Nonprofit Board Crisis

Nonprofit Board Size

A Chronicle of Philanthropy story about a board where 1/3 of the members had connections to the grant recipients caught my attention today but not because the question of conflict of interest raised its head.  This story actually caught my attention because of the size of the board: 47 members to be precise.  Really, 47?

I frequently say that size may not matter.  What matters more is the way members are supported and engaged.  But on second thought -- 47 does appear way beyond what is manageable.  Consider the scheduling complications; recruitment and training complications; meeting management complications; the list goes on.  Clearly there may be more to the story I for one would welcome learning.

Nonprofit Board: What's It To Do?

From an April Chronicle of Philanthropy article we learned that the Girl Scouts are having financial woes.  Demand has dropped so finances fare poorly.

I'm not sure I understand the why except perhaps for too many competing options but I have always rated the Girl Scouts way up there in the category of an organization that appears to be run well, mission-focused and relatively untainted and very honest compared to some organizations with similar missions.

Ah, but the times are hard and a Scout group in South Carolina decided to aution off its camp resulting in $2 plus million dollars.  Seems like a lot on the surface but I wonder if the short-term gain will do all that it is hoped for.  I wondered too about whether other options existed for the board like making other income generating uses for the camp; mergers or acquisitions; or just closing and turning over the assets to another mission-like group.

Yes these are harder times and nonprofit boards have many issues they must address.  I trust they are facing these issues fully informed with all their options assessed and mission at the forefront.  I'm guessing that this is the only way Girl Scouts conduct their business.

Nonprofit CEOs: Is there a "too long"?

I just completed reading an article about a behaviorist who has been CEO at his nonprofit for some 17 years raising the question for me: when is "too long" for a nonprofit CEO and who decides: the nonprofit board or the CEO?

The traditional answer appears to be that it is up to the CEO to decide when is "too long" but I suggest that at best, it is the nonprofit board in partnership with the CEO who develop the answer to the question.  Of course, the answer could be initially determined upon hiring.  This is to say that were there a contract between the nonprofit board, the nonprofit's "owner", and the CEO that said that assuming good performance and achievement of agreed-upon objectives, a discussion in x years will take place to renew the agreement between the two parties.

Such an arrangement would assume that there was indeed a a) formal agreement; b) agreed-upon objectives (results-focused and measureable, perhaps consistent with a strategic plan); c) and an established periodic and formal review to understand how both the results and relationship is progressing between the two parties. 

Does all this formality and the like answer the "how long" question?  Partially and its a fine start.  Twenty years in one institution (a not uncommon length in larger nonprofits) feels like it might be too long a time period possibly producing stagnation among other results.  But many CEOs are productive and continue to be productive over this period bringing quite fine, thank you very much.

So maybe the question isn't "how long".  The more appropriate question: how good?

Nonprofit Board Policy

Lest we forget that board policy should also address if and whether a nonprofit should accept money from "every" source, we learn that Robert Menendez of New Jersey has made good his promise to redistribute his illegally gotten campaign funds.  Yes, there is such a think as tainted money and yes, there is an old addage related to tainted that "the only thing wrong with tainted money is that there 'taint enough of it". 

So, nonprofit boards, it is indeed on you to determine if there is money your organization won't accept because, generally speaking, accepting the money/its source is offensive and or contrary to your values.  It appears that the Alzheimers and Autism boards in New Jersey, did not believe that to accept money from a politician who went awry (temporarily I presume)  was such a bad thing.  I emphasize the words "it appears" for I don't know what if any conversation the board had about what if any consequence and what if any issue is raised against the organization's values there was in accepting such funds.  At the same time, when was the last time your nonprofit board faced this opportunity and had a frank conversation?  Such a conversation is an important part of what fiduciary responsibility means.

Nonprofit Governance: How long is too long for a CEO?

I regularly see conversations expressing concern over how long a CEO has served at a nonprofit.  There are general beliefs that length of service for both CEOs and Board members matter and affect the effectiveness and efficiency of a nonprofit.

This week the Ford Foundation announced the appointment of a new CEO after the former CEO quit AFTER ONLY 6 YEARS OF SERVICE.  Pundits generally reacted surprised by how short the former CEOs tenure was.  Now, putting aside the quality of the former CEOs tenure, I am certainly moved to ask: just how long is too short or long?  I'm not sure I have a definitive answer.  I think the answer is largely situational and yet.....

Nonprofit Board Matters

The Wall Street Journal's recent story on the latest status of the Livestrong (formally Lance Armstrong) Foundation provides a number of important lessons about a nonprofit's volunteer leader position (aka board chair).

Most important: board and officer term limits should be viewed as a long-term sustainability strategy.  If an organization like Livestrong is particularly celebrity- dependent for attracting donors and program beneficiaries, at least in its start-up years, then identifying and seating other celebrities will help reduce the dependency on one voice. 

I might also offer that just maybe, the Livestrong folks, without a head that can woo donors but with program offerings that are valued, should seriously consider looking for another cancer-education organization which could adopt it and become the center for pursuing its mission.

Bottom line: replacing a founder-volunteer head can be difficult enough.  Replacing the head in time of crisis when there is no plan in place, can be uber hard.  And replacing a founder-volunteer head who is a celebrity and in crisis: maybe there is no recovery.  Can this all be avoided? Possibly with longer-range planning and applying good governance principles.

Nonprofit Board Challenges and Recommendations

Want a nonprofit board and its members to be effective?  The Nonprofit Quarterly reprinted the advice a resigned board member offered in the Guardiang and some of the points might be helpful to those of you wanting more from their board/board members. 

Here's some of the suggestions as I read them:

1. conduct a wide search for members -- don't just look iwithin your reach.

2. set term limits to reduce "stale thinking" gives the opportunity for others to serve

3, be clear about expectations

4. provide members the opportunity to use their core skills and acquire new skills and experiences

5. value member's ideas and thoughts

I would offer that as simple as these ideas may appear, execution is anything but simple.  Nonprofit board chairs may want to think about these recommendations as they strive to build the "power" of their boards.

Nonprofit Governance and Duty of Obedience

A nonprofit board (and its members) have a fiduciary duty of obedience.  While I would pose that of the three (plus care and loyalty) duties, this is the most difficult to prove and hold the board and its members accountable.  But the actions of the Long Island College Hospital board makes me consider that here is an example where indeed, the duty of obedience has failed to be observe.

The details of course are sketchy in terms of the kinds of conversations and intentional decision-making held by the board but the outcome is clear: there will no longer be a hospital and what was once a $135 plus endowment is gone.  Can no one be held accountable and made to make up for the results?

See the Wall Street Journal for more details.

Nonprofit Boards and Engagement Governance

From an article in the Nonprofit Quarterly we hear that CT's Governor is concerned about the process and speed which the Newtown Sandy Hook Community Foundation uses to make its grant distribution decisions. 

I would pose that the real question being asked by the Governor is whether indeed an "engagement governance" model can at all be effective.  Those who are proponents of engagement governance would offer that to some degree, this model is actually applied regularly to many nonprofits although perhaps not so intentionally.  For sure, when constituents and funders are upset about the behavior of a nonprofit, they make sure their voices are heard to produce change.  I would again pose, this is engagement governance in the raw and tentatively, effective producing changes in the way nonprofits do business.  Call it market responsiveness or whatever but policies and practices do change as the result of the public engaging and communicating.

That the Newtown Foundation has been more intentional about engaging its public and has established procesess and procedures to make this form of governance work recognizing that the board isn't the only place where governance needs to happen -- hooray!  Other nonprofits should listen and learn and determine when such a model might make for a more effective nonprofit.

Nonprofit Board Public Policy Communications

On July 9 I noted that a RI town was exploring how it might "tax" a college for safety services.  I used the opportunity to discuss the role of nonprofit boards in taking active roles in representing the needs of their institutions particularly through public policy communications.

Well, and partially as a follow-up to this previous entry, the RI Governor signed-into law an action that enabled the town of Smithfield to "tax" Bryant University for public-safety services.

I think this act should be viewed as a warning volley for all nonprofits, particularly the building-based entities and should serve as notice to these boards: now is the time to discuss this situation and its tentative meaning for their respective nonprofits.  I would argue that such discussions are part of a board fulfilling its fiduciary duty to ensure pursuit of mission and safeguarding the resources needed to achieve that pursuit.