateful for his leadership of the organization.

“My hope is that he continues to stay very involved and active, not just here but in the community,” Halstead Reid said. “He is a brilliant visionary and leader — and three or four months working with him was far too short.”

Halstead Reid also said that she had been in communication with Hoffberg since his resignation, and that he had been “gracious and generous, answering the questions I have in this transition.” She also said that Hoffberg planned to attend a private event for VCA donors and supporters at VCA on Friday evening.

Hoffberg, a former board member, joined VCA’s staff as director of operations in March 2018, after the brief tenure of VCA’s former executive director, Susan Warner. Her departure from VCA came weeks after a contentious town hall meeting, held at VCA in February 2018 and attended by almost 200 islanders. Speakers at the meeting expressed multiple grievances regarding VCA’s direction after it moved into its new $20 million facility in 2016.

The organization’s finances were also called into question during and after the meeting, when it was revealed that the assets of a $6 million trust, established by islander Kay White and long described by the organization as a sustainability fund or quasi-endowment, had been used instead to help pay for construction costs of VCA’s new campus.

Hoffberg was officially appointed to the executive director position in June 2018. At that time, he vowed to help chart a course for the organization to a secure financial future and re-engage the community in its many programs.

Prior to working at VCA, Hoffberg had not previously been employed by an arts nonprofit, though he professed a lifelong love of the arts and had served on nonprofit boards. His LinkedIn profile lists a long career as an executive, consultant and entrepreneur, working in almost 20 companies — several of which he started — in industries ranging from technology to marketing, banking and asset management.

As executive director of VCA, Hoffberg was known for his effusive communication style, which included authoring a weekly blog, The Fish Wrap. In the blog, which was also widely disseminated via email, Hoffberg enthused about the many goings-on at the arts center. In recent weeks, he had written about VCA’s summer arts camps for youth, the organization’s premiere of new dance works by the Seattle Dance Collective and this weekend’s presentation of Broadway singer Christine Andreas’ concert, “Love is Good.”

On Aug. 8 — the same day as the news of his resignation — The Beachcomber published an op-ed by Hoffberg titled “VCA: Our house, is a very, very fine house,” in which he wrote about the success of the dance program and VCA’s second annual Summer Arts Fest, a two-month rolling presentation of island visual art that he initiated last year. Hoffberg submitted the commentary on July 18, but The Beachcomber held it for publication, due to other time-sensitive op-eds, until Aug 8.

Hoffberg regularly presented himself as the face and voice of VCA.

This spring, he hosted a membership meeting at VCA, delivering a 75-minute, TED-style talk in which he recapped the organization’s previous year as well as gave a preview of plans for its future.

The evening included a notable reveal for those interested in VCA’s finances — a walk-through of documents including profit-and-loss statements for the arts center from 2015 to 2018. The documents, now posted online at vashoncenterforthearts.org/financial-information, included the organization’s 2019 budget and a balance sheet as of Dec. 31, 2018.

The documents show that VCA projects a budget deficit of almost $221,000 in 2019, up from a deficit of $13,000 in 2018 — a year in which VCA received $316,00 in various financial assets, according to the terms of Kay White’s estate. In the document, Hoffberg also projected that that VCA would need to raise in excess of $1 million per year on an annual basis.

At the meeting, he said that VCA had hit that mark in 2018, receiving approximately $1 million in donations, with an additional $200,000 pledged to arrive by the end of 2020. He also said VCA’s current cash reserves were approximately $1.65 million.

Both Halstead Reid and de Groen, in their interview Friday with The Beachcomber, said that VCA’s cash position is still strong.

During Hoffberg’s tenure, there was considerable turnover both in staff positions as well as the make-up of VCA’s board of directors. Devin Grimm, VCA’s full-time gallery curator, left the organization in January and was replaced by part-time gallery business manager Lynann Politte. Two other full-time staff positions were also eliminated early in the year, as a cost-saving measure.

In April, VCA announced its most significant staffing shake-up, eliminating the job of then-artistic director Angela Gist and announcing the creation of a new senior position of associate executive director, filled by Halstead Reid.

Halstead Reid resigned from the board two days prior to joining the organization’s staff.

On Friday, Halstead Reid said that she loves working for VCA and would like to be considered for the organization’s new director, and that she believed a search process would seem favorable to the community. De Groen, for his part, said that although the board needed time to come to a decision about the best way forward, both he and staff members were very grateful to have Halstead Reid at the helm of the organization.

“If I am offered the job, I will fully accept it,” Halstead Reid said. “If I’m asked to submit my resume, I will absolutely do that.”

Halstead Reid went on to say that she hoped Hoffberg knew, despite his abrupt departure, that he had created a strong staff and board who could carry on VCA’s work without him.

“There is never a good time for this kind of transition,” she said. “But I hope that he would … recognize that he put in place a strong staff and board that could move forward, even as chaotic as these first few weeks will undoubtedly be. He told our staff regularly that he had the utmost faith in us as an organization and in the things we do.”

Nonprofit Board Has Final Say #NonprofitBoard

At the end of the day, it is a nonprofit's board that must use what it deems as prudent (understanding what others facing similar or like situations would do) to decide about the future.  In retrospect, many so-called "wise" and reputable folks would say that the Portland, Oregon Opera's board has been less than prudent (and thus, not responsible from a fiduciary perspective) in drawing down, in two years, a part of its endowment.  It has also just recently removed its long-term director. 

That said, the board, has just completed a strategic plan and is resolved that it is making decisions with the best interest of the Opera's future in mind.  The future will tell but what the board has done IS what is theirs to do.  And, it appears that their decisions, at least according to the Board Chair, were not done without homework, thought, and discussion.  This I believe is how the public would want it even though in the short-run, there are those who question.

Here's the Portland Tribune article describing many of the ins-and-outs of this situation.

Portland Opera's dramatic turn of money troubles

 

Nick Budnick

 

Tuesday, August 06, 2019

 

Artistic company spending down its endowment to stay afloat, which has auditors concerned

 

The abrupt departure of longtime Portland Opera director Christopher Mattaliano last month followed financial struggles that have raised eyebrows at the Oregon Department of Justice and sparked the nonprofit's board to launch an aggressive remake of the Opera's operations and image.

As a result of the Opera's new focus, Portlanders can expect more productions like they saw this year — like "As One," the coming-of-age tale of a transgender youth, as well as "In the Penal Colony," a story about capital punishment that opened last week.

The push to become more relevant is part of a larger effort to make Portland Opera a more prominent voice in Portland's art world and, along the way, boost the company's flagging financial fortunes.

Records show the board of the nonprofit, which was founded in 1964, last year tapped its endowment at a level that state law considers fiscally questionable — for $1 million in operating funds in late October, intended to get the nonprofit through early March of this year.

Board leaders defend their financial oversight as appropriate and the endowment spending as necessary, but say a new strategic plan hammered out with an outside consultant will bring a new "austerity" to Portland Opera — as well as a new, more relevant sensibility that appeals to more Portlanders.

"It's a work in progress. We need to balance the budget," said board member Gregory Hinckley. "We will."

Mattaliano, who oversaw Portland Opera for 16 years, announced his departure jointly with the organization, saying he'd chosen to move into an artistic advisory role partly as a result of the strategic plan.

He did not respond to a Portland Tribune request for an interview about Portland Opera's future and his tenure. But some opera fans say the changes are both welcome and long overdue.

"This change has been coming for a long time," said Rodney Mazour, past president of the Portland Opera Guild, a separate organization that played a key role in founding the company more than 50 years ago. He says the Portland Opera has for too long focused on an old-fashioned model of exclusivity rather than inclusivity.

"I would say that this is a clear watershed moment," he said.

The opera board will vote on the strategic plan, forged with the help of the local consulting firm The Metropolitan Group, on Wednesday, Aug. 7.

High and low notes

For Portland Opera, it will be the second attempt to reset in five years. The previous one was the 2014 shift to a summer schedule called the Summer Festival.

Portland wasn't the first city to pursue the idea, some insiders say. But regardless, it was a failure, and the number of subscribers plummeted.

"We were beginning a transition to a new operating model that would allow us to reduce operating costs while continuing to produce world-class opera," wrote the Opera board's then-president, Kay Abramowitz, in a September 2016 letter to the Oregon Department of Justice charitable activities unit, addressing questions about Portland Opera's financial health. "The change to the new model and the lower-than- anticipated contributions have made it even more difficult to balance our budget."

Peter Bilotta, former director of development for Portland Opera, points out that Portland is not alone.

"Just about every major regional opera company in North America has been facing the same challenges that Portland Opera has, for really the last 15 to 20 years. You know, everything from changing audience demographics to just ... the very expensive model of producing," he said, adding that in smaller cities the challenges are greater. "One of the biggest challenges is that major regional centers like ours, companies are expected to produce at a very, very high level of quality, but don't have the support of the community and the level of ticket prices needed to actually pay for that quality of opera."

Whatever the reason, Portland Opera has tapped its endowment — part of which was generated by a joint fundraising effort with the Oregon Symphony and Portland Art Museum more than a decade ago — to help make up the balance. The endowment typically runs around $8 million — about the same as Portland Opera's yearly expenses.

The board withdrew $1.12 million from its endowment between 2014 and 2016, and last October authorized tapping it for $1 million more— well above the 4% cap that some nonprofit experts recommend and also above the 7% level that Oregon state law considers "rebuttably imprudent."

Essentially, "rebuttably imprudent" is a statutory yellow light for nonprofit boards.

The board reported its endowment spending to Oregon DOJ, inviting comment. On Oct. 26, 2018, state lawyer Susan Bower responded with concern.

"As your letter notes, the organization has made extraordinary distributions from its endowment for the past few years. I certainly understand the difficulties the organization faces, but of course, have some concerns about whether this trend will simply continue."

 

Board members say they are confident in the future.

Board president Curtis Thompson framed an aggressive vision for Portland Opera to follow the Oregon Symphony's lead in becoming a more visible and relevant member of the Portland art scene.

And Gregory Hinckley, who also is a board member, said Portland Opera has enough assets thanks to its real estate holdings to make the transition.

"It has a financial runway to work on its audience problem," he said.

One consequence of Portland Opera's new plan?

Mattaliano's successor may be only an artistic director, not an executive director, and may not be permanent, Thompson said.

 

The Tribune asked Thompson if it is fair to infer that Mattaliano's departure was related to his $253,000 yearly salary and the new austerity?

"I think it's more fair to say that the elements of the strategic plan that are being implemented, those are really what's driving all the change, and Chris resigning and going into artistic direction. That's the main driver of this change," he said.

"I'm really happy we did it," Thompson added. "And I'm not into going back into time and looking at what mistakes were made — though you can learn from these mistakes."

Upcoming season

The Portland Opera's 2019-20 season begins Oct. 25 with "Madama Butterfly" and continues with "An American Quartet," "Bajazet," "Big Night Concert," "Pagliacci," and "Three Decembers," ending in July 2020.

 

 

 

 

Nonprofit Founder Syndrome #NonprofitBoards

Nonprofit founders are often amazing people who successfully, through their vision, attract many to their endeavor.  Some of those "many" are volunteers while others are donors.  Some of those volunteers agree to serve in a governing position as board members.  But how much do they really know and understand about their responsibilities?  Often times, in my experience, very little.  After all, they joined to support their friend or relative, the founder(s) and will pretty much leave any type of fiduciary duty at the door while they allow their charismatic leader to take the wheel and drive any direction they choose.  Such appears to be the case, in my opinion based on sketchy facts drawn from the following Daily Interlake article that tells of a ministry with lots of activities, a revenue generating venture and a board member just taking charge while the organization is pretty much going to be closed.  The core of what went wrong would again be, in my opinion, failed governance.  Will better governance make-up for the history? It remains to be seen.  The lessons: governance means oversight (not a new lesson); founders, should step off the board nearly as soon as a board has been seated and, when recruiting a board would do better to have their early recruits (often their circle) serve a short period while these interim folks figure out who would make appropriate leaders to look out first for the well-being of the nonprofit.  

Here's the Daily Interlake article:

STATE OFFICE INVESTIGATING LOCAL NONPROFIT

 

August 06, 2019 at 5:00 am | By KIANNA GARDNER Daily Inter Lake

 Print Article

 

 

It has been just over two weeks since Potter’s Field Ministries and other associated nonprofits closed their doors amid a wave of allegations against the organization’s founders — a folding that displaced dozens of church members, put the ministry’s assets in limbo and created a rift in financial transparency between the ministry and its donors.

Officials with the Montana Attorney General’s Office, which monitors nonprofit activity in the state, “have been in conversation with them [Potter’s Field officials] and are currently looking into their current status.” Department officials were unable to comment further.

The Attorney General’s office, as well as officials with Potter’s Field, will be investigating potential problems involving mismanagement, fraud, labor, wages, and more surrounding the multiple nonprofits.

According to a public statement from Rob McCoy, the new chairman of Potter’s Field’s Board of Directors and pastor with Godspeak Church in Thousand Oaks, California, a “full investigation as to any formal allegations brought to the Boards of these ministries,” will be performed. He adds that, with oversight from other pastors, he will “arrange for an independent audit to be taken, with the findings to be made public.”

“If these ministries are found to have been involved in any ethical or legal failure, it is our intention to both own those failings and make restitution where fault has been established,” McCoy writes.

He says one red flag in particular may lie with the ministry’s MudMan Burgers restaurants, which was “doing business as” a portion of one of the nonprofits. As part of the ministry’s former IGNITE program, interns signed a contract saying if they worked more than 40 hours a week, those hours would be considered volunteer work. Multiple former interns said they worked upwards of 80 hours per week, for $2 to $3 per hour.

Officials with the Montana Department of Labor and Industry offered general responses via email to questions regarding pay in Montana as it pertains to nonprofits, according to Montana Law. The answers did not imply a position on MudMan specifically.

First, any contract, like the one signed by employees at MudMan, entered into between the employee and employer which violates or circumvents the law is “unlawful and void.” Additionally, Montana law requires if an employee works more than 40 hours, those hours are required to be paid at time-and-a-half. Finally, volunteer work falls under the Fair Labor Standards Act, which states “due to the possibility of coercion to perform unpaid services, paid employees may not volunteer to perform the same type of services for their employer that they are normally employed to perform.”

Former interns stated their paid duties and volunteer duties at MudMan were indistinguishable.

According to McCoy, the board hopes to sell the popular MudMan franchise. There are multiple interested buyers.

MCCOY had previously divulged intentions to promptly dissolve the nonprofits and liquidate the assets. While those intentions still stand, Montana law regarding nonprofits details the complicated nature of such transitions.

He wrote, “After conferencing with the office of the Attorney General of Montana, we have ascertained that immediate dissolution of the two Potter’s Field nonprofits cannot be accomplished. That process will proceed as to each organization in keeping with Montana state law and will eventually be subject to the review and approval of the Attorney General.”

McCoy now predicts the majority of the dissolution process will be complete by 2020.

Dissolution can occur after the assets of Potter’s Field, which amount to about $1.5 million in property appraisal values and more in vehicle assessments, have been sold at fair market value. But the matter must first be voted on by the Board of Directors, which acts as the governing body for the Potter’s Field nonprofits.

McCoy maintains Mike and Pam Rozell, the founders facing allegations of abuse who are also on the Board of Directors, have removed themselves from ministry operations. However, they and other original board members will hold their positions until the assets have been sold. McCoy says all board members have greenlighted the selling of the assets.

“Michael and Pam Rozell have voluntarily removed themselves from the day-to-day operations of PFR and will be formally resigning from the Board of Directors along with the current sitting Board members as new officers and directors are elected to continue administration of the kids programs,” the statement reads.

McCoy says Potter’s Field Kids, which is one of the more well-known and successful programs to come from the ministry, is the only arm of the ministry that will continue operating.

“It takes a lot do Potter’s Field Kids well and we’ve done it well because we were able to put hands and feet on the ground in order to make a real difference,” said Austin Hiatt, who has been with Potter’s Field Kids for several years. “It was more than just giving a child some money and say ‘have a good day.’”

The program’s estimated 6,000 to 8,000 donors have supported children in need in Guatemala, Uganda and elsewhere overseas. They give $20 per month, or about $1.4 to $1.9 million per year and are provided a “prayer child,” who is supported by the work done by missionaries.

“I’ve been in and out of hundreds of churches and have personally signed up hundreds if not thousands of the existing sponsors and I’ve always been clear you’re supporting the work of Potter’s Field Kids as a whole,” Hiatt said.

Moving forward, a minimum of 85 percent of all donations will go directly to the children and missionaries, McCoy states. McCoy says he will be exercising full transparency and financial accountability of the sponsorship program in light of claims by Calvary Chapel pastor Don McClure, whose church was previously affiliated with Potter’s Field, that a portion of the money “wasn’t going to the kids.”

The claim of misappropriation of donor dollars is being investigated.

In the coming months, McCoy also hopes to meet with those perhaps affected most by the closing: the dozens of ministry members and former interns.

“There are a lot of people who are hurting in this valley and outside of the area. People were shell-shocked, their entire ministry just imploded overnight,” McCoy said. “I want to counsel them and will as soon as I get past what’s right in front of me.”

McCoy, who came on as an authority figure of Potter’s Field only weeks before the official closing and is also the mayor of Thousand Oaks, California, has described the entire event as “horrifying.”

“In all of my pastoral and political career, I have never witnessed anything quite like this,” McCoy said.

As it stands, money from the sales of assets of Potter’s Field will go toward three main purposes: bringing dozens of missionaries abroad back home, paying the ministry’s debts and regular expenses such as payrolls, and preparing for any litigation that may surface in light of findings from investigations and the allegations of verbal and emotional abuse. Godspeak, Calvary Chapel Associations and the Rozells will not receive any compensation from the sales, according to McCoy.

Reporter Kianna Gardner at 758-4439 or kgardner@dailyinterlake.com

Nonprofit Boards Need Shrewd Businesspeople #NonprofitBoards

Are "sharp businessmen" the salvation for nonprofits?  While not the singular message of the Wilmington Biz article, this is the final message.  For some reason the author believes that the only folks with capacity to discern how to measure effectiveness or to even set the standards for measurement are businesspeople.  I don't agree - I think the folks who pursue a mission do know what are their expectations: they have a theory of change, grounded in facts or otherwise, that define for them and those they rally how the world or their community or the folks or animals or things will be as a result of their intervention.  They do have an idea even if they haven't calculated all the numbers.  Yes, folks who do calculate the numbers on a daily basis can be helpful but not them alone.  More importantly, calculating the numbers does matter for all the reasons further described in the following article.  So, businesspeople essential - not necessarily.  Calculating the numbers - absolutely!  

From Willington Biz:

Measuring Nonprofit ROI

SPONSORED CONTENT PROVIDED BY JC LYLE - EXECUTIVE DIRECTOR, WILMINGTON AREA REBUILDING MINISTRY

 

Donations to nonprofits, by their very nature, provide a return on a community’s investment. In many cases, the return can be estimated in dollars.
 
For example, with the help of volunteers, WARM may spend $2,500 on the home of an older adult to build a wheelchair/walker ramp, install grab bars, and complete other accessibility upgrades. These fall prevention measures may enable the homeowner to remain safe and independent in their home for three years or longer. Falls can cause head, hip, or other serious injuries, requiring a costly emergency room visit and ultimately assisted care. The median annual cost of an assisted living facility in the Wilmington area (the highest in the state) is over $50,000. That $2,500 investment can save $150,000!
 
Savvy donors always ask nonprofit leaders to report back on the ROI, measured sometimes by dollars saved and always by impact in the world: homes rebuilt, acres conserved, children fed, patients seen.
 
I’ve observed four nonprofit investment approaches. If you are on a board or donate to a local charity, think about the characteristics you’ve observed.
 
Fixed
The organization is meeting the need for its services at its current capacity. Leaders have decided it is not necessary to grow. Maintenance, staffing, and other ongoing expenses are covered; investing in sophisticated technology, new/larger facilities, personnel, and other infrastructure is not needed.
 
Fearful
Many organizations cannot meet the demand for their services, but the leaders shy away from investments. They may look at a recommendation for a $2,000 database and think, “$2,000 could buy a lot of program supplies,” or assume donors don’t want to pay for indirect costs such as continuing education. They are afraid to make a mistake; so, they play it safe.
 
Foolish
Any investment decision requires a careful analysis of the expected benefits and risks. This becomes even more important when managing donated funds. Obviously, buying every shiny new toy or spending extravagantly on events and facilities can drain funds intended for the mission. This does not honor our donors or improve our service to the people who need us.
 
Fruitful
Investments in nonprofits have a high return when they build the capacity of the organization to fulfill its mission. Just as in the for-profit sector, the return can be measured in dollars. That $2,000 database may save $4,000 worth of staff administrative time over the next three years, leaving more resources for the program in the long run.
 
In the nonprofit sector, there is a second bottom line: How much more impact can we make? That continuing education may result in a stronger after school program or a more efficient building practice. Most donors expect charities to strive for excellence.  
 
At WARM our cost benefit analysis includes questions such as:

1. How will this investment improve our services?
2. How many more families can we serve?
3. How will it enhance the volunteer experience and increase retention?
4. How will it put us in a better position to attract and administer more funds?

Delivering a strong organizational ROI requires important investments in the nonprofit’s infrastructure, decisions that can be difficult to make. If you are not serving on a board of directors, consider reaching out to a charity you believe in. Nonprofit boards need shrewd businesspeople like you to help develop a wise investment strategy and ultimately do more good in the world.

Nonprofit Board Conflict of Interest #NonprofitBoards

To gain a clear understanding of when a conflict of interest (a failure of fiduciary duty) exists for a nonprofit board member, the following Advocate story offers great detail.  The, what I would offer to be a righteous effort, by the LSU board to keep profits from the sale of university-developed software entails the setting-up of an LSU controlled nonprofit whose singular purpose was to do just this.  But the rest of the story is where multiple governance failings begin.  Should all have known better: I think so based on the story.  

You can go here to learn the details.

See, Hear, and, Speak No Evil: NonprofitBoards #NonprofitBoards

Like the Olympics, Boy Scouts etc., when sh**t happens, nonprofit boards tend to claim "they just didn't know".  But should they have known?  Absolutely!  They didn't ask the right questions.  The following American Bar Association article speaks more on this subject and serves as a good wake-up call for helping nonprofit boards rethink this position of just not knowing.

 

Can suing a company's board lead to more accountability for workplace misconduct?

BY LAUREN STILLER RIKLEEN AUGUST 1, 2019, 6:30 AM CD

When leaders behave badly, their conduct is often hidden in plain sight and insulated by enablers. So, it’s only fair to ask: When a corporate executive misbehaves, what did the board of directors know and when did they know it?

Even in the face of hundreds of #MeToo headlines revealing negative behaviors in the workplace, there has been little focus on those who have a fiduciary duty to the organizations that they oversee—the members of their board of directors.

It is possible that a lawsuit filed by a Lululemon shareholder may usher in a new era of corporate accountability for workplace misconduct. Last year, the athletic apparel company entered into a separation agreement with its CEO, paying him $5 million for a departure that was seemingly due to allegations of an inappropriate relationship and a toxic workplace culture.

Several months later, a shareholder sued Lululemon’s board and company executives, alleging that they breached their fiduciary duties and wasted corporate assets.

The shareholder’s lawsuit is at the early stages of its journey through the court system. The suit should, however, cause boards to examine their knowledge of workplace misconduct and their payouts of “separation bonuses” to alleged perpetrators after information about their behavior has come to light.

The Lululemon lawsuit should motivate boards to develop direct ways to learn about workplace misconduct, separate from information that they receive through the filtered lens of corporate executives.

S, SEE NO EVIL

Organizations will invariably seek to downplay negative events to the public. Recently, a national nonprofit’s board chair issued a statement following the termination of its charismatic co-founder. The chair did not provide a reason for the dismissal, pointing to the board’s duty to protect the confidentiality of personnel issues. Rather, he emphasized that the board responded to staff concerns about workplace culture and that it had immediately hired an independent investigator to review its policies and processes.

The chair’s remarks were typical of the mild contrition expressed by boards forced to confront accusations against high-profile employees. He praised the hard work of the board while dutifully acknowledging that its members weren’t looking closely at the day-to-day experiences of some of the staff, and they didn’t always ask the right questions of the CEO and president.

Yet such carefully couched language belied the founder’s reputation within and outside the organization. Years ago, I was part of a volunteer leadership team tasked with identifying speakers who would draw an audience to an event. When this now-terminated leader’s name was suggested, one of our colleagues immediately rejected the idea based on stories that had long persisted about his behaviors. The board chair’s admission that they failed to ask the right questions seemed to be a euphemism for never inquiring about critical workplace culture issues.

THE LAST TO KNOW

How is it possible that boards of directors can be the last to know that they had a sexual predator, or serial harasser, or someone guilty of offensive workplace misconduct within the organization? Assuming that a board is not acting out of willful blindness or indifference, the logical answer is that the organization’s policies and procedures provide no path for disclosure to those who arguably have the most important role in preventing such behaviors. Fixing that gap is a critical element of changing workplace culture.

Yet, it is seen as axiomatic that the role of a board is limited to serving as an adviser to management with respect to the company’s strategy and operations and having an oversight function with respect to monitoring performance. But those structures have one critical barrier: meeting materials are prepared by management—the very individuals who may be clueless about or complicit in behaviors impacting workplace culture.

And even where a CEO has knowledge of a problem and shares information with the board, there will be a strong inclination to put the incident in as positive a light as possible to those who oversee his or her compensation and employment future. As one commentator from Wired noted: “The tone of reports compiled for the agenda is usually meant to reinforce the idea that … we’ve mitigated the damage; we’re on track to improve/achieve results.”

The practical effect of keeping workplace misconduct issues within the purview of management is that boards have insulated themselves from accountability. But as with everything else in the #MeToo era, that bifurcation of responsibility has to change.

EVOLVING ROLES FOR CHANGING TIMES

The fix is not difficult. It will, however, challenge those who view the division of responsibilities between a board and management through a strictly traditional lens.

Boards should establish a direct route for employees to report allegations of workplace misconduct in a way that neither originates with nor passes through senior management.

Equally important, the board should not limit the scope of this process to a legal definition of sexual harassment, as few actions rise to that level. Negative behaviors commonly extend beyond the realm of unwanted sexual attention, with damaging consequences that can affect the physical and psychological health of employees and impact workplace culture and employee engagement.

If we have learned anything from the barrage of #MeToo revelations, it is that when powerful leaders are implicated as perpetrators or defenders of negative behaviors, silence is the likely result of those victims and bystanders who fear retaliation for speaking up, even when an internal reporting process exists.

I know from my own many experiences serving on boards that it is critical to respect the role of management. I also know, however, that there are times that boards have to hear concerns about workplace conduct in situations where employees think it is too much of a risk to pursue internal avenues of reporting. The sensitivity of the underlying facts should not be a reason to preclude a solution that helps address possible workplace misconduct.

Decades of silence tell us that a far more aggressive response is needed to end workplace misconduct and ensure a culture of respect that is free of fear, intimidation and other behaviors that diminish or disparage individuals or groups.

Boards of directors have the ultimate fiduciary responsibility for the organizations that they oversee. It should not take a shareholder lawsuit to ensure that obligation extends to workplace misconduct.

This is not asking boards to tread into territory where they do not belong. It is simply recommending that they claim a role that they should never have ignored.

Lauren Stiller Rikleen, president of the Rikleen Institute for Strategic Leadership, is the author of The Shield of Silence: How Power Perpetuates a Culture of Harassment and Bullying in the Workplace, a newly released book published by the ABA. Her prior ABA-published book is You Raised Us, Now Work With Us: Millennials, Career Success, and Building Strong Workplace Teams. She’s also a member of the ABA Journal’s Board of Editors.