Nonprofit Board Crisis

Nonprofit Board Chair and Emergency Prep

Your nonprofit maybe has an emergency succession plan for the exec (you know, what happens if the exec gets hit by a bus), no?

Let's remind ourselves that one of the tests for evaluating performance of the fiduciary duty of care is prudence, often framed by the question, what would any person, an owner, do facing a similar situation or circumstance?

Today, many individuals on the East Coast are preparing their homes and businesses for a hurricane.  Is it fair to ask all those boards of East Coast nonprofits, if someone has checked-in with the exec to learn how preparations are going?  Would this not be the prudent action of an "owner"?  Of course the prudent board would have prepared policies relating to this situation quite a while ago (remember post-9/11) so maybe the board chair's checking-in to learn that policies have been implemented would be good enough. 

Either way, are you the board chair and/or member of a noprofit and confident that your nonprofit is prepared for what's coming? 

 

Nonprofit Booard Fails

The board at the Liberace Museun have learned one big lesson:  all that glitters is not gold.

According to the Chronicle of Philanthropy, the Museum has filed for bankruptcy.  The board has been unable to pay on its $1.9-million property loan, which Chairman Brian Alvarez said carries a high interest rate and nonnegotiable terms.  The board's answer: a new museum site. 

Huh?

Nonptofit Salaries: so what?

A recent posting in the Chronicle of Philanthropy tells of "concerns for really big salaries of museum execs should have all of us asking, "So what?"

I, for one, believe that nonprofit boards are the only ones who get to question an exec's salary.  It's the board who does the recruiting, hiring and evaluating.  The board understands the skills needed and the market realities.

Frankly, exec salaries is boring news.  If there are questions to be raised about execs, they should focus on results and nothing more. 

 

Nonprofit Board Treasurer

What exactly should a nonprofit board Treasurer do?  Here's a brief description to consider or use both for bylaws and job description.

The Board Treasurer, on behalf of and reporting to the Board shall ensure that the Corporation’s financial plans (e.g. budget), policies and reports are understandable, accurate, timely and available on request for Board review and/or action.

Your thought?

Nonprofit Founder Leader Does Bad

Lance Armstrong has decided to leave the charity he founded, essentially determining he's too much of a distraction to Live Strong. 

It's difficult to deny that big name founders don't matter to donors, especially in the start-up years of a nonprofit.  But the successful founder is one who creates a charity with so much added value that their creation has merit beyond their name.    

There's reason to believe that Mr. Armstrong has done a good job of making sure his charity has value beyond him and maybe separation now is actually helpful beyond just disassociating with a negative situation.  Bottom line, donors and beneficiaries will determine how much the founder's departure matters.  Of course if I were a planner of the charity in question, before Lance resigned I would be out asking donors why they give to the charity and asking beneficiaries how much the name matters.  Then the next path would be clear.

Nonprofit Boards and Management

This will be my final draw from The Conference Board Review interview of former board member and CEO of Circuit City.

My final learning focuses on a question in the interview that asked whether "top people truly undertood what was happening and how Circuit City fit into the changed environment".

Mr. Wertzel noted that " in any company, when the CEO and two or three of his top associates agreee that something is the right strategy, it's hard for a board member and particularly for another member of the management team to be the squeaky wheel.  You can queak for a while, but you get drowned out.  When you leave, they find another wheel."

I regularly hear this story from disgruntled and frustrated former nonprofit board members.  I understand that when the will is collective, it can easily over-ride the singular.  And yet, one of the hallmarks, or what is held up to be one of the hallmarks of the nonprofit sector is the commitment to inclusion and process. 

I believe a good board chair is the key to ensuring this type of situation does not occur.  How' your board chair?

Nonprofit Strategic Planning

Yesterday I discussed some of the lessons shared by Alan Wurtzel, once a CEO and a Board Chair of Circuit City.  Mr. Wurtzel shared these lessons in his book: Good to Great to Gone: The 60 Year Rise and Fall of Circuit City. 

One section in the book centers around Circuit City's strategic planning.  In this section Wurtzel looks at the company's three-year strategic plans in the 90's identifying that "management refused to acknowledge the rise of Best Buy (its competitor), failed to ask key questions about how customers were changing, and moved the goal posts on what constituted success.  In The Conference Board Review article, Mr. Wurtzel offers that he was:

surpised by how many clues we (the board and management) failed to act on.  And, that may be the best lesson: when you think you have all the answers and aren't ready and willing to challenge yourself and your assumptions, that's when you fall into trouble.  There were a few board members that challenged management, but most of the board went along.

The take-away for me: here's good evidence that fully informed strategic planning, if done right, has value.

Nonprofit Boards Matter

When talking about nonprofit boards, one question that always arises: do they matter? 

In this month's The Conference Board Review (tcb.review) there's an interview Alan Wurtzel, the sun of the founder of now defunct Circuit City.  Mr. Wurtzel served as the company's CEO and Board Chair for a total of 25 years and ahead of the store's closing.  In his interview Mr. Wurtzel was asked about how much he blamed the Circuit City Board for not preventing the Company's eventual failure.  Mr. Wurtzel answered as follows:

For the fourteen years that I was a board member and not the CEO, I blame the board for not challenging the CEO strongly enough.  Of course, the board isn't capable of developing a new strategy--only the management can do that--and some of the members pushed for a revision of the strategy, but maybe we didn't push hard enough.  I'd give the board a C-minus.

But the board that succeeded the CEO.  I'd give them an F.  That was the board that missed the signals when they were much more obvious.  .......So the board from 2000 to 2009 missed all the signals (that indicated a need for different action) and all those opportunities.  And they handled the transitions poorly.  I don't think they spent enough time thinking about who should replace the CEO.  The did a terrible job.

While Circuit City was clearly a for-profit with a board making for-profit type errors, I believe today's nonprofits to be no less at risk of such mistakes which a strong, clear-thinking board can avert.  A lesson learned?

 

P.S. Check-out Mr. Wurtzel's book: Good to Great to Gone: the 60 Year Rise and Fall of Circuit City.  Hopefully there are few if any nonprofits that can recite such a tale but I believe there are many relevant lessons.

Nonprofit Death

Nonprofit's are born and sometimes, when the stars align, they die.  Nonprofit boards and/or their execs tend not to let nonprofits die, no matter the circumstances or worse, lack of purpose.  Still, some manage to close their doors or merge but definitely not continue into the future.

Check-out this story by Rick Cohen from the Nonprofit Quarterly.  It's a great piece, a memorium you might say, about Hull House.  This is content every board member should consider be they in strategic planning mode, evaluation mode, or actually having to think about whether going-on is the "right" option for their nonprofit.

Nonprofit Board Politics

An article about a Planned Parenthood PAC has me thinking about what nonprofits can do to play during an election.  An article by the Alliance for Children and Families offers some pointers to answer this very question.  The pointers make sense to me but don't emphasize one particular strength I believe nonprofits can tap into during election campaigns like the one currently underway.

Nonprofit boards have a duty (as part of the fiduciary duty of care) to talk about their mission and values and talk about these in election times as well as throughout the year -- whenever and wherever.  Afterall, even if a nonprofit has the means to pay a lobbyist, while skilled and knowledgeable, they are just one voice.  Clearly, twelve or fifteen or twenty-five voices makes a lot more noise than just one per nonprofit.  That said, nonprofits may want to ensure that board members fully understand what they can talk about and when they represent the organization versus when they offer their own opinion. 

Think about this though: if every nonprofit board member was clearly sharing the message of their organization's beliefs and commitments, would the outcomes to political campaigns be different?