Nonprofit Board Crisis

Nonprofit Merger Plans

San Francisco is offering a good example of how nonprofits and their donors (at least the Community Foundation) are coming together, literally.  According to the San Francisco Chronicle, nonprofits facing the weight "of state funding cuts, smaller foundation grants and an alarming drop-off in donations" are looking at mergers as one answer.  And the Community Foundation is playing a major role in providing the financial support for mergers. 

After all, "The Bay Area is home to 25,000 nonprofits - one of the highest concentrations in the nation. There are 7,000 in San Francisco alone, although nearly half are small, with budgets below $25,000. The combined budgets of all the region's nonprofits account for 14 percent of the Bay Area's gross national product - twice the national average."

San Francisco is definitely a model to be observed for the future of the nonprofit sector. 

Widely Recognized Nonprofit At Death's Door

4-H, an American Tradition, is dying according to a story in the San Francisco Chronicle.

The clubs that teach a number of skills and prepared youth for a variety of careers is just not getting the economic support needed to keep going. 

But maybe it's not just a bad economy.  Maybe the needs of what were once 4-H's constituents have changed.  Is it time for a new generation of youth to be served by a new generation of providers?  That's certainly the question to be answered by constituents and donors alike.  And the economy just provides a helping hand in moving the conversation along.

Wrath of an angry nonprofit Board member

Soon coming to a bookstore near you will be Wendy Kaminer's book: Worst Instincts: Cowardice, Conformity and the ACLU

So why my attention?  Ms. Kaminer is a former member of the national ACLU Board and according to the reviews, one who is very angry with much to say about how the board has failed its duty of care and how the management has failed to provide the board with the information it should have to ensure it can provide good governance.

I must say this is unusual - a board member who is angry and willing to publish her disgruntlements toward holding her former organization to a high level of accountability.

I have ordered and will review her book.  There is much to learn about how a nonprofit board member handles what she believes is bad governance - during and after service. 

Also, I believe Ms. Kamer is scheduled for a discussion with Terry Gross on Fresh Air some time in the immediate future.

Nonprofits' Days Brightened by MacArthur Foundation

"These are organizations that have the courage to push the boundaries of what is possible," he said. "They're all organizations that have determination, fierce energy, good leadership, strong boards and have a record of really getting things done." 

This is what MacArthur Foundation president Jonathan Fanton had to say about the 8 winners of up to $650,000 grants.  I'm glad Mr. Fanton told us the commonalities between these groups for I sure wouldn't have otherwise figured it out.  At the same time, it's good to know there's some good news for someone in the nonprofit sector.

For more about the grantees, see the Chicago Tribune.

Museums Offer A Few Answers to Nonprofit Sector Economic Dilemna

Waive attendance and do "stuff" together!  That's the answer to today's economic woes for the museum world outlined in an article in the Philadelphia Inquirer describing the topic of money for the two national museum conferences being held in Philadelphia this week.  I think for the nonprofit sector the collaboration message is definitely one to be taken to heart.  Collaboration is certainly better than going under, don't you think?

NY Times Foundation To Quit

According to the New York Times, the New York Times Foundation is ceasing its grantmaking and the company's matching gift program is ending.  Basically, the company lost too much money to continue to be charitable.  With its Boston Globe Foundation, we're talking the ceasing of $7 million in grants. 

That's a big drop in the bucket in nonprofit land.  And, a consistent predictor of what's to come in the newspaper industry.  And these guys might become nonprofits?  Let's see, the newspaper will be out raising money for its operations and $7 million worth of nonprofit budgets will be out raising money for their operations.  This picture is not looking good.

Nonprofit Board Chairs

I'm at the Midwest Center for Nonprofit Leadership & The Nonprofit Quarterly Conference on Nonprofit Governance.

Some research on nonprofit board chairs was shared.  Some research done by Yvonne Harrison at Seattle University, and also some research by William Brown at Texas A&M University.

One good learning: A nonprofit board chair's leadership competence is composed of two types of intellignece: emotional and spiritual. 

Emotional intelligence has two characteristics: personal and social (organizational awareness and inspirational leadership).  Spiritual intelligence also has two characteristics: a belief in something that grounds direction and a motivation or calling to bring others to service (referred to as altruism).

Preliminary research indicates that the high-impact nonprofit board chair gets high grades in both emotional and spitual intelligence.

The big challenge of course is in identifying and recruiting the individual that has these characteristics.  Also, the individual will perform best when they have some history and experience as a chair/leader; they have been prepared to serve; and, they are evaluated.

Nonprofit Embezzler of $3.5 million sues to keep his assets

I've been following the Fumo case (ex-PA senator) with some interest, and was gratified when the man was convicted and sentenced to 10 years in prison for setting up a nonprofit which he used to pass government money to himself. 

The government now wants Fumo to forfeit his assets which more or less equal what he stole.  Fumo thinks the government has it wrong and shouldn't be able to take his assets.  Huh?  Come-on Mr. Fumo, bite the bullet and give the money back.  After all, it wasn't yours to begin with.  See the story here.

Newspapers as Nonprofits: The Debate Moves Forward

Senator Kerry is holding hearings next week on the viability of the newsaper industry while a bill has been introduced in Congress to restructure newspapers as nonprofits (see Philadelphia Inquirer).

I'm very conflicted on this matter.  On the one hand, yes, the newspapers legally structured as nonprofits has plausibility as a model that can reach into largely untapped resources (donors and foundations).  At the same time, those largely untapped resources are under severe duress facing many challenges as to how to distribute severely reduced resources.  Adding a whole industry as one of the competitors with a number of very basic needs seems an unwarranted strain.

On the other hand, the current newspaper business model is clearly failing.  And, newspapers are critical to our democracy, such as it is.

Nonprofit Board Chair Explains Decision to Close

Perhaps a lesson in post-transparency, the Chair of the Board explained the decision to close the Safe and Sound organization in a letter to the Philadelphia Inquirer.

While I don't claim to know the all the nitty gritty, the letter offers "...that the board of Philadelphia Safe and Sound decided to close the nonprofit organization due to alleged mismanagement of funds or a putative FBI investigation". 

According to the Chair, exceedingly fast growth has more to do with the decision to close than anything else (huh?).

Equally interesting was some of the lessons shared about the organization and its designated intermediary status with the city.  I believe some of the lessons may apply to many types of nonprofits, not just intermediaries.  Here's what he said:

Any government using intermediaries should consider the public-relations and transparency problems associated with a "no-bid" process of contracting with them. Thought also should be given to the composition of an intermediary's board, emphasizing the members' independence from other nonprofit and governmental bodies. And intermediaries should be subject to the same ethical standards as the government.

We have also observed that reliance on large, well-funded intermediaries restricts community input and maintains a caste that, albeit well-meaning, enjoys exclusive access to city officials and decision-making.  Intermediaries' activities should be transparent and subject to more community input and oversight.

Finally, the administration might insist that intermediaries rely on more of a mix of private and public dollars.