Nonprofit Board Crisis

Nonprofits and Political Money cont'd

I suppose it's just too early for New York to take advantage of the blog lessons shared earlier this week.  The lesson: don't let legislators have money they can spend without full accountability and don't let nonprofits that are really, closely, even biologically tied to a legislator have money when it doesn't have systems or processes or reporting that is transparent and cannot ensure monies are spent for as intended.

Nope, too early and NY State Senator Huntly and the Parent Workshop are a great living example of all these failings.  Feel free to visit the Wall Street Journal for more details.

Nonprofits and Political Money

Over the past few years there have been quite a number of big-city stories about legislators who have used their positions and power to allocate discretionary monies to selected nonprofits that turned out to be "fronts" for personal or family financial gain.  Think New York City, Philadelphia, Chicago and Los Angeles, among others.

Well, the folks in Prince William County figure this doesn't have to be the case and have banned such sharing by legislators and have also initiated new methods for ensuring County monies will be well allocated and spent effectively.  Check-out the story in the Washington Post and feel free to share this approach with your legislators.  I'm sure the Prince William folks will be happy to share the language.

Nonprofit Transparency

Is transparency a core nonprofit value?  If you (me) were facilitating a board planning session where the subject of values was central to considering theory of change and mission, would transparency ALWAYS be one of the core values?

I raise this question because transparency is playing a central role in the current presidential campaign.  In particular, Richard Reich reflected in a Christian Science Monitor guest blog about the "covert nonprofits" advertising for the candidates, in particular, Romney.  He notes that these nonprofits are essentially covers for collecting big bucks which are in turn used for the intents of their donors.  Reich offers that the Romney faux nonprofits in particular are lying machines duping the public by spreading untruths.

But aren't nonprofits, by their nature and design, supposed to value and adopt transparent ways?  Apparently not all of them. 

Nonprofit Governance and Management Fails

These stories appear all to often (and of course I need to mention them). 

The NY State Attorney General is citing the "fiscal officer" of two nonprofits for embezzling over $500K (see Wall Street Journal).  And just how does this happen we have to ask? 

I think the answer is simple: failure on the part of the board and management to have checks and balances in place.  And even more simply, particularly on the part of the board, to look and question the financial statements.  If a board is not receiving regular financial statements (Income Statement and Balance Sheet), then it has an even more basic problem, that needs to be fixed immediately.  This is not rocket science!!

Nonprofit Board Accountability

When is a nonprofit board accountable to the public? 

I would pose that a nonprofit board, the surrogate owner of a nonprofit, is first and foremost accountable to the public.  Most often, on behalf of the public, the IRS is the first line of holding a nonprofit accountable.  Next up: donors.

But what happens when the IRS and donors aren't enough?  In the case of the Corcoran Museum, sometimes the IRS and donors don't do enough on behalf of the public.  And in this case, the "public" or some portion of the public has stepped-up to say it too wants a voice, even has a right and obligation, in engage in and map the Museum's future. 

We of course will see how this rolls-out but the question for me: just how much responsibility and accountability does a nonprofit board have in engaging the public to share in strategic decision-making?  My leaning is that strategic decisions should be fully informed and that means fully engaging those who care, would be affected, and can support (monetarily, politically, and as consumers) a given direction.  I certainly don't know what background work was done by the Corcoran to engage the broader public on this matter but based on this New York Times article not enough.

Nonprofit Partnerships

Nonprofit partnerships continue to be hot.  Take for example the reunited partnership between Planned Parenthood and Susan G. Komen.   Planned Parenthood  has a deep and widely distributed women's-health delivery system.  Susan G. Komen wants to reach the very same population served by Planned Parenthood.  Together, mission more accomplished. 

But, just like in any relationship, sometimes there are bumps along the road as was witnessed in the recent Komen/Planned Parenthood experience.  The experience also provides a reminder that partnerships between nonprofits are not just about the relationships between the organizations but includes the relationships between the organizations and their respective donors and public.  I would suggest that the donors/public, with and outpouring of voice (to Komen) and money (to Planned Parenthood) played a significant role in helping smooth the bump between the two organizations.  Lesson learned for both?  Here's an LA Times article which talks a bit about the future relationship. 

Nonprofit Formal vs Informal

A recent Philanthropy Monthly article titled Stuck in Mud-Now What? caught my attention.  I reviewed the article and found it interesting enough with some reasonably well-made points, but, more meaningful to me, the article reminded me about how much time I spend with nonprofits assessing the informal ways work is done, instead of the formal codified systems, practices and principles.

Admittedly operating under there is not intrinsic error with a board and staff which operates using informal norms over the formal.  But the informal can certainly produce lots of problems in every element of the organization when the informal way of doing business is not communicated and/or when the informal is more accepted than the formal and the informal hasn't been institutionally, across the board accepted as the formal.  And, while hopefully not a repeated event, informal standards like "it's ok to use the nonprofit's computer for non-business activities when not working" can lead to some interesting challenges.

My position: take stock of the internal practices and policies to ensure they are being observed and if not being observed, understand why or why not and adjust the formal, assuming it makes sense.  To illustrate, there's a story I've heard frequently about college campuses and the establishment of sidewalks.  For every practical reason, the builders decided that a sidewalk made sense in x place.   However, students didn't find the location of the sidewalk practical at all and took to making their own path from place A to place B.  Over time the college got the idea and made the path the students created THE path. 

Get the idea?

Nonprofit Strategic Planning and Execs

Blue Avocado (a good and quick read offering insights for managers) just published what I found to be an interesting piece about how nonprofit execs might think about a number of scenarios they could face when engaged in strategic planning.  Jeanne Bell of Compass Point wrote the piece, which I believe does a fine job of getting into what nonprofit execs are likely do face.  I could add some more framings (particularly one for the exec who enthusiastically embraces planning) and I am thinking that maybe a next article, from me or Jeanne or someone, should be a paralell on what Boards consider when the subject of planning is introduced.  Scenarios are forming in my mind as I write this.  The big question: what will the "new" framings look like?

Nonprofit Pushes Panic Button

Warning: the story you are about to read (here) may make you uneasy and/or have you scratching your head.  If you read you will see it's about a nonprofit that has enough juice with someone in the press it was able to get one of those press stories about how "it's out of money but what it does is so important."  And as you might guess, no, I am not wiping tears from my eyes. 

This group, the Washington Area Wheelchair Society does appear to be providing a service of worth (based only on the article).  But as stated in the article, like many nonprofits it is struggling and right now doesn't have enough money to pay its utility bills and rent (we're talking $5K here).

So what's my problem?  First, this group is 30 years old.  I'm not understanding where it's board is that it can't generate a few thousand dollars and/or didn't see this economic challenge coming a bit earlier (there's even a quote in the article: “If they don’t get to us and let us know in a timely fashion, it’s hard to help them,” said Adams, whose office aids nonprofits groups).

Next, I went to Guidestar to see if I maybe there financials would help me understand better what the problem might be and oops, I'm not finding financials (and this place is 30 years old).

So, this place might indeed be valuable and may do a great job but as an organization -- not so good from the limited data I have. It appears to not be doing much planning and it appears to have a board that isn't doing much to help (except perhaps playing the role of volunteer staff doing the work).

All in all, I'd say this is a candidate for being absorbed by an equally sized or larger nonprofit.  Certainly, an organization that needs to push the panic button at this stage, in my opinion, should seriously consider another way to get its mission accomplished.

Nonprofit Hospitals: Nonprofit Enough?

Here's another one of those government inquiries that could maybe result in good things ASSUMING all the factors are taken into account.  The study I'm referring to as storied in the LA Times reads as follows:

A state Senate committee will discuss that issue and others at a hearing
Wednesday as part of the debate over whether nonprofit hospitals do enough to justify their tax-exempt status.

Critics have said some nonprofit hospitals skimp on charity care while
amassing large reserves and paying hefty salaries to executives. Some nonprofit hospitals have also come under scrutiny for aggressive collection practices against the uninsured over unpaid medical bills.

Mission, not justifying tax exempt status is not the end game for hospitals.  I certainly hope that that providing access to quality health care for the widest range of income needs is a component of a nonprofit hospital's mission.  And this is where an investigation should begin - not on the nature of salaries.  Let's not confuse the competing goals: ensuring there are high quality health care providers for the community and ensuring access to these providers.  At that point, for the government to say "oh you are not" and to then not find ways to help pay the cost when that institution may be doing what is feasible will in the end not serve anyone's purpose.