Nonprofit Board Crisis

Nonprofit Boardless

From the Christian Science Monitor: "Bees Without Borders is a lean organization that goes only where invited. It has no board of directors or marketing department."

I went to this article, as I do with every article, curious about what if any mention is given of a nonprofit's board.  Lo and behold, Bees Without Boarders has no board.  It does have a founder who is apparently quite creative who is a beekkeeper with money.  Bees also has volunteers.  Do you see any problem like: who holds Bees and/or the exec accountable?  Donors?  Customers? Maybe and maybe that's enough.

Nonprofit Infograph to Orient Board, Staff and Public

I've been singularly working in the nonprofit sector for more than 35 years.  It's awsome but I continue to find lots of folks who don't quite understand the sector, its role and its impact.  

This infograph may prove a real help as part of a board and staff orientation telling the story of the breadth and depth and just plain awsomeness of the sector.

Nonprofit not a nonprofit

In some communities, tax-exempt status may be the only characteristic that distinguishes a "nonprofit" from a for-profit?

Take for example the privately owned "community" movie theaters in the Adirondacks -- rural communities with miles to go if neighbors want to connect.  

According to the NY Times story, what appears to be most threatening these theaters is technology.  Movies for the movie houses are produced for digital projection and that means theaters need different systems to provide their service.  The cost: somewhere in the $50Ks.  And, $50k is pretty daunting for any small business person.

So, community residents, in their wisdom and recognition that a service, privately held or otherwise, is a service they want and are willing to pay through financial contributions.  I might have suggested restructuring to be a co-op or even a nonprofit to provide a tax-exemption to the donor who are also direct beneficiaries but that doesn't seem to be the need.  

So, the theaters may be preserved for the near future.  Residents have voted with their check-book and simultaneously governed.  No need for a tax-exempt status here nor a board where accountability and oversight will be visible in the number of folks who continue to show-up for movies and other events these theaters may host.

Nonprofit CEO Term Limits

I first introduced this subject this year back in September: should nonprofit CEO's have term limits.  As we approach the end of 2013, this subject strikes me as appropriate for continued reflection given all things end-of-years often mean.

 

Is there a “too long” for nonprofit CEOs?

 

There has been no shortage of affirmation that board chairs and all board members should have term limits.  Many believe and can demonstrate that term limits provide the best long-term health of a nonprofit with a variety of rewards including at the very minimum, the removal of difficult and non-productive members.  But what about a nonprofit’s paid leadership, specifically, the CEO aka Executive Director?  The volunteer leadership must rotate “off” but the paid leadership can stay as long as it wants.

Why do I raise this question you might ask?  For me, a student of everything-nonprofit news, I am somewhat distressed by the frequency with which I am seeing the reports of CEO malfeasance and misbehavior.  I’m also struck by the number of #2s who are more vocally expressing their frustration (at least to me) over the failed predictions by the many sages who promised there would be this mass retirement of nonprofit CEOs.  And yes, the economy has played a huge role this change of expectations.   But THE change has not occurred and now, instead of only 15 or 20 years, nonprofit CEOs are spending 25 and even 30 years in their position.

Is this really a problem you might ask?  Is it not enough to postulate that nonprofit CEOs actually do have term limits.  In fact, many say, CEOs are pretty much “at-will” employees who can be fired at a moment’s notice with or without cause.  And in the largest nonprofit institutions, CEOs have contracts that more or less define what is expected of them and, if expectations are not met, a new CEO will be found.  I would offer though that neither of these “fall back” constructs actually achieve what nonprofit board term limits achieve: a guaranteed turnover.  On the contrary, in my opinion it is the rare and unusual board that takes the step to remove a CEO for anything but the most egregious act which may be quite proper given, in my experience a nonprofit board’s general lack of ability to provide oversight and even conduct performance reviews that are objective and substantive.

So, what might a term limit actually accomplish and what would be a “reasonable” limit?  As you rest during this seasonal break, here's one topic you might mull.

Nonprofit Customers

In the December 2013 Governing magazine, Mark Funkhouser, a former mayor of Kansas City writes that he has struggled with the use of the term "customer" when referring to the voting citizen.  He notes that Al Gore had chosen to use this term in his book "Reinventing Government" (does inputs, outputs and outcomes sound familiar)?  Mr. Funkhouser cited that it has taken awhile to accept the term but he does now because, when public sector agencies/bodies and I would add, nonprofits, recognize that their "customer" actually has alternative choices to get their needs met, they will come to understand that alternative choices means competition and the last contact an individual has with your public or nonprofit body, will be the memory that "customer" takes with them whenever they vote (i.e. for increased taxes) or consider making a donation.

Mr. Funkhouse began the story about a bus driver in DC who welcomes every rider as they board and bids a great day to those getting off.  This type of recognition by a provider is essential if there are expectations that the recipient must pay taxes or make a donation.  It does matter how staff address a customer, not just because that may be a standard for care delivery but because such treatment more often than not results in the kind of outcomes a nonprofit needs in order to carry-out business.

Nonprofit Book Review: When Leaders Leave

Most nonprofit leaders leave, eventually.  Priscilla Rosenwald and Lesley Mallow Wendell's When Leaders Leave: A New Perspective on Leadership Change address this event for both boards and ceos.  For this point alone: kudos!  

I have found few resources that provide all the basics for boards to take the steps that address their own transition as well as that of the CEO.  Yes, there have been missives and studies on the topic, particularly about CEO transitions (and when exactly there will be a big flight) and succession planning (what should be included and the types of succession planning (at least emergency and planned departure).  But other than honorable mentions to the board, I have found the actual templates useful but not much available about the types of conversations and by whom that should be conducted.  When Leaders Leave is about the conversation AND  provides step-by-step guidance with an appreciation and recognition that below the apparent subject is the subject of change -- a not so easily approached topic when realities hit home.  AND, there's discussion about how this all applies to the board and most important, the board chair.   

This 86 page (and approximately 1/2 the size of an 8.5x11 book) with big easy-to-read type describes key concepts, offers tables and anecdotes and tools like questionnaires to apply the principles.  And again, this can be used by the board governance committee to prepare for officer transition.  It's not too late to order this item for your favorite nonprofit board chair to start the new year thinking about their own eventual transition.Again, to the authors, kudos and thanks for sharing your experience with helping nonprofits through transitions.

I look forward to a sequel that could focus even deeper on board transitions and in particular, board chair transitions.  But before that, stay tuned for the learning from a survey soon to be distributed about the role and preparation of nonprofit board chairs.  If you are a board chair or ceo and would like the chair from your nonprofit to participate, let me know and I'll be sure they are on the mailing list.

Nonprofit: To Be or Not To Be

Yesterday's Nonprofit Quarterly Headlines included an commentary on ESPN's Outside the Line's story on the tax exempt status of the PGA (and in turn, similar storyline for the NFL (football) and NHL (hockey).  

I have to admit that while I might generally and have taken a position that on principle I don't believe that any of these groups merit tax exempt status, Michael Wyland makes some excellent points that better explain the difference between tax status for organizations like the PGAk as well as those not.  Very helpful.

My takeaway: can't judge a nonprofit by it's title.  I also think, now that I better understand the "special" tax status enjoyed by the likes of the PGA, have not heard the "mission" case for this type status.   And, shouldn't tax exemptions be granted for the "greater" good?

To see the commentary, go here.

Nonprofit Board Vice Chairs

From the just released CT Nonprofits newsletters, here's my thoughts on how to maximize benefits from the nonprofit board vice chair: http://www.ctnonprofits.org/ctnonprofits/sites/default/files/fckeditor/file/resources/publications/NPA-articles/FromNonprofitBoardChairColumn.pdf.

Nonprofit Board:Training Program for Corporate Board

I regularly receive unsolicited emails like I'm sure many of you do.  Mostly I just glance at the subject to figure out what will be my next step.  An email that got my attention as well as my ire  had the subject line: "Australian Board Appt Plus Gift Ideas".  Now who wouldn't open such an email particularly given my interest in Boards as well as Australia?

The real subject of the email: a coaching service that helps individuals access corporate boards.  The email inside title and author was Diversity in Boards (another subject of interest) and the opening "story" described what this organization has done to help one individual in particular get invited to be a board member of a corporate board in Australia.  Following the story, tips on getting on a corporate board including: 

*First succeed in a career where you are recognized for your leadership and business expertise. Build a reputation where people count on you -- where people know you will deliver outstanding results. 

 *If you do not have P&L responsibility, gain financial acumen through graduate level accounting and financial courses and hone your problem solving skills through Audit Committee diligence on a non-profit board.

 *Next, focus on increasing your capability for corporate board service. 

• Attend corporate governance and executive level graduate programs.
• Meet and get to know corporate board directors 

*Strategically, communicate with corporate board directors and CEOs about your interest and capability to assist a company's profitability and success at the Advisory or Corporate board level.

 *In addition, expand your leadership roles in prominent non-profit organizations:

• A major museum
• National non-profit organization
• A college or university

Now, bottom line, these all seem like good tips EXCEPT for the last point: expand your role in prominent organizations.  My take-away: Nonprofit boards are training programs for the "real" corporate board?  Harumph!  

I don't quibble that nonprofit board service should indeed add skills perfect for for-profit board service. But nonprofit board service is, in my opinion an exemplar goal in itself and not to be taken lilghtly or second in place to for-profit board service.  It's most frequently real hard work to serve on a nonprofit board and while the rewards may not be monetary (like on a corporate board), they are significant for all number of reasons like having an amazing community impact, developing a network with folks who you might not otherwise have a relationship, skills and, well the list goes on.

But nonprofit board membership has clear roles and responsibilities that benefit an organization and the community it serves.  Nonprofit board membership is not a training ground for other service but this might be an added value -- certainly not the most important benefit.

 

Nonprofit Revenue Generation

The following is an article about what to say to your board to get them "on-board" regarding a revenue generating activity.  I have a similar article on the Charity Channel.  But perhaps more useful are some of the examples of ventures some nonprofits have conducted.  This is worth a look-see if you are shopping for just such a way to get some more cash in your nonprofit (noting though -- this is a lot harder than it looks).  Here's the link.