Nonprofit Board Crisis

Nonprofit Local Development Corporations

Ever wonder what good local development corporations do?  You know there are a ton of these and to be honest, I've seen some produce pretty good outcomes.  But apparently, according to the New York attorney general, these "nonprofits" have great "potential for self-dealing, nepotism, improper loans and exorbitant expenses".

While this is New York, I wonder if this is just a New York situation.  And, when all is said and done, what role is does bad governance play?  See lot's of examples and the New York case, here.

Nonprofit Board Diversity Matters

I do not know exactly the ratio of women to men who sit on nonprofit boards.  Neither do I know exactly the ratio of people-of-color who sit on nonprofit boards.  From observing my nonprofit clients I would venture to say that women are better represented than people-of-color; however, depending a bit on the sector of the nonprofit, men often outnumber women.

So what?  Diversity matters and that diversity matters is brought home by this Wall Street Journal article that, while focused on gender and corporate boards, attempted to quanitfy how diversity matters:

Major companies with three or more female directors achieved significantly better financial results than those with none between 2004 and 2008, according to a 2011 study by Catalyst, a nonprofit research group. In general, they outperformed companies with zero women on boards by 84% for return on sales, 60% for return on invested capital and 46% for return on equity.

"A board with at least three women gains diverse viewpoints that can enhance results," says Debbie Soon, a Catalyst senior vice president.

This is a helpful lesson for governing in the coming year and , perhaps may stimulate similar research focused on woman & minoirty board representation in the nonprofit sector.

 

Nonprofit Leaders Fully Informed

I believe a strategic and effective nonprofit leader (paid or volunteer) is one who is as fully informed as possible.  But beign fully informed is not always easy - there are multiple sources of information, some good, some better.

One of the best, most creative and thoughtful sources of information is the Nonprofit Quarterly.  And one of the most creative contributions the Nonprofit Quarterly makes in the way of information is now its NPQ Illustrated Nonprofit Economy.  Now in its 2nd Edition and available with your subscription (Fall/Winter 2011) or separately at $5 each, $2 for 5 or some other amount for bulk purchases, you will not find a better compendium of the source of money and where it goes in the sector. 

So, if you are not a subscriber (again, CEO's or Board Chairs) you should be.  But baring some reason why not, at least order the Illustrated Economy 2nd edition.  You can order both at www.nonprofitquarterly.org.  Your nonprofit's future may depend on this decision.  Remember, being strategic means being fully informed.

Nonprofit CEO and Board Chair

In pretty much every nonprofit there are two individuals who more or less share leadership: the CEO and the Board Chair.  Usually, one is paid and one is a volunteer.

Dr. Eugene Fram (Policy vs. Paper Clips) reminds us, in his article from the November-December 2011 issue of the Nonprofit World, that particularly because Board Chairs tend to have terms way shorter than the CEO, there is a pretty short period for bonding.  Dr. Fram also hits home the point that the CEO must orient staff on who's in charge of what, so as to ensure there is little confusion. 

I must say that I am now thinking about just how much time the CEO and Chair have to "bond" before or while the Chair takes office.  It strikes me that a well selected and "right" chair is likely not an unknown entity to the CEO.  The best incoming chair may well have served as Vice Chair and led the strategic planning process (I believe a good idea particularly if responsible for Year 1 implementation).  The best incoming chair should have also been active in a board committee and likely, before even becoming a board member, active as a volunteer either on a committee or task force or working.  In the language of my colleage Don Currie, a really forward thinking board will have a succession planning process in place such that the search for future Chairs will happen possibly even before the propsect is a board member.

That's my food for thought as many organizations begin the year with a new Chair.

Nonprofit Book Review: Everyone Leads

Paul Schmitz, CEO of Public Allies has been and continues to be inspired: by his history, his work, the folks he works with -- pretty much by every element of his life.  And this inspiration forms the nucleus of Everyone Leads, published by Jossey-Bass, 2011. 

Everyone Leads attempts to be inspiring and for some it likely is.  The stories about folks who inspired Paul or folks inspired by Public Allies, and of course, the Public Allies themselves  are all inspiring and with a message.  Yes, one takeaway from Everyone Leads is what an inspiring experience Public Allies is, inside and out which is also maybe the one downside I will speak to before going on at-length discussing why maybe this is a good purchase.

Everyone Leads tells as much about Public Allies as it does the principles of teaching leadership. There is so much content about Public Allies, (people, history, theory, people, history, theory etc) that the book could almost have been called "Everything You Ever Wanted to Know About Public Allies". Were that the title, I probably would have been less inclined to read, while not discounting that the organization has earned its reputation for good reason.  But wait, it gets better...

The content of the Everyone Leads chapters generally includes a Public Allies story; key ideas & lessons; how the ideas and lessons are furthered at Public Allies; and, exercises & reflections.  The key ideas & lessons and exercises & reflections are particularly helpful.  If I were Mr. Schmitz, I would package these kind-of like what Jim Collins did in Good to Great for the Nonprofit Sector.  There's certainly all kinds of useful "how-to's" amongst these two parts of a chapter and worth the reading if one wants to understand the five core leadership values that make for a successful Public Allies program: asset-based community development, diversity and inclusion, collaboration, continuous learning and integrity.

Should you buy the book?  I'd say if you are in the business of teaching leadership, certainly.  The how-to's and the self-examinations make this a worthy instructional guide.  If you want to know all about Public Allies, the organization, you can find that in Everyone Leads as well.  And finally, if you are looking for inspirational stories, you will have come to the right place.

 

 

Nonprofits Fueled by Political Agendas

A New York Times article about the Texas Enterprise Fund should remind all during this pre-presidential contest period that nonprofit boards with extra-tight links to candidates do well to exceed the standards of fulfilling their duty of care.  And while I like to fantasize that nonprofit boards exceed the standard as a norm, it's clear that some of those with deep political connections may not be so observant.  Just a reminder that the duty of care asks members to be prudent in their actions doing what any "owner" would do to ensure the success of their venture (my loose interpretation of the standard). 

As the story about the Texas Enterprise Fund suggests, this may be a good time for the many nonprofit boards closely connected to presidential candidates (remember ACORN) to check-in on their perfomance and also ensure all their records are in order.

Nonprofits vs. Direct Giving

I hadn't caught onto this "trend" of "layaway angels" until seeing this article in the Christian Science Monitor.  Apparently, there have been some individuals paying off the layaway balances of buyers at Kmart.  And others have been giving out cash or other gifts of value directly to those without.

So, why would more affluent folks find it more satisfying to give cash or gifts of value directly to benefit individuals?  Do the benefits of giving to a nonprofit (tax deduction, assureness of the use of the gift, oversight of results by a board) not trump making gifts directly to individuals?  What are the benefits nonprofits can't provide that this type of philanthropy does?  These are the questions boards may want to consider as we prepare to enter a new year and one where competition for limited resources will continue. 

Nonprofit Accountability

While the online charity rating services (e.g. Charity Navigator) serve their purpose, there's nothing that says you are failing to serve the public's interest like when the Oregon State Attorney General lists you as one of the worst chairties of the year.  This is the case for Making Memories which appears to have an inordantly high proportion of administrative expenses (although if you accept the staff's story, the group just doesn't know the difference between administrative and program expenses).

That said, helping the public recognize best from worst in philanthropy is an excellent job for the state enforcement organization.  That they could analyze their own records and implement their own ratings over using the BBB program (which has had some "issues", not always being objective) is a bit of a concern but all-in-all, this is a great service I think every state attorney general should consider emulating. 

For the story, see, the Portland Tribune.

Nonprofit Boards Are Dysfunctional For the Most Part

In a kind-of Bill Maher approach to life (his general thinking about the American voter), the folks at socialvelocity suggest, in one of their predictions for 2012, that nonprofit "boards for the most part are dysfunctional".  He goes on to say of course that he is optimistic and beleives that boards will get smarter.

Not too offensive!  I on the other hand believe that nonprofit boards have unique challenges beginning with this odd mandate of being surrogate owners and moving-on to the idea that a disparate albeit often passionate group of people are pulled together to fill some kind of gap left by a public sector with little will or resources and a corporate sector focused on profits.  Seems like a situation waiting for a disaster and yet, boards do "make it happen".

Hooray for nonprofit boards!

Nonprofit Exec: Gatekeeper to the Board?

Is a nonprofit's executive/CEO the gatekeeper to the Board? 

Board are a nonprofit's surrogate owners.  Mature nonprofits define the nonprofit and ensure results.  They hire an executive to ensure that their (the Board's) vision is pursued.  So, should the hiree be the board's gatekeeper screeing all who would have contact with board members to ensure that board's "best interest" is served? And why would the board need a gatekeeper?  That is a question for another day but in the meantime, please ruminate.