Nonprofit Board Crisis

Nonprofit Board Strategic Planning Matters

Strategy: multi-year, fully informed, results focused.  In addition to fulfilling its fiduciary responsibility a nonprofit board, like any business owner, must be strategically focused to ensure it has the best interests of its nonprofit focused in an ever-changing marketplace.  One might argue that the Museum of Biblical Art has finally made a strategic decision: it will be closing its doors.  One might also argue that that same board had failed to be strategic before this decision.  

The following Wall Street Journal article tells the full story but the mini-story tells of an organization that for too many years has been getting its annual rent for $1 -- in downtown Manhattan.  Its landlord of some 20 years has sold its business.  The board, grateful for its low rent appears not to have ever started an endowment and/or built-up enough of a donor base to ever accommodate a possible change in location - or at least one that would be at the same price.  When the landlord gave notice, smart tactics were just not enough.  Now the board has moved to close the organization.  Lessons for others?

Museum of Biblical Art to Close

Its home has been sold and it can’t afford a new space in the city, officials say

ENLARGE

The American Bible Society in Manhattan sold its headquarters earlier this year. The Museum of Biblical Art had its home in the building.PHOTO: STEVE REMICH FOR THE WALL STREET JOURNAL

By 

JENNIFER SMITH

Updated April 28, 2015 4:19 p.m. ET

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The Museum of Biblical Art in Manhattan will close in June, having failed to secure a new space after the sale this year of its current home, the American Bible Society building near Columbus Circle.

This winter, the decade-old museum mounted its most successful show yet: a display of major Renaissance sculptures by Donatello and others that drew critical raves and the largest attendance of any exhibition in the museum’s history.

EARLIER

 

• Museum of Biblical Art Loses Its Landlord (Feb. 18, 2015)
• Museum of Biblical Art Welcomes Donatello Sculptures (Feb. 12, 2015)
• Bible Society Sells New York City Building for $300 Million (Feb. 1, 2015)

Despite that splash, museum officials said they have been unable to raise enough money to cover the cost of a market-rate space in Manhattan. “The time frame was just too tight,” said museum Director Richard P. Townsend.

The decision to close, announced Tuesday afternoon, highlights the challenges for small and midsize cultural organizations in New York City. Rents here are high and competition for donors and audiences fierce.

A secular institution that examines the Bible’s influence on Western art, the Museum of Biblical Art has mounted well-regarded shows on subjects ranging from the 400th anniversary of the King James Bible to the ecclesiastical work of glass maker Louis Comfort Tiffany.

It has a small staff, no permanent collection and no endowment. But the museum, known as Mobia, possessed a singular advantage: It paid just $1 a year for its space at the Bible Society’s building on Broadway.

The Society, a 199-year-old nonprofit that promotes engagement with the Bible, announced in March 2014 that it would sell the building and move to Philadelphia. Since then, Mr. Townsend said, he has sought new donors, checked out real estate and explored potential partnerships with other museums and universities.

Mobia, which has an average annual budget of about $2.8 million, faced two challenges: coming up with an additional $1.5 million to $5 million in annual rent, plus millions more to equip the space with museum-quality temperature and humidity controls.

“The cheapest appropriate space, which still would have required a build-out, was about $1.4 million,” Mr. Townsend said.

While new supporters stepped forward, and some existing donors doubled their pledges, “you don’t go from zero to 60” in a matter of months, Mr. Townsend said. “As the board looked at this very carefully, they didn’t see a way forward, unless a white knight came and wrote a huge check.”

None did.

The museum will close to the public on June 14, the last day of the Donatello show, and cease operations on June 30.

A planned joint exhibition with the Andy Warhol Museum that looks at Warhol’s “The Last Supper” series will be canceled. Another collaboration, a traveling exhibition called “Power and Piety” showcasing Patricia Phelps de Cisneros’s collection of Spanish colonial art, won’t open in New York as planned, Mr. Townsend said.

“It’s really disappointing on a lot of levels,” said Brian O’Neil, chairman emeritus of Mobia’s board. “And yet the plight of the small museum is a tough one.”

Some other institutions in New York are also weighing their options. The South Street Seaport Museum, whose operating budget has shrunk to about $2.3 million—from $4.4 million in 2012—is considering selling off some of the six-vessel fleet that hosts much of its educational programming.

Last month, the Museum of Jewish Heritage in lower Manhattan announced a two-year partnership with the National Yiddish Theatre Folksbiene, an alliance intended to broaden its audience and raise the profile of both groups. The museum has run deficits in five of the past six years, and relies almost entirely on annual fundraising to cover its operating budget, which in recent years has ranged from roughly $11 million to $14 million.

Mobia began as an art gallery founded in 1997 by the American Bible Society. The museum was spun off as a separate, secular entity in 2004 and reopened to the public the following year, after a major renovation. But it continued to receive significant backing from the Bible Society.

In recent years, that support has been scaled back, per an agreement that Mobia would transition into a fully independent institution. The museum was working to replace the Bible Society funds with its own, Mr. O’Neil said, and had made headway despite the financial crisis.

“There was an exponential difference between that,” he said, “and the need to find our own place, fix it up and pay a higher rent.”

Mobia’s board thanked the Bible Society, calling it the museum’s “most generous supporter from the beginning.” Mr. O’Neil and Mr. Townsend said they are proud of Mobia’s exhibitions, and regretted that efforts to sustain it as an independent entity failed to gain traction.

“If you’re a nonprofit and you don’t own your building, and you don’t have an endowment, it’s going to be a tough slog, at least in New York City,” Mr. Townsend said. “We are proud that we can offer this truly great last exhibition.”

Society spokesman Geof Morin said in a statement that he is grateful to museum staff and board members “for their tremendous work highlighting the cultural relevance of Biblical art.”

Mobia filled a unique niche, said its founding director, Ena Heller, now director of the Cornell Fine Arts Museum at Rollins College in Winter Park, Fla. Ms. Heller said she plans to visit the Donatello show over Memorial Day weekend.“It’s very sad,” she said. “I was hoping they would find a solution.”

Write to Jennifer Smith at [email protected]

Nonprofit Legitimacy

What are the criteria for discerning whether a nonprofit is legitimate?  For sure it is not whether the IRS has granted a 501(c) 3 status.

According to Wendell Potter in a Philadelphia Inquirer "rant" about Allyson Schwarz's new "nonprofit" advocacy group, the Better Medicare Alliance, here's what makes a nonprofit legitimate:

    ...listing of a physical address or phone number on its website; no mention of employees other than     Schwartz; no board of directors (I wanted to know who actually hired Schwartz and who she answers     to);  no apparent way to reach anyone there other than through a generic email address. (The          questions I     submitted to the group last Wednesday have still not been answered.)

I agree in part that these indeed are worthy criteria for discerning nonprofit legitimacy.  But these are not enough.  I believe that there should also be some kind of work going on -- some activity that has measurable results as well -- something to be accountable for and worthy of nonprofit status.  

But even without this added criteria, one does wonder what the IRS was thinking when granting exemption.  Is it ok for the IRS to grant exemption for only a small part of the already privileged public?  Alas, I believe that the law is written such that the answer is "yes".  What are Ivy League Colleges such that they are designed to serve a small part of the privileged public.  And, there are many such other examples while at the same time there are many examples of nonprofits that serve far more than the privileged public.  

Is it time to revisit the criteria for nonprofit tax exemption?  Do we really want to attempt to go down that road?  I can't imagine good resulting from that trip. 

Nonprofit Board Host Not Home

If nonprofit boards are the surrogate owners of a nonprofit representing the public/taxpayer's interests, it stands to reason that good governance would mean that the board would sit ever ready to listen and hear the needs, wants and interests of the many stakeholders/constituents of what the nonprofit has to offer.  If a board accepts this concept it then must also accept and value the concept of community engagement.  

In last week's conference on governance, David Renz of the Bloch School of Management and host of the conference suggested that a nonprofit board need not be the "home" of governance but the "host" of governance.  While the daily tasks are focused on fiduciary and strategic duties, these tasks are then informed by the community such that the board must always act from a more "global" or community-wide perspective and not then just from its several or whole biases and interests.

Unionization is certainly one arena that actually changes the position of the board from being a home to being a host effectively and legally forcing the board's governance to consider the interests of the employees in its actions.  The unionization of home health care aides in Pennsylvania will then go a long way toward making those nonprofit home health aide provider boards much more of a host than home in their governance.  One must wonder if the workers for nonprofits would have moved to unionize had the boards of the nonprofits been acting as host not home and whether indeed there is a lesson for all nonprofits.

Here's the Wall Street Journal article describing the unionization event.

Pennsylvania Home Health Care Aides Vote to Unionize

Two pending lawsuits seeking to block union drive may not be resolved for months

By 

KRIS MAHER

April 24, 2015 6:39 p.m. ET

1 COMMENTS

A union claimed victory Friday in its effort to organize 20,000 home health aides in Pennsylvania, even as two pending lawsuits seeking to block the union drive may not be resolved for months.

Home health aides voted 2,663 to 309 in favor of being represented by the United Home Care Workers of Pennsylvania, according to the union, which is a joint partnership of the Service Employees International Union and the American Federation of State, County and Municipal Employees.

The union noted that it won 89% of votes cast. Mary Kay Henry, president of the 1.9-million-member SEIU, which represents 600,000 home care workers, applauded the win in a tweet Friday afternoon.

But legal challenges could undo the victory. Two lawsuits are pending in Pennsylvania state court alleging that an executive order issued by Democratic Gov. Tom Wolf that allowed the vote violates the state’s constitution and labor laws.

The executive order permits an elected representative of home care workers to reach an agreement with the state Department of Human Services over wages, benefits, dues and other issues.

On Thursday, the judge hearing the cases said he would allow a representation vote to proceed but issued a preliminary injunction barring any union that won from reaching an agreement with the state. The lawsuits are scheduled for argument in September.

Among other things, the lawsuits complained that the executive order violated state law by allowing a union to win representation by gaining a majority of votes cast rather than a majority of eligible votes. In this case, votes for the union represented about 13% of eligible votes.

“Part of the reason they won was that the executive order was drafted as a handout to the unions,” said David Osborne, general counsel for The Fairness Center, which filed one of the lawsuits challenging the executive order. The nonprofit organization in Harrisburg, Pa., represents workers in disputes with unions.

Jeff Sheridan, a spokesman for Gov. Wolf, said the governor is pleased the process is moving forward. “The governor’s plan ensures that seniors, consumers, and direct care attendants will continue to have a voice in shaping the future of the homecare industry,” Mr. Sheridan said.

Nonprofit Board "Ice Cream"

I'm attending the University of Missouri-Kansas City of Nonprofit Board Governance where academics and consultants gather to discuss progress on the latest research focused on nonprofit boards.  I am here with colleagues from the Alliance for Nonprofit Management and have presented the findings to date from a study members of the Governance Affinity Group have collected on Board Chairs preparation and role.  More about that in the future.

Meanwhile, at one session reflecting in part on a finding from our Chair study about how only 50% of those who serve as board chairs have even looked for information about being a chair or anything related to nonprofit governing and one of the session participant posed the question: what might be the "ice cream" that would attract chairs or board members to want to learn more -- effectively, to be the best they can be.  Ice cream is of course representative of the concept of incentive or carrot as it appears clear that sticks (what the IRS poses) is not incentive enough for board members and chairs to prepare for their jobs.  It is of course possible that board chairs figure that given the short period they have to serve (usually a year) and pretty lean duties if one does the minimum (maybe manage 12 meetings in a year) there just might not be a there-there to provide enough reason to prepare.  But what if.....

Would nonprofit boards perform differently and possibly better if their chairs were prepared for their position?  Would chairs perform differently and possibly better if they themselves prepared?

Much to learn but a good place for study and dialog.

Nonprofit board member seek to protect their "good" name

It should come as no surprise that the Sandusky affair is not fully over.  It appears that some of the Pennsylvania State University trustees believe that the report on the affair may not have represented them fairly or accurately.  Clearly, "good name" perhaps even over responsibility is a serious matter for nonprofit board members.  But more importantly, as nonprofit board members are the "surrogate" owners on behalf of the public, if board members truly fail, they should certainly not continue to remain as board members.  Core to their duty of care is the responsibility to respond when wrongs have been done.  And of course, not demonstrating their innocence leaves board members, severally (individually) and wholly (all together) liable for deeds that resulted in serious harm when performed on the member's watch.  So, these members have a personal stake in clearing their name.  Let's hope that they have the same level of personal responsibility for seeing that acts of harm can be avoided and/or acted upon (when identified) as soon as what has happened is known.

POSTED: Monday, April 20, 2015, 9:02 PM

Seven Pennsylvania State University trustees followed through Monday on a promise to take legal action to obtain documents from a report on former coach Jerry Sandusky's child sex abuse.

The trustees' petition, filed in Centre County, argues state law grants a nonprofit's board members access to any records reasonably related to the performance of their duties. The trustees argue the university was harmed by the report by former FBI Director Louis Freeh, which concluded that former administrators, including longtime head coach Joe Paterno, failed to act when they learned of Sandusky's abuses. The report also criticized Penn State's culture of reverence for the football program as a factor that insulated Sandusky. The petition described the report's conclusions as "subjective, hyperbolic, and sweeping."

The documents requested are being withheld to protect people who provided information to the Freeh report investigators with a promise of confidentiality, university president Eric Barron said in a statement Saturday.

Read more at http://www.philly.com/philly/education/20150421_Penn_State_trustees_sue_to_get_Freeh_report_documents.html#jBH5Bp2eI4RZFA8e.99

Nonprofit CEO Job Qualifications

When nonprofit boards must hire their one employee, the CEO, what qualifications might they look for?  Here's two stories that provide some clues about what boards might be seeking

First, there's the story about Michele Nunn (former US Presidential candidate who has just been selected to be the CEO of CARE USA (Wall Street Journal) -- appears to be all about the connections :

• has spent most of her career working at nonprofit groups.
• (has) ability to forge coalitions, an important skill because the organization now focuses on “building global partnerships with local indigenous leaders,” 
•  has connections with both major U.S. political parties, and that could help CARE USA. The organization’s funding from U.S. government contracts has shrunk by tens of millions of dollars in the past few years.
• because of her organizational and leadership skills.
• She knows how to lead an organization during strategic uncertainty; she forms strong teams and holds them accountable; and she has raised money and worked with external partners.
• he “has great credibility in Washington” because she worked with Democrats and Republicans while head of Points of Light, Mr. Jones said.

Perhaps coincidentally, the Journal also included an article about another new CEO, a former college linebacker who has taken on the NY City Young Men's Initiative.  The board's criteria was a bit different an perhaps more along the lines of what I might expect:

• an ability to make quick decisions
• listening and not coming in with one's own interests first to align with mutual goals
• raise more private money
• Former political analyst for Everytown for Gun Safety.
• Former drug and gang counselor.
• Former staffer, 2008 and 2012 Obama presidential campaigns.
• Former special adviser to the director, Department of Homeland Security Office of Counternarcotics Enforcement.
•  political skills by uncovering common goals among constituents and following through on a campaign plan.
•  enthusiastic and a believer.”
• as serious and need(ing) to prove himself as a knowledgeable, confident leader. 
• Make the transition from being the on-the-ground guy to boss. 

    At the article's end he states: “... I spend the rest of the day in meetings,” he said with a laugh.     “I’m used to being a staffer and getting things done. I spend most of my time in meetings now and     you realize, ‘Wow, that’s what being an executive is.’”

What do you think -- good criteria or something lacking?  Are these really the criteria or is there just one: connections?  

Nonprofit Mergers

"It's become more and more challenging as nonprofits grow in the city; the funding pie doesn't get any bigger. There is more competition for funding. It's really smart and brave for organizations like us to create a more formal partnership like a merger."

This is what Ms. Lovell of the newly merged Fairmont Park Conservancy had to say about why a merger of two parks organizations that originally divided responsibilities for the Fairmont Park in Philadelphia.  Equally interesting is what Ms. Lovell had to say about how they managed to complete the merger.

The combined organization's budget is $2 million, and Lovell said savings would come from merging payroll, accounting, and other systems. The 16-person staff suffered no cuts.

The message: nonprofit mergers matter.

To read the full story go here.

Nonprofit Board Duty of Loyalty

Wonder what the failing of a nonprofit board's duty of loyalty can look like?  

One of the best examples I've seen is described in detail in the following Chicago Tribune story.  And, as a refresher, the most common failing of the duty of loyalty is conflict of interest -- that is, when board members make decisions that take advantage of their position as a board member and result in personal material gain.  If there's a case for failing their conflict of interest, this is it.  For shame, for shame, for shame!!! 

 

 

College of DuPage backers with exclusive deals rake in millions

College of DuPage Trustee Dianne McGuire shows President Robert Breuder a newspaper clip before a special board meeting in January. McGuire has pushed for competitive bidding for college contracts.

 (Nuccio DiNuzzo, Chicago Tribune)

By Stacy St. Clair and Jodi S. CohenChicago Tribunecontact the reporters

• Colleges and Universities
 
• Charity
• Finance
 
• Architecture
 
• Freedom of Information Act

Tribune: College of DuPage Foundation's board members have business ties to the school worth $200 million.

Who are top donors to College of DuPage? The official fundraisers who also billed it for $200M in business.

 

Officials at the College of DuPage have a long list of items to turn over to federal investigators by next week, including a trove of documents related to contracts with companies tied to board members for the school's fundraising foundation.

Here's what those records will show: Nearly half of the College of DuPage Foundation's 22 most recent board members are executives at companies doing business with the publicly funded school, and many of those companies have been awarded jobs without going through a competitive selection process, according to a Tribune investigation.

CAPTIONAmounts billed

CAPTIONSubpoena seek business dealings

CAPTIONA trustee's warning

CAPTIONA trustee's warning

CAPTIONA trustee's warning

Those businesses have billed the college for nearly $200 million since July 2010 — while also ranking among the foundation's most generous donors. The Tribune's investigation, examining many of the same documents now being sought by federal authorities, raises questions about the confluence of business dealings and fundraising at the state's largest community college.

The foundation contracts are the latest legal and public relations battle for the Glen Ellyn school, which was served with two grand jury subpoenas this week as part of a federal criminal investigation. Since January, the school has been under fire for giving its president one of the largest buyout packages in state history, lavish spending by top administrators and its lax financial oversight.

A review of board minutes, emails and an audio recording shows that some school trustees raised foundation-related concerns more than a year ago. But President Robert Breuder repeatedly resisted calls for a more open contracting policy.

"I thought here in Illinois especially, even the appearance of pay-to-play or conflict of interest is dangerous," college Trustee Dianne McGuire said in an audio recording of a December 2013 board meeting.

lRelated

BREAKING NEWS

College of DuPage under federal investigation

SEE ALL RELATED

 

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McGuire, the board's liaison to the foundation, pushed for a more competitive selection process and suggested at that meeting that, based on an earlier conversation with Breuder, he agreed.

He didn't, the recording shows.

"I never weighed in," said Breuder, now also a target of the federal investigation. "I didn't go either way. I just sat there."

"I have to assume that at some point you saw there was some validity to what I was saying," McGuire replied.

"No," Breuder answered firmly. "It was an easy way to satisfy an interest that you had."

Political shift on College of DuPage board could lead to president's ouster

It's now an interest shared by federal prosecutors. The college has been ordered to provide documents showing all payments, reimbursements, contracts or loans between the college and foundation board members and their businesses, according to grand jury subpoenas obtained by the Tribune. The subpoenas also ask for documentation of any bids the companies submitted, their professional qualifications, and any efforts made to ensure the work was competitively awarded.

Including two members who resigned from the board this month, 10 of the foundation's 22 board members do business with the school, according to documents obtained under the Freedom of Information Act. Of those 10, nine have received non-competitive deals for a variety of business, including construction management, legal representation and political lobbying, the records show.

cComments

• Nothing more than pay to play the Chicago way.
  RSOGA0
  AT 6:14 AM APRIL 17, 2015

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The businesses, meanwhile, all have donated generously over the years to the college's foundation. In fiscal year 2014, each company — or the foundation board member employed by the company — gave at least $5,000, putting them in the President's Circle, the highest level of annual giving, according to the foundation's annual report. Three companies are also part of the Presidential Society, an honor bestowed upon those who have given $100,000 or more over a lifetime.

College and foundation officials met with the Tribune on Monday, before the revelation of the federal investigation. In a lengthy interview, they defended the relationships because in all but one case, they said, the contracts were awarded before the company employees joined the board. The foundation-connected vendors all joined the board between 2010 and 2014.

Records show, however, companies tied to at least seven board members received contract renewals, extensions or increases, or new business, after their executives joined the board.

Many of the jobs did not have to be competitively bid because they involve professional services, one of the few exemptions under the state's procurement laws, or because the college already had a "satisfactory relationship" with the company, according to the officials.

Tribune coverage: Issues at College of DuPage

"These people were contracted long before and became good friends of the college because they became involved in the mission. They are community and business leaders," said Catherine Brod, the foundation's executive director.

Still, critics have said there is at least an appearance of impropriety.

"All of the transactions are completely legal if conducted at arm's length, but the pattern is troubling," said Adam Andrzejewski, founder of the watchdog group For the Good of Illinois and an outspoken critic of the college's spending.

Ethics vs. statutes

The nonprofit foundation serves as the college's fundraising arm, and while it is legally separate from the college, the school pays foundation employees' salaries and provides them office space. Foundation board members don't get paid.

According to the foundation's annual report, it gave away over $452,000 in scholarship money to more than 600 students last school year. It also awarded more than $130,000 to support faculty and staff projects.

"The people who are on our board are really very involved with their time. They are passionate about the college," said foundation board President Susan Lang Berry.

Board members are asked to donate at least $1,000 a year and make the foundation one of their top three charities, Berry said.

Community colleges nationwide have rules regarding vendor agreements between the schools and foundation board members, from policies prohibiting them to using conflict-of-interest statements to make the business dealings transparent. The College of DuPage Foundation's conflict of interest policy does not address board members' business dealings with the college, but cautions "most conflicts fall into a gray area where ethics and public perception are more relevant than statutes or precedents."

"Loss of public confidence and a damaged reputation are the most likely results of poorly managed conflict of interest," the policy adds.

Taken together, foundation-connected companies have billed the school for nearly $200 million in the past five years, records show. The companies include two construction firms, Chicago-based Power Construction Co. and Minnesota-based Mortenson Construction Co.; two local law firms, Robbins Schwartz and Fuchs & Roselli; lobbyist Scott Marquardt; architectural firm Wight & Co.; project management firm CCS International; and signage company Herricane Graphics.

U.S. Bank, which has a representative on the board, pays $1,500 a month to operate the only bank branch on campus, a noncompetitive deal approved by trustees in October 2012. The bank's Chicago market president, Marsha Cruzan, has served on the school's foundation since July 2010.

New College of DuPage trustees promise reform, independent thought

St. Charles-based Bison Gear & Engineering also has done a small amount of business with the college, selling $7,550 worth of equipment in the past year. A foundation official said Bison Chairman Ronald Bullock — a foundation member who donated $275,000 for student scholarships last year — would not have been aware of such a minor transaction at his company.

The companies and their foundation-connected representatives either did not return calls seeking comment or deferred most questions to the college.

Amid the Tribune's reporting, college attorneys Kenneth Florey, of Robbins Schwartz, and Steven Ruffalo, of Fuchs & Roselli, stepped down from the foundation board, citing personal and business reasons. Payments to their firms are included in the Tribune's analysis because they were sitting board members until earlier this month.

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BREAKING NEWS

College of DuPage under federal investigation

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The college declined to provide contracts signed before July 2010 and didn't release any records until a Tribune attorney intervened. Officials also would not provide records showing proposals from those companies, though the officials contend all went through a competitive process before their first deal with the school. The vast majority of the payments were for construction work as the college has built or significantly renovated a number of buildings since Breuder became president in 2009.

A review of more than 900 pages of invoices, contracts and board minutes shows that the college has paid more than $192 million in the past five years to Mortenson Construction and Power Construction. The two companies have spearheaded projects funded by a successful referendum in fall 2010, when voters approved a $168 million measure to expand the campus' homeland security education center and renovate other buildings.

College of DuPage enrollment growth not all it seems

cComments

• Nothing more than pay to play the Chicago way.
  RSOGA0
  AT 6:14 AM APRIL 17, 2015

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College officials say the $192 million figure is misleading because it includes payments that passed through the construction companies to other contractors. They also said the amount includes both construction management fees — which were not competitively awarded — as well as construction work for which the companies submitted bids.

School officials declined a Tribune request to provide an itemized accounting of the payments made to Mortenson and Power. Both companies deferred questions to the college, which argued that no quid pro quo existed because neither firm had a seat on the foundation board until last year.

Though the foundation does not provide detailed information about contributions, records show the foundation-connected construction companies are among the largest lifetime donors to the group. Both Mortenson and Power have donated at least $50,000 each over the years, according to the organization's annual report. Mortenson — which served as construction manager for the McAninch Arts Center renovations — also donated $50,000 last year to be the "platinum sponsor" of the building's re-opening celebration.

The firms also have contributed financially in other ways.

In 2010, the two contributed to a political action committee started by college administrators to help promote the building referendum. Mortenson gave $5,000, and Power employees contributed $10,000 of the $65,000 raised in total, according to state campaign records.

Eight months after the referendum's passage, school trustees awarded both companies construction management contracts.

"You have this culture of pinstripe patronage," said Chicago attorney Mark Stern, who raised questions about the political action committee during the referendum campaign. "People are contributing money to the people making the decisions."

Leader 'comfortable' with deals

There have been signs that trustees and law enforcement officials have begun to recognize potential problems with the procurement system. Before the federal investigation, DuPage County prosecutors began looking into no-bid contracts awarded to Herricane owner Carla Burkhart, who joined the foundation board in June 2012.

The Tribune recently reported that Burkhart has billed more than $630,000 to design and install signs for the school over the past four years without submitting a single competitive bid, including a new project awarded in 2014. Much of the work was made possible through a contract that references her experience as an architect, though she is not one.

McGuire — who is spearheading a board review of foundation-connected contracts — said in the interview Monday that she now feels comfortable with the existing deals after the college recently compiled statistics showing the fees were within industry standards. She also applauded a recent decision to bid an architectural contract for a new Naperville facility.

A new vendor won that job.

She said she intends to recommend that the college seek proposals from several companies before agreeing to professional service contracts in the future.

"I don't want to make it a mandatory process," she said. "I think we want to leave some flexibility in place, but definitely encourage that."

Although McGuire had been rebuffed by Breuder in December 2013, emails last fall show she continued to push for an open and competitive contracting process.

"If a foundation board member is also a vendor of the college, then the board of trustees must be assured that any contracts they receive must be shown to be competitive with other similar service providers," she wrote in an October 2014 email to Breuder. "(O)therwise, it has the appearance of pay to play ... we must be able to defend that contract if questioned."

Breuder replied that the college had no legal obligation to bid contracts awarded to foundation members.

When McGuire asked what harm could be done by a competitive process, Breuder ended the discussion.

"I am comfortable where we are," he wrote. "That said, we can always look at another step at times. We will rely on our good judgment."

Two months later — at McGuire's urging — the college board approved a new competitive contract for lobbying services. Foundation member Scott Marquardt had handled the college's lobbying efforts since 2010, and had joined the foundation board in July 2012.

The college had been paying him $5,000 per month under several non-competitive contracts.

But, when it came time to renew the deal last year, the school solicited proposals from 33 lobbying firms.

lRelated

BREAKING NEWS

College of DuPage under federal investigation

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In the end, Marquardt submitted the only proposal, but he lowered his price to $4,500 a month — saving the college $6,000 a year.

Tribune reporter Christy Gutowski contributed.

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Copyright © 2015, Chicago Tribune

Nonprofit Governance Policy

It is generally accepted that nonprofit board work generally involves policy, planning and evaluation. This "work" is the foundation for a board meeting its fiduciary duty of care.  While the folks involved are big public names, it should be reinforcing that the board of the Clinton Foundation are doing their policy-making job when making policy about the source of the Foundation's money.  Clearly the Foundation board has perhaps some additional factors to consider in their policy and fortunately for most nonprofit boards, doing their job is not so much under the microscope, but as described below in the Wall Street Journal article, the Clintons are just doing what any good board should be doing: making policy. 

 

Clinton Foundation to Keep Foreign Donors

Board’s decision to continue accepting funding from some countries could become 2016 campaign issue

ENLARGE

Former President Bill Clinton, Democratic presidential candidate Hillary Clinton and their daughter Chelsea at a Clinton Global Initiative meeting in March in Tempe, Ariz. PHOTO: SAMANTHA SAIS/REUTERS

By 

JAMES V. GRIMALDI

April 15, 2015 7:29 p.m. ET

259 COMMENTS

The board of the Bill, Hillary and Chelsea Clinton Foundation has decided to continue accepting donations from foreign governments, primarily from six countries, even though Hillary Clinton is running for president, a summary of the new policy to be released Thursday shows.

The rules would permit donations from Australia, Canada, Germany, the Netherlands, Norway and the U.K.—countries that support or have supported Clinton Foundation programs on health, poverty and climate change, according to the summary.

That means other nations would be prohibited from making large donations to the foundation. But those governments would be allowed to participate in the Clinton Global Initiative, a subsidiary of the foundation where companies, nonprofit groups and government officials work on solutions to global problems.

Ministers from any government would be allowed to attend meetings and appear on panels at the group’s meetings and their governments would be allowed to pay attendance fees of $20,000.

The new policy, which was designed to address growing concern that the donations would present a conflict of interest for a Hillary Clinton presidency, all but ensures that Mrs. Clinton’s links to the charity will be a feature of the emerging presidential campaign.

The campaign did not immediately respond to a request for comment. Last month, when asked about foreign contributions, Mrs. Clinton said she was “very proud of the work the foundation does” and noted that there are “hundreds of thousands of people who support the work of the foundation.”

The limits are meant to strike a balance between protecting existing programs while shielding the foundation and Mrs. Clinton from charges that foreign governments are buying influence through their donations, a person familiar with the foundation’s deliberations said. The foundation will begin to release donor names quarterly starting in July. Previously the names were released annually.

“By implementing this new, even stronger and more transparent policy, the Clinton Foundation is reinforcing its commitment to accountability while protecting programs that are improving the lives of millions of people around the world,” said Craig Minassian, spokesman for the Clinton Foundation.

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As a direct result of the restrictions, officials will stop holding events around the world, beyond an event planned for Morocco in early May, which was considered too close to cancel. That event, the Clinton Global Initiative Middle East & Africa conference in Marrakesh, has been funded in part by a $1 million gift from a Moroccan-government owned phosphate-export company, OCP. A Clinton Global Initiative-Mediterranean meeting focused on the economy and scheduled for June in Athens is being canceled.

The six countries on the approved donor list are less controversial and politically sensitive than some who gave in 2014, such as Saudi Arabia, Oman and the United Arab Emirates. Still, even the allowed countries would pose issues for a Hillary Clinton administration. Canada’s Foreign Department has made Clinton Foundation donations and is also leading the charge to win approval for the Keystone XL pipeline. Germany and the U.K. are two of the five countries, including the U.S., that drafted an antinuclear accord with Iran. The U.S. and Germany also differ on how best to respond to Russia’s aggression in Ukraine.

The foundation plan will likely renew the foreign-gift controversy just as Mrs. Clinton’s presidential campaign launched this week. Earlier this year, Mrs. Clinton came under fire from both Democrats and Republicans when The Wall Street Journal reported that foreign donations to the foundation had resumed last year after a virtual halt when she served as secretary of state from 2009-13.

Republican National Committee Chairman Reince Priebus said the new policy comes weeks after the Clinton Health Access Initiative, a charity affiliated with the Clinton Foundation, didn’t disclose millions of dollars in donations from countries including Australia, Canada, Ireland, Norway and the U.K. “The Clinton Foundation receiving foreign government funding as Hillary Clinton campaigns to be president should set off alarm bells,” Mr. Priebus said. “The fact that the Clinton Foundation previously failed to disclose foreign government donations should cast even greater doubt on any new policy.”

The new rules for the Clinton Health Access Initiative, an affiliated but separate charity, were expected to be somewhat less restrictive than the new Clinton Foundation rules, and hadn’t been completed on Wednesday. Officials said the missing disclosure was an oversight.

Ethics experts had recommended the foundation forego all foreign donations. Robert Walker, the former nonpartisan chief counsel and staff director of the Senate and House ethics committees, said the foundation likely will need to go further than its current plan.

“The only effective step would be for the foundation to cease accepting donations from foreign governments,” Mr. Walker said. “It is inevitable that the foundation will, sooner rather than later, decide to forego accepting donations from foreign governments, except for those pledges already on approved multiyear cycles.”

Under the new rules, approved countries would be allowed to renew multiyear pledges, or make additional contributions to new programs, an official said. Such funding would support economic development or climate-focused work of the Clinton Climate Initiative, the Clinton Development Initiative, which focuses on Malawi, Rwanda and Tanzania, and the Clinton Giustra Enterprise Partnership.

One example is a $12 million, three-year contract the Australian Department of Environment has with the Clinton Climate Initiative to create a system to monitor emissions in Kenya. The Australian pledge began in 2013 and continues until next year.

The Obama administration in 2009 wanted to avoid conflicts of interest with former President Bill Clinton raising money from foreign governments that also would be working with Mrs. Clinton as secretary of state. At the time, the Clinton Foundation agreed to stop raising new money from foreign governments, with a few exceptions for multiyear pledges for health and other initiatives.

Under the agreement with the Obama transition office, the Clinton Foundation agreed to separate the Clinton Foundation and the Clinton Global Initiative and to begin disclosing all donors to the foundation. The two groups won’t be divided under the new policy.

The terms also spelled out that Mr. Clinton wouldn’t solicit funds for CGI and wouldn’t send letters seeking contributions from potential CGI sponsors. Pledges and donations from foreign governments and government-owned companies were to be presented to the State Department for review by an ethics officer.

Documents released publicly so far under a Freedom of Information Act lawsuit filed by conservative watchdog group Judicial Watch show that the ethics officer wasn’t asked to approve any new foreign donations beyond continuing pledges. The State ethics reviews are still being released.

Write to James V. Grimaldi at [email protected]

Nonprofit Volunteers

 

The word is out on how much volunteers are worth.  If you are a nonprofit manager and you don't at least once a year and based on time sheets or some other documentation, reflect the value of your volunteers, I believe you should.  So, valuing volunteers is a part of reflecting the real cost of doing business answering the question what would the cost to the nonprofit be one had to replace with paid staff.  Also, funders want to know what the level of community support is that exists and valuing volunteers does that as well. Those are the three biggest reasons.

That said, below the latest is on how much volunteers should be valued.  I might suggest that this valuation may not be applied to every volunteer.  What jobs volunteers do and how this compares with paid folks should be factored-in to assess full value.  But, this valuation certainly gives some guidance.

 

How much is an hour of volunteer time worth? Independent Sector announces today that the 2014 estimate for the value of a volunteer hour is $23.07—a 52-cent increase from 2013, up 2.3 percent from the previous year. The value of volunteer time provides one way to measure the impact millions of individuals make with each hour they dedicate to making a difference. The release of this important figure comes during National Volunteer Week, a program of Independent Sector member Points of Light held April 12-18, 2015.   “For more than 40 years, National Volunteer Week has recognized the value of volunteers to nonprofits, to the people they serve, to society, and to life on this planet,” said Independent Sector President and CEO Diana Aviv. “Though we could never truly put a price tag on what volunteers mean to their communities, we are proud to offer this figure to attempt to frame the immense value of the time and effort they give.” IS also has updated the state-level breakdown for the value of volunteer time in 2013, ranging from a low of $19.31 in Arkansas up to $39.86 per hour in the District of Columbia. New for this year is an interactive map and table showing data for each state, where the value of a volunteer hour is highest and lowest, and how much the figure has risen or fallen since the previous year. Also new is the complete dataset for the value of volunteer time for all 50 states and D.C. from 2001-2014. See the full map and table of national and state-level volunteer time values The latest Bureau of Labor Statistics data show nonprofits employ approximately 11.4 million workers — about 10.3 percent of the American private sector employment[1]— and account for about 5.4 percent of GDP.[2]  According to data from the Corporation for National and Community Service, about 62.6 million Americans, or 25.4 percent of the adult population, contributed 7.7 billion hours of service in 2013.[3] Religious organizations were cited as the type of organization that volunteers worked in the most (33.9%), followed by educational or youth service (26.2%) and social or community service organizations (14.8%).[4] To access state-by-state values of volunteer time and learn more about the national figure, visitwww.independentsector.org/volunteer_time.     [1] Bureau of Labor Statistics, October 2014 [2] McKeever, Brice S., and Sarah L. Pettijohn, The Nonprofit Sector in Brief 2014: Public Charities, Giving, and Volunteering, October 2014, Urban Institute, 2014. [3] National Data from Corporation for National and Community Service. [4] National Data from Corporation for National and Community Service.