Nonprofit Board Crisis

Nonprofit Governing Policy Making

Using Prof. Gene Fram's book title, it's commonly understood that nonprofit boards should focus on "Policies vs. Paper Clips".

But it's not always clear about what "policies" look like.  However, today's Washington Post article titled the "NCAA creates task force...." does a nice job of giving some insight about this very topic.  And before getting a little deeper into what a policy might look like, I note that the article touches on another governance matter that I have been actively supporting.

That subject is standing committees.  As many nonprofit board members know, standing committees can often be uninspiring, unproductive experiences.  So why keep them when Task Forces will work just fine -- there's a clear assignment, it's time limited with a clear result - some type of recommendation for board action.  What's the only standing committee we nonprofit boards really need? The Governance Committee.

Back to policy making.  As written, the NCAA is appointing a Task Force to "look at the criteria and process for licensing bowls and will not approve any new bowls until updated standards are put into place". 

Yes, there are likely more definitions to consider about what makes good policy but this assignment is certainly a good working parameter.  Of course you can always read Prof. Fram's book for more insight.

 

Nonprofit Board Not In Sight

Have you heard of Greg Mortenson?

Mr. Mortenson is author of Three Cups of Tea and is known for building schools in Pakistan and his Central Asia Institute.  He's been featured by lots of national and international news media including the Christian Science Monitor, the source of this blog.

So? It turns out that Mr. Mortenson tells stories really well but his philanthropy does not actually do what it says it does.

Hence, my question and my belief that charity boards who let their Execs, even if they are founders, run loose without any accountability have grossly failed in their fiduciary duty and it is they that enforcers of fiduciary duties should focus.

Enough said.

Nonprofit Does Not Mean Non-sued

It is pretty much agreed that many of the best nursing homes are nonprofits (according to this study in Connecticut).

But, a new study reminds us and more importantly, nonprofit boards, that providing qualilty care does not mean the nonprofit won't be sued.

According to a recent Harvard Medical School analysis cited in the New York Times, there is at best a weak correlation between being sued and providing high quality care.  According to the report, “For the worst facilities, their litigation risk was about 47 percent in a particular year,” he said — meaning they faced a 47 percent chance of a claim being filed. “In the best, it was about 40 percent.”

So, nonprofit boards beware!  Yes, you will likely provide the highest quality of care among your counterparts.  That you do, however should not give much comfort.  For that, make sure you have good insurance.  As the threat of litigation is not a particularly strong motivator to provide quality care, other methods have been developed, or are being developed.  As a nonprofit, highly motivated to provide top quality care, it also is important to stay attuned to these alternative methods to ensure you continue to meet the bar, and are rewarded for your mission-based service.

Nonprofit Learns Cultural Competency Matters

If your image of the VFW matches mine, you imagine a bunch of older men sitting in a hall somewhere or marching in a war memorial day parade in their suits and little caps with medalions.

According to a story in USA Today you would not be far off.  And before, say, the 60's the number of women who served in a foreign war (that's the FW) was pretty small so a Post (that's what a local chapter is called) wouldn't necessarily expect to have women as members nor be tuned-in to the needs of former military women.

That number has changed, over the last 5 years in particular, with women "accounting for roughly 208,000 of the 1.4 million active duty personnel" and 260,000 women "who have been deployed in support of the Afghanistan and Iraqi operations".

So what's the VFW to do if it want's to be responsive to what proves to be different needs by women and more importantly recognize that part of its future actually does rely on recruiting women to its ranks (given the average age (60+) and gender (male)?  One answer: start Posts that are for women, which it has done now in upstate New York. 

This solution will certainly work in the short-run but I'm thinking that this solution does not actually affect the current 7,500 posts.  Seems to me like a major cultural competency training of the volunteer leadership in these posts might be another solution to how to think about and be inclusive of women.  Clearly, the National Board must step-up to the plate and make this a priority.

Nonprofit Charter Schools Short Paid Leaders

According to the Washington Post, there's a signficant shortage of Charter School Directors.  There might be plenty of folks prepared to lead the academic side of a Charter School but there are apparently far fewer prepared for the additional demands including "managing a board" and fundraising and, well, you can figure it out. 

Of course you might say, "where's the succession plan"?  And this is absolutely an imperative.  All nonprofit boards need to have a succession plan in place.  Yes, all nonprofit boards need to have a succession plan in place.  A good lesson, don't you think?

Nonprofit Board Wins Significant Eminent Domain Suit

Imagine you are a member of a nonprofit board that one day wakes up and is told by the city government that it was going to lose its youth-serving property thanks to eminent domain.  The city claimed that the area was blighted, thus unsafe and fell under the rules of eminent domain. 

This youth organization believed differently, sued saying the city was using false grounds to take their building (the city was really wanting to do economic development).  And the youth organization won.

For me, the equally amazing line to this story is that the board of a tiny nonprofit stood up and said they weren't going to take it.  Nonprofit boards everywhere: take notice!

Here's the story and congratulations to the Community Youth Athletic Center!

Nonprofit Board Totally Incompetent

Their are many parts that are incredulous about the story of the nonprofit Exec who just resigned following his actions being chronicled in the local newspaper.

For me, what I'm awed most disturbed about is that the board was so disabled that it failed to act for three years (ok, so we don't know they didn't try).  But I'm equally awed that an exec could accept $140,000+ a year and work 15 hours a week and think nothing of it.

Here's the story.

Nonprofit Board Votes to file for Bankruptcy

Stong balance sheet; big annual expenses -- why not file for bankruptcy and get the legal authority to make changes?  As reported in the Philadelphia Inquirer, the Philadelphia Orchestra board (75 member strong) voted this past Saturday to file for bankruptcy protection. 

While  the Orchestra is actually in good financial condition on the balance sheet and will continue performances, the Board believes that the reorganization filing will help the organization address the cost of it's annual $3 million contribution to its employees' pension fund plus other contractual obligations of around $2 million a year.  The Board also believes that this filing provides the opportunity to launch a big fundraising appeal that will strengthen its endowment of some $140 million.

While the Board claims this action is one of prudence (the actual standard for "responsible" board decision making) I certainly have to question the strategy of filing when the balance sheet is so strong and employee benefits are the target.  This move will certainly be "one for the books" and we will all stand-by to learn what happens next.

Nonprofit Governance

Continuing here at the Kansas City UKMC Conference on Governance.

A question: how's your board doing around what by some standards are considered the three functions of a board:

Fiduciary -- caring for and overseeing the work and mission

Strategic -- looking forward and addressing efficiency and effectiveness

Generative -- developing new ideas around how to best serve market

Possibly Part and parcel of Strategic and perhaps Generative or possibly a fourth function is transformational which is change-focused (internally or programmatically).

Nonprofit Governance

Still at the UKMC conference on nonprofit governance.

The question: who drives change and stability -- board chair? exec?

My thinking -- either or and sometimes both at a given moment of time.