Nonprofit Board Crisis

Nonprofit Nursing Homes are Better than For-profit Nursing Homes

The Chicago Tribune reported today on a report about Nursing Homes based on an annual federal review.

According to the report: "About two-thirds of nursing homes are owned by for-profit companies, while 27 percent are owned by nonprofit organizations and 6 percent by government entities."

"For-profit nursing homes had a higher average number of deficiencies than the other types of nursing homes," Levinson said. "In 2007, for-profit nursing homes averaged 7.6 deficiencies per home, while not-for-profit and government homes averaged 5.7 and 6.3, respectively."

My takeaway: when you take away owners who are in it for the money and put in owners who are in it for mission (because they care), quality of care improves.

Charges of Irregularities face another Charter School

You may note that a week ago or so I highlighted a Charter School's unlawful use of funds in Philadelphia.  The founder of the school was at the center of the problem.

Now, according to the Los Angeles Times, the founder of a nonprofit that runs charter schools in Sacramento and elsewhere faces charges of misusing and appropriating federal funds.

What exactly is the problem here?  Are charter schools particularly prone to founder/exec illegalities?  We know on the other hand that charter schools have proven their worth in serving kids who would otherwise not have an academic home and serve as a jumping-off point to higher education or careers.

And yet, there are these problems.  Perhaps getting volunteers who can both run a school and run a nonprofit is a problem (Charter Schools are both).  Perhaps its the founder-syndrome problem (charter schools are relatively young institutions and many still have their founders). 

Whatever the reason for the problem, these school boards have to step it up to better manage their directors/founders and recognize that these schools are not "owned" by the founders but by them, the board.

Nonprofit MAYBE Crosses Political Line

There's a big flap in Indianna over whether the executive director of Indianna's "largest child and family services" organization has violated the rule that nonprofits cannot be directly engaged in endorsing political candidates. 

According to the Chicago Tribune, the nonprofit's executive appears in a tv ad where she cites that "the magnitude of the change that has occurred since Governor Daniels took office is really almost unbelievable."

My questions: did the ED consult her board when asked to speak?  Does the organization have a clear policy that helps inform the ED when considering such an opportunity?  If this wasn't a governance matter before, it certainly is now.

Church:State Issues to Be Challenged This Sunday

According to the LA Times, "Christian ministers from California and 21 other states will use their pulpits Sunday to deliver political sermons or endorse presidential candidates -- defying a federal ban on campaigning by nonprofit groups". At stake: loss of federal tax exemption as doing so challenges a 1954 act of Congress that made it illegal for tax-exempt groups to publicly support or oppose political candidates.

My question: do the boards of these churches fully understand the consequences?  Have they discussed the risks and actually voted to approve their minister's action?  And would this conversation not be included under what would be considered "good governance"?  And, equally interesting, if the church boards did take action and said to their ministers that they did not want the ministers violating this law, would then the church be held accountable (lose its tax exempt status) for a contrary action by their minister?  Perhaps only if after the offense the church failed to take action to correct their minister.

40% of Arts Organizations Operating in Red Ink

Accoring to a Philadelphia Inquirer article, "40 percent of arts organizations operating with deficits. More than half of these groups were bathed in so much red ink - at least 10 percent of their total revenues - that the cultural alliance considered them in danger of closing."

Can it be that these nonprofit boards are actually signing off on deficits like this?  This is "duty of care" in action? Hm.....

Genius Awards Announced

MacArthur Foundation announced its Genius Awards yesterday and as usual, the real question: what's a genius?

See the New York Times' review here.

Woe to Nonprofits Who Do Not Have A Diversified Fundraising Strategy

Monday's Wall Street Journal provided an introduction to the pending threats facing nonprofits stemming from what's happening on Wall Street.

The real lesson: if a nonprofit hasn't diversified its sources of income, it faces a tough road ahead.  Note, this is not a new lesson but one that should have been learned in the 80's and maybe before when major economic slumps were experienced.  It may not be too late but...

Future Model for Nonprofit Incubation and Sustainability

The many small nonprofits of the future have found a home in the Thoreau Center sponsored by the Tides Foundation in San Francisco. 

Everything a small start-up nonprofit could want is available from subsidized rent and back-room services to "how-to" advice and association with other equally smart and enthusiastic people. 

I believe the Thoreau Center serves as a model for the future of how start-up nonprofits might thrive and perhaps grow big if that's the goal.  There should be one of these in every community-of-size.

For more insights read the San Francicso Chronicle article.

Nonprofit Board Got It Wrong Jeopardizing National Treasure

Saturday, the New York Times revisited a story it did this past summer about the Mark Twain House.

The story focused on the plight of the Mark Twain House in Hartford, CT.  As the story goes, a while back, based on some projections that a whole lot more visitors were going to be visiting, the Board took out some loans to finance a big visitor center and gift shop.  The idea wasn't totally far fetched from the supply side as the House wasn't quite suited to entertain as many guests as were coming. Alas, the projections weren't quite right and the visitors haven't come and neither has the money to pay toward the debt. 

Well this summer's NY Times article helped and a bit of money came in to reduce debt but the situation is far from over and a lot more money is needed.  This follow-up article told of a special effort by writers who are offering to do their part.  But even this may only offer a bit of relief.

Lesson learned?  Nonprofit boards must do their homework before "betting the farm".  Desire cannot be greater than confidence.  I for one was not in their board meetings and don't know more details but the reality certainly doesn't look good.  Maybe there were truly unpredictable factors like the economy really going south.  Who knows for sure, but all nonprofit boards should take a note of caution.

GO Senater Grassley!

The Chronicle of Philanthropy reported in its Sept. 18 issue that Senator Grassley has sent "11-page letters" to two hospitals with each letter "containing more than 40 questions about their operations".

The two hospitals have been in the news as places not particularly responsive to the poor. 

Thank you Senator Grassley for looking out for the poor and equally important, trying to ensure that the standard for what it means to be tax-exempt remains high.