Nonprofit Board Crisis

Conditional Philanthropy

I was just reading the latest issue of Rolling Stone and saw a "Snickers Bar Hunger" ad (get the play on words?)  The main message of the ad: "It tastes good to do good"!

You have got to be kidding!  If I buy sugar I will help grow obesity (see, I can play with words too)  AND feed those who don't have the money to, well, buy a candy bar.  What's wrong with this picture?  Has the Feeding America board really thought about these contradictions?  Is this really just another "only thing wrong with tainted money" situation or doesn't this cause-related money go a bit against mission?

One last thought: is there really a time when cause-related marketing isn't just selling out the nonprofit brand? 

Nonprofit Sustainability: Being Market Driven

Drucker said it; Phil Kotler said it; Jim Collins said it.  Basically, if any message has been given to nonprofits consistently by all the management gurus, it has been: understand your market and what you do best to serve that market.

Finally, Botanical Gardens are embracing this advice and retooling who they are to better attract what has been a swiftly declining audience and more importantly, to better attract long range prospects who may yet provide sustainability. 

This is what all nonprofits should be doing: reviewing who they are and particularly what they do best while conducting a thorough review of who their market really is and what this market values.

Go here to see the New York Times story.

Nonprofit Board's and Exec Compensation

Today's New York Times highlighted what may become a terrible trend because it effectively reduces the role and authority of nonprofit boards.  The trend: federal officials want limits set on salaries (e.g. Boys and Girls Club) and states are putting salary ceilings in motion. 

Now for a moment, put aside the fact that nonprofits choose to receive federal and state monies to better achieve mission.  Nonprofit Boards are the one group of individuals with authority to establish Exec compensation.  While I recognize that the system may not be perfect, salaries represent in part or wholly, performance.  The more "I" produce, the more I will be compensated.  It's also true of course that nonprofit boards aren't all that good at setting performance goals and matching compensation plans with these goals but this is the basic idea.

But now, government is stepping in and saying to nonprofit boards: "We'll tell you what you can pay AND we will tell you what your performance goals will be".  No!  This can't be.  Nonprofits are contractors with clear organizational or program goals.  If a nonprofit fails to meet these goals -- TAKE AWAY THE MONEY!  Otherwise, government, stay out of a nonprofit's operations.  Nonprofit boards can do compensation just fine -- and, it's their right and obligation!

Nonprofit Boards and Firing Their Execs: Its not always about Performance

Right or wrong, just like today's announcement that the BP board is firing their CEO, nonprofit Board's fire their execs.  Yes: right or wrong.

In our experience, many times nonprofit Boards don't fire their CEO's based on solid performance measures.  Instead, they fire because of elements like trust or relationships or other less tangible and loosely documented reasons.

Can Execs do something about this?  Sure.  Get performance focused but probably not until a sound relationship footing has been established.  Check out this BWB Solutions article for our insights on this matter.

Nonprofit Governance

In the Summer 2010 Conference Board Review there's some good fodder about governing boards. The Conference Board focuses principally on for-profit corporate boards but the content presented in this series of mini-articles is worth a discussion among nonprofit folks.

One learning: composition matters as does holding members accountable. 

The problem begins with the composition of the board.  Typically, boards have been unwilling to confront or ease out under performing directors; instead, they rely on retirement ages and term limits to cull the herd, taking out both stars and dos.  Many boards routinely reject efforts to increase board size, which delays the recruitment of new directors until a retirement looms.  This means that CEOs and shareholders must often wait years before bringing about directors with backgrounds and experience the company needs for meaningful boardroom dialog at its stage of growth.

Another: it's not clear what "best practice" really looks like.

One company's board separated the roles of chairman and CEO on the basis that this was a governance best practice, only to install a non-executive chair incapable of running an effective meeting.  Another board created a risk committee but is now mired in confusion over what this committee does vis-a-vis the audit and finance committees... In both cases, the functioning of these boards and the value they could contribute would have been affected far more positively by changes in the way the board engaged in strategy, provided pre-reading materials to its members, and structured its meetings.

There's a bunch more wisdom or at least matters to consider.  Please link on over and check out the article.  Oh, I do have to acknowledge that the piece from Nancy Lublin's Zilch on using the board's wisdom is also included.  Note, I agree that board members should certainly be a source of wisdom on any number of matters but as volunteers and certainly not as a primary resource to anyone but the Exec, or at least, only with the accompaniment of the Exec.

Nonprofit Governance: Do More

I reviewed Nancy Lublin's "Zilch" the other day feeling relatively positive about the book as a good Management 101 piece that really provides some of the inside secrets to the very successful "Dress for Success".

Today I want return to one chapter in "Zilch" titled "Do More With Your Board".  Because a large part of my practice is about nonprofit governance I gave this chapter a deeper level of attention.  I must say however that I was a lot less excited about what Nancy Lublin had to say about governance.

One example: "not-for-profit board members are like senior staff who won't be in the office every day or even every week and will never get a paycheck from the organization."  Ms. Lublin offered this thought in response to another nonprofit Exec's expressing the need to identify a "volunteer" who could help direct the strategy, tone, and execution of a multimedia campaign. Whoa!  Board members are like senior staff?  I would say yes, board members, when wearing their "volunteer" hats can be like senior staff.  But when board members wear their "board" hats -- they are not like senior staff.  Senior staff report to the Exec.  Board members report to each other and they govern (at 30,000 feet), not 500 feet. 

And the other "bad" example: "encourage the Board to communicate directly with staff".  I can not recall an occasion where this advice has worked out well for the staff, CEO or Board.  It is fraught on all kinds of levels of which I will think and blog about in the future.  Bad advice in my opinion and there are much better ways to accomplish the different benefits Ms. Lublin outlines than creating bonding between staff and board (unless it's the Exec).

On the other hand, ideas I believe to be good: the organization's "target market" or constituencies would be represented on the board (Absolutely).  Board members should not be compensated (this may have been one of the few advices more directed to business).  Expectations of board members should be clearly spelled out (Certainly and this is a pretty big weakness of nonprofits -- a particularly important job for Governance Committees). Don't put the CEO on the Board -- rare for nonprofits, again, likely directed at for-profits).  Finally, meet in the "field' -- probably what happens for most nonprofits although I would like to add: meet with your customers -- have them tell their stories and help find solutions to their challenges and the challenges of the organization.  This of course might lead you to think about Engaged Governance -- another topic but one which I believe is a solution for many challenges.

Nonprofit Book Review: Zilch

Nonprofits are frequently told they should "act more like businesses". 

Nancy Lublin, founder of Dress for Success and current CEO of Do Something felt it was time to change the paradigm and offer businesses lessons from the nonprofit sector. And that's what Zilch is about.

Zilch is certainly an eye-catching name that in many ways accurately represents how nonprofits succeed in having an impact using very limited resources.  But, in my opinion: Nancy Lublin has done a great job of providing a good Nonprofit Management 101.  On the other hand, providing lessons for business, who cares?  To be honest, I don't think business cares either.

Anyway, the eleven chapters of Zilch are each cleverly titled "Do More (something)".  The point is clear: more can be done even without more money, with more effective use of the brand, by better utilizing board or staff or volunteers and of course, with the money a business (nonprofit) has.  These offerings are thoughtful and even helpful and what works best is the examples which include Dress For Success.  Really, folks, including me, love to hear how someone makes something successful, be it for-profit or nonprofit.  Learning some of the "secrets" of Dress for Success and Do Something and a bit about Teach for America were really the treats from Zilch. 

So, if you are entering into the nonprofit sector or maybe you have even been in the sector awhile and need a refresher course and maybe a few new ideas, pick up Nancy Lublin's "Zilch".  It's good summer reading.

Nonprofit Hospitals Face Increased Requirements to Be Charitable

You may know one of my pet peeves is nonprofit hospitals.  I believe these institutions barely demonstrate that they are, well, charitable and deserving of their tax exempt status.

The IRS is apparently having the same reservations and IRS Notice 2010-39 is testimony to my belief.  This Notice is proposing four new requirements for being more charitable or at least demonstrating the level of charitability.  Right now this Notice is just that, a notice.  I want to encourage folks, who share my belief that nonprofit hospitals should do more to earn their exempt status, to share your belief with the IRS by commenting on Notice 2010-39.

You have 'till July 22 to offer your thoughts.

Nonprofit Cemetary-Tourism: A sustainability strategy

Yes, even nonprofit cemeteries may one day face the reality that they can't afford their future.  Hm, lot's of theological issues contained in that thought.

Well, the Green-Wood Cemetery, currently "home" for the likes of "Boss" Tweed, Charles Tiffany (the glass guy), DeWitt Clinton (NY Governor) and Leonard Bernstein (think symphony), is running out of burial space.  What I didn't know and the Wall Street Journal explained, is that the sale of burial plots accounts for a bit more than 1/2 of total annual revenues.  Investment income is the other big source of revenue and that of course hasn't been growing to say the least.

So, the Cemetery's curator and board, recognizing the historical significance of its residents, is effectively capitalizing on "cemetery-tourism".  I've made this term up but it kind-of parallels the agri-tourism industry except folks aren't coming to the cemetery to try out being buried.

Anyway, creativity lives on, uh, dies on, uh.......

Nonprofits and Tainted Money

If you are a member of the Board of Directors of the the National Fish and Wildlife Foundation and BP says "We wouldn’t dream of profiting from this terrible disaster,” would you take the money (estimated to be valued at $20 million generated from the sale of oil "salvaged" from the broken well)?

Now, if I am a BP shareholder or board member, I might also be asking why BP wasn't just keeping the money.  Is it really wrong for a company in the business of drilling and selling oil to, well, sell oil?  I'm not generally thinking it is wrong and think it's what everyone would expect BP to do.  Again, this is their core business.

But for probably PR reasons, BP feels moved to give this income away and likely reap a healthy tax deduction to boot.  Meanwhile, the Foundation Board has said it will take the money and go do good things with it. 

Should we applaud?  Isn't BP just doing more PR and taking advantage of the Foundation's image and name?  Doesn't the Foundation loose credibility in taking the money -- the sold-out syndrome?  Or is it true, that as long as mission is not compromised, the only thing wrong with tainted money is there taint enough of it?