Nonprofit Board Crisis

Nonprofit Health Care: Another Path to Health Care for the Uninsured

Patrick Soon-Schiong is offering the traditional U.S. approach to addressing the health care needs of the uninsured: he's making a really big donation.

From the LA Times we learn that Mr. Soon-Schiong will "provide University of California regents with a $100-million guaranty, underwriting the county's latest proposal to reopen long-troubled Martin Luther King Jr.-Harbor Hospital by 2012."  The gift comes with "no strings attached".  Mr. Soon-Schiong considers the current lack of access to health care for those who once were served by the hospital to be "unjust".  In addition, he does not plan to profit from his investment in reopening the hospital noting: "There's very little business in patients who are uninsured".

Good news: these folks will gain access to health care and there is a good chance that this nonprofit hospital will be charitable.  Bad news: the US capitalist system basically requires private sector rich folks to make this kind of commitment to make the good news happen.  If there's no rich folks who make this commitment, those who are uninsured will remain that way.  At least as the system works now.

Nonprofit Board Composition: Some New Thinking

I received a comment yesterday to an earlier entry about a nonprofit whose board co-chairs are both ending their terms and consequentially leaving a vacuum of leadership.  The commenter offered some insights on this topic. 

The commenter though began her thoughts with the statement that "although technically I have not been 'board material' according to what I always read"  and I thought that statement was equally worthy of a continued conversation.

For sure, there is a lot of prescriptive and some descriptive literature and preaching (by people like me) about who is the "right" board member.  My general position: that the individual be passionate about mission, results focused and willing to do what is needed.  But, the literature doesn't generally say this.  There are other expectations and needs and of course, a lot of this is often about the give-get equation.

That said, I'm proud to say that I've been alowed to be part of an affinity group of the Alliance for Nonprofit Management (this is where all the nonprofit capacity builders hang out to talk about their trade and change the world using their special gifts).  The Affinity Group, thanks in great part to the leadership and sound thinking of Judy Freiwirth, has been focused on building a new way of thinking about nonprofit governance that very much does not limit itself to typecasting the characteristics of board members, beyond being mission driven and willing to be engaged.

You can learn more about Engagement Governance by reading this article by Judy.  I believe that there are lots of details to be developed, but the roots of the concept will help lead nonprofit boards to a new and stronger place.

Nonprofit Board Diversity

There's an interesting e-journal article from the Council on Foundations about board diversity. 

True to its source, the focus is Foundation Boards but I think the "debate" is good for the whole nonprofit sector.  Sadly, the article's title is very misleading: Mission or Board Focused?

I say misleading because Foundations and nonprofits are simply "mission focused" while boards and their interests affect what the mission is and how that mission is carried out.  That being said, the actual subject of the article is how a board achieves diversity.  And the "debate" is much more about how planned or intentional a board needs to be about being diverse.  That subject is most interesting while flying somewhat in the face of planners like me. 

Anyway, check-it out.  I think this a worthy conversation on a much broader level.

Nonprofit Business Plan Competition: New and Special

There's a new business plan competition in town and it's pretty different than those that have come before it.

The Scaling Social Impact Competition is a business plan competition that identifies social sector scaling initiatives with demonstrated impact and readiness to grow – and supports them with up to $100,000 of financial and consulting awards. The Competition helps develop a strong pipeline of growth ready organizations and provides them with the resources to successfully take the next steps in their growth trajectory.

You can learn all about the competiton and the efforts of Social Impact Exchange here.  Note, while the business plan competition is one of these folks' activities, they are doing a whole lot more, all focused on scaling up great social impact ideas.  Also note, you can only look at all that they are doing by first registering and then waiting for your password -- a bit of a hassle but likely well worth it in the long run.

Nonprofit Executive Pay

In the Hartford Courant I found an interesting article about nonprofit executive pay. 

The best line: "finding that salary sweet spot is a complicated and perilous exercise for nonprofit boards everywhere. Pay too little, and you may miss out on the talent that can best run your organization, industry experts say. Pay too much and you invite the headlines.."

The article reviews some of the more controversial pay incidents from the North Carolina United Way challenge to some pretty infamous religious-connected organizations with million-plus salaries.

Clearly, getting the exec's pay right is a challenge and one that only the nonprofit board can address but one in which the public (donor) makes the final call.

Nonprofits Can Maybe Achieve New Efficiencies but what about THE System?

Are there too many charities in America?  The answer is yes according to an opinion piece by Paul Lamb in the Christian Science Monitor.

Mr. Lamb maintains that what those in need really need is not more nonprofits but more efficient nonprofits.  Mr. Lamb suggests for instance that donors could intervene directly to address the issues of poor people (even possibly giving money directly instead of through a "middleman nonprofit").  He also suggests outsourcing:

Cost savings could also come from outsourcing. Just as many businesses reduce expenses by outsourcing call support, nonprofits could pool and send their back-office work and general call-in inquiries to inexpensive outside agencies. Outsourcing groups can handle accounting and general inquiry calls at a fraction of the cost of hiring an accountant or secretary.

Shifting to an online-only organization, via a virtual office and video chats, could in certain instances eliminate the need for a real-world office or multiple service sites. Agency staff could work from anywhere, offer 24-7 assistance, and serve a larger client base no longer restricted by physical location.

In cases where office space is needed for meetings and direct care, sharing offices between nonprofits is a much more affordable alternative.

Mr. Lamb further suggests Neighborhood care councils that:

could manage collaboration among organizations and direct the flow of public and private monies, avoiding the uncoordinated services and inconsistent care in so many communities. This collaboration would inevitably weed out ineffective and redundant services.

And finally:

there is the increasingly popular option of social enterprise, where nonprofit organizations develop revenue-generating ventures to help support their programs. No longer relying on handouts and wasting valuable service time on fundraising, more charities could launch their own ventures or partner with existing ones to become self sustaining.

Well, my answer to Mr. Lamb: maybe.  Certainly some of these efforts are indeed being implemented with varying degrees of success.  They are not perfect solutions and for that matter, neither is the economic system that actually rests as the basis for the need for a nonprofit community to address the needs of the poor. 

Mr. Lamb -- if you really want change, let's think about public policy and let's begin with a health care system that is truly reformed and universal.  This of course is much more about public "will" than it is about making nonprofits more efficient.

 

 

Reader Funded News

Spot.US has another solution to the demise of the newspaper industry: journalists can raise money from consumers to fund a story.  Yup -- seems hard to believe that journalists should now be fundraisers to get stories told.  And, what about the stories that will change the way we do what we do but no one wants to pay for ('cause they really don't want to know)?  Well the Christian Science Monitor does say that Spot.US is just one of the tools that can help get the news prepared and distributed.  But, whew, seems kinda scarry to me.

Nonprofit News Service

Another nonprofit has been formed to "cover" for the declining sources of for-profit news carriers.

According to the New York Times, which is the first customer of this new service, "a cooperative has start-up financing from the John D. and Catherine T. MacArthur Foundation, and assistance from WTTW, a Chicago public television station. It is in talks with the WBEZ, the local public radio station, about collaboration."  The cooperative "will provide pages of local news for a Chicago edition of The New York Times".

Ok, I'm really not getting this.  The New York Times is a viable entity if it can produce its news through a nonprofit.  Well, actually, I do get that part -- what can be better for a for-profit than "free" sources.  And please note, I respect the MacArthur Foundation and public radio.  But I don't understand the business model.  If the for-profit can only do its work with support from a nonprofit, how far into the future can this continue?  Is the foundation setting up an endowment just for this purpose?  And, will the costs of news to the Times actually be cheaper than the cost it now pays to purchase news?  Too many questions -- not enough answers.

Nonprofit Affordability Test

Here's an activity I'm sure many US nonprofits would really appreciate (note: I seriously doubt this).

The Scottish Office of the Charity Regulator has developed a computer based model to assess whether charities provide public benefit.  The model focuses on understanding the ability of beneficiaries to afford fees charged by charities.  The Office says that for now it is just providing the information from its research to help set standards and will not apply its model to individual charities -- at least for the time being.

US Hospitals and education institutions look out!  Imagine if Guidestar or other nonprofit rating organizations were to use the tool with their rating systems.  Then we would truly be able to talk about how charitable some of these institutions are.

For the story, go here.

Nonprofit Boards: Is there a better model?

I received the following inquiry that I believe to be really important and worthy of sharing.

I am interested in finding a book (or article or essay) that makes the case for substantially reducing or eliminating board structures… After 20 years in nonprofit, I am wondering if the ENTIRE model of nonprofit governance is fundamentally flawed.  In my estimation, more than 80% of nonprofit boards have sub-par performance… even the very good ones are still subject to power struggles, bureaucracy, etc.

A few nonprofit organizations I work with that are very successful actually operate with NO board (save the required IRS officers) or committees.  They are very entrepreneurial, efficient, innovative and can adapt to change quickly.  In essence, they remain mission centered but operate like small for-profit businesses.

Do you know of such a book?  Does anyone share this question?  (Seems to me that so much of the literature is aimed at propping up the model, but doesn’t question its validity).

Alas, few in the field have been willing to put in writing what you have just clearly put forth.  On the other hand, I know that many execs share this experience and feelings.  And, I agree.  The model IS flawed.  The theory is that nonprofit board members will be and act as owners with all the responsibility and none of the tangible rewards (like in corporate boards).  That is certainly what I believe to be the fundamental problem.  Passion or commitment to mission is just not tangible enough to make boards or their members fully effective and reliable.  But, the IRS has not been willing to accept another construct.

Meanwhile, I think this new social enterprise model may be offering a possibility (L3C -- http://www.nonprofitlawblog.com/home/2009/03/l3c-developments-resources.html ) which, while not a perfect solution and not paying particular attention to the governance issues, will likely significantly reduce the role of the nonprofit board as we have known it.

I think where a board is particularly dysfunctional, reducing the size to the minimum (usually 3) is a good strategy to begin starting over.  I also believe that as long as this is the construct we must work in, we must continually seek solutions to making it effective.  Finally, let's not underestimate the role of the Board Chair in really making a difference between an effective and ineffective board.  I am quite convinced that the Board Chair can make or break a nonprofit board.

Please let me know if you find some other references beyond the plethora of literature focused on making nonprofit boards work.