Nonprofit Board Crisis

Nonprofit Founders Syndrome

The following article says it all but in brief explains why/how founders and founder families with little or no "outside" governance oversight are just simply not a good idea.

The story from the Chronicle of Philanthropy is about a charity founder that grew a small nonprofit into a good-sized national organization and then brought it to its knees from bad press and theft.  Here's the story: http://philanthropy.com/blogs/philanthropytoday/defunct-ga-food-charitys-head-gets-7-year-prison-term/74107?cid=pt&utm_source=pt&utm_medium=en 

Nonprofit Plea

The CEO for Dance New Amsterdam says in the Wall Street Journal,  "it will close its doors for good if it doesn’t raise $50,000 by Friday".  According to the article, the organization has filed for Chapter 11 and is facing a big cash crunch.

Hm...I don't know enough about the organization to know how far $50K can really carry but I don't ever get a good feeling about this type of "cry for help" news.  My first question: what is the board doing about this?  Sending the exec to the press to beg? 

As fundraisers know, this kind of fundraising often has long-term repercussions.  Great fundraising is about long term relationship development -- this is certainly not that. 

And what do we know about what led up to this situation?  What do we know about what has been done besides Chapter 11 filing to prevent or fix the situation?  And finally, what do we know about who loses if this studio closes or who might win if it for instance merged with another group?  Alas, the article does not provide any of this data.

My bottom line: I have little hope for this group's future and I would suggest that responsible governance would be looking for a good merger.

Nonprofit Leadership

When the IRS admitted it was doing its job by being zealous in screening Tea Party type organizations for nonprofit status, a Miss Jenny Beth Martin was able to take advantage of the media and move into a leadership position of what up to that point had been a group of folks who had lost significant political power and cache.Kudos for Miss Martin and particularly her  ability to see opportunity and run with it.  Clearly the Tea Party "movement" needed exactly what Miss Martin had to offer: leaderhsip.  (Learn more in the Wall Street Journal article on Miss Martin.)

As the focus of this blog is not politics but nonprofit governance, the story of Miss Martin provides the opportunity to again think about nonprofits when one person matters so much, as appears true for the Tea Party.  Observe what was devolving with the Tea Party pre-Miss Martin. 

I believe, and there is evidence to support this, that great non-profit governance does not rely soley on one individual, as many nonprofits appear to demonstrate when boards hire a great staff person and believe their role is to sit-back and let that staff person do as they will, for better or worse. Yes, hiring a great staff person is an important part of the nonprofit board's job.  But there is so much more a nonprofit board can and should bring to the table -- one of these being sustainability.  A one-horse show does not ensure, it helps, but does not ensure sustainability and the ongoing furtherance of mission.  The Tea Party serves as a lesson for all nonprofits.

Nonprofit Governance Policies

Perhaps I'm just naive but it hadn't until hearing NPR's discussion about USA Swimming (all those clubs starting from really young to Olympics) that I was thinking that rampant child sex abuse was pretty much the purview of religious and educational institutions.  

OK, so I exagerate a little bit.  Interestingly though, while we continue to hear of child sex abuse in lots of places where children appear to be more accessible, what we don't hear is exactly what the boards of these institutions are doing about the situation -- especially institutions that could maybe be a location for this type of activity.

Well, the good news is that the USA Swimming has created and is distributing (anyone can get a copy on line) a Safe Sport guide that I'm thinking might be something to use for every kid sport.  Anyway, this is at least a forward positive step representing responsible governance.  Can't say much that it took this long to come to this place but......

Nonprofit Governing Default

In the "irritating Mike" category, some for-profits are switching to become nonprofits.  The Nonprofit Quarterly noted that this hopefully not "trend" is certainly an activity that deserves attention.  Why?

I find sector-switching primarily the result of market failure.  In my view, buyers didn't see value.   And, for some reason the switcher believes that the charitable market is more lucrative -- less effort perhaps; less accountability; less....well, whatever to beat struggling in the for-profit sector.

I fail to see how this effort isn't just an entrepreneur trying to keep their income flowing.  And, to top it off, where is the governance?  The entrepreneur must go out and secure good hearted friends to stand-in with the pretense of governing.

I just don't like this!

 

Nonprofit Governance Matters

Does the board matter to the success of a nonprofit organization?

This is certainly a fair question and one for which there is not much statistical evidence either way.  On the other hand, anecdotes certainly provide insights for answering this question.

Take for instance the Negro Leagues Museum.  Nate Taylor's New York Times story does an excellent job at providing background into what went right and less right about this once struggling museum.  And the answer: the board and its leadership was and is what went right.

Yes, nonprofit boards can matter.

Nonprofit Board Too Engaged

A common theme for boards living in the infancy, juvenile and/or adolescent stages of development is a tendency to micro-manage.  In the infancy stage, boards micro-manage primarily because this is their function -- to open the doors and provide services and the backroom as volunteers first, govenors second.  By adolescence there is less tendency of this behavior becuase the organization is fully staffed and board can pretty much pay attention to governing (although you all know the stories). 

So what's going on over at WBAI (Pacifica New York)?  It appears that they are nearly out of business and according to staff, the board is largely to blame.  In the Chronicle of Philanthropy we learn:

(WBAI's) station governance structure, involving contentious local boards subject to frequent elections, creates gridlock and makes policy and programming shifts difficult. Former WBAI staff members said regular, board-engineered management changes hampered their ability to do their jobs.

The sad thing: these conditions are reported by the staff.  True?  However, if the board is not responsible for at least approving this kind of fiscal bleeding, who is?

Nonprofit Board Compensation

It the nonprofit world, board members do not usually get paid.  Members are usually viewed as volunteers with a so-called "sacred" duty to care for the organization and its work.  As best as I understand, there are few if any laws that prohibit compensation but the general thinking is that this is part of volunteering and that the driver is mission. 

But what happens when the work of being a board member is really hard and demanding (oops, isn't that true for most nonprofit boards?)?  Well, the case with the Rauschenberg Foundatiion is certainly one example where the perceived experience as board members has just been too much to handle and now the matter of compensation has become a legal matter.

Generally I believe that if folks who are thrust into or choose to be thrust into trustee service expect compensation, that expectation should be clear from the start and the institution should accept service with this understanding.  What I see is a late-in-the-game seeking compensation and I believe this to be a problem, not as much as the idea that compensation is warranted.

Bottom line: prospective board volunteers should know the terms when signing the dotted line BEFORE service.  After the fact: YOU ARE TOO LATE!  STOP SERVING!

For the story, see the Chronicle of Philanthropy.

Nonprofit Board Protects Brand

According to the Chronicle of Philanthropy, the Boy Scouts of America are defending their honor (actually, their brand) by suing an Oakland, CA organization that has taken the name "Hacker Scouts".  The Boy Scouts believe that the use of the term "Scouts" violates their exclusive right to use the name.

So, is it just good governance for the Boy Scouts to pursue this litigious approach presuming that some out-of-court effort has been made and I suppose, presuming that the BSA board knows and has approved the acticity (this is a fiduciary matter after all)? 

And what indeed was the board over at Hacker Scouts thinking?  Did they really believe that the BSA would not think anything of their use of the privaleged title? And just how much is this worth fighting for?

All this to remind nonprofit boards that there are a number of matters that merit a "fight".  I might argue that among these matters, boards would do well to be thinking and considering action around protecting their tax-exempt privaleges and public education about their contributions to society and how they do no harm and......

Nonprofit Boards and Family Philanthropy

Bill Clinton is once again under attack (New York Times). The thing I have to love about Bill is that his best defense is always an offense and offense and transparency are the approaches he's taken so as not to defend a number of allegations regarding his/his family's charity but to discuss what "others" don't understand about philanthropy and to say he's brought in an outsider to take over the day-to-day reigns.

Yes,the answer to family philanthropy governance is frequently, I believe, best found in the recruitment of an outsider. Let's admit, the family means well but its "new" business requires a lot more than just good intentions.  Thanks Bill for another lesson.