Nonprofit Board Crisis

Nonprofit Value: Do No Harm

Whether it's annual or every 3-5 years, a core nonprofit board task is to review organizational mission AND values.  A review like this is frequently conducted during a strategic planning period but when outside forces (governance outside the boardroom) call for action, a board may want to conduct such a review outside of planning.

Why do I speak of a nonprofit board's review of mission and values?  I've just completed reading a Wall Street Journal article focused on California State Legislature action to extend the statute of limitations on child sex abuse torts.  The result of such legislation: expose nonprofits to unlimited litigation.  The author states that such legislation essentially targets the Roman Catholic Church and the Boy Scouts.

I for one am not against such legislation.  My thinking: if institutions are still standing after such heinous acts, they perhaps have not been held accountable enough.  But let's put this opinion aside for the moment and focus on what I believe to be the root cause of the problem for these two institutions and any others with histories of having done harm.

From where I stand, nonprofits, groups that exist to serve the best interest of the public, should be held to a standard of doing no harm.  This is a difficult standard to regulate and litigation may be a necessary tool for achieving this principle.  To incorporate this concept, it must first be subscribed to by each nonprofit's board.  I would offer then, that one essential core value of every nonprofit (and its employees) should indeed be "we will do no harm".  But each board must subscribe to such a statement along with other core values. I believe then that this is a task to be taken up for review every year and for possible adjustment during every strategic planning period. 

Values matter and when they are not upheld, legislatures, regulators and litigators if not the public as a whole, have to step in. 

Nonprofit Governance and 5 Revenue Generating Questions

Over time communities and their needs change.  To “keep up” a nonprofit must find new approaches and offerings.  Given the board's role as keeper of the nonprofit’s mission and resources, nonprofit boards will be presented with new programs or ventures to consider. 

Here's five simple questions board members can ask to ensure
that what is proposed has been vetted to help ensure success. 

Q. 1: What are the expected results from the proposed project?

Q.2: Who is the target audience for this project?

Q.3: Have the 5 P’s of the offering been identified?

Q.4: Are the income and expenses for this project clear?

Q.5: What are the risks and how will they be managed or mitigated?

Nonprofit Governance: Strategic and Fiduciary

A good lesson in nonprofit board governance was presented today in a Wall Street Journal article that asks the question: is the Red Cross correct in continuing to hold onto about 1/3 of the money raised for Hurricane Sandy Relief?  The article does a nice job reviewing the plusses and minuses of full distribution having been completed by now. 

If indeed the strategy was to hold back a bit to ensure that all monies were eventually distributed to where most needed, then the Red Cross has done great.  If, on the other hand, the strategy was to distribute ASAP, then the Red Cross did not succeed.

Two questions remain.  First, what did the donors want done with their money (reflecting of course what "promises" were made during the solicitation? Next, what indeed has the Red Cross Board intended.  Note, that for the Board,either strategy is good and intentional.   But, the bottom line: the decision, the strategy, rests with the Board of Directors'.

Nonprofit Partnerships

Still the latest "thing" in the nonprofit sector, partnerships can be a means to an end (mission).  Partnerships can also be complicated. 

Here's a link to a few reasonably smart "how to's) to consider around partnership.

Nonprofit Board Recruiting

One of the bigger needs for nonprofit boards is recruitment.  It's not hard to understand why this is such a challenge.

Nonprofit boards tend to be pretty insular.  Recruitment practices are often limited to current board members reaching-out into the circles known by the members.  Here's some thoughts to address this challenge.

First, board recruitment is a human resource activity.  Like searching for great employees, board recruitment involves searching for great members.  After developing your job description and specific skill set needs, think about where such skills can be found.  Remember though, passion matters as well.

Here's a few more ideas:

• Human resource folks at local and regional businesses
• Community Activty persons at assisted living residences (highly creative, often affluent, and not-too-busy folks living here)
• Community event tables with good signage and a job description
• Paid ads in community newspapers
• Finally, the local job center, often filled with folks with potential, who may have time on their hands, or see volunteering on a board as a good way to increase their network.

Nonprofits can make a profit

I often get told: nonprofits can't make a profit.  I reply: that's not legally correct.  Nonprofits can indeed make a profit from their activities, and will go out of business if they lose money year after year.  The difference is that those profits must be put back into mission.  What is correct: the board members can't financially gain from the profits of a nonprofit. 

Joyfully, the public must always be the winner.

Here's a good example of a nonprofit that is literally, profiting.

Nonprofit Board and Faith-Based Values

A Chicago Tribune article about the Chicago religious order of Jesuits which "consciously concealed the crimes of convicted sex offender Donald McGuire for more than 40 years as the prominent Roman Catholic priest continued to sexually abuse dozens of children around the globe" should serve as a reminder that "faith-based" values do not exempt an organization from being culpable for doing harm. 

If anything, such values, in my opinion, should reinforce a commitment to do no harm.  The Jesuits did not learn this lesson and have had to pay, in cash at minimum.  Should the board of the Order been more responsible and have they learned their lesson?  Let's hope so and let's hope the same is true for every nonprofit board. 

Nonprofits To Be Regulated To Do What They Should

I can guess why New York lawmakers wanted to overhaul the state's oversight of charities and other nonprofits (although I think they have it backward -- the lawmakers should be the ones being overseen given recent history).  But, some of the oversight to be given is not new and is what is supposed to be the case already. 

From the Wall Street Journal:

One bill would require that charity boards actively oversee financial audits, require full disclosure of any insider dealing and prohibit any nonprofit employee from chairing its board.

Another would require that nonprofit boards review chief executive pay to determine if it's justified.

Really?

Nonprofit CEOs: The Buck Stops Here?

Serious troubles have been brewing at the IRS, Veterans Affairs, State Department and who knows where else.  Just how responsible is the President for what happens at all of his agencies?  Does his responsibility end with the people he places in charge of agencies his Office oversees?  And if the answer is "yes", then what happens when these people fail to perform their duties?

It's clear that all the misdeeds going on in these Federal departments are embarassing to the President, at the very least.  At the very most: they are bad government.  Who is responsible for fixing the situation?  The President of course in "partnership" or shared leadership with the Congress. 

Mr. President, now's a good time to step up and pay some serious attention to your "house".  You know as most do: overtly bad management is not tolerable for very long.

Nonprofit History

As the US Congress sorts out the IRS messiness with 501(c)4s, the Wall Street Journal has done us all the favor of trying to better understand the history behind these types of nonprofits.  Even if you are not particularly a history buff, the Journal's analysis provides a bit of an understanding of what is now proving a distraction for a bunch of folks.  Folks who appear more willing to be distracted than to get the necessary work of the People done.

PS -- the more I think about the actions taken by the IRS, the more I am thinking that the only wrong is that the Agency didn't do similar "screening" of the left-of-center although it's not evident they didn't.  The real lesson: enforcement is at best difficult especially when there are so many who don't want to be regulated or limited in pursuing their goals.