Nonprofit Board Crisis

Nonprofit Values Mean Action

By now many of you have heard the story about Scarlett Johansson and Oxfam.  Basically Scarlet was being a spokesperson )of financial value to Oxfam) and went and signed-on to be an endorser for a Israeli west bank producer of consumer goods.  Oxfam has made it clear that it is in opposition to industries being operated in the west bank and supporting Scarlett contradicts this position.  So....divorce was inevitable.  Values into practice is what this is about.  Kudos to Oxfam.

Nonprofit Board Chairs

A recent artcile in the Nonprofit Quarterly (a must-read for capacity builders) moves me to consider that there are an awaful lot of folks, including me, who offer insights about nonprofits and nonprofit board chairs abound -- with and without solicitation; with and without evidence or research. 

The article on nonprofit board chairs that launched my thoughts today gave me pause because in its nature it was excrutiatingly prescriptive, not unlike what I might offer in some of my writing BUT, I am thinking that the nature of this particular piece goes beyond what I traditionally expect of the Nonprofit Quartlery -- opinion versus facts or studied.  

I do want to say that some of what is said in this piece may have some truth and value to some but it is with this proviso that all unsresearched, documented or evidence-based materials should be viewed the same way.  Fact is fact.  Opinion (like this blog) is opinion.  Should a board change its behavior because of an opinion?  Possibly but certainly not singularly based on the opinion and certainly not an opinion that appears to be more promotional of additional services or resources than the opinion alone.

Nonprofit Board Versus CEO

Just how much latitude does a nonprofit CEO have when the board has neither dictated parameters (policy) or been clear about what doesn't "fit" within the CEO's purview?

Lat night, President Obama laid out his plans for his next 1000 days with a stated commitment to get what needs done despite a "boss" (aka congress in particular) that has put roadblocks in his way throughout his term +.

Now the beauty of a president declaring he, in the final duration of his tenure will just "get it done" is pretty great.  The consequences for deviation from his bosses wishes are limited.  I suppose there's the risk he could make mistakes (like his many-fronted wars) and only history will judge of course along with the respective electoral parties.  History could also celebrate if the actions render good or even great results.

But what about a CEO?  Nonprofit boards are nororiously bad at both setting parameters and judging (how many boards conduct annual performance review (we know the answer is "few").  We also know that day-to-day oversight aka guidance or parameters, is not particularly storng by most boards.  But there is also evidence that when something goes horribly wrong, boards do react.  Boards however react for the most part, slowly and sometimes, without tangible action although informed by external parties -- contractors, funders, donors and sometimes, customers.

So, can nonprofit CEOs do as they think best?  Sadly, I believe, the answer is "probably".  One last "but".  Where boards have in place a strategic plan (they know where they want to go and what success will look like AND what theirs and their CEO's role is and maybe are helped by a clearly enunciated dashboard); have clear policies that outline the parameters for which staff can perform; have an annual performance review with clear annual goals -- the likelihood is that the result will be a win:win:win for the board, ceo and most importantly, mission/constituents.

We do want our CEO's to have the freedom to do what they do best but within clear parameters.

Nonprofit Board Oversight

A "big" controversy has been tentatively settled in Newport, RI.  The center of the controversy, the Breakers, one of the Vanderbilt summer "cottages".  If you want to understand how the 1% lived in the roaring 20's, there's no better example.

Back to the controversy.  The Board of the Preservation Society wants to invest in a welcome center to be located at the mansion.  The Board insists there is a need and is committed to investing more than $4 million to implement this goal.  But there are those who claim that building the welcome center will affect the historical integrity of the mansion.  Even the feds got into the discussion sharing their own reservations. The debate has at least temporarily been resolved with the zoning board saying the Society can proceed with its plans.  

Nonprofits are institutions provided with tax exempt status and responsibility to pursue missions that are consistent with some aspect of the public's well being or interest.  Nonprofit boards are the caretakers of these nonprofits, assigned the responsibility to ensure that the nonprofits do indeed pursue mission within all the promises set out in artcles of incorporation and bylaws.  Sometimes though, it's possible that what the nonprofit board concludes is best and right may conflicts with the "public" as illustrated through the mansion conflict.  At this point the question becomes: who is the board most accountable to?  

Who do you believe a nonprofit board is accountable to, first: the organization's interests or the public's when the two bodies may indeed have differing interests?

Nonprofit Values Ripple

When apparently conflicting nonprofit values "ripple" throughout an organization, should that organization, in total, be removed as an institution in the US society?

I have been advocating for such action for the Boy Scouts USA who have and constinue to promote a value that does not recognize the personhood of one part of the population that has a different dna than what current scout leaders and those who came before have determined makes this population as "unacceptable members".  I can continue to stand by my charge that the Scouts do harm, as a body, from the head down even though I have to admit that I have and continue to meet some amazing individuals who are scouts or scout leaders -- people who actually state their objection to this particularly vile policy BUT people who also continue to play a role in and as scouts.

Now, what about the folks over at Tau Kapsa Epsillon (TKE)?  There, a chapter of the fraternity, putting it politely, behaved beyond badly being racist to the max and chosing Martin Luther King day to do so.  Not one aspect of this performance meets any standard of decency and only did harm.  Doing harm: my standard for not acceptable and a solid basis for why a nonprofit should not be permitted to retain its tax exempt status.  But the folks at the top of TKE have publicly decleared their own lack of accceptance for what the behavior of their chapter.  Is this enough?  Do not values ripple from the top and so one might argue that the chapter was behaving reflectively of what it has seen or heard from the top?

At the very minimum the lesson should be that what is determined by the top leadership of an organization must be enforced by the top leadership.  If indeed the top folks at TKE are not satisfied with their chapter's behavior, should they not disband the group for having done harm?  Would this not be the only acceptable action?

Values are not just words.  There must be rewards for living positive values and consequences for having and living harmful values, I believe.

Nonprofit Board Oversight

The Doc Hurley scholarship fund is out of money.  Approximately 7 plus years ago, the million dollar fund had a goal of trippling its assets making it possible to annually give away a healthy number of scholarhips.

The foundation board hired the donor's daughter as exec and it appears that that event coincided with the fund's steady depletion.

So, while the state attorney general will do what he should regarding to pursuing the now ex-exec, what about the fund's board?  Are they not culpable and liable for all that has evolved?  At the very minimum, is it not up to them, as trustees, to develop a strategy for getting the fund's money back and not doing what they have done to date in terms of oversight -- watching the till as any small business person might say?

Really, if there is shame and accountability to be had here, I believe its on the fund's board.  It is not right that these folks should just ride off into the sunset with an "oh well".

To see the story, go here.

Nonprofit Board and CEO

There's been more recently in the  media stories about nonprofit execs increasing their compensation, on their own, over reasonably short periods of time to the result that the nonprofit finds itself out of money.  Clearly, CEOs do not have the right to raid the company till.  But this question begs a different and what I see as much more common albeit what I understand to be, unacceptable practices by some nonprofit exects.  One practice: for the CEO to determine their compensation level without authorization by the board.  A second practice: for the CEO to opt not to, without board authorization, to draw a paycheck (for whatever good and sane reason).

Here's what we know in answering these questions.  First, we know that a nonprofit board, technically and practically, has one employee: its executive (aka CEO, aka President).  The CEO is the only position in the organization who the board hires, supervises, evaluates and is directly responsible for dismissing.

Next, we know that nonprofit boards are held accountable, legally, by the feds, for settetting and not paying excess compensation to their employees.  A board must be prepared to prove that the basis for the salary it pays is within a ballpark of comparative positions in comparative organizations.  

And, we also know that only the board, as described in the by-laws (often) has the resposibility to discern that the board can have an "agent" and that when it does, it the board, not the agent, establishes the compensation for the agent.  The same is generally described for the organization's taking on debt but the board will determine who, how much and when.  Of course, processes for these activities will not be included in the by-laws but board policies and procedures will likely state so.

So, back to the original question: can a CEO establish his/her own compensation and can that same CEO defer, without other guidelines or "approval", to not draw a paycheck?  The simple answer: no.Two decisions a CEO does not get to make without written board policy or prior consent by the board: creating debt, which includes not drawing a paycheck (although multiple times would give more concern than an isolated incident); and setting one's own pay level, be it multiple times during a period or once a year.  These are policy decisions left to the board.

 

 

Nonprofit Values

The Center for Sustainable Shale Development by its title might be considered an oxymoron, particularly to those who are dead-set against shale drilling because of the the high environmental risks.

But the board of the Center is composed of some pretty heavy-hitting true blue environmental caretakers and advocates.  The Center board also includes shale and energy indsutry folks.  The "good" energy folks want to ensure that whatever drilling takes place, it's in the best interest of the environment while the "other" folks want to ensure access.  

The question then: can this bi-farcated group of values actually produce a win:win outcome?  Of course it will not be difficult to answer the question -- either the environment will win a lot or the corporations and consumers (?) will will alot.  It does not seem possible, in my opinion that both can will equally but let's say in the debate over values that there's uber give on the part of the shale folks-----is this then a win:win?

Values matter.

To read about the Center, go here.

Nonprofit Crisis Signs

If any of the following is true for your nonprofit, perhaps its time to consider a merger, partnership, or even an acquisition:

1. Your organization doesn't have more than 30 days of cash in the bank;

2. Your CEO or perhaps a competitor/partner CEO is resigning or retiring;

3. Funders keep asking: have you thought of merging with another nonprofit;

4. Competitors, even new nonprofits on the block, are offering similar services to your constituents and attracting funder support, often, away from you;

5. There's a lot less money out there for what you do best;

6. Your management is always stretched too thin to be fully effective;

7. Your services are stretched too thin to meet the full demand.

Again, if your nonprofit is facing any or many of these realities, it may be time to consider a merger or at least partnership.  More later.

 

 

 

Nonprofit Board Candidates

Just yesterday I noted from a Chronicle of Philanthropy opinion piece that nonprofit boards will, given the many challenges they will face in 2014, want to be paying a lot more attention to recruiting to match these new demands.

The Freedom of the Press Foundation recently announce that it has recrutied Edward Snowden (yes, whistleblower par excellance) as a new board member.  Talk about mission into practice.  Kudos to the Foundation for both recognizing an individual who lives what it preaches and sees the added value of having this resource play a role in its work at the governing level.

Meanwhile, I am imagining that the Foundation's by-laws are pretty flexible about meeting attendance and decision-making presuming that board members are not just eye-candy.  

Here's a link to The Guardian to learn more about this appointment and what Mr. Snowden is up to.