Nonprofit Board Crisis

Nonprofit Taxation: Indirect

Most nonprofit folks know the concept of PILOTs -- payments in lieu of taxes that usually large nonprofits make to a locality to recognize usually tangible benefits provided them by that locality.  But what about a GILOT?  According to the Addison County Independent, Middlebury, VT has proposed a GILOT -- gardens (or median strips or the like) in lieu of taxes.  This "voluntary" support would be provided in gratefulness for the generosity of the town.  And, equally interesting, the nonprofits are pretty supportive of this plan.

What I can't help getting over: that the town doesn't believe that the benefits it receives from the nonprofits aren't enough.  What does this say about how well these nonproift boards are doing in telling their nonprofit's story?

Nonprofit Governance and Branding

There's a number of groups who are calling on McDonald's to decouple itself from the Ronald McDonald's Houses.  They claim that because McDonalds only provides 20% of the budgets of the Houses, McDonalds shouldn't get the public credit.  

But I've got to say that what McDonalds does as a donor and what its grantees do is basically between them and not for anyone else to determine.  The boards of the Houses know what it takes to operate and they understand their history which I understand to be intricately linked to McDonalds.  Boards understand their loyalties and the rewards that come from these loyalties.  This is one of the jobs of a nonprofit board -- to know who to thank and recognize and even offer naming rights if that's what it takes to achieve mission and be sustainabile.  This is not a question for the public unless that public is going to come through with the added funds to offset the losses from losing a major sponsor.  

 

 

Nonprofit Accountability

NNonprofit boards have the responsibility to ensure that donated funds are accepted and used for mission purposes.  When a nonprofit fails to use its funds appropriately, state enforcers can step-in. 

So it's no surprise that the New York Attorney General has stepped-in to ask some nonprofits to use more of their moneys to address the plights of those who are still struggling from Storm Sandy.  Or is it a surprise?

According to the Wall Street Journal, the NY AG has worked out a deal to get some pretty sizeable funds flowing to Sandy survivors.  For instance, the Red Cross has "agreed" to put out $6 million for Sandy purposes.  But this is puzzling to me.  Did the Red Cross not already have an agreement with its donors to spend this amount of money for this purpose?  Didn't the agreement already take place between the organization's board and the donors?  Is there really a "place" for law enforcers to do such bargaing?  I'm confused.

Nonprofit Fiduciary Duty of Care

What is generally identified as a nonprofit board's first fiduciary duty? The Duty of Care.

What is the duty that appears to be failing, at least for a sizeable number of nonprofits (and I can't imagine just here) in Washington, DC? The Duty of Care.

It's good to know that nonprofits are not totally off the journalistic radar.  Unfortunately, the journalistic radar that was on active mode in yesterday's Washington Post was all about nonprofit loss.  And the losses were not so small and not the problem of just a few nonprofits.  

The bottom line for nonprofits is mission results, But mission results are not possible if an organization is not sustainable.  Sustainability is often achievable, even in difficult economic times, but strong management and governance caretaking ensures that what resources a nonprofit does have, it uses singularly well for mission.  If Washington, DC nonprofits are any example, the sector has some serious work to do.  

Nonprofit D&O Insurance

Wonder what nonprofit D&O (Directors and Officers) insurance can do for you?  The Boston Globe reported story about the Westfield University President suing the trustees for, what would suggest, doing their job i.e. protecting their institution for what appears to be an out-of-control ceo.  

Whichever side is correct, according to wikipedia "Directors and officers liability Insurance (often called D&O) is liability insurance payable to the directors and officers of a company, or to the organization(s) itself, as indemnification (reimbursement) for losses or advancement of defense costs in the event an insured suffers such a loss as a result of a legal action brought for alleged wrongful acts in their capacity as directors and officers. Such coverage can extend to defense costs arising out of criminal and regulatory investigations/trials as well; in fact, often civil and criminal actions are brought against directors/officers simultaneously."

A good reminder that nonprofit boards should not do without this coverage.

 

 

 

Nonprofit Values Matter

The following story from a station in Oklahoma is a helpful reminder to nonprofit boards about why spending time developing, affirming and promoting a nonprofit's core values matter.

OKLAHOMA CITY, Okla. – When you think of Girl Scouts, you probably think of buying cookies, but one Colorado pastor says when he thinks of the Girl Scout Organization, he thinks of one word “wicked.”

Preacher Kevin Swanson begs listeners of his radio show, Generations Radio, to stay away from the cookies.

“Please, I beg of you, do not buy Girl Scout cookies,” Swanson told radio listeners.

Say no to children with cookies? Swanson seems to feel the treats are the Devil’s food cake backed by lesbians.

“I mean, I don’t want to support lesbianism. I don’t want to support Planned Parenthood, and I don’t want to support abortion,” said Swanson. “I don’t want to promote a wicked organization.”

It’s hard to think of 11-year-olds as part of anything wicked while they make their crafts, but NewsChannel 4 reporters still asked Shleigh Bourque what she’s learned from girl scouts.

“You have to respect your authorities and be kind to people. You have to be courageous and strong,” said Bourque.

Crystal Slater works with the girls. She says, “The Girl Scout cookie program is really about teaching girls skills, financial literacy skills.”

“Girls that earn our Gold Award, which is the highest award of Girl Scouting, go on to be parents of very successful children. They go on to be CEOs of Corportations. They go on to the military and serve their country. Those are the things girl scouting is about,” said Slater.

However, Pastor Swanson says those skills lead to communism.

“In fact, if you want a Communist in the White House in the year 2020, you have got to get more daughters raised with the worldview, the independent mindset, the worldview that is presented by the Girl Scouts of America,” said Swanson.

NewsChannel 4 called Swanson multiple times to ask him about his harsh views on the Girl Scouts. He did not return messages.

As for Slater, she says the preacher’s message motivates her.

“The fact that he feels the need to address Girl Scouts means that we’re doing something in the community that’s important,” said Slater. “I think that our community knows that.”

The Colorado pastor said the baked treats promote “lesbianism and abortions.”

He spoke out about the cookies on his “Generations” radio broadcast.

 

Nonprofit Closes with Media Spin

When a nonprofit closes, a frequent story is: there wasn't enough money.  That frequent story is the one the Big Brothers/Big Sisters of SE CT is telling and the media is buying looking instead the woes to the children affected by the story.

Funny though: an organization was in trouble and no one has to take responsibility--not even its owners, the board of directors.  Should the community ask for more accountability?  I certainly think so.

Go to the New London Day or WTNH or the Nonprofit Quarterly for specifics on the story which should have read: When a Nonprofit Board Fails its Constituents.

Nonprofit Governance Matters

Uh, the following is certainly not a case in point specific to Jewish charities:

According to the Chronicle of Philanthropy:

Long leadership tenures and lax governance are factors in a string of recent scandals involving prominent Jewish charities in New York, nonprofit experts tell The Jewish Daily Forward.

The firing in August of the Metropolitan Council on Jewish Poverty’s 20-year CEO, William Rapfogel, and his arrest last month for allegedly stealing millions from the charity followed on recent allegations of misconduct at Yeshiva University, the Conference of Jewish Material Claims Against Germany, and the 92nd Street Y.

Professionals specializing in Jewish nonprofit management say two-decade terms are common for Jewish charity leaders and trustees are chosen more for deep pockets than oversight skills, creating an environment in which boards rarely challenge or question strong executives. The experts say greater turnover and better training for trustees could improve governance.

 

 

 

Nonprofit Board Size: Does It Matter

I was just reading an email blast invite to a VCG sponsored conversation featuring an individual who served as the corporate secretary to a large nonprofit arts organization in NYC.  The e-blast indicated that the speaker would share her insights about nonprofit governance and that these insights are applicable to large and small nonprofits alike.  The e-blast also noted that the nonprofit with which this individual bases her primary experience has a board of 70 members.

70 members.  Whew I want to say.  That's a lot of board members.  What will be interesting to learn: what are board meetings like; do all members provide the same benefit; what is the criteria for a board member not meeting expectations and what are the expectations?  Are there committees and likely a number of other questions.  But the real question for me: is 70 too many, just right, not enough?  And is just right or not enough really universally applicable answers?

Pardon my dubiousness but I am having a difficult time wrestling with the demands of 70 members.  True, this is conceivably great fundraising group, especially if that's what they do.  But what else to they get done, if anything?  I guess we will just have to wait for the presentation.  If anyone who reads this blog goes, I'd like to hear the learning.

Here's the invite:

REGISTRATION OPEN!

VCG Governance Matters &
The Foundation Center
Breakfast Roundtable

"A Conversation With Lesley Rosenthal"

Thursday, November 21, 2013
8:30 a.m. - 10:30 a.m.

Please join us for “A Conversation with Lesley Rosenthal, Vice President, General Counsel & Secretary of Lincoln Center for the Performing Arts, and Best-Selling Author of Good Counsel.”  Come learn about nonprofit governance from an expert who navigates the multi-faceted issues facing a major arts complex – issues that may be encountered by both small and large nonprofit organizations.

Lesley will share insights on the following topics:

 

·         The $1.2 billion redevelopment of Lincoln Center’s iconic complex.

·         As corporate secretary, how she counsels and supports the 75-member board of directors.

·         In her role as General Counsel, how she has fashioned the legal context for Lincoln Center’s world-class cultural and educational offerings.

·         How Lincoln Center manages its mission-related activities and ancillary lines of business.

 

Lesley is VP, General Counsel & Secretary of Lincoln Center for the Performing Arts in New York.  Rosenthal also counsels and supports a 75-member Board on all corporate governance matters.  Lesley is the author of Good Counsel: Meeting the Legal Needs of Nonprofits (John Wiley & Sons, 2012) which was ranked #1 on Amazon’s bestseller lists for both corporate law and nonprofit management.  She chairs Charity Corps: Lawyers Helping Nonprofits, an initiative of the New York State Bar Association and the State Attorney General’s Office Charities Bureau to encourage more pro-bono legal services to charities.  She also serves on the governing bodies and the Audit Committees of the New York State Bar Association and its Foundation, and in 2006-07 chaired the 2,600-member Commercial & Federal Litigation Section.  Lesley also chairs the Cy Pres committee of the New York Bar Foundation overseeing over $5 million in grants to grantees under the orders of many federal judges.  For thirteen years she was in private practice as a business, litigation, and technology lawyer at Paul, Weiss, Rifkind, Wharton & Garrison in Manhattan.  She clerked for US District Judge Shirley Wohl Kram in the federal court in Manhattan.  She graduated from Harvard College magna cum laude and Harvard Law School.

 

Moderator:

Nicole T. Sebastian is the Deputy Executive Director of VCG Governance Matters and has over fifteen years of experience in the nonprofit and corporate sectors. In her current role, she works with nonprofit Boards to improve their overall functionality by providing leadership coaching and consulting services on their governance-related needs.  Prior to joining VCG, she was a Senior Associate with the CEO and Board Practice at Heidrick & Struggles, a leading global executive search firm.  In this capacity, she primarily worked to build the Boards of Fortune 500 companies, and also worked on several marquis CEO and CFO searches.  She was previously the Manager of Governance at the Robin Hood Foundation, where she was responsible for the Board development, recruitment and governance education needs of Robin Hood’s grant recipients.

 

 

Date: Thursday, November 21, 2013

Time: 8:30 - 10:30 a.m. (8:30 - 8:45 - Coffee/Bagels/Networking; 8:45 - 10:00 - Discussion; and 10:00 - 10:30 - Q&A from the Audience)

Venue: Foundation Center, 79 Fifth Avenue, 2nd Floor Conference Room, New York, NY

Cost: $20 non-members, $15 members, $5 Students (with valid I.D.)

Registration: Please click here to register. Please note that copies of Good Counsel will be available for purchase and signing at the Roundtable session.

 

 

For further information, contact Evy Gonzalez of VCG Governance Matters at [email protected].

Refreshments will be available.

 

 

Nonprofit Governance

Nonprofit governance is simply about ensuring that no harm comes to the organization and those served by that organization.  And, while I believe the majority of nonprofits are governed to this standard, it appears that some nonprofits have a harder time with this principle,

Take for instance First AME in LA.  The founding paster "built" the church from 250 members to 16,000 members.  He started-up nonprofits focused on community and economic development and by all counts, was quite effective.  He retired and apparently all has changed such that the institution and related institutions and those served are not in the same place, rather, going down hill.

Now on some level I would propose that what perhaps failed was a sense that the church and its assets were a sole proprietorship subject to no governance.  I would propose further that while Pastor A was apparently quite amazing in his accomplishments, what he failed to do was support the creation of an institution that had a life following his departure where no harm would be the first principlle.  Creating such an institution would be all about establishing a system of overseers who would be dedicated to the core founding principles.

When nonprofits are sole proprietorships without checks-and-ballances that ensure no harm we end up with something that looks like what has happened at First AME.

For the story, see the LA Times.