Nonprofit Board Crisis

Nonprofit Board Oversight Might Have Made A Difference

I believe that two of the biggest contributions a board can make are to develop policies which support the ability to provide oversight and actually providing that oversight (determining and ensuring results toward mission).

The absence of an effective governing board means that stuff like this is bound to happen.

Nonprofits Proliferation: why it's not a bad thing

I originally read and was going to write on this Christian Science Monitor article as someone who was unhappy with the idea that individual rich people were out there filling the social sector domain as just that: individual rich people who might be doing good but were doing it solely on their terms without governance that ensured that the benefits truly extended beyond whatever they (the individuals) chose to benefit. 

This still may be true but I re-read the article and came to recognize that many of these entrepreneurs had actually chosen nonprofits as their vehicles for doing good and thus actually did have some type of governance that went beyond them.  Again while re-reading I recognized that another more important theme of the artice centered on the "necessary" (and abhored by nonprofits) practice of proliferating nonprofits -- essentially expanding a based of entities that today struggles trying to secure a very limited pool of resources.

But the article makes the case that proliferating nonprofits and increasing the pool of competitors is not about proliferation or competition but about identifying methods that are more effective to address not-yet-solved (or new) social ills.  This evolution may displace those who have failed or introduce new and better approaches.  Of course, the success of new nonprofits is reliant on the will of donors to step-up and divert their funds in recognition that what is being tried has a place in a very crowded market.

Let's give a round of applause for these new folks and let us thank those who have come forward with "new" approaches to change the world. 

Nonprofit Advice for Individual Seeking Board Service

There's quite a lot of literature in the sphere advising boards and staff on searching for new board members.   The most common recommendation: seated board members should tap their network.  On this matter, I suggest a step further and not to directly seek board members but seek committee or task force volunteers and provide the opportunity for the organization and the individual to mutually screen.

That said, what I don't see so much about is advice for the recruit -- what questions should they ask when considering nonprofit board service?  Here's some questions I would ask:

what is the organization's mission, values and is there some kind of strategic plan?

who are the current seated board members?

how often does the board meet and what happens at meetings?

what is expected of a board member in terms of time, duties, money?

how long is board service?

what do I really bring to a board?

Have you other questions you might ask?

Nonprofit Boards: Composition Matters

If you, a nonprofit founder or CEO, select board members who are loyal to you above the nonprofit, you are not doing any favors for yourself, your board members or the public.  At minimum, all three parties risk losing objectivity on their respective behalves.  At worst, the CEO, board members and nonprofits can risk facing what Greg Mortenson (Three Cups of Tea and Stones into Schools) is now experiencing: a $1 million fine.  Board composition matters.  And while I understand a CEO's fondness for having only those who would agree with him/her, this is not effective governance.  Here's the story about Mr. Mortenson and his organization.

Nonprofit CEO Compensation: fair and reasonable

I prefer to believe that the citizens' interest is waning with regard to nonprofit CEO compensation.  My thoughts though were proven incorrect by two newspapers, one in Atlanta and the other in New York.  Unlike what we usually read when Senator Grassley is focused on the subject, these two press sources focused not as much on the subject of outrageous salaries but on how to think about what is fair and reasonable.  The bottom line:  It's not at all about salaries, it's about outcomes.  Here's a link to a google search that turned up these articles.

Nonprofit Board's Duty of Care

If a board has exercised prudence in its decisions over difficult issues it is generally thought to have met the common standard for fulfilling its duty of care.

And what is prudence you might ask?  Prudence is how the "majority" of people facing a similar situation or decision would respond.  Prudence is not as much scientific as it is experiential -- you kind-of know it when you see it and more importantly, recognize it when it has not been used.  On the other hand, there is a formal definition: "the use of good reason" often including the characteristic of "caution".

All that said, examples often help to demonstrate what is not "prudent" and the General Services Administration provided a live one last week!  Specifically, two GSA deputies spent $823,000 on a conference in Las Vegas.  Some of the must haves: a clown, mind reader & comedian, boxed commemorative coin sets, novelty yearbooks & souvenir canteens, and a $75,000 "team building" exercise.  The head of the GSA and two top officials have since fallen victim due to this questionable use of government funds.

The good news: it's not that hard to find stories about what is not prudent decision-making.  As a simple rule, if a board has doubt as to what is prudent, they might ask the question: what would (name a person generally respected) do in a similar situation.

Nonprofits' Tainted Money

If the money that was given away by a seemingly very generous donor was illegally gained, can the nonprofits who benefited from the donor's largesskeep the money?  What's an example: Madoff where the question is certainly being answered in the courts.

Meanwhile, and this is probably something nonprofits in every state should consider, in Minnesota the legislature has an answer: create legislation that protects the nonprofits.  For more details, see the Wall Street Journal article.

I would offer though that the premise behind protecting nonprofits is that they have no clue about the source and they are of course doing good things.  But when nonprofits invest in "too good to be true" investments and receive large gifts from sources they can't really explain or even fully understand why them, does this truly deserve blind absolution?  I'm not so sure.

Nonprofit Book Review: The Mission Myth

It was with great curiosity that I opened Business Solutions Press' recently published "The Mission Myth: Building Momentum Through Better Business" by Deirdre Maloney.

When I see a new nonprofit related title I frequently fantasize that some new or clever approach to supporting nonprofit boards and managers might be awaiting my review.  Sadly, The Mission Myth did not fulfil my fantasy. 

Let me begin by saying that the title Mission Myth and the context, that mission is not enough to make a nonprofit successful (effective and efficient), is appealing.  Mission or passion for mission is the one fundamental and common element for pretty much everyone engaged in the nonprofit sector.  Whether "everyone" actually doesn't know that mission isn't the only ingredient I would argue that it certainly doesn't take long for a newbie to find out but I presume this is debatable for at least Ms. Maloney.

That said, The Mission Myth offers a 4-M paradigm to frame the understanding of what beyond Mission is necessary for successs.  The title suggests that the "what beyond" is "Better Business".  Better business within the 4-M paradigm means management, money (mostly fundraising), marketing (mostly telling the public your story) and measurement.  Uh...ok.  I suppose these are as good as any other "m" I might conjure. 

A truly helpful framework, though?  Not in my opinion.  There are certainly no surprises, likely even for the newbie, the only possible beneficiary of The Mission Myth.  There are some nice anecdotes and most of the content is relatively consistent with my own understanding but worth taking time out to read?  I don't think so.

But before concluding allow me to dispel one myth I found in The Mission Myth.  The myth I would like to debate focuses on the marketing "m".  According to Ms. Maloney, "marketing inspires people to act on behalf of your organization to help reach its goals."  HUH?  I am afraid there is no part of this definition I can agree to either academically or practically.  This definition could almost pass for the meaning of marketing communications but even then this is not a perfect translation. 

Adapting the classic Kotler definition and pretty much any of the gurus in the field of marketing management and planning: marketing is the identification and satisfaction of "consumer/donor" needs in exchange for meeting organizational needs.  Marketing planning uses the 4-P's to achieve successful marketing goals.  The 4-P's: product/service, price, place and promotion in addition to position or value proposition are informed and based on marketing research.

Marketing research and the marketing plan are the foundation of a strong nonprofit business plan.

I'm just saying....

Nonprofit Leaders Use Political Voice

Recently I have been hearing leaders from faith groups being politically loud.  For instance, leaders from the Roman Catholic Church have been preaching on their radio station, at press conferences and from their pulpits about the unfairness of a provision of the Obama healthcare act on the Catholic Church while making an exception for the Amish.  And just today a Massachusetts Catholic college cancelled an appearance by Senator Edward Kennedy's widow "because of her support of abortion rights and gay marriage."  See the Wall Street Journal for the story.

I am coming around to accepting that part of the duty of obedience for the paid and volunteer leaders of a nonprofit is "getting the message out."  This is essentially part of their duty to achieve mission.  It is for this reason, I believe, that a coalition of faith groups have banned together to strike against the Obama health care plan.  These groups have an obligation to their mission to act according to their values. 

Oh well...

Nonprofit Capacity Building Group Teaches Interesting Lesson

Nonprofits strive to be learning organizations.  So, let's hope the members of the American Association of State and Local History are embracing the lessons in fiscal oversight and risk reduction through checks and balances as the details about the Association's finance director and his wife unfold. 

Oh, did I mention that the finance director stole more than $700K over at least a few years -- apparently unnoticed until last year? 

So not good......  For details check-out the Tennessean.