Nonprofit Board Crisis

Nonprofits and Regulators

One of my seven warning signs that indicate to a nonprofit board that there may be issues and it's time to act is when State regulators raise yellow or even red flags.  A second warning sign is when the media focuses on similar issues.

Well, Board of Phoenix Houses of NY, it's time to get in gear.  The NY State Comptroller has said there are serious issues following his audit.  And the Wall Street Journal is following the story. 

The good news: Phoenix Houses of NY has a spokeperson who responded to media inquiries.  It appears this is neither the board or CEO but at least there's a response.  Board, where are you?

Nonprofit Board Chair:CEO Relationship

The Conference Board released today a chart (based on its benchmarking research) that addresses the question of separation of powers between the CEO and Board Chair and related policies.

Nonprofit boards and staff alike I suspect would generally be scratching their heads over this topic with the question: what's the big deal?  These Chair and CEO are two different positions requiring two unique sets of responsibilities.  True?

True I suggest, at least in name.  But really, ask yourself: just how separated in duties are your CEO and Chair?  How much infuence does the Chair really choose to have over the CEO, especially you long tenured CEO's? 

In my experience, CEO's are pretty independent and influential folk who accomodate Board Chairs.  Board Chairs are pretty independent "visitors" who "drop-in" to the CEO's life for little moments of time.

What do you think?

Nonprofit Board Diversity

There is regular "talk" in the nonprofit secotr about diversifying boards and often all kinds of reasons to be less than aspirational.  And, then there's the conversation about what exactly diversity accomplishes never mind what it is (answer: different results for different industries and the ability to know more than just the faces around the table).

Either way, the corporate sector may be getting the value of diversity.  Take a look at the following Conference Board material: TCB-COW_V2N12[1].PDF

Nonprofit Governance: Policy Making In Action

"Laws are like sausages, it is better not to see them being made." - Otto von   Bismarck.

Perhaps watching policy being made by nonprofit boards merits a similar statement.  The Boy Scouts America are close to releasing their review of their anti-gay policy.  What appears in the works: a policy that allows members to be gay but leaders to not be gay (I don't really need to comment on this proposal, do I)?

But because I really try to pontificate about nonprofit boards and not specifically about what they do and decide, although frequently about what they don't do, this Boy Scout process merits discussion.  According to the Washington Post, the Scouts sent a survey to their members and they have talked to their Partners and even some experts about sex abuse.  The data (and of course, their values) then informed the proposal about to be published.

Generally, a board that is strategic is one that makes decisions that are long-range, fully informed and results focused.  Say what you might about the actual decisions but kudos to the Scouts for taking policy making seriously and strategically.

Nonprofit Board Untangling Mess But...

The board and management of CONCACAF appear to be having communication problems -- among many other problems -- some legal.  According to reports (eyewitness and written) the exec of the organization, a chapter of the world-wide Soccer Federation, has been spending like he was a big corporate big wig (which he maybe kind-of is) but apparently doing this on the financial back of the Association.  The Washington Post goes into some of the details of his lifestyle which seems to be finally generating conversation by the Board and others who claim the Exec got his money through fraud.

The Exec's lifestyle doesn't appear to be something new so why did it take the Board and others so long to raise questions?  Meanwhile, it appears that the Board is at least beginning to address the issues but really: just now?

Nonprofit Governance Issues or Not?

Last month the Philly Inquirer published a story on a yet-to-be-published report outlining a huge list of mis-deeds by a nonprofit development organization.  While the Inquirer slanted the story on the link between a prominent politician and the ability of the nonprofit to have access to large state grants, what remains a bit of a puzzlement for me is the question of who to question: the board or the management.

It strikes me that it is possible for the board to see the bottom-line of a financial report and, assuming the numbers look good, have done its fiduciary job.  How would a board know if the managment had been doing wrong with the grant money?  Yes, a report such as is in the hand of the Inquirer would be one indicator after-the-fact.  So, is after-the-fact learning mean the board was not asking the "right" fiduciary questions?

I would offer that we turn back to rule of prudence to satisfactorily fulfill the board's fiduciary duty.  The rule of prudence determines that the expectation of the nonprofit board is to do what any other boards in a similar situation would do assuming that the comparative boards themselves are becing conscientious and looking out for the best interest of the community being served and the nonprofit.  After-the-fact, a prudent board would definitely want to reign-in its management.  Before-the-fact: ask deeper and wider questions?

 

Nonprofit Boards Gone Wild

No, this is not one of THOSE stories, at least what might come to mind with such a title.  But, this is a story of a nonprofit board (and there's many like this) that has gone wild with the founder and exec the chair of the board and the rest of the board either family members or close friends of the family.  And a group making decisions that outsiders (pretty much everyone else) do not think in the best interest of mission or the organization's customers.

So, what can the outsiders do?  Here's some thoughts:

1. Know your facts.  Is what you think is wrong truly wrong?  Are customers being harmed?  Is money being misspent?  Are bylaws being ignored or worked around?  And, it's helpful if you are not the only one that knows the facts.

2. try to talk with board members about the facts, not your emotions -- not alone but perhaps in partnershp with someone who has a good relationship and will be viewed as a "friend" -- but this can't be a mean or angry or critical conversation -- it must be one that stresses mutual caring and a desire to see things set right.  But if this doesn't work:

2. Talk to the press -- actively telling a factual story that can help get action.

3. Reach out to donors -- when donors stop giving, an organization stops functioning

4. Reach out to the State Attorney General -- again, with facts.

These are just a few ideas -- I'm certainly open to hearing from others about what they know to have been effective.

Nonprofit Board Thinks Like Consumers

We (consultants) along with our academic and other board-wise advisors often say that the effective board is the strategic board.  Strategic for my purposes: long-range (multi-year), fully-informed (by data), and, results-focused.

At the same time we urge nonprofit boards to be diverse in their composition, we encourage them to include representatives of the organization's consumer.

I believe all of this to be the correct advice but what happens when the board predominantly thinks and acts like a consumer; when all conversations are more about the day-to-day operational issues, not strategy?  What's to be done?

Thought for the day: a dashboard, preferably related to the strategic plan.  Assuming there is a strategic plan, and that the plan includes goals (using my paradigm) around program, management, sustainability and governance.  Then a dashboard that covers each of these areas showing expected results and current progress against those results can be very helpful.

The best part of all this--just having the very extensive and even multiple-meetings about what should be in the dashboard will move the board toward more strategic thinking.

Nonprofit Board Chair Authority

How much authority does a nonprofit board chair have? 

Part of the answer: depends on how much authority the rest of the board gives to the Chair.  A board that isn't fully engaged essentially turns all of its authority over to the Chair.  A board that is fully engaged turns to the Chair to support its decision-making. 

I'd like to hear other's thinking about their Board Chair: the great, the less-than-great.

Nonprofit Boards: Mission Pursuit Arbiters

Now that this year's big winners have been determined (Louisville and UCONN) the "real" action will continue and the discussion of who should benefit from all the money that traded hands can continue Conversations that include considering compensating players instead of depending on their volunteerism and figuring out why the only winner on campus is the sports program and, whether players shouldn't get some access to the monies earned in their name after they graduate.

Today, just a thought.  Why do sports programs in colleges/universities singularly reap the benefit of sports programs and more importantly, why doesn't the university board have something to say about the "profits"?  Isn't it their job to have say-so?  In any other nonprofit, a revenue generating activity's surplus usually benefits the institution -- what's so special about college sports that this story is different and what's so special that the board has so little say?  I would offer that this should not be the story -- that boards have a loyalty obligation to ensure that surpluses are used in the pursuit of mission -- not singularly preparing a handful of students for professional sports success nor providing entertainment of students and the rest of the community (however large that becomes) but for achieving academic mission.  Come on University Boards -- revisit your job and your loyalty.