Nonprofit Board Crisis

Good nonprofit fundraising or compromising values?

Paul Krugman of the New York Times summed up his review of cases involving two conservative think tanks and "modifying" their political positions to garner mega financial support with this thought: "I don’t think many people grasp just how raw, how explicit, the corruption of our institutions has become."

While I politically lean exactly to where Mr. Krugman has gone, his case examples, especially the one about the American Conservative Union, does make me wonder about what the boards of each of these nonprofit institutions, ASSUMING THEY WERE IN ON THE DISCUSSIONS AS THEY SHOULD BE, were thinking. 

One thought might have been -- "whoa, this is a great fundraising proposition that really won't lead the public to think less of us" (obviously not true for Mr. Krugman).  Another might have been -- "this really sucks but the times suck worse and we need to preserve our institution, no matter how much what we do or say waters down our mission." 

Or maybe the board more measures staff performance on how well it does bringing in resources than what it does around mission.

Some thoughts for all of us struggling in these times in this sector.

Nonprofit Dashboard

Kudos to Jan Masaoka (Blue Avocado) and Jeanne Bell (CEO, Compass Point) for a really helpful introduction to a great way to construct and use a dashboard for helping the Board understand its status/condition in all the important areas -- program, management, governance and finance/sustainability.

Great Job!

Embezzlement in Nonprofit and Public Land

Well, the truth has arrived as the otherwise spotlessly reputed Councilman from New York has admitted to pilfering up to $100,000 of funds intended for two nonprofits.

Welcome to the Hall of Shame now ex-councilman Martinez!  And come-on city managers and nonprofit governors -- let's get on top of this stuff -- don't you notice when you don't have the money you were supposed to have?  Maybe it's not as easy for you public managers but hey nonprofits, good policy and practice would not allow this happen! 

To see the story, turn to the New York Times.

Alliance for Nonprofit Management Membership Meeting

The Alliance for Nonprofit Management's Membership Meeting was held on Thursday (yesterday) with much fanfare about a "new" approach that focuses the Alliance on being inclusive (of members) in its decision-making. 

One topic was a serious and moderately indepth review of the Alliance's finances cleverly reflecting the really great 2002 condition in comparison with the anything-but-great postion over the last couple of years and slight improvements over the most recent months.  I would say that the bottom line message was that there are short-term and long-term sustainability planning activities underway and a strong day-to-day oversight (by Raffa and the Board) but in reality, there's no promises that the ship that is being righted will stay afloat.  There are a lot of uncertaintities and yet, hope, if not a bit of confidence.

There was an update on the status of membership and work around thinking about the products/benefits current and prospective members really want.  This is a place where hope is a message, but lots of recruiting and strategies to accomplish the same must be conjured up and put into place.  Advocacy for sure moved up pretty fast although there needs to be a recognition that this is hard stuff to do without staff.

The Governance Task Force, in part, reflecting the work of the Governance Affinity Group shared some insight about Engagement Governance which is focused on giving members a real role in governing the Alliance.  Check out the Allliance web site to learn more.

And, finally, a draft strategic plan document was distributed and discussed.  One conclusion -- the plan is light on the details so there is high expectation that the Board will do something about this issue.

All-in-all -- the "new era" member meeting actually engaged members conversations and thought -- maybe a little tight on time but what good is a meeting I can't criticize. Yes, there is much work to do and yes, information will be a key to success and yes, the Board may have learned something today about how to better prepare its members to produce a higher rate of return.

Bottom Line -- I'm cautiously optimistic about the possibility of a future for the organization -- LONG LIVE THE ALLIANCE!

Nonprofit Cuts staff AND BOARD

It was a wow enough story when I read that the UK Arts Council has 622 employees (country-wide) and is reducing this workforce by 21% or 130+ employees.  I should note though that this is not your typical Arts Council.  The Arts Council England manages the National Lottery and distributes grants to arts groups.

That being said and accepting that tightening the belt can mean some pretty radical conditions -- like cutting 21% of an organization's workforce -- The Arts Council is also going to "reduce members of its executive board from 14 to nine".  I honestly can't say that I've heard of many folks taking this step, nor that it's even on the plate for most nonprofits.  Though this certainly makes me want to ask why -- does a 14 member board cost that much more than a 9 member board?

This story was taken from ThirdSector.

Alliance for Nonprofit Management Members Gather

Some 150 Alliance for Nonprofit Management members have begun their annual meeting gathered in the California desert. 

And yes, it is hot!  Not just the temperature mind you (it's around 115+) -- but also the enthusiasm and love for the Alliance and commitment to the field of nonprofit capacity building. 

The Alliance board began its work two days before the Conference to introduce 9 new (including myself) members (to the current 5) and get to work on the many challenges that face the Alliance over the immediate months and years including renewing the life of and vision for the Alliance, attracting new members and financial support and, staffing-up.  More Members came a day earlier to work in affinity groups that focused on topics members are engaged working on improving thinking and practice in the field of governance. 

And, the Conference opened last night with a great kick-off thought piece by Natalie Abatemarco (Citi VP and director of North America Programs and Alliance Board member) essentially reviewing the "state of the sector" from her lens.  The Alliance also presented its lifetime achievement award to Fran Barret from New York City's Community Resource Exchange -- a 30 year-old anti-poverty capacity-building organization.

All hands are on board for making a strong Alliance.  Stay tuned for more about the Conference and the future of the Alliance particularly as I report on the membership meeting scheduled for this morning.

Getting City Money: Not About Who You Know?

It was only a few blog entries ago I suggested that "who you know", otherwise known as the "relationship",  is a pretty accepted standard toward "helping" a nonprofit secure grant funding.  The relationship helps provide the grantmaker with confidence that if money is given it will be spent as promised and produce intended outcomes.  The relationship also helps get the foot in the door with the hope that the greatest solutions get identified among a plethora of folks with great solutions.

I have also been regularly following what has been going on in New York City and its Burroughs where Council reps appear to direct some fairly large sums of money out of a "discretionary" pot to their preferred nonprofits.  For sure, there has been some very shady dealings with Reps creating some nonprofits that were effectively supporting their relatives and friends or even themselves.  Tisk, tisk.

Now, another Councilman has resigned and, according to the NY Times, he directed funds to a Nonprofit that on the surface does the economic work you would hope the City would support.  But the nonprofit "received little city support until 2006, after Mr. Martinez’s (the Councilman's) sister, Maria, joined the board in an unpaid position. Since then, it has received more than $1.4 million in City Council funds, including more than $400,000 sponsored directly by Mr. Martinez, according to Council records.

So, clearly a who-you-know situation.  But wrong?  Is the councilman or his family gaining personally?  We must wait and see as the facts unfold.  But, this situation certainly does challenge some of the thinking about what a nonprofit needs to do to get supported.

Fuomo Gets 48 Months: Justice?

When I wrote several days ago that I thought making Victor Fuomo go to jail wouldn't really do justice for the nonprofits he ripped off on a grand scale -- I was really advocating for a sentence that would have him working to help repay the nonprofits -- make his wrong a right.

Well, the judge has handed down a sentence and it looks like Mr. Fuomo is really not going to be righting his wrong.  Instead of the recommended 21 years, Mr. Fuomo is getting 48 months. 

So, at least someone is getting justice -- he can walk away from all this in just 4 years and likely not even that.  Only he wins.

Nonprofit Board members can be held individually liable in a discrimination case

I'm a bit surprised that a stroy like this is rising up, and from the City of Brotherly Love, but, at the very minimum this serves as an important reminder for nonprofit boards, according to Montgomery County civil-rights lawyer Brian Wiley, "Nonprofit board members can be held individually liable in a discrimination case".

The Philadelphia Inquirer began covering this story last week about a "nonprofit" swim club with 150 members that first accepted and then revoked a contract to enable a day camp of kids from the inner-city to make use of the pool during certain hours daily.  My understanding is that club members verbally expressed their discomfort with sharing their pool with inner city (black) kids and raised a low-key ruckus that resulted in the contract's ending.  From all reports, the kids behaved quite fine and really, just wanted to do what they came to do -- swim.  So now, the daycamp is suing on grounds of discrimination.  Makes sense to me. 

And now, back to the consequences of the club losing their case.  As quoted in the article, "Tax lawyer Jennie Sikes noted that the U.S. Supreme Court in 1983 upheld an IRS decision to strip the private Bob Jones University of its tax-exempt status because of racially discriminatory policies."  I guess practices don't count as much as policies or are harder to prove but there you have it.  Take the loss of the tax exemption and throw in individual liability for board members -- I think it's time to turn over the swim club to the day camps -- seems like a good ending to me.

Nonprofit Success: It's all in who you know

Eight Washington, DC nonprofits appear to have had a connection through Councilman Barry in successfully getting financial support according to reports by News Channel 8 via the Chronicle of Philanthropy via Linked-in.

Somehow though, I'm scratching my head to try to understand the problem.  Of course, I'm assuming all the nonprofits are qualified and will deliver AND they distinguished themselves from the rest of the equally deserving nonprofits who did not have a relationship with Councilman Barry. 

Uh...isn't this one of the benefits of folks who are classmates from the likes of Princeton or Harvard or Yale?  Doesn't a "relationship" always count to give an edge when all things are otherwise equal because these are the people a grantmaker can fully trust?  I mean I have always thought this to be part of the way things are done -- agreed?