Nonprofit Board Crisis

Nonprofit Governance: It Matters

This weeks Newsweek magazine had an article titled "The War Within Wikileaks" by Mark Hosenball.

You should know by now that WikiLeaks and in particular, its spokesperson Julian Assange, leaked bunches of documents about the US's war in the Middle East.

According to Newsweek and why I care, there's trouble in Wiki-hills and a move by some of its members to reign back Mr. Assange while he faces a range of accusations that are sullying his credibility and subsequently, I would guess, the credibility of WikiLeaks.

Mr. Hosenball is most direct in his assertion that what is truly known about what is truly happening within WikiLeaks is somewhat ironic given its emphasis on transparency and "better democracies".  What's of most interest to me is what Hosenball notes about the organization and its governance. 

Hosenball says: It's not known how many members the group claims.  ....the organization may have a governing council of nine members--but it's unclear who they are.  And, the only other recognized spokesman "hides behind a pseudonym".  Another WikiLeaks person who has spoken for the organization and supports Assange says "he can't discuss the tension with Assange, or even describe how the site is governed, because they're not public matters.

Ah, but the fact is that who governs and how governance is conducted becomes an especially public matter during times of an organization's strife or behavior when that behavior is upsetting to those in power outside the organization.  Simple evidence: this article.

Nonprofits and Foundations: Do they really want to work together as equals?

I've always believed and experienced that nonprofits and foundations are not equal on the playground of philanthropy.  One has money (not the nonprofits) and the other (the nonprofits) want the money.  Both want to do what they think is best for the world.  Both want the other as a partner to achieve their respective desired outcomes. 

So, I don't know that Foundation Source's new Foundation Source Access service will really change the philanthropy playground but the desire by both parties that have signed-on offers me hope that each party wants to know and/or understand each other better to improve transactions. 

Certainly, transparency is the first step to equalizing relationships, or at least, equalizing expectations.

Nonprofit for-profit test -- too early to tell

A few months ago I chatted about Panera's test restaurant concept that has a pay-what-you-want pricing for the regular Panera offerings.  While patrons have the option to pay what they will, signage indicates that paying equal to or even greater than the traditional Panera pricing will provide excess receipts for charity. 

I expressed my doubts about the concept before and the early results have me continuing to scratch my head over what's the point.  The early results: some folks pay what the menu suggests; some pay a little extra; and, some don't pay or pay less than what the menu suggests.  Panera is not sharing the raw numbers and I'm guessing that's for a reason. 

In the end, I would still really prefer that Panera just give to charity and make as much money as it can through its stores but that's not what this experiment is about.   But then again, what exactly is this experiment about?

You can read about how it's going in the Philadelphia area here.

Nonprofits that didn't get the memo

Call me crazy but I think the IRS has done some amazing work to ensure that every nonprofit was aware of the need to complete a filing or basically go out of business.  The IRS made the process to file really easy too.

And yet, lo and behold, there remains those that claim to not have gotten the "memo".  So I glean from the Chicago Tribune article, one that even identified some nonprofits that had yet to file, after the last extension.  And that's enough to get at least some credit as the IRS doesn't even know who all the nonprofits. are.

This situation raises a bigger warning flag and question: should a nonprofit that doesn't read the papers or have a connection to any of the many networks and media that relayed the IRS filing story really be able to continue to operate as a nonprofit or are they even operating at all? 

I seriously wonder as some of those in the Tribune story relayed, if the only need is to keep their nonprofit around for an emergency or it's too much work to complete an annual filing, why not turn over everything to the likes of a community foundation.  And, more importantly, how are these nonprofit "owners' fulfilling their fiduciary duties if they can't even find the time to file?

P.S. -- one of the groups in the story had an auditor -- no money and an auditor?

Nonprofits are not for personal gain!

Once again the line between public and personal benefit has been crossed by the board of a nonprofit. 

As reported in the New York Times, at least two US congressional representatives directed scholarship money from the Congressional Black Caucus Foundation to family members and to associates' family members.

For shame, for shame, for shame.....  How many times do nonprofit board members need to be reminded about their conflict of interest policies and their fiduciary duty of care to avoid these behaviors?  Apparently, there just aren't too many times and that is in itself a lesson for Board Chairs. 

Nonprofit Board Chairs: it is your duty to remind your members that they are bound by their conflict of interest policies or they must, at minimum, leave their position.  And, if the occasion for members to gain personally is permitted, you bear some of the responsibility for letting this happen. 

Not easy, true -- board members may even be your friends.  Necessary, yes.  You accepted serving as chair.

Nonprofits and the Media

Why are some nonprofits better than others at getting their "story" out to the media and ultimately the public?  This is the question I have been pondering following last week's successful media experience by the minister with the itty bitty church in Florida. 

Many nonprofits would be delighted to garner this level of attention on a local never mind a national level.  For certain, what this minister got right was to create a firestorm around his story.  The ability to create such a firestorm is worthy of study with the hope that there may be something positive to glean from this event.

Nonprofit Lobbying vs. Advocacy

I frequently hear nonprofit board members wring their hands over whether they are too close to violating the rules that restrict a nonprofit's engaging in lobbying. 

In its review of this very question centered around Common Sense, a nonprofit  "that gives parents and teachers advice on media and technology for kids", the LA Times does a great job of highlighting the issues and drawing the lines between lobbying and advocacy. 

I've generally believed that few nonprofits have anything to worry about on this issue and I think this article might put a few minds to rest.

Nonprofit Transparency: is it all it's cracked up to be?

In a recent Wall Street Journal story, the "Bill & Melinda Gates Foundation has taken another step toward increased transparency, acknowledging in its annual report that the world's largest charitable foundation is too secretive and hard to work with."  In the same article, Pablo Eisenberg, famed charity critic and currently an academic  said "the foundation has a moral obligation to share its decision-making process more broadly as it distributes what is partly taxpayer dollars they saved on taxes by giving the money away."

I generally agree with Prof. Eisenberg on many of his criticisms but I wonder if the Gates Foundation is being too harsh of a self-critic as what I value most, particularly about foundations but equally so for all nonprofits, is what are its results.

After all, many consultants including myself are stressing to nonprofit boards that their focus must become about results, not activities. While the use of resources is important from a management and governance perspective, I believe that the real measure of a nonprofit is in its results, and if we are talking about transparency, a nonprofit's understanding of its results and understanding what role its intervention had in producing these results ranks first in what I need and want to know.  This is also what I believe the public needs to know to understand how their tax dollars are being used.

So, sure Gates Foundation and others in the sector.  If you want to share how you decided to do what you do and other more micro-focused items, feel free.  But more importantly, tell me about your results and what you did to produce these results so others may emulate.  We need success stories and we need to know how we got there.

Nonprofit Takes Stand Against Funder

According to the Philanthropy News Digest, the Salvation Army of Massachusetts is breaking from the United Way and exploring launching its own workplace giving campaign.

The reporting on the matter suggests that the Salvation Army exec just has issues (and certainly a history) with the United Way while the the United Way wants to stay together.

I find it hard to believe that a nonprofit exec, no matter how wide and deep the issues with a funder, could make such a move without the sanction of the board.  So, despite the United Way's protestations, I'm thinking there's more to this story.

Good case study about when it actually makes sense for a nonprofit to "walk away" from a funder.

Nonprofit Private Universities Expand Their Wealth

Good long-range planning?  That's one of the questions raised from a Philadelphia Inquirer article focused on private colleges and their acquisition of lands and buildings on a speculative basis (they don't know exactly what they will do with these assets).

One could argue that such acquisitions are good, in the short term, for the communities where they are located.  As I understand it, buildings that are not being used for academic purposes can be assessed for property tax, and if they are being rented out by non-academic renters, can be taxed as unrelated business income.  So, that's the good news.

But is this really good stewardship by these academic institutions' governing bodies?  Do such purchases further mission?  And do such purchases, in the end make it more affordable for those without means to pursue an education?  Oops -- maybe that's a question that can only be asked of public institutions.  Private universities don't actually have to be charitable AND educational.