Nonprofit Board Crisis

The following is copied from my colleague Deb Beck's blog.  Wise words and good counsel for nonprofit CEO's and Boards alike.

A "Nonprofit Board Member's Bill of Rights"

Jun 29, 2015

In honor of the U.S. holiday taking place at the end of this week - and the unique leadership and service roles of nonprofit governance - I offer up my "Nonprofit Board Member's Bill of Rights."

The post originally was offered as a counterpoint to an earlier entry on my blog, outlining a few (not always pleasant) realities about nonprofit governance.  In the rights outlined below, I offered then - and offer today - what I believe to be the essential environmental and support factors that our boards need and deserve if we want them to lead effectively.

The Nonprofit Board Member's Bill of Rights

We the community leaders who serve on nonprofit boards, in order to govern toward a more perfect vision of the future and a fulfilling mission that advances that vision, require an environment conducive to fulfilling the responsibilities entrusted to us. To that end, we have the inalienable right to the following:

1) A clear understanding of our responsibilities, outlined before we join the board, and clarity about why we are being asked to serve. We have the right to participation in a thoughtful recruitment process, where a governance-focused job description is presented so we can make an informed decision about accepting the invitation to serve. We also have the right to know the specific skills, knowledge, connections, etc., that make us the right fit - at this time - for the board.

2) A rich, multi-stage, user-friendly orientation process that prepares us for active participation and, ultimately, leadership on the board. The information presented in the recruitment process is only the beginning. We deserve both a thorough initial orientation (including supporting materials) after we join the board and ongoing support in the initial months of our service.

3) Ongoing access to information, stories, etc., that provide the context and data to make the best decisions possible for the agency and the community. We deserve timely, ready access to that information, in formats that are accessible to us and conducive to effective decision making.

4) Work that draws upon our strengths as community leaders. Our governance work is future-focused and impact-driven, grounded in questions of consequence. The work that we do does not waste our time. We come together to govern and lead, not wallow in management minutiae. We expect that that work will draw upon our individual strengths, expertise and skill sets. We expect to use our individual connections to broaden the base of supporters for our mission in engaging and appropriate ways.

5) Meetings that are intellectually and creatively challenging.  We have the right to agendas built around questions about the future, that demand our active participation, and that give us space to reflect and create. We deserve work environments that expect us to contribute regularly, as equal members of the governance team.

6) Experiences that bring us closer to the mission we are charged with advancing. The more vividly we understand the agency's work and the lives touched, the better we are able to communicate that impact to others and the stronger our own commitment becomes. We have the right to build our knowledge, not only in formal training events but in authentic experiential learning opportunities throughout our board service.

7) Expectations that are appropriately high. We have the right to set our own high bar, drawing from our significant collective expertise. We have the right to all of the forms of support required to fulfill those expectations.

8) A strong, effective partnership with our CEO. We recognize the complementary leadership responsibilities that each brings to the table, and we collaborate to ensure that both parties receive what we need to fulfill them. We neither receive our marching orders from our chief executive nor dictate from above.

9) Recognition that is personally meaningful. We deserve regular acknowledgment that what we bring to the board is valued. We deserve acknowledgment that different people prefer that recognition in different formats, and that our individual preferences should be appropriately accommodated.

10) Respect for our contributions as community leaders. We have the right to be supported and valued, not treated as inconveniences. Your power and potential rests, in large part, on our power and potential. Respect us, support us, and we will lead in ways that bring you closer to your mission than you could ever achieve on your own.

So, before I rail about this obsession journalists have with nonprofit CEO pay, I have to admit I did pause a bit when I saw the compensation of the execs highlighted in the following Wall Street Journal.  Pause I did as I do every time I see humongous salaries of CEOs around the US and I think about the distance between the highest paid and lowest paid employee and I think about how many more people could be employed with just some of this salary and I think about why entertainers or sports figures get so much for just being in shape and doing their "thing" for relatively short periods of their lives in any given year.

What I don't however do is wring my hands over the fact that nonprofit execs, running operations in the same league as for-profits should be paid at comparable levels.  I also don't worry over the idea that the boards of these institutions have set a value they believe is necessary to compensate individuals they have recruited to address a really big set of demands.

So journalists, if you insist on singling out nonprofit exec pay, do so in comparison with the other sectors.  Consider that the folks who sit on these boards have a pretty good idea of how important it is to retain a qualified CEO.  Understand that worth is measured by more than the final compensation package.  

High Pay for NYC’s Cultural Leaders

Five prominent institutions paid executive-compensation packages exceeding $1.2 million

 

By 

JENNIFER SMITH

June 29, 2015 6:00 a.m. ET

0 COMMENTS

New York City’s leading museums and performing-arts groups may be nonprofit organizations, but their top jobs offer pay and perks that many in the private sector would envy.

ENLARGE

Visitors entering the Museum of Modern Art (MoMA) in New York City. The museum’s director, Glenn Lowry, led New York’s cultural-institution leaders in 2013 total compensation, earning $3.4 million. PHOTO: GETTY IMAGES

Leaders at five of the city’s most prominent cultural institutions—the Museum of Modern Art, Lincoln Center for the Performing Arts, the Metropolitan Opera, the Metropolitan Museum of Art and the American Museum of Natural History—had compensation packages that exceeded $1.2 million in salary and benefits in 2013, according to a Wall Street Journal analysis of recent tax filings for a dozen groups.

Perks boosted leaders’ compensation. Several of the most highly paid receiving housing assistance, while others were reimbursed for club dues, dependent care during after-hours events and, in the case of Anthony Marx,president and chief executive of the New York Public Library, tuition for dependents. A library spokesman said all executive salaries are paid for with private funds.

Big bonuses also nudged payouts for leaders at MoMA and Lincoln Center to new heights.

While MoMA director Glenn Lowry’s base pay in 2013 was $739,620, his total compensation came to $3.4 million. That figure includes retirement and other benefits, an annual bonus of $360,000—plus a $1.3 million multiyear performance bonus for meeting various financial and programmatic benchmarks, such as endowment growth and expansion planning. Earned over five years, the bonus was paid out in 2013.

At Lincoln Center, then-president Reynold Levy earned $2.4 million in salary and benefits in 2013, his final year at the performing-arts complex, where his tenure included shepherding a $1.2 billion campus renovation.

Mr. Levy’s compensation included $600,000 in bonus and incentive pay earned over an 18-month period, “with emphasis on the redevelopment projects,” according to the organization’s 990 filing for fiscal 2014.

Tax filings for nonprofits report compensation for the calendar year ending with or within the organization’s tax year, which for many New York arts groups ends between June or July.

Such awards strike some as unseemly, given the tax-exempt status of most art groups and the financial challenges many face.

“If I wanted to make a great deal of money I would join Goldman Sachs and I wouldn’t be working at a university or a museum or a theatrical company,” said Naomi Levine, the executive director of the George H. Heyman Jr. Center for Philanthropy and Fundraising at New York University.

RELATED

 

• For Metropolitan Opera’s General Manager, a $2.1 Million Pay Package in 2013
• Major Expansion Planned at American Museum of Natural History
• The Met’s Marathon Man
• Whitney Museum, Still Focused on American Art, Looks to Raise Its Global Profile
• Celebrating Lincoln Center’s $1.2 Billion Overhaul

To be sure, running a major museum or performing-arts group requires a rare combination of managerial acumen and fundraising prowess—along with artistic or academic expertise.

Leaders must be able to attract and retain the best staff. Many are essentially on call 24/7, hosting functions, cultivating new donors and traveling constantly to boost their institutions’ profiles. They also preside over major capital projects, such as the Whitney Museum of American Art’s new $422 million downtown location or the $325 million wing planned for the American Museum of Natural History.

ENLARGE

Paintings on display at the new Whitney Museum of American Art, where Director Adam Weinberg’s 2013 compensation was 2.46% of the institution’s operating budget. PHOTO: CHRIS GOODNEY/BLOOMBERG NEWS

“The jobs are more complex and finely tuned” than people think, said Sarah James, a principal at Phillips Oppenheim, an executive-search firm that recruits leaders for nonprofits. “It is a high-profile institution, and you are its face.”

Those demands are amplified in New York City. Competition for donors is fierce and organizational scale can be formidable.

The Metropolitan Opera and the Metropolitan Museum of Art, for example, have hundreds of employees apiece. In fiscal 2014, the institutions had operating budgets of about $315 million and $266 million, respectively.

Nonprofit boards often hire outside firms to advise on what the Internal Revenue Service calls “fair and reasonable” executive pay. Typically that entails comparing compensation packages with those offered by similar organizations—which can be a challenge given the larger size and scope of some leading New York arts groups.

“You plot the expense budgets against the compensation,” said James Abruzzo, a nonprofit-compensation consultant. “You usually get some kind of trend line and look to see if your person is above or below.”

At the Metropolitan Opera, Peter Gelb’s 2013 compensation package totaled $2.1 million in salary and benefits. The package for Mr. Gelb, who has since taken a pay cut that reduced his base salary to $1.4 million from $1.5 million, accounted for less than 1% of the company’s fiscal-2014 operating budget.

‘If I wanted to make a great deal of money I would join Goldman Sachs and I wouldn’t be working at a university or a museum or a theatrical company.’

—Naomi Levine, the executive director of the George H. Heyman Jr. Center for Philanthropy and Fundraising at New York University

By contrast, the New York Philharmonic’s music director, Alan Gilbert, earned $1.7 million in salary and benefits in 2012, the most recent year for which records were available. His package was proportionally larger, amounting to 2.36% of the orchestra’s operating budget for fiscal 2013.

And the Whitney Museum of American Art’s director, Adam Weinberg, earned $818,752 in salary and benefits in 2013—2.46% of the operating budget. That percentage could change in the coming year, as the operating budget for the Whitney, which opened its new downtown location in May, has increased substantially, a museum spokeswoman said.

High executive salaries have raised eyebrows among some of the cultural world’s rank-and-file. At MoMA, the union representing the museum’s professional and administrative staff raised Mr. Lowry’s compensation during recent contract talks, noting that the average staff member salary is $49,000.

The gap between the high- and low-paid workers at nonprofits has widened over the past two decades, said Maida Rosenstein, president of United Auto Workers Local 2110, which represents more than 250 MoMA staffers. “The 24 most highly-compensated [MoMA] employees average $544,000 a year, more than 10 times the average salary for the bargaining unit,” she said in an interview earlier this month.

The union has since approved a new three-year contract with the museum.

Donald Marron, chairman of MoMA’s compensation committee, declined to discuss the contract talks earlier this month, but said that during Mr. Lowry’s tenure, the museum has undergone a major expansion and is now in the midst of another.

The competition for talent has intensified, Mr. Marron said, as global interest in art has increased and more new museums emerge. Retention was also a factor, he said.

“MoMA is an extraordinary institution in terms of quality and reach, and therefore you need someone that is eminently qualified and has the talents to run it,” said Mr. Marron. “You have to ask yourself if someone has all that talent, what factors into deciding to use that at MoMA, or at Apple?”

Write to Jennifer Smith at [email protected]

Nonprofit Governance and Fraud

The following Nonprofit Quarterly piece about fraud by nonprofit employees.  Like everything about what should go "right" within a nonprofit, m main takeaway is that fraud prevention begins with the board.

Here's the article:

Nonprofit Fraud: It’s a People Problem, So Combat It with Governance

By GERRY ZACK AND LAURIE DE ARMOND | 22 hours ago

Skimming cash, purchasing schemes, and financial statement fraud—three very different types of fraud that nonprofits must prevent, detect, and insure against. Still, behind each of them—and every variety of deliberate, deceptive acts against nonprofits—there’s a fundamental and shared dynamic at play.

Fraud isn’t just an operational or financial risk. It’s inherently a human risk, meaning it often crosscuts numerous functions and departments within a nonprofit organization. Not only that, but the people behind these acts are complex. They are pressured by varying circumstances, motivated by different opportunities and self-assured by their own unique rationales. Making matters more complicated, fraud is not always a solo act. In fact, a 2014 ACFE report found that 46 percent of fraud cases involve multiple perpetrators, meaning that when fraud does occur, the web of nefarious activity often extends to surprising depths within an organization.

To combat this complex threat, nonprofits face a critical need to address fraud from the top—starting with more guidance and engagement from leaders and boards to create an anti-fraud environment and oversee a fraud risk management function. Realistically, though, due to their mission-driven focus and more limited operating budgets, nonprofit leaders are often left with less time and fewer resources at their disposal to proactively develop anti-fraud governance measures. One of the most important deterrents of fraud is knowing that the organization has no tolerance for it and will act accordingly to detect it and take appropriate action if identified.

Given these challenges, how can nonprofits’ leaders and boards better mitigate their fraud risks? First and foremost, they should focus on governance, including these four key areas:

• Catalyst required: Nonprofits need a high-ranking sponsor to get fraud risk management off the ground. This leader and his/her team’s first order of business should be deciding whether their organization’s fraud risk management will be integrated into the existing risk management function (which typically focuses on strategic, operational, reporting and compliance risks)—or whether it will be separate. Either way, the goal is the same: embed a risk management element into the daily activities of all your personnel.
• Responsibilities and structures: With your management process in place, establish a governance structure for it, including designated oversight responsibilities at the board level, such as an audit committee. Keep in mind, this framework and the tools your organization uses should be scaled to fit both your size and your available resources. It’s impossible to completely “fraud-proof” any organization, so understand the weak points in your infrastructure and organization, and then work backwards to execute. Also, while fraud prevention is ideal, many nonprofits have to weigh the costs and practicality of preventive processes versus detective measures.
• Engage and educate: Especially when faced with resource constraints, nonprofits should utilize all their personnel in an ongoing system of fraud deterrence. Above all, engage with your employees through workshops and trainings in which you educate them on why people perpetrate fraud, which red flags to watch for, and what resources are available to them, such as whistleblower policies, reporting systems, and hotlines. Awareness throughout your organization can be the single most effective fraud deterrent and vehicle for detection, but it has to start from the top.
• Dynamic risk assessments: People are dynamic, so your risk assessments must keep pace. With roles and responsibilities identified, use your team to pinpoint which inherent risks exist and then prioritize them based on their impact, likelihood, and the speed at which they occur. Finally, use those priority rankings to map the risks to the best preventive and detective controls.

For many nonprofit organizations, risk assessments often identify the three categories of fraud this article began with—skimming, purchasing, and financial reporting frauds—along with other schemes as risks that must be addressed.

Skimming involves the intercepting of incoming funds intended for an organization. It is referred to as an “off-book” fraud because the money is stolen prior to it ever being deposited or recorded on the organization's books. While cash is the first thing that comes to mind with skimming, checks and even credit card payments can be targets for this type of fraud, as fraudsters can often convert these forms of payment into cash rather easily.

In one case, a bookkeeper for a mid-sized organization was in a position to gain access to incoming checks made payable to the organization. He intercepted the checks, opened a bank account in the name of the organization at a bank separate from the one the organization primarily used, and deposited the checks into that account, later withdrawing the funds to support his extravagant lifestyle.

In another instance, incoming checks were often made payable to an acronym since the organization’s name was rather lengthy. In this case, the perpetrator, the organization’s receptionist, carried out the fraud by opening a bank account in the name of a different (and phony) organization whose name matched the acronym.

Skimmed funds are most difficult to detect when one or both of these characteristics are present:

1. There is no receivable recorded on the books to which the payment is expected to be offset
2. There is little to no tangible exchange of goods or services with the payor, such as with incoming contribution income, dues revenue, etc.

For example, a recent case illustrates the ease with which funds can be skimmed when both of these characteristics are present. The president of an organization personally solicited and collected contributions from donors. He skimmed more than $4 million of contribution income over a 15-year period before being detected. He was only detected once his successor solicited one of the donors who had contributed, under the impression that the individual had never made a contribution to the organization. When the donor indicated he had been a significant supporter of the organization for several years, the fraud was then uncovered.

The purchasing function is the most common target for fraud. Some of the most frequent schemes that should be considered in any fraud risk assessment include:

1. Abuse of a corporate credit or debit card for personal purchases
2. Expense reimbursement schemes (similar to the preceding in that personal expenses are misrepresented as being legitimate business expenditures)
3. Writing organizational checks to pay personal bills
4. Shell company schemes

The final category, shell company schemes, can be particularly difficult to detect. A shell company is an entity formed solely for fraudulent purposes. These companies often exist in name only, but some are actually registered as businesses with the state. Shell company schemes are most likely to exist in cases where services, rather than goods, are purportedly provided to the organization.

Recently, for example, the director of information technology for one organization set up a shell company to provide various IT services. Due to the highly technical nature of the services (another red flag), he was in the unique position of being the only person who could claim to understand the organization’s needs and the nature of the services supposedly being provided by the vendor. The vendor, of course, did not even exist. The IT director simply approved the fraudulent invoices for payment and waited for the payments to be mailed to a post office box to which the fake invoice requested all payments to be sent. He also set up a bank account in the name of the shell company so that he could easily receive the funds and spend them for personal purchases.

Financial statement fraud is not a risk that is unique to big businesses. While the Enrons and WorldComs of the world first come to mind when this risk is discussed, nonprofit organizations can engage in this type of fraud as well.

Unlike big businesses, where the primary factor leading to financial statement fraud is revenue, profits or financial health, the pressure behind nonprofit financial statement fraud often involves other issues. The most common nonprofit financial statement frauds are:

1. Misclassifying expenses as program expenses when they should more accurately be classified as management and general or fundraising expenses
2. Inflating the fair value of donated goods and services received by the organization
3. Grossing up certain fundraising activities that generally accepted accounting principles would require to be reported at net.

These categories are just three of the dozens of other fraud risks that an organization should consider as they perform and update their fraud risk assessment.

 

Nonprofit Mergers

One of the important decisions in a merger agreement, I believe, is what will constitute the new board.  For me, the board, a nonprofit's "owners" (albeit, surrogate) will ensure fidelity to the new organization's mission in addition to ensuring that the organization operates well.  

So, when might the board composition discussion take place?  After agreement is reached that there will be a conjoining of the two organizations?  Certainly.  But after all the other details like what will be the work of the organization and the staffing and the financials?  I don't think so.  I believe that these decisions are the decisions of the board such that if the board composition is not discussed until after then who will be really "owning" these decisions.

That said, it appears that the board is to be the last conversation in this newly announced merger of two Pittsburgh river-focused organizations.  So I wonder why.  What happened in the merger conversation that moved this agenda item to the very end, even after the public announcement of the merger plans.  What happened?

Here's the TribeLive article on the merger.  Your thoughts about just when governance should be discussed in a merger process is welcome.

Nonprofit Board Matters

Nonprofit board composition, size, fiduciary responsibility, community engagement: these are just some of the themes that run through the following Philadelphia Inquirer article about a community center with small, insulated board that appears, according to the article, to be fighting with its community over what role the center should be playing in addition to "who" should be the center.  This set of dynamics are rarely spelled-out as well as in this Philadelphia Inquirer article.

My own opinion: this is a board past its prime and out-of-touch without term limits, unclear about mission, and lacking in succession or any other planning.  The best immediate option would be to offer a at least three board seats and go from there.

MATT GELB, INQUIRER STAFF WRITER

POSTED: Sunday, June 21, 2015, 1:08 AM

 

image: http://media.philly.com/designimages/partnerIcon-Inquirer-2014.jpg

 

At Tolentine Community Center, high above the dozens of South Philadelphia kids who zoom on gym-class scooters and toss basketballs, loom two Autoframe Bingo King scoreboards.

For years, prodigious bingo games funneled hundreds of thousands of dollars through this city-owned building. In time, the games became a source of neighborhood bewilderment.

"Those machines," Tony Mattei said, "I'd like to sell them."

Mattei, 77, is interim executive director at Tolentine, where officials insist that after-school programs and summer camp - not bingo - are the priority. Tolentine is a 25-year institution in East Passyunk Crossing, a neighborhood whose now-constant whir of change can be measured in new restaurants, new boutiques, new rowhouses.

 

 

Space is at a premium, and the 35,000-square-foot community center is a desirable spot with an expiring lease. That has generated an acrimonious neighborhood dispute. Within its imposing black fence at 11th and Mifflin Streets, Tolentine is at the intersection of old vs. new.

"They do nothing for the immediate community," said Joseph Marino, 52, the cochair of the East Passyunk Crossing Civic Association, which is pushing for a change. "The gates are constantly locked."

The nonprofit that runs Tolentine signed a 25-year lease with the city for $1 in 1990. It ends July 12.

Marino wants the city to assume control of the building. He envisions better use of the only public space in the neighborhood - maybe a dog park - and more inclusive programs.

He and other neighborhood residents portray Tolentine as a secretive community building fueled by taxpayer dollars and run by an insular board.

Anna Mattei, the board's president and Tony's wife, said she feels betrayed by the neighbors.

"I have lived in this neighborhood for 65 years," Anna Mattei, 73, said. "Show us a little respect. I understand the enthusiasm. I applaud it. I support it. I am behind them. The young blood is needed to keep anything alive. But you cannot come in and smash and burn. Why can't we work together?"

The city constructed the building for $2.2 million in 1990; former State Sen. Vincent J. Fumo helped secure funds. While the center is on city-owned land, it is not subject to oversight by the Department of Parks and Recreation, although the city pays about $30,000 a year for its utilities.

"It's different than anything else in our system," said Michael DiBerardinis, deputy mayor for environmental and community resources.

He wants a resolution by the fall.

"It's a little messy," DiBerardinis said. "I've been trying to find the middle ground. Will that happen? I'm not sure."

 

image: http://media.philly.com/designimages/square.gif

 

About 50 people - young and old, lifetime residents and newcomers - congregated in late April at the Neumann Goretti High School cafeteria for a civic association meeting to discuss Tolentine's future. The sound of basketballs striking the gym floor upstairs provided a cadence.

There were verbal jabs. Sensational accusations. And, following South Philly manners, some shouting.

"This is my meeting!" Marino yelled at Tony Mattei in the middle of it. The 77-year-old retired engineer collected his belongings to retreat.

Councilman Mark Squilla stepped in as peacemaker.

"We are trying to start a new day today," Squilla said.

Mattei paused. He raised his arms.

"Let's start," he said. "We are open."

The residents derided a lack of access to the building. Some complained of gratuitous fees. Others wondered how the nonprofit's board was chosen, and how much money the city supplied.

About 60 kids use Tolentine's after-school program, which costs $65 a week, Mattei said. The 10-week summer camp runs $1,350, and about 80 children are enrolled.

One man, who refused to give his name or address, spoke in favor of Tolentine's programming. The rest called for change.

Stephanie DeJesse, 49, wistfully recalled the groundbreaking for Tolentine. A few years ago, she said, she took her son and his friends to play basketball inside. She was turned away, she said. The gym was arranged for the next day's bingo game.

"I'm sure there are all kind of horror stories," Mattei said.

As the meeting concluded, Marino apologized. "I want to make clear these were not personal attacks against the Matteis," he said. Moments later, he said Tolentine was held hostage by a small group of people who must adapt with the neighborhood.

"I do not believe them capable of that change," Marino said, and the attendees dispersed.

Until last week, Tolentine's website had not been updated since March, to announce a closure due to snow. The online calendar for senior activities stayed frozen on November 2014. Bingo was scheduled for 10 a.m. every Wednesday.

For years, bingo proceeds funded Tolentine.

In fiscal 2002, Tolentine reported $713,316 in gross bingo revenue, but after $657,909 in expenses to run the games (including prizes), the organization netted $55,407.

Tolentine's net gaming income rose to $111,911 in 2010 and $154,468 in 2011, but it reported an overall loss each year.

That, Anna Mattei said, was related to the exorbitant cost of maintaining the aging former Broad Street Armory.

The nonprofit, seeking a larger bingo venue, bought the building at 1221 S. Broad St. from the state in 2003 for $106,246. It fell into disrepair. A decade later, Tolentine sold it to a developer for $835,000, but not before paying $400,000 to the state to release deed restrictions to enable the sale.

Tolentine's lawyer, Anthony B. Quinn, said the organization broke even on the Broad Street transaction.

Bingo continued during those years at Tolentine, where neighbors complained about the influx of cars and commotion.

"For 10 years, we didn't pocket one penny from the bingo games," Mattei said. "It went back into the building. People don't want to hear what they don't want to hear.

"We have no secrets. We have absolutely no secrets."

In time, the lucrative bingo games dwindled. Tolentine, after selling the armory, reported a much smaller income from the games in its 2013 tax return; just $29,154 in gross revenue and $8,199 in net gaming income.

Once Tolentine curbed its bingo, the center's former executive director resigned.

She had been paid $52,000 a year to manage the center's day-to-day operations. "It was always a constant battle between us," Mattei said. After a closer inspection, the board found inefficiencies, such as paying $300 a month for trash collection when the city was supposed to do it for free.

Mattei installed her husband as the interim executive director last August. The current board is five members with unlimited terms who are not paid.

"When you get a board of that size, you have a lot of insularity," said Laura Otten, executive director of the Nonprofit Center at La Salle University, who reviewed Tolentine's financial documents for The Inquirer. "Part of the reason we want a larger board is so you can have enough diversity of perspective, skill sets, and knowledge."

Mattei invited two younger neighbors to join the board in 2013. They did not last.

One of them, 38-year-old resident Ian Toner, said the tension between the board and the center's former executive director was too great. "That was sabotaging everything that needed to happen there," Toner said. He attended two meetings.

"It was frustrating," said Kate Clark, 38, another recruited board member who soon left. "The board was really small and they didn't do anything. The meetings felt dysfunctional. There was a lot of yelling. They were long. I just didn't feel comfortable."

The Matteis said Toner and Clark gave up. They said Toner threatened them with accusations of misbehavior. They bristled at suggestions to change the center's name.

"The board is old and conservative," Tony Mattei conceded during the April community meeting.

Toner, seated in the audience, stood.

"I have not disappeared," he said. "I am not rolled up in a carpet at the bottom of the Schuylkill River."

Marino lives a block from Tolentine. He wants the black gates destroyed. "It looks like something out of Fort Knox," he said. This, he attributed to "old Philly politics."

"I thought I had a good rapport with Mr. Marino," Anna Mattei said. "We have been friends forever and forever."

Quinn, Tolentine's lawyer, said the nonprofit was looking for another building to continue its services. Clark, the onetime board member, believes the Matteis genuinely care about the community.

Father Nicholas Martorano, of nearby St. Nicholas of Tolentine Church, blamed gentrification for the disconnect.

A faded sign, written in Italian, hangs from a Tolentine fence on 11th Street: Per Servire La Comunita.

"It hurts me a little bit," Martorano said, "to see the new forgetting the old."

---

[email protected]

215-854-2928@MattGelb

 

Nonprofit Board Size

I found the following letter in the The Garden Island News most interesting particularly about the proposed board size but equally so about one more animal protection nonprofit that is experiencing internal challenges (which seems to happen a lot specifically with animal protection organizations).

The writer proposes that the current 12-seat board is too big and that 6-8 is more ideal.  From a process standpoint it certainly is often more efficient to have few board members.  It takes far less time to organize a meeting; there's more time to discuss items in-dept; it MIGHT be easier to get consensus - there's many advantages for sure.  For that matter, in many states (that's where the rules about minimum size gets established) a board could be comprised of as few as three people.

But small size doesn't always ensure smart (that all the correct "brains") nor diversity (of opinion which also helps towards gaining support).  Small size doesn't guarantee efficiency.  Even among few there can be disagreement.  

So, small: sometimes efficient while not gaining advantages that 12-15 individuals can add.

 

KHS board should take action

Basil Scott’s article and analysis on the Kauai Humane Society in the June 14 Garden Island was excellent. I would also like to comment on the KHS.

I have had experience on nonprofit boards both on Kauai and Oahu. I have served on and chaired these boards. I also have 20-plus years of management experience and a significant amount of management training. In the case of the KHS, it is not unusual for an organization to have one or two disgruntled employees; but when a third of the staff, including key people, are willing to put their jobs on the line in a dispute with the executive director, there is definitely something very wrong with the organization and its management. The KHS board should recognize this and take immediate action.

In my view, they should, as a minimum, obtain a neutral third party evaluation of the KHS, its executive director, and the organization’s operations. Stonewalling the issue, as they appear to be doing, is very wrong and unfair to the organization, the executive director, the people of Kauai that support the KHS and more importantly the animals involved. Additionally, misrepresenting facts and matters related to the issue is very inappropriate.

The KHS is a nonprofit that receives funds from the public as donations and fees as well as funding through the county with our tax dollars. In any case the board has a fiduciary duty to the public, those that give donations and the people of the county who pay through taxes a part of the operating costs. They also have an obligation to the animals. This board is not meeting this requirement and needs to move forward with an independent evaluation.

As a final comment I find it surprising that the KHS board has 12 members. This large number will make it hard to get consensus and accomplish the mission of the organization — in my view 6-8 maximum is a good number for a board.

John Gordon

Princeville

Nonprofit Board Efficiency and Effectiveness

The following Comstock Magazine article offers prescriptive (not necessarily research based) advice to nonprofit boards on how to be functional.  Again with this presumption that nonprofit boards are predominantly dysfunctional!  Now I'm not denying that there are indeed dysfunctional nonprofit boards (this is pretty much my stock and trade as a governance consultant) but nonprofit boards by-and-large function, they just do not always function efficiently and effectively.  

My first wish, lets not focus on dysfunction but efficiency and effectiveness.  Nonprofit board work should focus on results, not conditions.  Maybe this is semantics for some but the difference to me is about what I truly care about - supporting nonprofit boards so they can achieve mission.

But back to the article.  In my experience, board members are frequently highly engaged individuals.  Depending on the board's stage of development, engagement ranges from making it to all the scheduled board and committee meetings to actively volunteering (especially for boards in their infancy and adolescent stages) and passionate people.  Do boards engage in doing the work of governing?  Perhaps less so.  Are they engaged? Yes.  So, are is all the advice given in the following article correct? Maybe.  I for one do indeed agree that all great boards begin, not solely, with great chairs.  But they equally begin with selecting the right people for the job.  Composition matters.  And yes, term limits matter when enforced but the question is to whom do they matter and for what outcome.  

Well readers, please take a look at the following and be sure to consider that the question is: do the following "tips" increase my board's effectiveness and efficiency?  And remember, the conversation is one for all to have, not just one.

Let’s Get Functional

3 tips for better board performance

BACKARTICLEJUN 18, 2015By Kim Tucker

Our region’s nonprofits save lives everyday. Many of them do so despite answering to dysfunctional boards. From all-volunteer, grassroots organizations to multi-million-dollar, statewide agencies, we’ve heard the stories of boards that lack leadership, management, strategy and vision.

Most board members join an organization for the right reasons, but many fail to make a meaningful impact. Meanwhile, executive directors complain their board lacks engagement and makes unreasonable demands. Obviously, a disconnect exists, but this scenario has a solution and can be fixed. Here’s how:

First, recognize that highly functioning boards share these attributes:

• An engaged board chair — someone not over-committed, who is available, responsive and supportive of the executive director

• A culture of accountability among board members

• Board term limits that are followed and celebrated

• Objectives that are accomplished between board meetings

• Structured meetings with the advance distribution of consent calendar and meeting materials

Exceptional board management requires strong leadership. The board chair should pay attention to and make great use of individual board members’ talents and interests. A strong board chair should also establish a culture of accountability with personalized job descriptions that leverage members’ spheres of influence. Board leaders should inform members that the expectation is an individual contribution averaging six hours of monthly service outside of board meeting time.

Successful board meetings are dynamic exchanges wherein everyone engages, and discussions are about the strategic and long-term. Does that sound like your last meeting? If not and you’re a board chair, consider how your style might contribute to a lack of engagement. Are you too focused on consensus? Do you steamroll through the agenda, not allowing time for meaningful discussion? Do you let that one annoying board member dominate the discussion? If so, accept responsibility, and take corrective action.

You are responsible for the culture of the board, and you can change it to one of accountability, respect and impact. Transforming a board into an exceptional one, or at least improving its performance, is an exercise the board chair shares with the executive director. Together, consider these upgrades.

Recruit strategically. Give up pursuing for your board the nine players in your area who run big corporations, and focus instead on a diverse group that aligns with your mission. Recruit new board members who are passionate about the organization and have a firm grasp on whom or what it serves and how it goes about achieving its mission.  

Train your new folks well. Once you identify a new board member and they willingly accept, remember that it’s not the qualified who are called, its the called who get qualified. Provide great mission-centric exposure and information, and make sure the board has an orientation protocol that offers periodic training on a variety of subjects. The protocol will get your new members up and running and will establish a pipeline for new board members.

Training for new board members should include an introduction to a strong committee structure where newbies can visualize a good fit for their skills. Start by combining all internal, external and governance-related functions into three committees, with every member assigned to just one committee. Getting work done at the committee level and between meetings allows time for big-picture discussions at the board meetings.

Whether a board member is new or has been around a while, institute an individual board development plan for each person. Toss out the old job description that gently suggests 75 percent attendance at meetings, and instead convey higher expectations. Create a fill-in-the-blank template that generates ideas of how each individual can make a difference for the organization. You’ll be amazed how ho-hum can morph to wow when board members are empowered with information and direction.

Commit to individualized attention. Part of the job of board chair is to conduct meaningful, strategic planning and board evaluations annually. Meet one-on-one with each member of your board at least once a year. The outcomes will be valuable when considering whom to groom as a potential leader.  

If you are an executive director, get to know these board members. Conduct your own one-on-one interviews, especially with new board members, and do it well within the first 90 days of their term. It will be very helpful to you to know how each board member can support the mission, i.e. support you. A great board will have your back if relationships are formed early, expectations are clear and courtesy and respect are mutual.  

If you serve on a nonprofit board and feel out of the loop or think you don’t matter, think again. Consider the above-mentioned upgrades — and speak up!

Don’t forget, you are on a board because you bring skills to the table. Your nonprofit’s impact depends on the engagement of all board members. If strategic, mission-centric board pursuits aren’t happening, take it upon yourself to lead change. 

Nonprofit Board Efficiency and Effectiveness

There's a general rule of thumb that bad press can be just as good as good press when it comes to an organization, product or service.   So it is with some hesitation I'm going to muse about a new start-up posted describe in the following Boston Globe story.

The new organization is launching a service focused on strengthening the efficiency and effectiveness (not their words) of nonprofit boards.  BoardOnTrack's fundamental theory of change appears to be that “Most nonprofit boards are dysfunctional" and that it's innovation is cloud-based software and as a result, boards will become more efficient and effective (again, not their words).

First, that BoardOnTrack's basic premise is that nonprofit boards are dysfunctional appears to me as both judgmental and negative and not in-fact, totally true.  I believe that nonprofit boards and board members do indeed face a number of challenges through their various stages of development and being volunteers makes it more complicated but overall, nonprofit boards produce amazing results.  Are these efforts sometimes painful? Absolutely!  Could their efforts been less painful? Sure.  

Next, there have been some pretty effective cloud-based services out for nonprofit boards for quite some time -- Board Effect for instance. And, equally important, as a 35-year nonprofit consultant, I can confidently state that technology has proven helpful in increasing board efficiency and effectiveness but the preparedness needed to utilize this technology does not come through technology but through process and know-how.  Goal setting for instance.  Decisions about board composition and structure.  And then of course, the many relational aspects of governance. Technology supports but does not drive.

While I am impressed with the amount of money raised for this effort, at this moment, I am unimpressed with BoardOnTrack's plans.  The market will decide but I'm thinking there really needs to be "more" to this more.

 

With new funding, BoardOnTrack wants to bring order to non-profit board meetings

 

Scott Kirsner

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23 hours ago

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Innovation EconomyBoardOnTrackgovernanceboardsInnoLoftConstant ContactMarci Cornell-Feist

Board meetings of non-profit organizations can be a mess: a roomful of high-caliber people spouting opinions, pushing pet projects, and sometimes disappearing mid-conclave. Everyone’s a volunteer, so they want to feel they’re having a discernible impact.

“Most nonprofit boards are dysfunctional,” asserts Marci Cornell-Feist, founder and CEO of BoardOnTrack. Her company offers Web-based software for making them more efficient, and the Concord-based startup recently wrapped up a $1.7 million funding round.

Cornell-Feist was previously an executive at several education-related non-profits, and she admits that the first time a venture capitalist mentioned the acronym SaaS to her — for software-as-a-service, where customers pay for access by the month — “I said, ‘What is SaaS?’” Since then, the company has participated in the InnoLoft program for startups at Constant Contact in Waltham, and attracted about 140 boards that use it, primarily those that oversee charter schools.

The software is designed to help boards perform better — and get the organization they oversee doing the same. Cornell-Feist says it tracks things like, “Are the members attending meetings? Are they reading the board materials? Did they set strategic goals, and are they hitting them? Which committees are performing better?”

 

“Our app captures everything,” she says. “It takes meetings and makes them paperless. They do their agenda and take minutes in the cloud, using our system. There’s a dashboard for the board’s goals and the CEO’s goals, and that is used at all their committee meetings and board meetings.”

The software also supplies a score on how well the board is operating. “Every quarter, they get on a coaching call with us,” Cornell-Feist says. “We hold the mirror up and challenge them to get better.” Using the BoardOnTrack software costs $9,995 a year, but the company is planning to announce a free version with limited features at the National Charter Schools Conference in New Orleans next week.

Cornell-Feist says that the fresh funding will help the nine-person company build the next version of its product, which will do more to provide what she calls “apples-to-apples comparisons” on things like what principals get paid, how long teachers and students stay at the school, and how many students go on to graduate college. She also plans to begin marketing the software to more different types of non-profits.

 

"there just isn’t good, comparative, actionable data in the charter movement, and other nonprofits,” she says.

Investors in BoardOnTrack’s recent round include Launch Capital, MassVentures, New York Angels, Cherrystone Angels, and HubAngels.

Scott Kirsner writes the Innovation Economy column every Sunday in the Boston Globe, in which he tracks entrepreneurship, investment, and big company activities around New England.
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Nonprofits Too Big To Govern?

Yesterday, in the Philadelphia Inquirer in an opinion column, the following was noted:

Unfortunately, at the very time the nonprofit sector should be taking a victory lap, there has been a recent string of damaging headlines.

On May 19, the Federal Trade Commission, all 50 states, and the District of Columbia announced legal action against four cancer charities: the Breast Cancer Society, Cancer Fund of America, Cancer Support Services, and Children's Cancer Fund of America. The charities are accused of defrauding donors of more than $187 million.

Then, on June 4, came the results of an NPR/ProPublica investigation that found that the Red Cross had grossly mismanaged the half a billion dollars it had raised in the wake of the 2010 earthquake in Haiti. It wasn't the first time that the Red Cross has come under serious scrutiny.

And, of course, there are all the headlines raising questions about the propriety of some of the actions of the Bill, Hillary, and Chelsea Clinton Foundation.

I note one commonality in this list of badly behaving nonprofits: girth.  And, noting this commonality, I must ask, given the general challenges by nonprofit boards who take-on the role of governing, is it possible that the bigger the nonprofit, the more challenging to govern and subsequently, the greater a likelihood of failure or misdeeds?   

One might argue "of course not! look at the corporate sector.  there's really big corporate boards and they all govern really well!"  And again one might say, "not!".

But is the problem really just the tasks of governing (policy, planning and evaluation) that are challenging no matter the nature of the organization (corporate, nonprofit, public) or are there other elements that contribute to a board's difficulty in governing effectively?  I pose that composition, process, training, and information (from management) are likely 4 culprits that contribute to dysfunction.  And likely there are additional factors.  

All this to emphasize that governing is not an easy task but not an impossible task and size may contribute but it may not be the overwhelming explanation for misdeeds.  Really, fidelity to mission, if kept primary, should be the fundamental guide that can in turn produce great outcomes.

Nonprofit Accountability

I believe we in the nonprofit sector are slowly entering into a new dawn where accountability for results is more valued than accountability for activities.  This is what results based accountability and logic models are all about: measuring "better off" and impact versus just whether what a group did what it said it would do.  It's not that doing what was promised doesn't matter but the real "so what" of these doings is what changed -- by the moment, by the day, by the year etc.

But the call for accountability and measuring results does not appear to have taken place among those who like to invest one individual at a time.  I believe that the following Wall Street Journal goes a long way to illustrate my point.  In crowdfunding, individuals "invest" in promised activities.  They invest in the "idea" that a kid, according to the following example, will get an experience.  Life changing? Maybe and maybe ok as this attracts dollars.  But results focused?  Accountable?  American Idolish?  Much more so.  

Ok?  The market will decide as it always tends to in American society.  But then, does this form of funding really make permanent change and lift all boats such that the need for this type of fundraising does little more than meet the fantasy needs of those who give?  Will society really be better off?

 

Crowdfunding for kids' summer programs takes off

 

Updated June 15, 2015 1:18 a.m. ET

Associated Press

NEW YORK — This summer, thousands of young people will go to camp, attend prestigious academic programs and even study filmmaking in Paris thanks to online crowdfunding sites like Kickstarter and Indiegogo.

Donors can help middle schoolers learn computer programming in Pennsylvania, support a leadership academy for Virginia teens or send children of incarcerated California parents to sleepaway camp.

There are no statistics for the number of children and teens whose summer activities are being financed through crowdfunding, but Kelsea Little, a spokeswoman for GoFundMe, said fundraising for summer camps is skyrocketing on the site.

Little said more than $4.3 million has been raised for campaigns that specifically mention "summer camp" since GoFundMe started in 2010 — and donations in the category more than tripled between 2013 and 2014. No 2015 numbers exist yet, she said.

There are crowdfunding campaigns for individual youngsters, for groups and for entire programs.

Reel Works, a Brooklyn nonprofit that teaches filmmaking to teens, is using Kickstarter to send five students to Paris, where they will work on a film with five French teens chosen by a Paris-based nonprofit.

The American teens met this month to make a short video about how they imagined life in Paris — it featured a baguette and a fake cigarette — which they sent to their French counterparts in exchange for the French kids' video about their imagined Brooklyn.

"A lot of the time the thing that gets between kids and their dreams is the amount of money they have," said Justin Casquejo, 17, one of the filmmaking students. "And crowdfunding is a great way to get around that issue. It's something I'm really grateful for because I don't come from a background of a lot of money and I would never in a million years be able to afford a plane ticket to Paris."

A nonprofit called Wishbone, based in New York, the San Francisco Bay Area and Los Angeles, is using online fundraising to send 400 low-income high school students to summer programs including those at Brown University, Philips Exeter Academy and UCLA.

Wishbone Executive Director Beth Schmidt said the average donation is about $25 and many people donate because the students remind them of themselves. "They say, 'I had an incredible summer opportunity that changed my life,'" she said.

Wishbone funded summer enrichment programs for 150 teens in 2014. Alondra Perez, now 18, went to ballet school in Brooklyn.

"I was so grateful but I was also really inspired," Perez said. "I want to be in a position where I can help other people."

Camp Thunderbird in South Dakota raised $5,375 on Indiegogo for this year's summer camp for children from the Rosebud and Pine Ridge reservations.

Kate Bartholomew, president of the Camp Thunderbird board, said Indiegogo works better as a fundraising tool than a simple "donate" button on the camp website because of the participatory aspect.

"They have that tracking mechanism, 'We're this close to the goal and this many people have funded,'" she said. "You feel like you're part of something."

Crowdfunding donors can be friends, mentors, friends of friends or strangers. Sites such as Kickstarter and Indiegogo require that the funds go toward the stated purpose.

Amy Sarisky contributed toward a $7,000 GoFundMe campaign for New York City high school sophomore Lissette Barretto to attend a summer program at Stanford University after being contacted by a graduate school friend who is one of Barretto's teachers.

"If I can make an impact on a young person's life, even if it is a relatively small one, I wanted to help out," said Sarisky, who works in public affairs at New York University.

John Robichaux, an assistant dean who directs pre-collegiate studies at Stanford, said crowdfunding for summer programs is something the university is aware of but does not participate in.

"What we hear anecdotally is that crowdfunding platforms have provided more students an opportunity to reach more people," he said. "We've had some success stories."