Nonprofit Board Crisis

Nonprofit Partnerships #Nonprofit Boards

Partnerships between nonprofits continues to be the "buzz" word in today's economy.  This appear to be exemplified in Philadelphia where the museum world in particular is taking all kinds of leaps that begin with partnerships (joint efforts) and could even result in a merger.  

The following story tells of such a relationship being explored by a Philadelphia art museum and history museum.  There are two locations and a little bit of redundancy in staff.  Budgets are not huge although the money received to help move a partnership exploration along certainly can make a bit of a dent in each organization.

It's noteworthy that the Philadelphia Inquirer's reporter does cite a number of variables including the boards of the respective institutions.  While programming partnerships do not in my opinion need board approval (these look more like contract arrangements) a merger changes the "ownership" and does indeed have some impact on board composition as well of course as board engagement.  It is likely that a combined board will need to have an eye on raising funds - a challenge particularly true for such institutions.  

Here's the article:

Woodmere, Philadelphia History Museum mull a merger

STAFF WRITER

LAST UPDATED: Wednesday, October 28, 2015, 8:13 PM

 

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The Philadelphia History Museum at the Atwater Kent and the Woodmere Art Museum are exploring a partnership that could produce a merged institution devoted to exhibiting more than three centuries' worth of the region's entire range of art and artifacts, according to officials at both institutions.

The exploration process, funded by William Penn Foundation grants of $867,075 to each institution, will initially lead to a joint public exhibition opening in about a year at both, tentatively titled "A More Perfect Union."

Officials are weighing how their collections interact, how staffs and boards operate together, what new visitors will see their collections, and what might attract new donors and board members to a venture of such scope.

The Philadelphia History Museum, mandated by the City Charter as the official repository of Philadelphia's material culture, is housed in a neoclassical building on South Seventh Street. The original home of the Franklin Institute, it was donated by radio manufacturer Atwater Kent to create a public history repository. The collection is owned by a private nonprofit for the public benefit.

 

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Woodmere, in Chestnut Hill on the estate of the museum's founder - oil man, politician, and collector Charles Knox Smith - has a collection of about 5,000 works, with particular strength in the region's 19th- and 20th-century art. Smith left the estate and collection to the public; it has been owned and operated as a private nonprofit since 1940.

The History Museum, which contains art and artifacts from its own collection as well as those it acquired in a 1999 agreement with the Historical Society of Pennsylvania, has more than 100,000 items, including the formidable desk used by George Washington during his presidency, and artworks by Thomas Sully, the Peale family, and many others.

"We both have collections of Philadelphia-centric stories," said Charles Croce, director and chief executive of the History Museum. Woodmere's "is more contemporary than ours. Ours is more object-based; theirs is two-dimensional-art-based. The idea is to put these two collections together to tell the story of Philadelphia."

The exploration process is expected to run at least a year and a half.

"We're asking a lot of questions right now," said William Valerio, Woodmere's director and chief executive. "We're setting up the ["More Perfect Union"] exhibition in a way that will give some answers and some sense of what is it in the past of Philadelphia that's relevant . . . today. That's ultimately the goal, to employ our collections toward this question of how does the past matter to the present.

"Our sense, Charles and myself, our staffs, our boards - we have a sense that by bringing art and history together we can explore culture in a broader sense and in a way that isn't being done currently with any collection in Philadelphia."

Croce and Valerio said each institution would remain where it is. Neither believes institutional charters and conditions of bequest will present legal obstacles to a partnership - or even a merger, if that ultimately happens.

News of a possible merger comes at a time when there have been high-profile unions in the city - the Academy of Natural Sciences merged with Drexel University, and the Rosenbach Museum and Library with the Free Library of Philadelphia.

The History Museum-Woodmere partnership is somewhat different. Neither is a behemoth, and both have had financial and operational struggles in the near past.

Woodmere abandoned an ambitious expansion plan several years ago and operated for a time without a director or other key staff positions filled. Since Valerio arrived in September 2010, the museum has put together a string of balanced budgets, built up its endowment, and this year raised $1.5 million for replacing drives, lighting, and other amenities. Its annual operating budget this year is up to $2.4 million, and endowments stand at $10.6 million. Annual attendance is about 40,000.

The Philadelphia History Museum completed a lengthy $6 million building overhaul three years ago and has paid down a $2.5 million construction debt to $250,000. Its staff is lean, and fund-raising is an ongoing issue. The city provided a $293,000 subsidy this fiscal year; total annual operating budget is $1.6 million, with the endowment at about $1 million. Attendance hovers around 25,000 annually.

It is no secret that history museums are struggling nationwide. A study released Monday by the Greater Philadelphia Cultural Alliance showed 30.3 percent of history organizations across 11 metro regions, including Philadelphia, operating with deficits greater than 10 percent of their budgets in 2012, the most recent year with complete data. That compares to 24.8 percent with deficits in the more amorphous category of museums, galleries, and visual arts.

The History Museum and Woodmere are operating with balanced budgets. That said, area foundations for years have urged local history organizations to consider consolidation.

Shawn McCaney, program director of William Penn's Creative Communities grant center, said the History Museum and Woodmere approached the foundation for support in exploring the partnership possibilities. It agreed, hoping for greater "financial strength, audience, and visibility" for both. "That's our main interest," he said.

Helen Haynes, the city's cultural officer, characterized the move as a positive development for the History Museum. Her concern, she said, was that its collection "remain an asset to the city."

"I applaud them for taking this step in a thoughtful manner," she added.

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Read more at http://www.philly.com/philly/entertainment/arts/20151029_Woodmere__Philadelphia_History_Museum_mull_a_merger.html#q1RGHxKlZuUb14Ku.99

Nonprofit Board Service: How Many is Too Many? #Nonprofit Boards

The following LA Times story about Pat Haden asks two age-old questions about nonprofit board service:

1. How many nonprofit boards is too many to serve on especially if one has a full-time job and also serves on one or more corporate boards; and,

2. Should an individual be paid to serve on a nonprofit board.

Alas, no firm answer is offered.  But let's start with the Sodom-Gomorrah-esq question: when exactly does service on multiple boards affect the contribution to each of the boards?  If I serve on one board, all my attention benefits the one.  If I serve on two, my attention gets divided.  And on three, a little less for each. And four..... You likely get the picture.  But reducing a bit of attention is not the only issue.  Surely, unless an individual has equal passion for multiple types of organizations, they will at some point find competing interests in serving on multiple boards.  Folks who are passionate about the arts tend to serve on arts specific nonprofits for instance.  So, will that individual be equally effective in raising money for all their boards, equally?

And then there is the compensation question.  Corporate boards pay so why not nonprofit boards?  I think the simple answer could be - as long as the money is not coming from donors (who are not making gifts to pay for governing - usually), maybe it's OK.  But another related question: what's the nonprofit getting in return for its payments?  Do they have a significantly increased access to more donors or contracts for instance?  I'm basically willing to pay if the return on investment is equal.  But of course, this position is contrary to what is generally not the practice or expectation. So...

 

Outside of USC, Pat Haden holds more than a dozen roles that pay at least a half-million dollars a year

In addition to serving as USC's athletic director, Pat Haden holds more than a dozen outside roles, such as seats on corporate boards, that draw on his time. (Luis Sinco / Los Angeles Times)

Paul Pringle and Nathan FennoContact Reporters

 

For USC Athletic Director Pat Haden, the demands of the job lately have seemed unending.

He fired head football coach Steve Sarkisian last week, huddled with top school officials and team members and met with reporters to explain his actions, all before flying to South Bend, Ind., for the Trojans' nationally televised game against Notre Dame.

The frantic stretch of long days and late nights — he briefly fell ill before the game — highlighted the all-consuming responsibilities that come with running a major university's sports programs.

"You can't work any more at this job than I do," Haden said.

 

But he also juggles extensive obligations outside USC as a member of more than a dozen corporate and nonprofit boards, side work that pays him at least a half-million dollars a year (including stock options and share awards), a Times review of proxy statements and federal tax records has found.

In recent weeks, Haden's performance at USC has come under increased criticism, with some calling for his resignation.

You can't work any more at this job than I do.- Pat Haden

 

Haden, whose annual salary and benefit package at USC is $2.5 million, collected about $135,000 combined in annual fees from four charitable foundations, according to the most recent Internal Revenue Service filings for the school and the nonprofits.

Most foundations and other types of charities do not pay their board members, nonprofit watchdogs said, expecting them to volunteer their time. Asked why he accepted fees from the organizations, Haden said through a USC spokesman that the other directors for the four foundations also are paid.

The number of Haden's corporate and nonprofit obligations makes him unique among Pac-12 athletic directors, according to searches of the Bloomberg and Guidestar online data bases — leading sources of information on companies and charities, respectively. None of the other athletic directors is paid for charitable work, the Guidestar registry shows. And most of their nonprofit positions are related to their university jobs.

It is not uncommon for chief executives to hold seats on multiple boards, although advocates for greater corporate accountability say the practice can weaken oversight of companies. Haden said he spends "very little" time on his board assignments and works an average of 70 hours a week at USC.

The school hired the former USC and NFL quarterback in 2010 to turn around a department that had been tarnished by NCAA sanctions. His pay package is more than double what his predecessor, Mike Garrett, earned in his final full year, according to tax records.

Haden is credited with navigating USC through the NCAA penalties, but has drawn the ire of some for not vetting Sarkisian more closely before hiring him — and then for failing to act more decisively after the coach's off-field problems became apparent when he slurred words and shouted an expletive during the school's "Salute to Troy" event in August.

On Thursday, Riki Ellison, who played linebacker for USC and in the NFL, published a lengthy critique of Haden on Facebook that described the athletic director's leadership as "toxic" and called for his ouster.

Sarkisian's downfall has been a major embarrassment to USC, and is the latest setback to its storied football program. Two years ago, Haden fired head coach Lane Kiffin in midseason. Now he is under pressure to find a championship-caliber successor to Sarkisian while balancing his other responsibilities as head of a 21-sport department with an annual budget in excess of $100 million.

"Being an athletic director, that's at least a job, a job and a half, maybe two jobs," said Daniel Rascher, a sport management professor at the University of San Francisco.

In an interview with The Times, Haden said that he sat on two nonprofit boards and one corporate board, repeatedly emphasizing how little time the work required. However, in response to follow-up queries, he acknowledged that he actively serves on seven boards — four foundations and three businesses.

In addition, he is listed on tax records as a board member of the L.A. Sports Council and two related groups. The three nonprofits don't pay their directors.

All of his outside commitments, Haden said, had been approved by USC President C.L. Max Nikias when he was hired as athletic director. In a statement, Nikias confirmed that and said Haden "works tirelessly in his role as AD and I deeply appreciate the dedication and long hours he devotes to USC."

Haden works an average of 13 hours a week combined as a board member for the Fletcher Jones, George Henry Mayr, Rose Hills and UniHealth foundations, according to their most recent IRS filings. Tax records for the sports council and two affiliated organizations state that he works an average of six hours a week, but Haden said he has "never been to one meeting."

Several other entities list Haden as a board member or advisor, including a Rhodes Scholarships committee, A Better L.A. and the Pacific Club Impact Foundation. Haden said he is not active in them.

He also sits on the College Football Playoff selection committee, which starting next month will require six trips to Dallas for meetings that are usually spread over two days. Through a USC spokesman, Haden said that last year he spent about 20 hours preparing for each of the sessions. Members are expected to watch condensed versions of key games each week.

"The committee members really give unselfishly of their time," said Bill Hancock, executive director of the College Football Playoff.

Haden, who has a pacemaker, was hospitalized twice last year. He said at the time that "I'm not in good health." A day after this month's Notre Dame game where Haden felt light-headed, he tweeted that he was "fine."

Experts say the corporate board posts should add several hours a week to Haden's workload, as he steeps himself in management decisions and prepares for quarterly meetings.

Haden is a board director at Tetra Tech in Pasadena, a publicly traded consulting and engineering company with 13,000 employees. He also is a director for TCW, a Los Angeles-based asset management firm that handles billions of dollars in funds and pensions. He holds another board position with First Beverage Group, a privately held business in L.A. that advises and invests in beverage companies.

His total compensation from Tetra Tech and TCW last year was about $360,000, according to the firms' proxy statements.

First Beverage's fees for board members are not public, and Haden declined to say how much he is paid, except that it was "considerably less" than what he receives from either Tetra Tech or TCW.

Ann Skeet, director of leadership ethics at Santa Clara University's Markkula Center for Applied Ethics, noted that corporate scandals like the one that engulfed Enron led to calls for more intensive oversight of companies by their boards.

"It's a huge commitment — the phone calls, the in-person meetings, the amount of preparation that is required," she said.

Skeet said Haden's "description of the amount of time he spends doesn't suggest the traditional amount of time the people in those roles spend. He should be asking himself if he is spread too thin."

Although Haden declined to estimate how many hours all his board tasks consume in a typical week, he said he believed the companies were "getting their money's worth" from him.

He said he isn't doing the corporate work for the paychecks — "absolutely not" — but rather to help the companies succeed.

Spokesmen for TCW and First Beverage said in statements that the firms were happy with Haden's service, citing his "valuable insights" and "deep financial experience."

Tetra Tech did not respond to interview requests.

Before Haden returned to USC, he had a successful career as a partner in the private investment firm Riordan, Lewis & Haden. One of the partners was former Los Angeles Mayor Richard Riordan.

Most of Haden's nonprofit compensation came from the George Henry Mayr Foundation, which paid him $72,725 last year for working an average of one hour a week, its tax filings show. Since 2000, Haden has received more than $1 million — including as much as $84,000 in single years — for his work on the foundation's board, according to the IRS records.

Five coaches have led the USC Trojans football team since 2000. The fifth will be offensive coordinator Clay Helton, who was named interim coach after the firing of Steve Sarkisian on Oct. 12.

His daughter, Natalie Haden O'Connor, is also on the Mayr board, listed as its secretary. She was paid about $68,000 last year, the filings show, and the foundation reported to the IRS that she too worked an average of one hour a week.

O'Connor did not respond to requests for comment. The Times asked Haden if he had arranged to have his daughter placed on the board and what her qualifications were. The USC spokesman responded that Haden "doesn't comment on other directors."

The Mayr Foundation trust administrator said the report to the IRS that O'Connor worked an average of one hour a week last year was a mistake and that the number was actually 15 hours a week.

The Times noted to the administrator that the foundation had reported the same average of a single hour per week for O'Connor and Haden for several years. A spokesman for the administrator later said that those reports also were "inaccurate," but that the correct figures were not immediately available.

Daniel Borochoff, president of CharityWatch, said he believes foundation board members should not be paid because "these are tax-free organizations, so the rest of us are subsidizing them."

The Mayr Foundation, which had net assets of about $19 million, distributed $645,000 in grants last year to educational institutions, including USC, and scholarships, while paying its four board members and the trust administrator a total of $410,000.

The Rose Hills Foundation has donated an average of more than $2 million per year to USC — including the athletic department and sports teams — since Haden joined the board in 2009. He said he recuses himself from decisions by all the foundations that involve USC.

See the most-read stories this hour >>

Sandra Miniutti, vice president of the nonprofit watchdog group Charity Navigator, said Haden might have taken on too many foundation assignments, given his USC and corporate roles.

"It would be hard to see how you could be an effective board member for so many different organizations," she said.

But Haden said he's able to manage the busy schedule: "I'm built to work."

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Twitter: @pringlelatimes

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Nonprofit Succession Planning #Nonprofit Boards

According to a just recently released Bridgespan report based on 458 responses to a survey, nonprofit execs are leaving their nonprofits because they don't get enough support from their boards.  And, when execs leave, presumably boards are missing an opportunity: tapping into their own staff to replace their departed exec.  On top of this, the execs, I presume, have not payed attention to strengthening their "bench".

Hm...accurate portrayal on all three counts -- unhappy execs (enough to leave because their boards aren't supporting them); shortsighted boards (who look outside of the org. for a replacement); and, shortsighted execs who aren't building the strength of their staff.  

I welcome one and all to state what they are experiencing.

 

Nonprofit Success Rates #Nonprofit Boards

Yesterday was "look in Trump's past day" and today it's time to take a moment and look at another current U.S. presidential candidate's past.  As noted in the article below, Ben Carson, pretty much up there in the polls as a potential Republican nominee for president, had a brief conversation on the "This Week" show where he stated that "9 out of 10 nonprofits fail".  

While maybe he was thinking of small businesses (which actually have a higher life span as well according to the Bureau of Labor Statistics), more than 1/2 of nonprofits succeed.  

I think a more interesting question to be asked is what exactly contributes to nonprofit survival rates?  I offer my own answer: relentless boards and executive directors combined with demand (by donors and consumers).  Let's not forget that US nonprofits are pretty much a product of capitalism like their sister for-profits.  Where there is demand, there is survival.  And, where there is response to demand, there are smart folks who get behind a solution and stick with it to make it effective.  Nonprofits!

Here's the Philadelphia Inquirer article discussing Ben Carson's wisdom abut nonprofits.

 

FactCheck: Ben Carson on nonprofit failures

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D'ANGELO GORE, FACTCHECK.ORG

POSTED: Thursday, October 22, 2015, 12:32 PM

 

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Ben Carson said “9 out of 10 nonprofits fail.” Yet data on nonprofits show that half of the organizations that received their tax-exempt status 20 years ago were still considered active by the IRS in 2015.

Carson, who currently ranks second in an average of national polls for the GOP presidential nomination, made the claim during an Oct. 18 interview on ABC’s “This Week.” Host George Stephanopoulos asked Carson, a retired neurosurgeon who has never held public office, to respond to Donald Trump, the current front-runner for the GOP nomination, who questioned if Carson would be able to negotiate with leaders of China, Russia and Iran as president.

Carson touted the success of the Carson Scholars Fund, a nonprofit college scholarship program he founded in 1994, as an example of his ability to negotiate.

Carson, Oct. 18 (2:11 mark): I had to negotiate with many people in different cities as we were putting the Carson Scholars Fund together. It’s now active in all 50 states. As you know, 9 out of 10 nonprofits fail. Not only that, it has won major national awards that are only given to one philanthropic organization in the country out of tens of thousands. That’s not done without having the ability to negotiate.

 

 

Carson’s campaign did not respond to our request for supporting documentation. (The Carson Scholars Fund website also doesn’t list any awards that would fit his description of being “only given to one philanthropic organization in the country,” nor could the organization point to other such awards when we called.)

While he did not mention a specific time frame for the claim that “9 out of 10 nonprofits fail,” recent data from the National Center for Charitable Statistics, “the national clearinghouse of data on the nonprofit sector in the United States,” suggest that nonprofit organizations have greater longevity than Carson’s statement would lead viewers to believe.

“Our data do NOT support this claim,” wrote Thomas Pollak, program director for NCCS, a project of the Urban Institute, in an email to FactCheck.org.

Pollak included a table showing that 64 percent of the nonprofit organizations that obtained tax-exempt status from the IRS in 2005 are still considered active in 2015.

In addition, nearly 1 in 4 of the public charities, which make up the majority of all nonprofits and are what Pollak said most people usually mean when they refer to “nonprofits,” reported financial activity in 2015. That is, they filed either an IRS Form 990 or 990-EZ, which require organizations to report their revenues, expenses and assets.

(Small nonprofits, or those with $50,000 or less in gross receipts, only have to file a Form 990-N (e-Postcard), which does not require financial reporting.)

What’s more, over half of the nonprofits that received tax-exempt status in 1994, the same year that Carson and his wife formed the Carson Scholars Fund, are still around.

According to NCCS data provided by Pollak, 51.3 percent of the nonprofits, and 55 percent of the public charities, from 1994 were still considered active in 2015.

Even nonprofits no longer registered with the IRS may not have actually failed.

The NCCS says that it’s difficult to accurately determine deaths of nonprofits from the IRS Business Master File of Exempt Organizations, the source of its data, because of limitations.

NCCS: IRS lists of registered nonprofit organizations and Form 990 filers are a useful starting point for exploring the issue but have significant limitations.

One limitation is that one cannot know what happened to an organization that stops filing with the IRS. It might have died, but it might have successfully merged with another organization, been acquired by one, or transformed into a government agency, church, private foundation, business, or other entity that is not required to file the 990. Alternatively, the organization might have gotten small enough (less than $25,000 in gross receipts) that it was not required to file.

A second limitation is that the 990 is mostly a financial reporting document, so there isn’t going to be any indication of many of the things (like access to legal services and education) that we might hypothesize are related to an organization’s survival chances.

Not knowing what happened to an organization that disappears heightens the problem of equating disappearance with “failure.” Some nonprofits close when they fulfill a mission that they set out to accomplish, so it succeeded rather than failed.

So, do “9 out of 10 nonprofits fail”? We didn’t find evidence of that. The best data we could find from an authoritative source on nonprofits don’t support that claim.

Read more at http://www.philly.com/philly/news/politics/FactCheck_Ben_Carson_on_nonprofit_failures.html#mfwVAS8j4JdmDEwc.99

Nonprofit Board Duty of Care #Nonprofit Boards

Today's blog will not be about that Trump guy even though that appears to be part of the background about why the Wall Street Journal saw the story about the plight/future of the New York Military Academy of interest to its readers.

Instead today's blog continues with the issue of absent-tee "owners" aka the board.  The New York Military Academy, one subject of the Wall Street Article has just been allowed judicially to get out of debt by selling its campus - worth $16 million.  While the article says very little about how exactly it will continue being a military academy without all the grounds, the plan is to do just that.  I won't speak to the merits of high school military academies - you can judge that.  

I do want to ask the question: what exactly has a board been doing that first allowed the school to get into so much debt ($10.9 million) while in recent years also seeing a significant decline in student enrollment.  It would strike me that the markings on the wall would suggest closure as a better option.

But wait, there's another item in the story that slips silently away without a bit of scrutiny.  The NY Military Academy's buyer is an organization called the Research Center on Natural Conservation.  A look in Guidestar indicates that the group had approximately $1 million in revenues last year, has a $6 million mortgage on the property next door to the school and according to the following article is going to spend $15 million to buy the school.  Oh, and did I mention that the board is comprised of 3 individuals?  And what exactly is "natural conservation"?  And, I would have provided a link to their website but guess what?

Bottom line: harrumph!

 

Military Prep School in New York to Reopen After Bankruptcy Sale

• By KATY STECH 

A historic New York prep school whose famous alumni include presidential hopeful Donald Trump is preparing to reopen after a bankruptcy judge on Wednesday approved the nearly $16 million sale of its campus.

The 126-year-old New York Military Academy, lcoated in the Hudson Valley, is expected to reopen on Nov. 1 under the guidance of new owners, academy president Anthony Desa told Bankruptcy Beat Wednesday.

Before closing earlier this year, the school readied students for college or military service on a 77-acre campus in the town of Cornwall. It has also gotten a heap of attention after Mr. Trump, a 1964 graduate, told his biographer that although he didn’t officially serve in the U.S. military, he felt as though he did because of his attendance there.

The book also quoted the billionaire real-estate mogul as saying that the school gave him “more training militarily than a lot of the guys that go into the military.” The New York Times NYT -2.84% reported that Mr. Trump “received draft deferments through much of the Vietnam War.”

Other school alumni include Green Mountain Coffee Roasters founder Robert Stiller and deceased MetLife chairman Robert Benmosche, who executed the $182 billion bailout of insurance giant American International Group amid the fear of global financial collapse in 2008.

As the 54-worker school’s financial troubles deepened, several alumni extended $2 million in loans to it. (Mr. Trump wasn’t one of them, school officials said.)

The school closed after filing for bankruptcy earlier this year, blaming a severe decline in enrollment.

Founded in 1889 by a civil war veteran, enrollment reached roughly 400 students in the 1980s. But only 55 students were enrolled in its eighth through 12th grade programs early this year, according to documents filed in U.S. Bankruptcy Court in Poughkeepsie, N.Y.

By the time the school filed for bankruptcy March 3, it had $15,000 in the school’s bank accounts and faced $10.9 million in debt. School officials immediately asked Judge Cecelia G. Morris for the power to take out a $2 million bankruptcy loan, saying the school costs $350,000 per month to operate.

“Everyone worked around the clock to memorialize the [purchase offer] and obtain court approval on shorted time, realizing it was necessary to save the school,” said Jeffrey Testa, the school’s bankruptcy lawyer.

On Wednesday, Judge Morris approved the school’s $15,825,000 sale to Research Center on Natural Conservation Inc., a nonprofit that’s controlled by a Chinese business group. The group had already purchased the nearby historic Arden House once owned by railroad magnate Edward Harriman for $6.5 million in 2011 and converted it into a conference center.

Nonprofit Board: Bad Planning #Nonprofit Boards

It appears that the board of the S.S. United States just does not know when to "fold them".  Once the fastest luxury liner of its time the ship was purchased by a group hoping to save it from deconstruction and use it for "something" that would preserve its memory.  

I pose that the story should read: when you don't have enough fans (with money or access to money) who care passionately about you, you sink.  I also pose that the board that initially organized this venture did not assess where, of which a lot would be needed, money to fund the effort would originate.  

If you love ships, now is the time to head to Philadelphia to get a glimpse of one maritime slice of history.  The Philadelphia Inquirer article follows.

Cash-Poor S.S. United States sends out SOS

The S.S. United States has been languishing in Philadelphia for 19 years. The conservancy that owns it is running out of money and may have to sell the liner for scrap. AP Photo/Matt Rourke, File

 

JEFF GAMMAGE AND MATT GELB, INQUIRER STAFF WRITERS

LAST UPDATED: Monday, October 19, 2015, 1:07 AM

 

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

 

On the outside, not much has changed. The once-grand S.S. United States continues to rust along a South Philadelphia pier.

On the inside, some things have significantly changed, and not for the better:

The conservancy that is trying to restore the iconic ocean liner - and that set an end-of-the-month, save-it-or-scrap-it deadline - has seen its fund-raising decline dramatically. While its officials insist that a secret developer is closer than ever to a suitable proposal, the ship needs time.

And time, for the S.S. United States, is pricey.

 

Public tax documents show that donations dropped 95 percent in two years, from nearly $4.2 million in 2011 to $213,000 in 2013, the latest year for which figures are available.

"It is certainly true that in recent years, we have by necessity become a leaner organization," said Susan Gibbs, executive director of the S.S. United States Conservancy, the Washington-based nonprofit that owns the ship. "We have been remarkably efficient with the resources we have. . . . So much of our funding is invested directly into our mission, preserving the vessel."

Twelve days ago, the conservancy announced that it intended to hire a broker to explore selling the ship to a recycler by Oct. 31, an outcome that could be avoided only by a sudden infusion of cash.

Gibbs, whose grandfather designed the ship, could not say how much money was needed by month's end.

There was no sign last week of where that cash might be found. Or that the ship might soon depart Pier 82, where it rises over Columbus Boulevard, costing $60,000 a month to maintain.

The tax documents provide a year-by-year snapshot of a conservancy that operates in constant search of money, seeking donations through its website, emails and events.

The conservancy had a deficit of $358,686 in 2013, tax records show. The group's net assets decreased from $3.6 million in 2011 to $3.1 million in 2013.

Donations totaled $889,928 in 2010. The next year, that figure soared to $4.2 million. But in 2012 it fell to $1.2 million, and in 2013 fell again to $213,753.

From 2012 to 2013, Gibbs' pay as executive director went from $75,000 to zero.

In a recent fund-raising pitch, the conservancy said it raised more than $447,575 in 2014. That figure, though, represents roughly seven months of docking and service costs.

The group announced in February that it had received an anonymous $250,000 donation. And, in the week since the latest call for cash, Gibbs said $56,000 was raised.

The conservancy recently broke down how it spends every donated dollar: 40 cents on pier rental, 25 cents on ship insurance, 21 cents on ship maintenance, and 6 cents on administration.

That leaves 8 cents of every dollar for outreach and programming.

"Our mission is not to keep the ship afloat in its current condition indefinitely," Gibbs said. "That does no one any good. Our mission is to really serve as a temporary steward of the vessel, to advance a viable redevelopment plan."

While working toward redevelopment, the conservancy has produced a website and documentary film, and gathered a collection of art and artifacts from the ship. Raising public interest in the vessel is an important accomplishment, Gibbs said.

The ship has languished in Philadelphia for 19 years, landing here after years of sales and auctions during which its interior was stripped. The S.S. United States Conservancy incorporated as a nonprofit in 2009, buoyed by ship lovers who saw the vessel as a monument to American imagination.

Gifts totaling $5.8 million from prominent Philadelphia philanthropist H.F. "Gerry" Lenfest, owner of The Inquirer, enabled the conservancy to buy the ship in 2011 and go forward with rescue plans.

Lenfest said last week that he had no intention of intervening now, and knew of no others who might.

"I've already put up a lot of money to give the conservancy reasonable time to restore it," he said. "I have no plans to do anything further."

If the ship is scrapped, the proceeds from the sale are to go to his foundation, Lenfest said. Robert Berry, a vice president of International Shipbreaking in Brownsville, Texas, said his company had been approached about a potential deal.

"They are ready to sell it right now but they picked a real bad time," Berry said. "The scrap market has tanked. At this moment, they're going to have to pay to get rid of it."

In its day, the S.S. United States was a queen, longer than the Titanic. Designed by naval architect William Francis Gibbs of Philadelphia it was built in Newport News, Va., with steel from the Lukens company in Coatesville.

The ship's 1952 maiden voyage shattered the trans-Atlantic speed record, which it still holds. But in the 1960s, plane travel made liners outmoded.

The conservancy sees the United States reborn as some combination of office space, condos and a museum on the New York City waterfront, but has provided few details of how that would be accomplished.

It entered into a preliminary agreement earlier this year to advance the ship's redevelopment with "some of the nation's most qualified, respected, and innovative developers and managers of commercial real estate."

It identified none by name.

Nondisclosure agreements limit what information can be publicly shared, the conservancy said. Gibbs said the signing of those agreements, while necessary, "has challenged us on the fund-raising front. It is difficult to build enthusiasm for a project that cannot be elaborated upon."

The group earlier sold one of the ship's massive propellers, and in July 2014 was poised to sell another when Jim Pollin of the Pollin Group donated $220,000 to halt the sale.

"I'm feeling extremely positive right now," Pollin said in an interview last week, adding that he was not privy to details of conservancy planning. "I know Susan is working really hard to save the ship."

The conservancy made a similar do-or-die declaration a year ago, saying in August 2014 that crucial decisions about the ship would have to be made that fall.

Joseph Henwood, of the Binnacle Group L.L.C. in Media, said then that he was speaking to investors who expected to win the ship once the conservancy ran out of money. The plan was to create a floating hotel near the Harrah's casino in Chester.

Last week, Henwood said that plan was now "a long shot," because potential investors have withdrawn. He blamed the conservancy for what he called drawn-out, last-gasp efforts that hurt a realistic proposal to save the ship. "They've failed," Henwood said. "They're now marketing their own demise."

[email protected]

215-854-4906

@JeffGammage

Read more at http://www.philly.com/philly/news/20151019_Cash-poor_SS_United_States_sends_out_SOS.html#h3FSSEkSJG72VLy2.99

 

Nonprofit Board Duty of Obedience versus Duty of Care

In a little town south of Atlantic City there sits a six-story elephant  Lucy is a National Historic Site (built in 1881) and she is in a bit of disrepair needing attention.  But wait!  PETA will help.  PETA (the anti-cruelty-to-animals folks) has offered to throw-in some cash if they can also highlight, using Lucy, the plight of circus animals.

The Board of the organization that owns and is committed to the preservation of Lucy has however rejected PETA's offer saying that anything that might make the Lucy experience less than a happy experience is not acceptable.  While the PETA money would certainly help the board address its duty of care needs, the board's perceived duty of obedience (to remain faithful to and pursue the goals of the organization and in particular, honor donor requests) would be violated.

This is a great lesson for nonprofit boards.  There are those times when challenges may appear too great to handle while at the same time, not every resolutions is acceptable.  Of course these situations may be as much about perception as reality.  It's is Lucy's board that perceives PETA's offer "tainted" while we must recognize that PETA saw their offer as an opportunity to pursue their own mission.  Of course the same might be said of the many institutions that accepted Coca-Cola money to do nutritional research and education.  What is perceived as tainted and outside the box of "obedience" may not actually be.

Here's the NJ.com article.

 

By Don E. Woods | For NJ.com 
Email the author | Follow on Twitter 
on October 12, 2015 at 1:47 PM, updated October 12, 2015 at 3:04 PM

 

MARGATE — Jersey Shore landmark Lucy the Elephant may have painted toenails but she won't be getting a tattoo anytime soon.

The tattoo was one of the conditions set by the People for the Ethical Treatment of Animals (PETA) to donate money for Lucy the Elephant restoration efforts. The conditions were too depressing to consider, according to Lucy officials.

PETA requested that Lucy be fitted with a foam shackle, a teardrop tattoo and a banner promoting awareness of circus elephant abuse, according to an announcement by the Lucy Board of Trustees.

"Lucy is a happy place," said Richard Helfant, CEO of the Lucy the Elephant Team, in the annoucement. "We must always insure that children who visit Lucy have a happy experience and leave with smiles on their faces. Anything that could sadden a child is not acceptable here at Lucy."

PETA offered a $2,000 donation for restoration efforts last week.

"Cruelty to animals is abhorrent, but given the divisive nature of some of PETA's campaigns, Lucy is much better off seeking 'no strings attached' donations," said Robert McGuigan, board member on the Save Lucy Committee, in the announcement.

Lucy is a 65-foot-tall wooden elephant in Margate. She was built in 1881 to attract people to Absecon Island to buy real estate. She was named a National Historic Landmark in 1976.

The Save Lucy Committee is raising money to fix railings on the top riding carriage, fix rust on her hide and repaint the elephant.

Restoration is estimated to cost $58,000.

Nonprofit Boards: Really Necessary? #Nonprofit Boards

In case you missed it, here's Anne Wallestead's (CEO, BoardSource) Huffington Post defense of the paradigm that demands that nonprofits have a board of directors.

One observation and a couple of thoughts.  First, it's interesting that it's the BoardSource CEO not the Board Chair defending the nonprofit board paradigm.

Next, Ms. Wallested offers three defenses:

1. Without a board it would be difficult to earn and keep the public's trust.  I would offer that's a big maybe given that in my experience the majority of donors actually are investing in the CEO, not the board and in even more nonprofits, the public is barely aware there is a board, never mind, who is on that board.  True, when knowledge of the board is clear, there may be some extra faith and trust but really.....?

2. Nonprofits need leadership and without the board, who would step-in in challenging situations, particularly with bad execs.  I agree that there are indeed bad execs but again in my experience, only when the exec is REALLY bad, do boards tend to step-up.  Again, the public looks to the CEOs to lead, not the board.

3. Transitions need a board. OK, but not until they have to.

So, this may sound like I am not a fan of nonprofit boards.  Quite to the contrary.  I believe however that boards can and should be about giving voice to what should be the direction and ensuring the CEO follows this.  And with direction, accountability and of course risk management - a board has value.  For me, these are the strong arguments in defense of a nonprofit board.  And yes, the construct and more importantly the practice definitely needs improvement.

Are Nonprofit Boards Really Necessary?

Posted: 10/12/2015 11:31 am EDT Updated: 10/12/2015 11:59 am EDT

 

This past summer, I had an opportunity to attend a leadership intensive for nonprofit CEOs at Stanford University. For 10 days, 50 of my peers from organizations across the country and around the globe and I learned skills and strategies to help propel our organizations forward.

I expected it to be a truly amazing educational experience, and it didn't disappoint. I -- and BoardSource -- will be benefiting from the time spent with some of the brightest minds in strategy, communications, and management for years to come. What I didn't expect was my classmates' interest in spending time with me: Early on, many asked if I could meet to talk about how to build a stronger relationship with their boards.

So I organized an informal dinner conversation one night and -- much to my surprise -- almost the entire group came. We pushed together tables, and they told of the board challenges they are facing around such issues as recruitment, fundraising, engagement, founder transitions, and boundaries. We talked for more than two hours. They shared their concerns and hopes, and, as a group, we offered each other advice and counsel. And then, toward the end of the conversation, someone asked this question:

"Don't you think it's time for a different model?"

I actually get asked this question all the time in my role at BoardSource, and have come to realize that -- for at least some CEOs -- it's another way of saying, "Can't we just get rid of boards? It would be so much easier for me to do my job without one."

And it's a somewhat understandable sentiment. The board -- as a construct -- is not without its challenges. It's a body that, by design, is meant to bring together influential people with diverse opinions and perspectives. We ask them to bring their expertise and networks, but put aside their personal loyalties and position. And we ask them to tackle big questions of organizational strategy and sustainability and make decisions -- as a collective, not as individuals.

There are a lot of dynamics and variables that can go wrong or get out of whack in that scenario. From the CEO's perspective, that's a challenging thing to manage -- and an even more challenging thing to be managed by. Because, of course, for the CEO, the collective board -- with all of those group dynamics and challenges -- is also his or her boss.

A Gallup poll of more than 1 million workers found that the No. 1 reason people quit their jobs is because they had a bad relationship with their boss or immediate supervisor. So it should be no surprise that when asked by BoardSource to grade their boards' support of them in their role as leader, almost a third of nonprofit CEOs give their boards a "C." And that those chief executives who are unhappy with their boards are more than twice as likely to be making plans to leave their position.

And yet -- despite these challenges -- I am a staunch believer in the absolutely necessity of boards. I believe that the end of boards would be the end of the nonprofit sector.

I know that sounds apocalyptic, but I really believe that it's true. Without boards, the social sector would falter in ways that would irrevocably harm us, and would ultimately lead to our demise -- maybe not instantly, but eventually.

Here's why:

• First, organizations would struggle to earn and keep the public's trust. Another recently released Gallup study found that charities are amongst the most trusted institutions in our society, ranking higher than government, corporations, newspapers, banks, and even schools. But that trust is fragile, and, I believe, relies heavily on the idea that there is a group of people with shared accountability watching over the organization's practices and working to prevent bad things from happening.

• Second, organizations need strong leadership to succeed. Every organization needs a strong and effective leader. But the truth of the matter is, not every organization has one, and, when that's the reality, it's the board's role to step in and either provide support or make a change. Without a board, ineffective leaders would remain in place indefinitely, leading to a growing number of organizations being poorly led and a slow decrease in the reputation, stature and, most importantly, the impact of the nonprofit sector.

• And finally, surviving a CEO transition would be the exception, rather than the rule. Without a board, there would be no solid mechanism for finding an organization's next leader, which would create a whole host of dysfunctions -- employees hiring their bosses, CEOs appointing "heirs" to their leadership, or EDs simply walking off to leave the organization to fend for itself. Not to mention the fact that -- without the stability of the board's leadership and reputational capital -- new leaders would face a tremendous uphill battle establishing credibility and securing the funding that the organization would need to succeed. And many organizations simply wouldn't.

Some might say... so what? Isn't it okay if organizations falter or fail? Won't there be others that come up right behind them? Won't it encourage organizations to build resiliency and strength in creative and innovative ways? And there's some truth in all of that, without a doubt. We do suffer as a sector from too many organizations that aren't built for resilience and impact, and -- as many have suggested -- the sector might benefit from some thoughtful and strategic restructuring and consolidation.

But that leads me to perhaps the most important point: Failure in the nonprofit sector is a high-stakes venture. When a nonprofit organization goes under, it doesn't just affect the people who lose their jobs. It leaves a void in services and a hole in its community. It means that the people who relied on that organization are even more vulnerable.

Can our communities survive one or two failures? Probably. But if we're talking about large-scale destabilization of the nonprofit sector, what we'd really be talking about is large-scale destabilization of communities across the country. Hundreds of thousands of people who rely on nonprofit organizations for support and basic services would be without.

The nonprofit sector is too critical to our society and our communities to have a cavalier attitude about its sustainability and survival. And it's too critical to abandon the very good idea requirement that each organization have a group of people who are bound and committed to the organization's success in such a real way that they are willing to put their own financial, reputational, and social capital on the line.

That's why we need boards. And that's why we should be celebrating their commitment, rather than questioning their existence.

Follow Anne Wallestad on Twitter: www.twitter.com/AnneWallestad

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Nonprofit Board Fiduciary Duty of Loyalty #Nonprofit Boards

A nonprofit board member's fiduciary duty of loyalty is pretty much about conflicts of interest although more broadly speaks to the concept that a nonprofit board member can not profit through their activities, and more specifically, governing decision-making.  The case in question below describes what might be perceived from the outside as "self-dealing" whereby the board member votes on a grant/contract of her employer.  

Now what's fuzzy is that the board member does not in fact directly benefit from her employer's grant Her job does not appear to be paid for from these monies.  But that said, at the same time, the board member likely is "on-duty" for her employer as a board member and even if this is not overtly stated by her employer, it is a reasonable expectation.  This is of course, in my opinion, one of the challenges to those nonprofits that receive federal money and are required to have seats allotted from public sector bodies.  The question in those cases is who exactly does the public sector individual represent (or whose hat are they wearing when making decisions)?  

Thus the problem for this school board member.  Could that member clearly remove their employer's expectations, hopes or dreams while sitting on the School board?  Likely not in my opinion.  And so, the better action: recuse themselves from any vote where her employer could benefit or lose.  

Here's the Stamford Advocate article highlighting the challenges around fiduciary duty of loyalty.

Stamford school member votes to fund non profit employer

By Evan Simko-Bednarski

Updated 7:53 pm, Thursday, October 8, 2015

STAMFORD — A vote cast by Board of Education member Julia Wadewill benefit her employer, a non profit that receives money from the district.

The vote, taken during the Sept. 29 meeting of the full board, allocated some $300,000 in state grant money over two years to an after-school program administered by DOMUS, where Wade works as its director of volunteers.

Her approval of the grant calls into question Wade’s prior assertions that her employment by the non profit does not constitute a conflict of interest.

Wade, a seven-year board veteran, was hired by DOMUS in 2010. The organization runs two charter schools in Stamford as well as several programs aimed at providing educational opportunities to under-served students in the district.

Wade did not return requests for comment through phone calls and emails over three days this week.

Wade told The Advocate in August that she saw no conflict in being employed by an organization that received money from a city board on which she was a voting member.

While the district does not have any formal process by which board members are asked to disclose potential conflicts of interest, the city’s Code of Ethics requires all city officers to notify their boards of any conflict.

Wade, in her August interview, said DOMUS excluded her from certain business conversations due to her position as a board member. Her employer also acknowledged it expected to lose her vote regarding DOMUS business.

“There are conversations that I am absolutely not privy to at a senior level,” she said. “Not only am I careful, but DOMUS is very careful in making sure that the information I’m provided doesn’t compromise my position on the board.“

When asked about Wade’s employment in August, Garland Walton, the DOMUS chief of staff, said the organization “acknowledged that employing a Board of Education member would in fact be a disadvantage for DOMUS, because - knowing Julia supported our work - we would lose a vote on the board because she’d have to abstain on any vote that would affect DOMUS.”

Board President Jackie Heftman did not return requests for comment regarding the September vote. In August, however, she told The Advocate that it was up to individual board members to decide if they had potential conflicts of interest.

In addition to grant money for individual programs, the district’s two DOMUS charter schools, Trailblazers and Stamford Academy, receive money from the Board of Education’s operating budget. Those schools were budgeted a total of roughly $1.2 million in district money for the 2014-15 school year.

The program to be funded by the grant, four days a week of after-school enrichment at Turn of River Middle School, provides students with academic support with an eye toward college readiness. The grant was accepted unanimously by the board with a vote of 8-0.

[email protected]; 203-964-2215; stamfordadvocate.com/news

Nonprofit Board Diversity Matters #Nonprofit Boards

I have been reading a lot of articles highlighting the need to diversify nonprofit boards.  Diversity takes-on a number of characteristics including race, ethnicity, gender, socio-economic status, experience, skills - well, you get the idea.  I pose that establishing and maintaining a diverse board (recognizing that diversity can include a wide variety of meanings) is both a matter of values and matter of mission/strategy.  The same is true in reverse.

But even with what appears to be a strong shift in intentional nature of boards to indeed make diversification a priority, it was surprising for me to see in yesterday's Washington Post an article about diversity in the leadership of the Mormon Church. Effectively the answer is that there is little diversity in the Church's leadership.  Membership organizations in particular may find that the lack of leadership diversity has an even larger impact than in non-membership organizations (again, a mission/strategy question).

According to the article:

    The top 15 leaders of the religion — including the president, his two counselors and the Quorum of     the Twelve Apostles — are all white men. Only one, Dieter F. Uchtdorf, is from outside the U.S. He     was born in Czechoslovakia and raised in Germany.  There aren’t any blacks either on the next-level     leadership group, the seven-member presidency of the Quorum of the Seventy. But there are two     minorities: Ulisess Soares of Brazil and Gerrit W. Gong, an Asian-American.  There are no black     leaders from the U.S.

So what you might ask?  According to Mormons cited in the article:

    The dearth of black leaders is an issue for recruitment and retention, Reeve said.

    When you don’t have a representation of people who look like you, the perception can quite easily     be: That’s a white church,” Reeve said. “It leads to feelings that somehow I don’t belong if I’m a     black person.”

    “There are a lot of great men called as bishops and stake presidents, but sometimes they just don’t     understand the problems that somebody who is black has,” said Harwell, of Cottonwood Heights,     Utah.

For those who have not yet been convinced that diversity on board matters, perhaps this Mormon lens can be helpful.