Nonprofit Board Crisis

Nonprofit Board Composition #Nonprofit Boards

I am usually not fond of the much overused phrase "think out of the box" but this is indeed the phrase that first came to mind when I came upon the following Louisville Insider article that discusses a new Center for Nonprofit Excellence program to prepare artists to sit on nonprofit boards.  

The article begins with noting that artists and the prospective boards each have something to gain: artists with connections they might not otherwise have access to and the boards, thinking they might not otherwise have access to.

Of course, in considering this, one might think there to be a variety of folks who could provide similar value and are otherwise left out of the nonprofit board service opportunity and in turn, leave boards out of the benefits.  For instance, there is a huge number of sol practitioner auto mechanics who are quite disciplined in their craft (bringing a different approach to problem analysis) and have their own networks introducing a new audience to a given nonprofit.  I know a guy who runs a printing company who's quite creative, committed and a net-worker par excellence and again, a trade not one might think of in the first line of board prospects.

Yes, this idea opens-up many avenues that could turn for the positive, the composition of nonprofit boards.

 

 

NEWS | Center for Nonprofit Excellence, IDEAS

SEPTEMBER 28, 2015 4:50 PM

Creative Catalyst Program aims to train artists to serve on nonprofit boards

by Melissa Chipman

IDEAS and the Center for Nonprofit Excellence have partnered to create a new program that would train artists to serve on non-arts related boards of directors. The Creative Catalyst Program will train artists and assist in placing them on the boards of philanthropic organizations.

There are a number of benefits to having artists serve on boards, particularly when it comes to creative thinking.

There are strong benefits to the artists as well. Boards often consist largely of leaders in the business world, and an artist could benefit from those connections. It also takes them out of their community and places them into another, enabling them to learn new skills.

According to the website for the CCP, “The goal is to integrate great creative minds into comprehensive community planning and development in order to help strengthen the social, physical, and economic fabric of Louisville.”

The CCP will begin by training six artists and pairing them with six boards.

“As an artist-led organization focused on corporate and civic innovation, we understand the power of focusing creative minds on solving important problems,” explained IDEAS co-founder Theo Edmonds. “When properly trained and supported, artists are fantastic at helping organizations advance missions and at creating shared value between organizations and communities.”

Nonprofits and artists interested in participating should submit their information through the Creative Catalyst Program page.

ailMELISSA CHIPMAN

Melissa Chipman is the Assignments Editor at Insider Louisville. She was born and raised in New England, but she's a Southerner by choice who relocated to Louisville from New Orleans 10 months after Hurricane Katrina. In addition to working for Insider Louisville, she has reported for The Louisville Paper, WFPL ...

Nonprofit Boards Values Statements #Nonprofit Boards

Usually reviewed every 3-5 years (during strategic planning) nonprofit board's values statements inform pretty much every strategic and operational decision.  Take integrity:  firm adherence to a code of especially moral or artistic values : incorruptibility (Webster).  

These are at least two values that could hold certain types of nonprofits to in turn not perhaps also adopt the adage: "the only thing wrong with tainted money is there taint enough of it" (unknown origin).

So, has the Academy of Nutrition and Dietetics been doing wrong by accepting Coca-Cola and the other soda industry giant's money?  On the Academy's website, integrity is specifically defined as one of it's core principles.  But, the Academy has not been covert in accepting what others claim might be "tainted" money, e.g. Coca-Cola.  And, the Academy has indeed been able to achieve its program goals/mission in part due to the support of Coca-Cola among other similar corporations. 

So, bad Academy?

 

Coca-Cola Ends Financial Sponsorship of Academy of Nutrition and Dietetics

Health group criticized for accepting money from large food and drink companies

 

By 

MIKE ESTERL, Wall Street Journal

Sept. 28, 2015 5:13 p.m. ET

 

Coca-Cola Co. isn’t renewing its financial sponsorship of the Academy of Nutrition and Dietetics, part of a broader funding review at Coke after critics accused the beverage giant of trying to downplay the role of sugary drinks in obesity.

ENLARGE

Coke has spent millions to fund U.S. research and health programs in the U.S. since 2010.PHOTO: LUKE SHARRETT/BLOOMBERG NEWS

The move also comes after the health group—which represents tens of thousands of U.S. nutritionists—came under fire in recent years for accepting millions of dollars from large food and drink companies.

Coke disclosed last week it spent $118.6 million funding scientific research and health and fitness programs in the U.S. since 2010. Recipients spanned dozens of well-known institutions including the American Academy of Family Physicians, Louisiana State University and the Boys & Girls Clubs of America.

The disclosures followed a New York Timesarticle last month detailing a Coke-funded nonprofit that suggested Americans were overly fixated on calories and not paying enough attention to exercise. The website of the organization, Global Energy Balance Network, initially didn’t disclose it was funded by Coke.

The Academy of Nutrition and Dietetics has previously disclosed financial ties to major sponsors including Coke, PepsiCo Inc. and Unilever PLC. The health group shared the news internally Sunday that Coke wouldn’t renew its sponsorship. Coke gave the academy $2.6 million over the past eight years for conferences and programs.

Coke spokeswoman Joanna Price said the company made the decision early in the summer not to renew the sponsorship for budget reasons and that it is broadly reviewing its partnerships aimed at addressing obesity. Sandy Douglas, president of Coca-Cola North America, will start meeting with health groups in the coming days as part of what the company has called “a listening tour.”

Ms. Price didn’t rule out Coke contributing again to the Academy of Nutrition and Dietetics after its current sponsorship expires this year. In a departure from past years, Coke won’t have an exhibit at the academy’s annual Food & Nutrition Conference & Expo starting Saturday.

Ryan O’Malley, a spokesman at the academy, confirmed Coke’s sponsorship agreement expires in December and that there are no renewal plans. He declined to say why Coke was stopping funding, adding sponsorship agreements “come and go for a variety of reasons.”

Several dietitians formed a group called Dietitians for Professional Integrity in 2013 to pressure the academy to stop accepting money from big sponsors like Coke, PepsiCo and Unilever, arguing the companies sell unhealthy foods and drinks.

“There’s a long history of [academy] members being unhappy and concerned about these types of ties,” said Andy Bellatti, strategic director at Dietitians for Professional Integrity.

PepsiCo said it has a “significant and growing nutrition business” and that its participation in the Academy of Nutrition and Dietetics helps the company learn more about health and wellness issues. Unilever didn’t immediately respond to requests for comment.

Earlier this year Kraft Foods Group Inc. and the Academy of Nutrition and Dieteticsdropped plans to apply the academy’s “Kids Eat Right” logo on Kraft’s Singles cheese products after an outcry from some academy members.

Mr. O’Malley, the academy spokesman, said the academy is transparent about sponsorships and that companies can play an important role in promoting health. The academy is “vigilant” every message to consumers is “backed by sound science and not influenced by any outside brands or companies,” he said.

The spokesman added he’s not aware of plans by any other large companies to not renew their sponsorships with the academy.

Write to Mike Esterl at [email protected]

Nonprofit Boards Will "Remain involved" #Nonprofit Boards

While I'm not 100% certain that the merger of the two organizations described in the Michigan Biz article linked below, nor convinced that the merger defines a comprehensive win-win outcome, the merger does represent what is becoming more of a survival necessity of nonprofits.  If I were to make a guess, this merger might have been heavily urged by a funder (s), in this case the United Way noting that it has not made its decision about what next in terms of funding as it had been funding both organizations.  Also, unless the retired CEO was making a huge amount of money, the economy of scale gains from the merger appears to be pretty small.  But, this merger was likely about the long-range and the challenges that would likely be faced by both organizations as the economic environment places more pressure on both.  

The one piece of information I most miss from this Michigan Biz article is the disposition of the board members.  The article says there were opportunities to remain involved.  Who actually remains will provide some insights as to who will be leading.

- See more at: http://mibiz.com/news/nonprofit-business/item/22930-merger-positions-gr-nonprofit-to-better-serve-children,-teens#sthash.ddLv5Vyu.dpuf

Nonprofit Boards and CEO Salaries #Nonprofit Boards

 

Again with the obsession with nonprofit CEO salaries!  Only this time the media rises to new heights over how evil are the CEOs and their boards (at least they have the correct "target").  Yes, villains they all are according to this press who appears to be attempting to shame all and to some degree, shame the public into questioning everything about these institutions, pretty much the largest in Portland.

What would it take for the media to be creating lists of the 100 most productive and outcome focused nonprofits?  What would it take to create a list of the top "beneficiaries" of the community's nonprofits? Both of these types of lists would challenge community donors to ensure they understood the results of their contributions.

Come-on already!

 

Here's the GoLocalPDX article.

The Top 25 Paid Executives of the 100 Richest Nonprofits in Portland

Thursday, September 24, 2015

Brendan Murray, GoLocalPDX Contributor

 

The 25 executives of the top 100 non-profits in Portland with the most assets made more than a combined $29 million in the fiscal year 2013. Robert G Gootie, CEO of the Oregon Dental Service, collects the most of any non-profit executive, raking in 13,226,990 in the year 2013.

 GoLocalPDX reviewed nearly 1,500 tax filings collected by the non-profit, media watchdog group, ProPublicawho has been collecting and organizing tax filings from organizations who filed for any fiscal year — during the 2012 or 2013 calendar years.

SEE SLIDES BELOW: #25 to #1: Executives of the Top 100 Non-Profits in Portland with the Most Assets

In GoLocal’s previous coverage of the 100 non-profits with the most assets and the 50 non-profits with the most debt in Portland, medical centers, organizations, and colleges dominated the lists. The list of the highest earners saw more of the same.

Eight of the top ten earning executives worked for non-profits in the medical field. That includes executives from three different medical centers, the Doerenbecher Children’s Hospital, Legacy Good Samaritan Hospital and Medical Center and Legacy Emanuel Hospital and Health Center.

Universities were also well represented on the list. While none finished inside the top 10, university presidents represented one-fifth of those on the list.

“At least bankers and CEOs of large corporations are honest about their rapacity,” Mark Alfano, an Associate Professor of Ethics at the University of Oregon, told GoLocal. “When the alleged leaders of charities plunder from funds that would otherwise go to helping people who are poorly off, the only appropriate responses are disdain and disgust.”

An Ethical Issue?

Ann Skeet, Director of Leadership Ethics at the Markkula Center for Applied Ethics at Santa Clara University and the former CEO of the American Leadership Forum Silicon Valley, told GoLocal she was surprised by the high salaries enjoyed by local non-profit executives.

“I didn’t realize that people who ran colleges and hospitals made so much money,” Skeet said. “It’s especially surprising if you consider that salaries for non-profit executives should be on the low side of compensation when compared to for-profit businesses.”

Aaron Renn, a senior fellow at the Manhattan Institute, told GoLocal that he questioned whether organizations who store millions of dollars as assets and pay their executives large salaries were really operating as non-profits. 

“There's a legitimate question of well-endowed universities,” Renn said. "Are they really truly non-profit -- like a homeless shelter is a nonprofit -- in reality, no, but what are your criteria for determining a bona fide nonprofit versus an extremely wealthy entity able to generate a large endowment and high paid executives.”

Alfano said that the trend of medical and scholastic organizations paying their executives such high salaries is not surprising, but disappointing. He said that the high salaries for college and university presidents or the heads of medical foundations were particularly concerning.

 

“If your organization's mission is to help those in medical or educational need, then it is especially hypocritical to line your pockets at their expense,” Alfano said.

Alfano also said that there may be corruption or conflicts of interest on many of these non-profits’ boards.

“Beyond the direct waste of desperately needed funds on lavish salaries, these boards often end up suffering from groupthink and even outright corruption,” Alfano said.  “If I'm on the board that determines your salary at one non-profit while you serve on the board that determines my salary at another non-profit, we both have an incentive to play nice with each other, not to ask tough questions, and to support raises for 'deserving' leaders”

More Competitive Industries

Larry Kaplan, who owns and operates an advocacy service for non-profits, told GoLocal that the importance of top-notch executives and leaders has risen sharply for charities in recent years, forcing them to spend more on their leaders.

“The biggest changes in the nonprofit world are twofold: first, the growing diversity of the community has diversified the client base of most nonprofits and put pressure on them to diversify their governance and leadership, as well as their fundraising efforts,” Kaplan said.  

Patricia Schaefer, a contributor for Non-Profit Quarterly, agreed. She told GoLocal that in decades past, philanthropy was not an industry that attracted big names and big salaries, but that is no longer the case.

“Today we have a highly preemptive model of philanthropy and newer philanthropists and entrepreneurs want to see things happening on the ground now,” Shaefer said. “They want to be part of the mechanics of change, involving themselves in the creation of social change networks, as opposed to individual organizations.”

Nonprofit Board Exec. Hiring andOversight #Nonprofit Boards

Of the many and varied tasks of nonprofit board members, it is often said, and I concur, that one of THE most important tasks is the hiring (and providing oversight) of the organization's executive, it's one employee.  

But getting hiring "correct" is usually best known after the fact.  But what if there are indicators that can help both tasks?  We know for instance that what is said by those who have been the former "boss" matters in the assessment process or at least provides fodder to know comparisons.  The following Washington Post article provides what I believe to be some helpful insights for nonprofit boards who may be hiring a CEO or do conduct an annual evaluation.  What is most useful about this article is not just the characteristics that make for a productive leader but examples and characteristics that do not contribute.  Helpful information I believe.

 

Good people make good leaders

by Tom Fox September 21

Fred Kiel, author of Return on Character: The Real Reason Leaders and Their Companies Win, conducted a seven-year study of more than 100 CEOs, their companies and 8,500 of their employees. What he found was that leaders of strong character achieved up to five times the return on assets as did leaders of weak character.

Kiel discussed his findings and views on leadership in an interview with Tom Fox, a guest writer for On Leadership and a vice president at the nonprofit Partnership for Public Service. Fox also is the head of the organization’s Center for Government Leadership. The conversation has been edited for length and clarity.

Q. What are the traits of leaders who have high character?

A. The leaders who attained the greatest financial bottom-line results had strong character habits that involve four basic principles: integrity, responsibility, forgiveness and compassion. They almost always tell the truth, keep their promises, are willing to own up to their mistakes and take responsibility for their choices. They are very forgiving of others. They are all about learning from mistakes rather than punishing. And finally, they care about people.

When employees say that leaders show these character habits, in contrast to those who show them about half the time, there was an amazing difference in bottom-line financial results—almost five times more.

Q. What else is needed besides high character to be successful?

A. High character is the foundation. A leader also has to have a certain set of business skills. Highly principled people aren’t necessarily going to be good business people. They have to be able to create an aspiring and compelling vision and establish the strategic focus for the organization. But it’s also incumbent on the leader to establish a culture of accountability. The most effective leaders are those who combine a military toughness with regard to accountability along with a compassionate side, being very caring of the individual and their own success.

Q. What about employee engagement?

A. You can have a business plan and strategy and vision, but if it isn’t executed effectively, it doesn’t mean anything. Execution is all about having an engaged workforce that is inspired by the vision. They must be eager to work together, collaborate and feel free to innovate and easily work in teams.

Q. What role does a senior leadership team play in this process?

A. The senior team really drives the organization. We find stronger correlations between characteristics of the senior team and organizational effectiveness than we did between the CEO and organizational effectiveness. So the skill of the CEO is to choose, develop and lead a high-performing team. If a CEO does that well, then the team will really engage the workforce.

Q. What does a low character manager look like, and how does that undermine success?

A. They are well intentioned people who have fallen into some carelessness regarding how they treat other people. Generally, a lot of their behavior is fear-based. They have a negative view of human nature and a frightening view of the world. Most would never think of treating their families the way they treat the workforce—they would be much more engaged and friendly. We’ve discovered that of all the character habits, compassion is perhaps the most powerful one in engaging a workforce.

Q. How does that behavior undermine an organization’s success?

A. It tends to shut down feedback. They begin to believe their own press releases, and they live in their own bubble. The virtuoso CEOs, by contrast, are always eager to seek out information. They assume that they don’t have all the answers and that the people in the organization are smarter than they are.

The ones at the bottom of the character curve assume that they know better than anybody else what people should be doing. That doesn’t work very well to engage a workforce.

Q.  How can leaders go about changing bad habits?

A. Everybody has had some experience in trying to change habits, and so they know it can be done. The first step is to become aware of your habits. Habits by definition operate below the level of self-awareness.

Tom Fox, of the Partnership for Public Service, explores workplace issues and provides advice for federal managers through analysis, interviews and reader Q&As in his Federal Coach blog for On Leadership.

Nonprofit Engagement Governance - Not! #Nonprofit Boards

Sidwell Friends School in Washington, DC has just agreed to give a huge amount of money to a property currently occupied by long-term sick folks who have few or no resources to call their own.  The following Washington Post article pretty much makes a villain of the School for pursuing an opportunity that increases its quality of education or at minimum, increases its overall efficiency (a value much trumpeted by donors).

I pose that Sidwell is not the villain.  Sidwell management is doing its job.  Who didn't do their job is the board of the Home having left residents out of the conversation and not having ready and communicated a plan for what happens next for the current residents.  At the same time, the board did do its job to think about the institution's future and a plan for in-home care makes a lot of sense.  At the same time, it strikes me there's more than enough money earned from the property sale to ensure its current residents will be cared for appropriately.  Bad communication; bad constituent engagement: these unfortunately off-set the possible institutional good being achieved with the transaction.

The lesson: boards that don't engage can in the end, only harm themselves.

 

Education

A land deal for an elite private school will displace more than 100 sick, poor people

 

By Terrence McCoy and Emma Brown September 20 at 7:43 PM  

 

Thomas Taylor, swaddled in a bed of white sheets, flipped off the television and considered his mortality. He has been sick a long time. Multiple sclerosis. He’s not sure how much longer he can hold out, he said, not with the grim news he’d just gotten, not with all of these worries occupying his thoughts.

Taylor, a resident the Washington Home in Northwest Washington, didn’t receive a bad health prognosis. Last week he learned that he and the other residents of the Washington Home, where Thomas has lived for two decades, will have to move out.

“It’s murder to me,” said Taylor, 59. “I really don’t know what I’m going to do. It definitely will put my health at risk. When you have a lot of weight on you, it makes your health worse. It could be fatal — not only for me, but for a lot of other people in here.”

There had been rumors for months that Washington Home officials wanted to sell the property, which splashes across a leafy expanse along Upton Street. More than 100 Medicaid recipients receive care there, and it also serves as the city’s only inpatient hospice facility. Top officials had consistently denied a sale was in the works, families and patients said.

Until last Tuesday, when it became clear the Washington Home as it is now — with its 200 private rooms, rehab facilities and spacious hallways — will be no more.

 

Nearby Sidwell Friends School, where President Obama and some of Washington’s wealthiest families send their children for an elite education, bought the home and its six acres. Sidwell plans to consolidate its lower school, currently in Bethesda, with its main campus. The purchase price, said Ellis Turner, Sidwell’s associate head of school, was $32.5 million.

In the days that have followed the deal, emotions have run high at the Washington Home, a 127-year-old nonprofit that was a pet charity of former first lady Barbara Bush. People weep in the hallways. Others seethe about inequality.

“You’ve got the most vulnerable, the poorest, the oldest people — and then you have the 1 percenters that want to come in,” said Ivan Mayfield, co-chair of the Washington Home’s family council. “And yes, the home obviously sold to them, but on the flip side, you’re coming in and taking away their home from them to build this exclusive campus that costs $40,000 a year for these kids to go to school.”

Many long-term residents, who have to clear out by the end of 2016, have little idea where they’ll go. Others wonder how the deal started and when. And because Washington Home officials say they don’t plan to buy or build another facility, what will they do with so much money?

Sharon Casey, chairwoman of the Washington Home board of directors, said the sale will free the charity to serve more people. Washington Home plans to focus on in-home hospice care.

“I’m sorry for these particular people and their families,” Casey said. “But we feel we’re going to serve many more people in [poor] communities when we have community-based services in the city rather than in our fortress on Upton Street.”

Turner said Washington Home has more than a year — until December 2016 — to develop individualized plans for the people it serves and also has the option to lease back from Sidwell if the transition isn’t completed when the closing occurs.

 

“We were assured that the Washington Home and its commitment to its mission to serve those in its community would not be affected,” Turner said of the purchase.

It’s unclear how the land deal began. Sidwell officials say they were evaluating the possibility of buying other properties when Washington Home approached them through a broker, wanting to sell to their neighbors along Wisconsin Avenue. But Washington Home officials say Sidwell approached them.

Casey declined to discuss specifics of how Washington Home will use the financial windfall: “These are confidential discussions that the board is discussing.”

Washington Home’s board of directors began talking about the facility’s long-term strategy about eight years ago. The board found that its endowment was shrinking amid rising medical expenses, Casey said. So officials started looking for a new chief executive, ultimately landing upon Timothy Cox, whom Casey said she liked in part because he had had a history of cutting costs.

Cox had spent more than eight years as the chief operating officer at the Armed Forces Retirement Home, where he instituted sweeping austerity measures in 2004. The hope was to shrink costs by as much as 30 percent within one year, but the cuts sparked a backlash. Several residents filed a federal lawsuit against Cox alleging that those cutbacks adversely affected their “health, welfare and well-being.” The lawsuit settled in 2010.

In 2007, the Government Accountability Office sent a letter to the Pentagon saying veterans at that retirement home “may be at risk,” citing patients with pressure sores and one man who was found with maggots in his wound. Cox disputed the allegations, and a Pentagon investigation found little evidence to substantiate them.

Cox left in 2011 after accepting Washington Home’s offer. It came at a time when that institution also was undergoing a series of changes as it was losing millions of dollars every year, records show. And 20 years out, Casey said, the financial picture was even worse.

Cox did not respond to requests last week for comment.

Turner said the school’s board had been looking for parcels to buy to consolidate its campuses. It considered the site of Fannie Mae, across Wisconsin Avenue, and another nearby lot owned by Washington Home and leased to the U.S. Postal Service.

By last November, Sidwell was looking at the Washington Home land, and by May, rumors had reached residents and their families. When they asked Cox whether there were plans to sell, he said there weren’t, said Mary Mason, who also sits on the family council.

“He promised that the Family Council would be active partners in the dialogue if it appeared that serious consideration was going to be given to moving TWH out of residential care,” Mason wrote in an e-mail to a Washington Home administrator in May.

But that apparently didn’t happen.

“We didn’t want to set off a panic among residents and employees and start a whole cascade of events that would be difficult to reverse if we didn’t make a deal,” Casey said. “Why would we get everyone all worked up?”

That explanation doesn’t sit well with Taylor. This is his home. His life. And he has no say in it. He’ll have to move into a new place, he said, where he probably won’t have his own room.

“I don’t think it’s morally right. I think it’s wrong,” Taylor said. “Smile in your face, and turn a knife in your back.”

Nonprofit Board Dos and Donts #NonprofitBoards

In a short list of dos and donts for start-up nonprofits, the Wall Street Journal offered the following about board member selection and expectations:

    Many individuals choose relatives as board members for their charity startups, often just because it’s     easy or because they think it would be fun to involve family.

    This is a mistake, consultants say: Your relatives may have no interest in being involved in the charity,     they may know nothing about the cause, and they may not be able to help raise funds. It can also pose a     problem if the founder leaves the charity and the relatives don’t want to continue, says Ms. Adaway, the     nonprofit consultant.

    The Fix: Find board members with skills that can advance the organization. Attorneys, accountants and     fundraisers can help a startup that may not have the funds to hire such experts, she says.

    “Make sure they have a real passion for your organization and understand they are the fiduciaries who     steer the organization toward a sustainable future by adopting a sound, ethical and legal governance and     financial management structure,” Ms. Adaway says.

    All board members also should be expected to donate to the charity. “Many foundations won’t even     make a grant to a nonprofit if all the board members aren’t giving,” she says.

I certainly agree with the basic advice: don't recruit families and friends solely because they are the folks you know.  On the other hand, if these folks are as passionate about the nonprofit's focus as you, then by all means, bring them along.  Either way, as Jim Collins (Good to Great) emphasizes, getting the "right people on the bus" matters a lot!   

But there are two additional pieces of advice with which I must quibble.  The first is about who from a skill-set perspective should be recruited.  Attorneys, accountants and fundraisers all do offer what can at times be helpful skill sets.  At the same time, these three professions in particular do not have universal skills that match every nonprofit's needs.  Divorce attorneys for instance rarely have extensive experience with corporate law.  And not all accountants understand nonprofit accounting.  It is of course true that for a start-up a nonprofit will need legal and accounting knowledge but I believe there may be alternative ways to acquire these skills beyond adding these professions to the board.  Long and short term gains may be in question.

Similarly, fundraising experts also possess specific knowledge in the fundraising arena (e.g. events, major donors, endowments) AND they have to earn a living from their expertise and a board seat doesn't offer that. Again, if advice is what is desired, a board position is not necessary.

The second concern in the article: all members are expected to donate (or get) resources.  I firmly believe in the concept but commitment to this principle needs to be agreed-to by the board as an expectation, reinforced during the recruitment process and spelled-out throughout the year by the whole board.  If this expectation is not agreed to by the board, it's not an expectation.  And, yes, there are consequences for board members failing to give or get but again, not explicit and understood, not to be expected.

Good thought piece just the same.

Nonprofit Board Failure #Nonprofit Boards

For the many that say that nonprofit boards have little-to-no impact on a nonprofit, this would not be a shared opinion by the following writer from the Greensboro.com press.  After pointing out failures to govern by three boards, the writer ends by stating that bad governance results in loss of benefits to those who were the intended beneficiaries of the nonprofit.  I'm not quite certain I understand all of the cause-and-effect links but I'm certainly willing to buy into the concept that bad governance can have bad consequences.

Our Opinion: Will they ever learn?

Roger Sommer/Special to the N&R

 Posted: Sunday, September 20, 2015 12:00 am

 The sad, despicable scandal at the Guilford and Davidson county animal shelters seems destined only to get worse before it gets better.

Two weeks ago, the facilities’ former executive director, Marsha Williams, and her daughter, Dana Williams-King, were arrested and indicted on animal-cruelty charges. A third former employee, Marissa Studivent, also was arrested. In addition to the animal-cruelty indictment, Williams was charged with illegally keeping a controlled substance at the Davidson shelter and obstruction of justice. More charges are likely. Investigations are ongoing, including a probe by the federal Drug Enforcement Agency.

Beyond all that, not all of the abuse at the shelters may have involved cats and dogs. As the News & Record’s Kate Elizabeth Queram reported last week, the workplace under Williams’ management appeared to be gripped by fear, suspicion and secrecy. Former volunteers say Williams appointed family members and friends to top posts (a problem the county should have flagged at the outset) and ruled the place with equal parts paranoia and imperiousness. Small wonder there were any volunteers at all at a place that seemed to treat them so poorly, as if they were more a nuisance than a help

Board not welcome?

Even more amazing was the center’s seeming contempt for its board. Williams complained that board members of the nonprofit United Animal Coalition, which held a contract to run the shelters — and which was Williams’ direct employer — were interfering when they visited the facility.

The shelter fiasco reveals a festering problem that could have been addressed long ago if anyone had been paying attention. But the UAC board was either afraid or unwilling to do its duty. And the county commissioners failed to keep tabs on a contractor they were paying $1.6 million a year.

A familiar problem

The county has seen a contractor go bad before and done little to address it. In 2008, the county drug abuse treatment center contract was awarded to Missouri-based Bridgeway Behavioral Health, which had been selected from an applicant pool of one. In less than a year under Bridgeway’s management, the facility was fined $30,000 for multiple violations, including falsified logs, failure to properly secure drugs, and a lack of required criminal background checks for some employees.

As was the case with the Animal Shelter, many in the local drug treatment community complained about Bridgeway’s lax practices. But the county was slow to respond. Bridgeway eventually was replaced but never should have been hired in the first place.

Indifference

As far as their own boards are concerned, local nonprofits have faltered time and again for lack of proper oversight. More than a decade ago, the now-defunct nonprofit affordable home builder Project Homestead misappropriated city money under a board of directors that rarely met. According to its minutes, major decisions and financial transactions were made without board approval. Homestead, which received $5.8 million in Greensboro tax money from 1997 to 2001, reported more than $488,000 in questionable purchases such as liquor, jewelry and ocean cruises. After the nonprofit filed for bankruptcy in 2004, taxpayers got only $93,228 of the $1.3 million city officials had sought in bankruptcy court. In 1997, another nonprofit home builder, Greensboro Episcopal Housing Ministry, had cost taxpayers $350,000 in misspent money.

All three cases were widely publicized. But familiar mistakes keep repeating themselves. Nonprofit boards and government leaders fail to do their jobs. And, in the end, the people pay.

Nonprofit Board Fiduciary Duty of Care #Nonprofit Boards

The following Wall Street Journal article is about a lot of topics in the nonprofit governance world.  I thought framing my own thoughts around a nonprofit board's fiduciary duty of care to be one area of focus but beyond this subject is a rarely displayed "what can happen" when there's a new chair "in town" and when there are questions of competency (re paid staff) and transparency (financial and program) and the board's own fulfillment of its duty to provide complete oversight.  Certainly I'm not the one to predict how this will all shake out (new exec?; new board members; changes in policy and practices?) but I'm hoping the article's authors will be able to follow-up and let us all know.

At the very minimum, it's heartening to watch so much passion, by board members, in play.

Allegations by the music hall’s chairman, Ronald Perelman, have sparked a boardroom dispute

 

By 

GREGORY ZUCKERMAN and JENNIFER SMITH

Updated Sept. 16, 2015 7:52 p.m. ET

 

NEW YORK—A simmering clash between leaders of New York’s Carnegie Hall boiled over on Wednesday as financier Ronald O. Perelman, who recently became chairman of the hall’s board of trustees, accused the prestigious music institution’s executive director of improprieties and said the hall has operated with poor oversight.

The allegations include operating the hall with limited transparency and entering into “related-party transactions.” In such transactions, the individuals involved have a relationship prior to the deal.

Mr. Perelman said his criticisms, which he sent in an emailed letter to members of the Carnegie Hall board on Wednesday, were raised earlier in the summer and led to the brief suspension of the director, Clive Gillinson.

The claims have embroiled Carnegie Hall’s board, which includes some of the most powerful players in New York’s financial and cultural worlds.

Through a Carnegie Hall spokeswoman, Mr. Gillinson said: “In serving Carnegie Hall for 10 years, I am very proud of everything we have achieved together. I love the hall and everything it stands for, and will continue to give it my all.”

Mr. Perelman, who built a fortune with corporate acquisitions and investments, is no stranger to high-profile battles. The billionaire has sued investment bank Morgan Stanley, art megadealer Larry Gagosian and a key former business partner, among others.

ENLARGE

Chairman Ronald O. Perelman PHOTO: SHAHAR AZRAN/WIREIMAGE/GETTY IMAGES

Mr. Perelman’s letter, which was reviewed by The Wall Street Journal, serves notice that he may be prepared to bring the bare-knuckle tactics of a corporate raider into the genteel precinct of one of America’s most august cultural institutions. Such disputes generally are handled discreetly and kept out of public view, much as they usually are at orchestras, museums and other art organizations.

In the letter, Mr. Perelman, who succeeded philanthropist and former Citigroup Inc. leader Sanford I. Weill as chairman in February of this year, said he detected in the spring “a troubling lack of transparency and openness in the way Clive Gillinson was interacting with me and the Board.”

Mr. Weill couldn’t immediately be reached for comment on Wednesday.

Mr. Gillinson, a British cellist who joined the prestigious London Symphony Orchestra and rose up to become its managing director, has served as Carnegie Hall’s executive and artistic director for more than a decade.

“My concerns initially arose because of an inability to obtain a full picture of Carnegie Hall’s financial operations, especially as it related to profits and losses involving performances,” Mr. Perelman wrote. “I was told that such financial information was never shared with the Board or even the Chairman.”

Specifically, he continued, he was concerned about “the manner in which related-party transactions were being identified, vetted and approved.”

In the letter, Mr. Perelman said “issues arose” in Mr. Gillinson’s handling of the Warner Music Prize, something Mr. Perelman describes as a “related-party transaction.”

Established in 2014 to honor a promising young classical musician with a cash award of $100,000, the prize is presented in association with Carnegie Hall.

The prize was created with support from the family foundation of Len Blavatnik, the Warner Music Group owner who serves on hall’s board.

In Mr. Perelman’s letter, he said that “in light of various issues,” Mr. Gillinson was instructed to put the prize on hold. He went ahead and “executed a contract” for the prize, the letter said, “without the approval mandated by New York law.”

“These matters implicate Carnegie Hall’s obligations as a nonprofit organization and as a public trust,” according to Mr. Perelman’s letter.

Such lack of transparency, he said in the letter, fails to meet the standards of the New York State Nonprofit Revitalization Act, which mandates that board members take an active oversight role over staff action and, he wrote, “imposes greater restrictions and approvals in connection with related-party transactions.”

It wasn’t clear in the letter exactly what the related-party issue was.

On Aug. 18, Mr. Perelman and Edward Forst, the hall’s treasurer, suspended Mr. Gillinson, according to the letter, and called a meeting of Carnegie Hall’s executive committee. During the meeting, held the next day, Mr. Gillinson was reinstated by the executive committee, the letter said.

Emanuel Ax, a pianist who performs at Carnegie Hall and serves on its board, but not the executive committee, said the letter from Mr. Perelman was the first he had heard of the dispute.

“My contact with Clive has always been fantastic,” he said. “He’s a great guy. As far as I could tell, he was running everything wonderfully.”

Founded by Andrew Carnegie, the hall opened in 1891 and has since become a destination for top musicians and ensembles. Artists who have appeared there include Maria Callas, Jascha Heifetz and Gustav Mahler, as well as major orchestras and jazz musicians such asBillie Holiday and Miles Davis.

The hall was put up for sale in the mid-1950s and was saved from demolition when it was purchased by New York City in 1960 at the behest of the Committee to Save Carnegie Hall, led by violinist Isaac Stern, who later served as the venue’s president. Over the next few decades, its physical condition deteriorated to the point that “the bathrooms were leaking into the boxes,” Mr. Weill said earlier this year.

Mr. Perelman took the reins from Mr. Weill, who held the role of chairman of the hall since 1991. During Mr. Weill’s tenure, the famed music venue underwent a series of renovations and grew its endowment from $4 million in 1991 to $320 million. The hall also expanded its educational program and in 2003 opened Zankel Hall, a third auditorium that was previously used as a cinema.

The hall has embarked on a $125 million campaign to support its educational and performance offerings and develop digital initiatives.

—Pia Catton and Jennifer Maloney contributed to this article.

Nonprofit Board vs. For-Profit Board #Nonprofit Boards

What is it exactly that differentiates a nonprofit from a for-profit?  Is the answer obvious?  One makes profits and the other doesn't?  Would this be the case Laureate universities?  Well, according to a Wall Street Journal article, Bill Clinton was paid $16.5 million to serve as its “honorary chancellor” from April 2010 to April 2015).  laureate is a for-profit and according to this article and using the Obama education scorecard, the university would not get a passing grade given that it has a pretty low graduation rate and its students make as much money after graduation as they would have had they only graduated high school.

But is paying trustees and having poor outcomes a difference accounted for by tax status (nonprofit versus for-profit)?  I'm not thinking these are the perfect measures although it is unlikely that nonprofit trustees are receiving any compensation never mind compensation at the level of former President Clinton (although it is after all, former President Clinton).  But could paying trustees REALLY be the big differentiation and if so, how on earth does this impact results?  Perhaps because the intended result of a for-profit is to make money with no other priority coming close.  And, is the for-profit not also filling a demand not addressed by the nonprofit community?

So, bottom line, does making a profit mean that good outcomes for consumers won't be achieved?  Really?