Nonprofit Board Crisis

Nonprofit Board Is Liable

Thanks to Crains Detroit Business for a great article on how nonprofit boards are liable for "unpaid taxes, penalties and fees and unpaid wages".  The article does a great job in describing the circumstances and the consequences for a nonprofit board's failure to institute solid methods for ensuring that all steps are being taken to ensure that taxes in particular are being paid.  In these times in particular, this serves as an important reminder that there are some operational details to which a nonprofit board really must give attention.

Nonprofit Under Attack: Does it have the best response?

Planned Parenthood is once again under attack (sort of par for the course given their work and the unresolved issues by some parts of the public). 

This time a young woman has made it her mission to show how the nonprofit has failed to fulfill one of its legal responsibilities (reporting statuatory rape) more or less as a message to say the organization is not truly fulfilling its mission.

Planned Parenthood, in a media response to the stories and videos posted on-line has made it clear that it fully observes the mandated reporting rules.  More interesting Planned Parenthood clinics have, according to Reuters, "posted Rose's picture to alert workers" (as the young woman making all the fuss has been covertly recording her experiences with Planned Parenthood staff). 

Clearly such efforts on the part of any anti-organization distracts from doing the work and affects financial support.  But I also wonder that Planned Parenthood shouldn't be reaching out to this woman to better understand what is driving her mission.  Clearly she has concerns and her concerns are not different than those of Planned Parenthood -- the welfare of the women seeking care.  Demonizing her internally is not, I believe, a responsive nonprofit response.

See the Reuters story here.

Activist Directors vs. Complacent Directors

There's a big fight brewing at Target (the department store).  There's an "activist" director who is claiming that the rest of the board has been asleep at the wheel (my words).  It's kind of exciting to think about these corporate (paid nonetheless) board types having this fight over who is being responsible as well as what issues really need attention and, who should even be on the board.  I know -- such fights are a bit distracting to the day-to-day business but maybe this is the kind of discussion that should be going on to ensure the board is doing what they are paid to do.

Now, Imagine a nonprofit world which had activist (board) directors vs. complacent directors. 

I can hear you nonprofit boards and execs saying "that would be a nightmare and a distraction to the real needs of the organization!"

But stop for a moment and appreciate that the activist director represents the passion and kinds of discussions and interest many of you nonprofit execs wish happend at your board tables.  But it often doesn't.

See the Wall Street Journal for the story.

Robin Hood Reminds Us of What's Possible In These Times

Robin Hood, the Foundation not the character, just completed its annual event of raising money mostly from New York City's financial times.  The event raised $72.6 Million -- yup, $72.6 million!

And you thought it couldn't be done.  Take a look at BizBash's report for some of the details.

Nonprofit President Found Guilty of Embezzlement

It always warms my heart when someone who embezzles from a nonprofit is not only caught but more importantly, convicted. 

That's the good news about the former president of the Philadelphia Home and School Council.  This guy stole at least $115,000 from a district-wide parents group.  He faces 28 years in prison.

Lets hope the Council puts some policies and practices in place that make this not-so-possible in the future.

See the Philadelphia Inquirer for a few more details about the case.

Craigslist: Not a Nonprofit

A Reuters article about why Craigslist won't stop its sex-related posting had in it the following line:

For all the stories written about Craigslist and the profiles of its founder, the company can still baffle anybody trying to make sense of it. A telling episode was the performance of Jim Buckmaster, the CEO who runs Craigslist day to day, at an investor conference where he was asked to explain the company's strategy for maximizing revenue. Buckmaster answered that it didn't have one ... or want one because that wasn't the point.

But Craigslist is not, despite the .org in its address, a nonprofit or a strictly free online ads service: It charges for job ads and some rental ads. On the other hand, it is not exactly, as Buckmaster made clear to the investment folks, a for-profit enterprise, either. The site could make a lot more money by charging for more categories of ads or even running display ads on some of its pages.

Just out of curiosity I went to see what Craigslist has to say about itself.  It says:

Q: Is craigslist a nonprofit?
A: No, craigslist was incorporated as a for-profit in 1999.

Q: Why does craigslist still use a ".org" domain?
A: It symbolizes the relatively noncommercial nature of craigslist, as well as our service mission and non-corporate culture.

So, this gave me pause to ask the following:

Don't all nonprofits have a  strategy for generating if not maximizing revenue?

Don't many nonprofits charge for some services and not for others?

Aren't most nonprofits noncommercial by nature, have a service mission and strive for a non-corporate culture?

And so, why isn't Craigslist a nonprofit?

Perhaps the answer is in who benefits from its revenues (only the public benefits from a nonprofit's revenues) -- i.e. its shareholders and chief employees.  Or maybe its the services it offers....

These questions do help highlight how the lines between what's nonprofit and what's for-profit are blurring though. 

Nonprofit Gets the Job Done?

I found a story in the Philadelphia Inquirer that caught my attention.  The story tells of a nonprofit that is essentially an extension of a family living out its Catholic values.

The family has adopted, at least to date, 18 kids and are guardians of 3 more.  And, the family are home-schoolers.  Arising from these two choices, the family has created a "service" they are calling a co-op that supports a bunch of area families who are also home-schoolers.  The area families bring another 70+ kids to the family's property a couple days a week where there are classrooms and they all share in teaching classroom-style (at which point I am not sure how this qualifies as home-schooling except that the place is not part of the traditional public or private educational system).

Best as I can tell from the story, the family created a nonprofit so they could raise non-taxable revenues to offset the cost of their and the other families' lifestyle choices.  Clearly this nonprofit is within the legal parameters and purposes for which nonprofit status is granted.  And, the families are getting their goals met. 

So, is this what being nonprofit is about?  And, would this nonprofit meet all the current standards of excellence (of course, that question could be asked of many nonprofits) particularly in the area of governance and management?

Hm...

For-Profit Running Non-Profit Will have to release records

Pennsylvania's largest charter school doesn't share any information about its finances.  Yes, it is a nonprofit but all of its management is conducted by an "arms length" for-profit organization, Charter School Management.

The Philadelphia Inquirer filed a suit to learn the finances of the school and used a new state agency under the Right-to-Know Law to do so.  The new agency ruled in favor of the Inquirer.  Of course, more appeals are to come but this is a victory just the same.  And I must ask anyway, why does a nonprofit, heavily subsidized by public money (it is a public school), need so much privacy to begin with?  Secrecy is often an indicator that something's not right.

For the story from the Inquirer, go here.

Church violating Nonprofit Lobbying Rules?

A gay-rights advocacy group says that the Roman Catholic Diocese of Maine is violating tax rules by helping a referendum campaign that would repeal the state's new same-sex marriage law according to the San Francisco Chronicle.

According to the paper, "The Empowering Spirits Foundation said its challenge was filed Wednesday at an Internal Revenue Service office in Dallas. The San Diego group said the diocese is engaging in political activity by collecting signatures for the referendum, violating IRS rules applying to nonprofits."

Now this is interesting stuff -- using the nonprofit no-lobbying rules against a big powerful mainline church.  And to top it off, there's that church-state stuff too.

Very exciting!

Nonprofit world not totally gentler and kinder than corporate

From the New York Times we learn of the action of a number of colleges that are suspending their payments to the retirement accounts of faculty and staff members.

There is this perception that the nonprofit world is maybe a gentler, kinder world than corporate,” said Roland King, Vice President for public affairs at the National Association of Independent Colleges and Universities. “So some people seem to perceive this as a breach of faith, especially since many people go into nonprofit work at less salary, because the benefits are so good. But we are absolutely at a point in this economy where these sort of things have to be on the table.”

I tend to agree that nonprofits must take prudent steps to ensure they can still achieve mission.  For the many nonprofits that have few resources, a suspension of retirement accounts, assuming the likelyhood that they have such a thing, certainly seems reasonable.  On the other hand, I do wonder about the necessity of such radical actions by institutions such as Brandeis.  (Although Brandeis in particular has been in the news over the past few months with financial challenges even prompting it to consider its very valuable ($300 million) art collection (story)). 

Still I wonder as these big institutions cry pain, have they considered slashing the salaries of their generally very generously paid Presidents as a first if not symbollic step to show this is not the heartless corporate America?