Nonprofit Board Crisis

Pursuit of Nonprofit Mission Can Pay Off

Tuesday's (2-12-08) Wall Street Journal (<a href="http://online.wsj.com/public/us">http://online.wsj.com/public/us</a>) noted two events I want to hail as proof that a nonprofit's pursuit of its mission can and will pay off in time.

One story focused on the presence of PVC in toys and the probable danger such presence holds for kids who are likely to put such items in their mouths.  While the Toy Industry Association says this isn't really a problem, nonprofits focused on this issue have spoken loud enough for Wal-Mart, Target and Sears to reduce their inventories of these items.

A second story noted Safeway's pursuit of a "new policy that will elevate animal welfare as a priority when buying the meat and eggs that line its shelves".  According to the Journal, Safeway is "one of the U.S.'s largest grocery chains" so this is not a small step.  Credited for influencing Safeway in this direction are animal rights groups PETA and the Human Society.

All in all, not a bad day in nonprofit

Arnold Doesn't Play Fair

The LA Times reported today on a foundation that is set-up to collect funds from private donors to send CA Governor Arnold and others on international field trips to bring home the bacon for California.  The article essentially questions the legitimacy of charitable dollars used for this purpose which generally involves lifestyles that only the rich and famous (like Arnold) can afford.

You know, there are humongous numbers of nonprofits around that accomplish all kinds of missions serving all kinds of constituencies.  I might be jealous of Arnold's lifestyle.  I might be more jealous that Arnold has friends who he opens doors for.   And finally, I might be jealous that the friends also get tax deductions (whoopti-doo) when supporting the Foundation that supports the friends who go on the trips.  But, am I unhappy with the fancy museums and hospitals and universities who all spend really huge bucks doing stuff that only benefit the few, probably some of the same donors that support Arnold's foundation?  Bottom line, we really should be looking at the whole charitable tax code but we probably won't.  There are folks who gain enough to trickle enough to not want the apple cart to tip.

Nonprofit Governance and Management Practices Can Have Long Term Negative Impact

Nonprofit governance and management practices can have a long term negative impact when not well managed, at least according to the accrediting body called the Western Association of Schools and Colleges.

According to the <a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/02/12/BAPOV0C6G.DTL&hw=western+association+of+schools&sn=001&sc=1000">San Francisco Gate</a>, this Association cited the University of California for a number of bad practices that included:

<blockquote>A decentralization of the university's administration, with many important decisions being made by top executives case by case without review or approval from the governing Board of Regents, allowed violations of UC compensation policies, the report says.  In addition, the report says, there is confusion about the roles and responsibilities of the university president, the regents and the 10 campus chancellors with no clear lines of authority and boundaries.  There was no consistent annual evaluation of executives and no self-assessment or training for the regents, the report said. In addition, there is no clarity on how regents should make official statements or decisions on behalf of the board.</blockquote>There are lessons here for all nonprofits underscoring the importance of good governance and management practices.

US Naval Academy Follow-up

If you want to know more about the governance suit at the US Naval Academy (I referenced yesterday), a reader was good enough to offer the following link:

USNA Alumni Association - Litigation Update

Thanks reader!

Curator Boot Camp

Today's New York Times reviewied a Mrs. Gund supported "Boot Camp for (Museum) Curators". 

Great Idea! one that could be simulated in a number of nonprofit arenas.  When you think about it, most directors who rise up to director positions are folks who have most of their strengths in their respective discipline: social work, health care, law, housing etc.  The curator boot camp recognizes this and says wait, you don't have to be a director by default, you can be an effective director by default.  Ok, pushing a bit but you get the picture.  This boot camp is a good idea. 

Still, as the article ends,  it is important to remember that training or no training, "There still has to be that magical fit between the candidate and the board that does the hiring.”

Thin Line Between Education and Business

According to the Chicago Sun Times, the University of Wisconsin Alumni Foundation (the caretaker of the University's patents) is suing Intel for patent infringement (basically making money off of university research used in a product that has been profitable).

Interesting, the Alumni Foundation is the protector of patents.  Used to be that Alumni Foundations kept alumni close to their alma mater and, in exchange, collected donations.  And where exactly does business begin and research end -- or is that the question?

Serious Governance

The Chicago Tribune reports today that the CEO of the US Naval Academy Alumni Association and the Naval Academy Foundation will resign from both posts this summer.  A graduate of the Academy, he had a good record of raising some pretty large sums of money. 

He said that he and his wife knew "it was always a matter of when, not if, we would move on", fair enough, but his resignation comes on the heels of a lawsuit filed by two alumni against "28 of the association's 29 trustees, alleging that the association's term limit rules were violated in the group's 2006 election." 

Now I don't have more details but will poke around.  It is so notably rare that members take governance so seriously as to sue over term limit rules or elections that when it happens, it is definitely worth noting.  Would that more felt this passionate, right or wrong, about what it takes to seriously govern.  My condolences to the CEO but my compliments to the two alumni.

Philanthrocapitalist

Herb and Marion Sandlers are philanthrocapitalists (so is Bill Gates for a reference point).  And, according to the New York Times, they are not that happy about how nonprofits are being managed. 

According to the Sandlers, Human Rights Watch is a nonprofit they believe meets their standards: "It was effective. It didn’t waste money. It issued meticulous reports that tracked its results. And it was run at the time by someone whom the Sandlers trust."

Are these the standards that all philanthropists should hold nonprofits to?  That's for each of us to assess, although I would argue they are reasonable enough.

The View from On High is Not Always Clear

From the Financial Times via The Week (2-8-2008) we learn of a survey conducted by Roffey Park Institute that says that "82% of corporate directors believe their organizations are in good or excellent shape while only 52% of middle managers share this opinion.  Similarly, more than a third of directors believe company morale is high; only 9% of middle managers agree."  The lesson: "if CEOs want to know the truth about the organizations they lead, they need to spend more time listening to middle and junior managers."

I would propose that this is a lesson applicable to nonprofit CEOs as well, particularly as nonprofits face mergers and other opportunities for growth that actually create a larger nonprofit middle manager community.

Church Can't Find $400G

The New Haven Register reported today that Rev Michael Moynihan, who resigned from his parish a year ago and was stripped of his priesthood after found living with another man, ripped off a wealthy Greenwich catholic parish some $400G which he used mostly to live a life style comparable to his parishoners.  The Register says he spent $58,000 to buy a boat and that he also funded resturaunt and travel expenses. 

Can you believe that a bunch of parishoners with lots of wealth, knowing how much they were paying this guy, didn't notice?  This my firends is simply bad nonprofit governance -- no checks and balances on the part of the lay folks and on the part of the Diocese (his boss) who state now that they have made "great strides in implementing a new system of financial procedures and controls in all 87 parishes".  These strides have even become a "model for other dicoseses" and, says the diocesan spokesperson, "I think people can have a great deal of confidence that the donations to the parishes are used well and wisely for the mission of the parish". 

Sure, just like they have all along, before the new system of financial procedures and controls.  Come on folks, bad governance does not regain trust over night!