Nonprofit Board Crisis

Nonprofit Duty of Care to Extremes

One of the fiduciary duties of a nonprofit board is care.  Care bascially, like its title, means at minimum that a board will do what it can to ensure that the nonprofit is wise with its resources in pursuit of mission.

The Wolf Trap folks (you know, fancy nationally known performing arts center near Washington, DC), via their executive, have taken care to a new level.  The issue is the protection of the organization's name, or at least one of them.  It appears, that in some small community not that geographically close nor a venue big enough to confuse with Wolf Trap, another nonprofit is using one of Wolf Trap's names.  The name, The Barns, will not likely confuse the other nonprofit's audiences, but Wolf Trap must exercise its duty of care and thus, it is suing to ensure that the use by the other folks ceases.

Duty of Care in Extreme?  Sister organization against sister organization?  Here's the Washington Post story. You judge whether this is "right". And while you are at it, perhaps you can recruit Judy Collins or one of Wolf Trap's other big name performers to share the wealth and show up for a benefit at The Barns -- and no, not Wolf Trap's The Barns.

Nonprofit Board Member

What might be the characteristics of the ideal nonprofit board member?

The Alliance for Children and Families (alliance1.org) offers an answer to this question in an article about Lutheran Social Services of Wisconsin board member John Grace.

"John has depth of knowledge, breadth of experience, passion for the work, and a strong intellect that guides our thinking for effective service and plannning for a strong future......John walks effortlessly between management, the community, and the world at large--all of whom recognize his expertise and respond to it to better shape systems."

So there you have it.....

Nonprofit Board Diversity

And the survey says: diversity (gender, region of residence, professional functional area (eg accounting), culture and ethnicity) is among one of the top four areas needing improvement for nonprofit boards.

This data comes from a survey of 350 execs and senior managers who participated in executive education programs at the University of Notre Dame's Mendoza College of Business a group I would judge may be a bit more enlightened that the average nonprofit exec (suggesting that they are pursuing academinc education and may well have had a conversation on this matter) but let's suggest that this 350 are an indicator of the broader nonprofit pool of execs.

In that case, for those valuing diversity on board, the best answer: consider adopting a multilevel structure that creates opportunities to involve more individuals in varying roles.  Next, recruit using other means that your board members -- afterall, the folks they know have characteristics that are likely just like them.  Another problem for achieving divversity goals: boards without or not enforcing term limits.  In the survey, 25% of the boards don't enforce their term limits.

And, still on the matter of diversifying, creating an outer "friends" group as a feeder body comprised of donors, volunteers and or serving on committees or task forces can help diversify in the long run.

Nonprofit board diversity is not that difficult but it requires intentionality and commitment and a real appreciation of the many benefits to the organization to pursue. 

Nonprofit Board Meeting Attendance

Nonprofit Governance question of the day: does a nonprofit board member truly fulfill their fiduciary responsibilities if they do nothing more than show up for meetings?

My belief: no.  If I am an owner of an enterprise, a surrogate owner at that and an enterprise not even focused on generating profits, how prudent (the test for fiduciary decision-making) can I be if the only contribution I make is to show up for board meetings?  Am I capable of being prudent if not preparing for the matters for discussion?

I think not.  Plus, there's so much more I might contribute....

Nonprofit Board Does Not Take Embezzlement Scheme Lightly

In perhaps a twist of irony, the executive of a halfway house embezzled more than $200k .  Of course there is some shame on the board for not figuring out what was going for two years although I will admit the exec was cleverer than most in their scheme.  The good news however is that the board did figure out what was going on and reported the micreant to lots of stakeholders. 

But on another count noted in the same news item, I learned that this exec had been successful in embezzling from another halfway house in another state BUT, the board had decided not to prosecute apparently settling the matter in some way that appears to have satisfied the board.  Huh?  So much for zero tolerance. 

Once upon a time in a land not very far from where I currently dwell, I served as the Treasurer of a Food Co-op.  Typical of food co-ops, the board is elected primarily because they are passionate about co-ops and food.  While their is  usually a smattering of professional types that serve, only a few are conversant with financial information.  But, as you can imagine, understanding financial information is essential to providing good oversight.  Bottom line as treasurer I learned that my job not only included ensuring that the financial information was in the board's hands but more importantly, needed to focus on helping members understand what the rows and columns meant.

So what?  While I don't hear it often, I am convinced that boards would benefit from a Treasurer who adopts the practice of understanding that they accomplish their job if they train.  Financial reports are opportunities for training.  Budgets are opportunities for training.  Training is the only sound way for a board to know and understand what its financial information means.  Understanding the financial information is one important element in being fiduciarily strong and safeguarding a nonprofit's assets.

Nonprofit Book Review: Yes!

If you are in the nonprofit sector you likely have someone you work with (e.g. customer, staff, board) you want to have say "yes".  

Well, I have just the resource for you.  Yes! offers "50 Scientifically Proven Ways to Be Persuasive".  Each "way" is offered conceptually, anecdotally and with the research to back up the premise.

Bottom line, if you are looking for simple, direct and helpful ideas about how to move your mission, pick-up Yes!  At the very least, it's entertaining.  At the very most, you will walk away with some concrete how-to's that can support you in your everyday efforts.

Yes! authors are Noah J. Goldstein, Steve J. Martin and Robert B. Cialdini, and is published by Free Press.

 

Nonprofit Checks and Balances: NOT!

Just how many stories in the media does it for nonprofit boards and staff to learn that there are some functions, particularly those involving money, that demand a separation of duties.  One of these in particular is that when cash is being received, two people at least should count the money when it arrives and the one who records the reciept should probably be different than the person who deposits the money in the bank.

Ok, let's say there just isn't enough people for the day-to-day transaction check and balance (and agree that is very possible for many smaller nonprofits).  So now we turn to the board (you know, the surrogate leader with the responsibility to act prudently) and ask: if an employee is able to steal $45,000 over an 18-month period and you never noticed, what happened?  Pick one from the possible answers:

a) the board doesn't ask for or receive financial statements

b) the board receives but doesn't understand the organization's financial statements

c) the board receives and understands financial statements but doesn't compare this year or period with previous years or previous periods (that's one way to at least have a red flag that something isn't right)

d) duh.....

See the article in Eagle Tribune and a nod to Dr. Fram (Polices vs. Paperclips) for the reference.

Nonprofit Keeps On Chipping

Once upon a time somewhere in this Universe, some well-intentioned folks, mostly friends of the organizer, sat down with an idea they just couldn't get out of their heads.  Maybe it was a justice to right or some value to preserve or any number of driving forces but once voiced they just had to get this job done.

Perhaps it's the nature of being nonprofits.  There isn't any task that is so foreboding it shouldn't be attempted.  And so goes the never-ending story of One Laptap Per Child.  The Laptop people have been attempting, for a number of years, to create a machine that would be the basis for expanding knowledge and linking people in locations where conditions and money do not enable these results.   One standard -- produce a machine that could operate in and withstand most conditions (e.g. sun, heat, sand...).  Another standard -- make it simple to use.  And yet another standard -- make it downright cheap.

And now, because technology has been moving alongside of this quest, this mission is more possible according to a story in the Wall Street Journal.  A tablet that meets all the criteria, possibly, will be introduced at the Electronics Trade Show next week.  Has sheer will translated into Mission accomplished? 

Bottom line, in the nonprofit sector, the impossible is possible, eventually.

Nonprofit Mission and Money Matter

The Archdiocese of Philadelphia announced on Friday that it had decided to close forty-five of its elementary schools and four of its high schools.

These closings are in recognition of a significant drop (thirty percent) in enrollment.  The consequence of such a drop is two-fold: significant financial bleeding and equally important, religious education is not effectively reaching as many as they would like.

While the plan on the surface looks like the Diocese is getting out of the business of private education, in reality, the Diocese has a plan to regionalize its system, making it more cost-effective while simultaneously increasing the quality (partially through efficiencies and partially by changing the standards).  The Diocese is including plans to install "new advisory boards with lay members who have financial and management expertise, and establishing a foundation that will raise money for the schools."

In my opinion this is a nonprofit that has recognized that its current method of achieving mission does not match market demand and is effectively "breaking the bank" which in turn severely limits future potential to achieve mission. 

See the full-story in the Philadelphia Inquirer.

 

Nonprofit Nursing Homes Better

In a NY Times article about staff happiness at nonprofit nursing homes we learn:

...researchers have reported that ownership status is one of the factors related to quality care. “Most studies show that nonprofits do a better job of caring for patients,” said JiSun Choi, a postdoctoral fellow in nursing and long-term care at the University of Kansas Medical Center School of Nursing. “But we’re not sure why that happens.”

We could speculate about the role that money plays, of course. A nonprofit nursing home doesn’t have to worry about paying shareholders dividends or keeping stock prices high. It can also rely on philanthropy to help bridge the gap between what it takes in from residents and government reimbursement and what it needs to spend.

My conclusion: it's not often we see the media pick up on the distinctions between nonprofits and for-profits.  Boards of nonprofits should celebrate that their hard work is producing positive results, and perhaps promote these facts more.