Nonprofit Board Crisis

Nonprofit Board Development #NonprofitBoards

 The folks at BoardSource (or their spinoffs) have a hopefully tested nine-step approach to building a functional nonprofit board.  These steps were presented in the following agrinews.com publication.  I would pose that while nine steps appear pretty basic, there are multiple complications that challenge implementation.  The complications are where board chairs and execs must give attention.

For instance, there's an assumption that a strategic plan exists or that there is even the notion of what results should occur 3-5 years out particularly in light of the internal and external realities.  And, in my opinion, beginning with a board-developed theory of change, the plan must be owned by those who will ensure its implementation.

Recruitment, which I might argue is actually Steps 2 & 3 can be a very challenging task again given the local environment.  For sure, I believe that the one critical ingredient for a prime recruit: passion for mission.

Engagement (step 5) is a challenge for boards equal to recruitment.  While passion for mission is a driver, have the "right" work proves to be work in itself.  Committees may be an answer although I believe short-term, clearly defined fiduciary, strategic, generative or advocacy projects keep the attention of members better and when time-limited, provide a feeling of contribution and level of satisfaction.  These areas though are not just the domain of committees, they belong to the whole board and nothing, again in my opinion, drives interest and commitment like stories that highlight successful implementation of mission.

Finally, evaluation is not a simple nor un-painful exercise.  Hence a governance committee - one of the two most important standing committees. 

For sure, what these steps speak to, is that great attention must be given to the "care and feeding" of an engaged and productive board.  The lack of thoughtful care and feeding: an unproductive and un-engaged board.

Here's the Agriinstitute article.

9 steps to a build a board of directors

 INDIANAPOLIS — Today’s nonprofit boards need members that are knowledgeable, skilled and focused.

To help volunteers to lead their organizations, AgrIInstitute hosted a board of directors training session. Board members from agricultural and non-ag groups alike attended.

Dave Sternberg, partner at Loring, Sternberg and Associates and senior governance associate at Board Source, was the keynote speaker.

“How do we get board members ready to participate at the highest level?,” he asked. “At new member orientations, they’ll often direct you to the committee that might be ideal for your skill set. They’ll assign you a board buddy to quickly acclimate you to what’s going on.

“It’s important to get people engaged.”

Education also is crucial for board members, Sternberg said. Topics for education include fundraising, current trends in the sector and impacts of federal legislation.

“What they need to know and understand in order to be an effective board member is what you want to educate them about,” Sternberg said. “Some of these things are ten minute drops of education before a board meeting starts.”

Sternberg shared nine steps to build a successful board of directors.

Building A Board

Step 1: Identify board needs, such as skills, knowledge and connections needed to implement a strategic plan. Find out who has the needed characteristics.

Step 2: Cultivate potential board members. Get them interested in your organization and keep them informed.

Step 3: Recruit prospects. Describe why a prospective member is wanted and needed. Explain expectations and responsibilities of board members, and don’t minimize requirements. Invite questions and elicit their interest.

Step 4: Orient new board members to the organization. Explain program history, bylaws, pressing issues, finances, facilities and other issues. To the board, provide recent minutes, committee lists, board member responsibilities, and a list of board members and key staff.

Step 5: Engage all board members. Discover their interests and availability. Involve them in committees or task forces. Solicit feedback. Hold everyone accountable, and show appreciation for a job well done.

Step 6: Educate the board. Provide information concerning your mission area. Promote exploration of issues facing the organization. Don’t hide difficulties.

Step 7: Rotate board members. Establish and use term limits.

Step 8: Evaluate the board and individuals. Engage the board in assessing its own performance. Identify ways to improve, and encourage self-assessments.

Step 9: Celebrate by recognizing victories and progress. Appreciate individual contributions to the board, organization and community

AgrIInstitute is a leadership development program that includes a two-year leadership certificate program.

“We want to advance leadership in the agriculture industry, but not everyone can do the two-year program,” said Beth Archer, executive director of the institute. “The Thought Leader program and board of director training are ways to reach new people and organizations.

“We can being in experts like Dave, and they get an opportunity to network. At the end of the day, everyone learns something new.”

Learn more at www.agriinstitute.org.

Nonprofit Board Thin Lines #NonprofitBoards

This weekend I wrote about Mr. Bannon of Breitbart fame and his role as board member and employee at a separate nonprofit that is not so separate.  Well, according to the following Philadelphia Inquirer article, Mr. Bannon is not the only individual playing multiple roles and not drawing lines or establishing accountability effectively challenging what I believe to be the right and just rules that should guide nonprofit board and exec behavior.  Do note, this article turns out to be a lot more than just a story about MAYBE questionable nonprofit exec salaries.

PS I would quibble with the article's consultants who speak of "best practice".  Evidence-based and or documented as practices I don't believe so.  Ethical or donor dictated?  More likely.

CEO pay at region's nonproft service providers

The two brothers who founded Pedia Manor Inc., a Bucks County nonprofit provider of rehabilitation services for children, use an unusual formula to determine their salaries.

According to compensation rules they have written themselves, Sudesh and Dinesh Singh, Pedia Manor's key executives and only board members, are each eligible to receive $12,000 a month for each of five locations the brothers own, Pedia Manor's latest tax return says. 

"The most egregious thing in this whole scenario is that the brothers are both the only two board members and the two top employees," said Otten, executive director of the Nonprofit Center at La Salle University.

"They determined their salaries, they wrote the contract as 'their bosses,' and they signed the contract. None of this is anywhere on the best-practices continuum," Otten said.

The Singhs, who get most of their $6.35 million in revenue from Pennsylvania Medicaid and affiliates, did not respond to requests for comment.

Pedia Manor - along with a nonprofit that has paid more than half its revenue over the last decade to for-profit firms owned by the executive director - stood out in an Inquirer survey of CEO pay at more than 90 tax-exempt human-services organizations in the Philadelphia area.

That the Singhs paid themselves only $520,001 each in 2014 - 16 percent of Pedia Manor's revenue - instead of the $720,000 they were entitled to, did nothing to assuage nonprofit expert Laura Otten.

Topping the list of human-services executives, with total pay of $1.3 million, was Diana Ramsay, who led Woods Resources, of Langhorne, for just four years, a far shorter period than most of the top-paid CEOs.

Placed in the larger universe of executives who run the area's biggest hospitals, Ramsay's pay would have ranked ninth among 21 Philadelphia-area health-system CEOs, putting her between executives running systems with three times and four times more than Woods' $191.5 million in revenue.

Steven M. Altschuler, who left the Children's Hospital of Philadelphia in summer of 2015 after 15 years as CEO, was the highest-paid health-system CEO, with total pay of $4.7 million in 2014.

At Woods, which has operations in Pennsylvania and New Jersey, Ramsay expanded through four acquisitions, nearly doubling the size of Woods. She left Woods four months after her final deal in September 2015. That deal was undone in April.

A spokeswoman for Woods declined to answer questions about Ramsay's compensation, such as whether Ramsay was able to keep retirement funds. Ramsay could not be reached for comment.

The next two highest-paid executives had much longer tenures. M. Joseph Rocks, who led NHS Human Services Inc. for 15 years, was paid $1,060,166.

Close behind was Joanne Gillis-Donovan, of Melmark Inc., in Berwyn, who had total compensation of $944,383 after 20 years at Melmark.

Sometimes salaries and benefits do not tell the whole story, which is the case with the Philadelphia Mental Health Clinic Inc.

The Center City organization, which operates as Philadelphia Mental Health Center and provides mental-health treatment to disabled children and their families, paid its executive director, Kerey Ruggiero, $207,142 in 2014. That is about average.

But the clinic also paid $7.2 million, or 65 percent of its $11.11 million in fiscal 2015 revenue, to for-profit firms Ruggiero owns, plus $400,486 in rent to Ruggiero and her relatives.

During the 10 years ended June 30, 2015, the clinic paid nearly $60 million - more than half of the clinic's revenue - to those firms and landlords.

A federal lawsuit filed in Philadelphia in July by Philadelphia Mental Health Clinic's former chief operating officer - who was fired in February after objecting to the insider deals - alleged that many of the payments to Ruggiero's companies were for unneeded services. Staffing fees by Staffmore LLC, a firm owned by Ruggiero, were allegedly inflated by 25 percent.

Ruggiero, who splits her time between Philadelphia and Florida, did not respond to requests for comment. Nor did her attorney, Brenna D. Kelly, of Saul Ewing LLP, in Philadelphia. The former executive, Caryn Gratz, declined to comment, said her attorney, Noreen Amir, of the Law Office of Guy Vilim LLC, in Media.

Officials at Community Behavioral Health, a quasi-governmental entity that accounts for the bulk of Philadelphia Mental Health Clinic's services, said they could not comment because of the lawsuit, which said officials there were concerned about the amount of money Ruggiero was paying her companies.

Notable about the clinic is that it has a small board, with just three members who do not work at the organization, according to a 2015 licensing application in Pennsylvania.

One lives in Florida, another in Denmark, the third in Newtown.

"Charities are required to have independent boards that include representatives from the communities they serve," Solomon, the attorney, said.

"Often, when there is a misuse of charitable assets, it occurs because the organization lacks an active, engaged, healthy board that's doing its job of providing oversight over the charity, its assets, and operations," she said.

[email protected]

Nonprofit Staff as Board #NonprofitBoards

In a fairly exhaustive article on the politically left's nemesis and now chief strategist for President-Elect Donald Trump, Washington Post writer Robert O'Harrow Jr. demonstrates that Steve Bannon has been working two jobs simultaneously: Breitbart News Network and the Government Accountability Institute.  Writer O'Harrow also, in his article makes the case that the Government Accountability Institute essentially violate the IRS rules of not playing partisan politics nor necessarily maintaining an arms-length relationship with Breitbart News raising the question as to whether the Government Accountability Institute is a legitimate nonprofit.

It appears from the article that Mr. Bannon has indeed been working two jobs (and yes, this is America so lots of people work two jobs - most of them out of necessity).  It is also likely (based on the reporter's evidence) that the nonprofit that Mr. Bannon works for does indeed cross a thin line in playing partisan politics particularly when considering that the second "employer" effectively is the primary employer that serves as THE distribution vehicle for the work of the first employer (not maintaining an arms-length relationship).

And ok - we are now aware of the evidence but I'm not convinced that there's a lot or anything to be done about these "facts". However, what does interest me is a question as to the non-existent line between staff and board as well as the question of pay for board members, particularly when the staff are the board.

At the Government Accountability Institute, the leadership staff is the board AND also folks who work for the for-profit (the second employer).

The Institute's president, secretary and treasurer is Peter Schweizer, a prominent conservative writer and at-large editor for Breitbart. He received $778,000 in salary from the institute for 2012 through 2015, the IRS filings show.

The institute's vice president is a Tallahassee lawyer, Stuart Christmas. He said he worked from 25 to 40 hours a week and accepted more than $480,000 in salary over four years.

Paying a nonprofit's board members is not illegal unless state law or bylaws specify otherwise.  But, when board are staff, the more important question becomes: who is responsible for ensuring that oversight and accountability for financial and mission well-being occurs?  Paid staff as board certainly have it in their best interest to ensure there is enough money in the "till" but what about their work?  I suppose accountability for mission is left up to the donors. And, in the case of the Government Accountability Institute, there are only 2 of which one also sits on the board.

The institute received nearly $4 million in donations between 2012 and 2014 from two conservative charities - Donors Trust and the Mercer Family Foundation.  The institute's board of directors includes Rebekah Mercer, director of the conservative family charity.

The good news about a donor's sitting on the board is that there is deep familiarity with the results of the foundation's investments.  This assures some degree of accountability.  And maybe the public should be satisfied with this arrangement.

But, there is one final question.  The Institute's staff's (aka board) also works for Breitbart.  Clearly this is acceptable to the donor.  But is this arrangement in the public's best interest - at minimum - four million dollars of tax exempt money effectively being used to sway hearts and minds?  

 

 

 

 

 

 

Nonprofit Boards Fiduciary Oversight is Not Enough #NonprofitBoards

For some folks, particularly nonprofit lawyers and accountants and often execs, fiduciary responsibility is the only realm in which they believe board members matter.  Conversely, these same folks believe that when a nonprofit fails it was on account of the lack of a board to fulfill its fiduciary responsibilities (oversight).

I certainly understand that failure by a board to fulfill its fiduciary responsibility can indeed have tangible consequences both from a penalty perspective and even, in the worse case, loss of the nonprofit.  But I believe that a nonprofit board can also affect the well being of a nonprofit by failing in non-legal ways as well.  For instance, the failure to be strategic, another generally agreed upon responsibility, can lead to having the wrong people (CEO) on the "bus".  And not paying attention to market (donor or consumer trends) can lead to not fulfilling mission.  And a board that doesn't want to represent the mission of a nonprofit to the public can limit the number of voices needed to ensure support is given.

The bottom line: a board, always the sum of its parts, can have a positive or negative impact that goes well beyond just fulfilling its fiduciary responsibilities.  

The following article is from the Pittsburgh Post-Gazette.

Lax board members hurt nonprofits

November 22, 2016 8:59 AM

 

Agreeing to serve on the board of directors of a nonprofit organization is a serious undertaking accompanied by a number of legal, ethical and financial responsibilities.

Most executives understand these duties in theory, but in practice may not follow through. When their work and personal schedules get busy, they may decide to skip several board meetings in a row or may not thoroughly review reports and financial statements.

A survey conducted by Stanford University’s Graduate School of Business found that 27 percent of nonprofit directors did not have a thorough understanding of the organization’s mission, and a majority did not believe their fellow board members are experienced or engaged enough to appropriately manage the organization.

Many of the boards lacked formal governance processes, with 42 percent saying they had no audit committee and that they relied on monthly bank statements to monitor their financial situation.

Many nonprofits can get along for a long time with lax governance from the board, particularly if they have a high-performing chief executive officer or executive director. But it’s almost inevitable that such loose procedures will eventually create an opening for financial fraud and organizational mismanagement that could create serious legal trouble for the organization.

A member of the board of directors of a nonprofit organization must be prepared to fulfill the following responsibilities:

—  Regularly attend board meetings

— Be informed on organizational issues and exercise oversight of organizational decisions

— Use independent judgment

— Avoid conflicts of interest

— Observe the board and organization’s confidentiality obligations

Without question, serving on a nonprofit board is an excellent way for professionals to give back to society and network among peers. But board members need to seriously consider the time and effort they must give before making a commitment.

- Patricia Farrell, Meyer, Unkovic & Scott, [email protected]

Business Workshop is a weekly feature from local experts offering updates on matters affecting business. To contribute, contact Business editor Teresa Lindeman at [email protected].

Nonprofit Board "Waiting for an Angel" Strategy #NonprofitBoards

The Camden eye clinic, admittedly in a very economically challenging environment is facing closure after some 55 years in business.  Closure is not a selected strategy nor pending due to lack of demand.  However, closure does appear to be more likey as the board of this nonprofit just doesn't appear to have a strategy that extends the clinic's life.

I must admit that I am not moved by media posted threatening-to-close appeals.  Woe-is-us messaging just doesn't do it for me.  On the one hand, with my own beginnings as an executive of one of the early community health centers, I do care about places like the Camden eye clinic.  However, I find it difficult to believe that the board of this organization couldn't have explored a wider range of options for the organization's future.  For instance, some 15 years ago or even five years ago (the fiftieth anniversary) the time for planned giving or a year of mega fundraising events or even considering merger options would have been appropriate strategies.  The reality of the times has really not been that different in the past year as in the past 10 years. Perhaps in some of those years the times even opened opportunities that would have offered a more rosy future.  

Sadly, I'm seeing a nonprofit board that just has not done its homework and fully lived-out its strategic responsibility.  Sad for the patients.

Here's the Philadelphia Inquirer story.

 

Camden eye clinic running short of funds, may close

Updated: NOVEMBER 20, 2016 — 11:59 PM EST

 

by Kevin Riordan, Inquirer Columnist @Inqkriordan

An eye clinic that has enabled generations of kids and adults to see more clearly may soon go dark.

 The South Jersey Eye Center, founded in Camden in 1961 to provide affordable vision care and eyewear to city residents, is running short of operating funds.

"We should have closed" already, manager Denise Baker says, adding, "The other day I burst into tears."

 Jobs have been eliminated, hours cut, the annual budget slashed by more than half, and the third floor at the main office on Chambers Street shuttered to save on utilities.

The center serves 2,000 patients, about 68 percent of whom live in Camden. Half are children, only a tiny fraction have conventional health insurance, and many, like Rosa Smith, rely on public transportation.

"I just hope they stay in business," says Smith, 84, a retired church housekeeper from Parkside who's been treated for what she describes as "a little glaucoma and a little cataracts."

The center, Smith adds, "is the only eye doctor I've ever been to."

Medical director and optometrist Shelby Baker says the nonprofit clinic is being squeezed by rising costs, stagnant Medicaid reimbursement rates, and the mistaken impression among potential funders that all poor people are now covered by the Affordable Care Act.

"About 95 percent of our patients are uninsured or underinsured," he says, noting that eye exams and related services often aren't covered for adults through the Affordable Care Act.

Worsening the center's cash crunch: A $350,000 annual state funding cut imposed as the economy cratered in 2008 was never restored.

And while the Lions Clubs of New Jersey and the Lions Club International Foundation are stalwart supporters, other traditional funders of vision-related services have begun underwriting research rather than treatment.

"We let the staff go at noontime on Wednesday [Nov. 16] because we didn't have a doctor," Denise Baker says.

"When we don't have a doctor," Shelby Baker adds, "it's because we can't pay a doctor."

I meet the Bakers, who are married, and board member MaryAnn Ragone DeLambily - her father, Lawrence Ragone, founded the center and still serves on the board - at the Chambers Street headquarters.

"We don't want closing our doors to be an option," DeLambily says. "But what we need is operating money, and that's tough to get."

She and other center officials hope to keep the lights on for a few months while they pursue a partnership or a merger - which would be easier to accomplish while South Jersey Eye remains a going concern.

"This has never been a 'Medicaid Mill,' " says board member and optometrist Charles Fitzpatrick. "The doctors and the staff have taken time to treat our patients as if they were private-pay patients.

"We're hoping that public or private benefactors will find it's worthwhile to keep this going," Fitzpatrick adds.

In addition to the main clinic, the center also operates a satellite office (rent-free) at Camden County's Lakeland complex in Gloucester Township, and a clinic-on-wheels that formerly ran twice monthly but has been cut to once every other month.

"I founded the center because I saw there was a great need," says Ragone, 88, an optometrist who grew up in South Camden and entered private practice there in 1956.

He set up what was then called the Camden Eye Center five years later, "with $150, some antique equipment," and rent-free digs in the old Camden Convention Center on Haddon Avenue.

The center has recorded about 450,000 patient visits since 1980, "which is very gratifying," Ragone says.

But the possibility of closure "is very difficult for me emotionally," he adds.

"Ten years ago, if you asked me whether we should merge or partner with another [provider], I would have said no. Now, I say, absolutely! Because we need to keep serving the people who need us. We have to keep our doors open."

I agree; I've written about the center over the years, and have been impressed by the mission, and by the people who carry it out.

"We're waiting for an angel," says DeLambily.

Adds Shelby Baker, "Maybe two or three."

[email protected]

Nonprofit Advocacy is Legal #NonprofitBoards

Nonprofit advocacy is legal! Nonprofits engaging in partisan politics (endorsing candidates) is not legal!  

NOW is the time for all nonprofits to come to the aid of their citizens (yes, paraphrased)!  It is a nonprofit's (BOARD) right and responsibility (see the 1st Constitution) to speak out to ensure that what a nonprofit believes in is preserved - that its constituents are not harmed.  Your voice matters.

To learn more about the hows and wherefores of nonprofit engagement in advocacy check-out the National Council of Nonprofits as well as your own state nonprofit association of nonprofits.  And don't wait.  The time for protecting all that is important to your nonprofit is NOW.  And Board members - this means YOU!

Nonprofit Board Recruit Advice #NonprofitBoards

Just yesterday I queried about how many nonprofit boards an individual can serve well simultaneously and while I have a similar question about the following individual, her article is focused not on the number of boards in which she serves but on considerations an individual should have when selecting a nonprofit board to serve.  

I do want to quibble with two points: if an organization only wants its board to listen to staff reports as the focus of board meetings - the board is failing its fiduciary and strategic responsibilities.  Don't join if that's the culture.  Second, I would want to hear more about what Ms. Armstrong thinks giving "time" means.  Time could mean just attending board meetings or it could mean a whole lot more.  Yes, to ask but also to clarify.

Anyway, Ms. Armstrong's advice makes for the start of a good primer for those exploring nonprofit board service.

Here's the piece from Investment News.

If you're thinking of joining a nonprofit board, pick an organization you care about

Nov 20, 2016 @ 12:01 am

By Alexandra Armstrong

 

 

I was one of the lucky people who had a female role model before I knew what that was. My first job in the financial world was working for a successful female stock broker at a regional New York Stock Exchange firm in Washington, D.C., in the mid-60s — a rare occurrence in what is still a male-dominated world. She taught me many things that guided me throughout my career. One of the most useful pieces of advice she gave me was that since we earned a living from the people in the community, it was incumbent on us to give back in some way to that community.

Over the years, I have followed her advice and have derived immense satisfaction from my volunteer work. It feels good to make a difference and to help others less fortunate than we are. As advisers, nonprofit boards welcome us as members because of our financial expertise.

My first nonprofit activity was serving on the board of the Boy Scouts council in our area, one of the largest in the country. You might ask why I chose the Boy Scouts. Well, they were looking for women on their board, they met every other month a block from my office and I knew they trained youth to meet certain standards. After serving on the board for a while I learned that theirs was a very efficient organization and the staff members were truly dedicated. Furthermore, I was pleased to find out that the other people on the board were responsible. Many of them were former Scouts, and if they said they would do something they actually did it — something not true of all nonprofit board members!

I also served on the national board of Reading Is Fundamental, which is dedicated to motivating young children to read. And I serve on the board of the D.C. Police Foundation, which helps the police finance projects not in the D.C. budget, like a gym for the police as well as a training facility.

My real passion over the past 20 years has been serving on the board of the Foundation for Financial Planning, which helps people gain control of their financial lives with the assistance of pro bono financial planners. We work primarily with families of the military as they return from overseas, as well as families of cancer victims.

Over the years, my volunteer work has been immensely satisfying. It exposes me to people I wouldn't meet in my work and enables me to move out of my daily routine. However, I do have some advice for people who would like to maximize their time on nonprofit boards.

(Related read: 2015 InvestmentNews Women to Watch Lifetime Achievement Award Winner: Alexandra Armstrong)

First, focus on a few charities where you can have an impact. I have seen people go on too many boards and then not do a good job at any of them.

Second, pick a charity you care about, not just to get business. You may or may not get business from your board, but first you have to earn their trust.

Third, ask to see the financials. You need to know they are financially sound and if they are producing timely statements. You don't want to give your time and energy to a group that is shaky.

Fourth, if you agree to do a job for them, do it. This way you can build the respect of your fellow board members, which can lead to eventual business.

Fifth, it used to be that you were expected to give either time or money. Nowadays you are expected to give both. When you are approached to join a board, ask how much time and money they expect from you, and whatever the answer is, double it!

Sixth, find out if the board is an active one or if you just attend board meetings and listen to reports from the staff. My personal preference is to be on a board that has input into the strategic direction of the group.

(Related read: 2015 InvestmentNews Women to Watch)

We are fortunate to be in a profession in which we are financially rewarded. I believe it is important for us to share some of our success by giving back.

Alexandra Armstrong is chairwoman and founder of Armstrong, Fleming & Moore Inc.

Nonprofit Board Membership #NonprofitBoards

"Lee has joined six nonprofit boards, heads up an education committee for the West Contra Costa Unified School District and serves on the city’s economic commission, as appointed by Mayor Tom Butt."

Yes, I could not make this up!  From the Richmond Standard we learn that one of the new Chamber of Commerce Exec's strategies (which appears to be having a positive impact) has been to join six nonprofit boards AND head up an education committee AND serve on the city's economic commission.  Now, just for your reference, Richmond, California has a population of about 100,000 people.  Not tiny but not huge and clearly a town where a lot happens (Chevron is a dominant company) and there are quite a few nonprofits.

But the obvious question today: just how many boards can one person serve and do that service justice?  Just coordinating meeting and event scheduling, for a person who has a full-time position, admittedly one that is very public, must be quite a challenge.  And are there no other obligations that come with this service to this many groups? And what about all the time spent in understanding finances.  And if you read the article, you will also note that the person featured in the article has also cut the staff of his own nonprofit.

But as I have asked before and will continue to ask, just how many boards can an individual really serve, well, at one time?  

 

 

 

Nonprofit Board Life Cycle #NonprofitBoards

Even the best of boards with a long history can, as life cycles are known to happen, fail.  Such appears to be the story of the Community Charter School in Charlotte, North Carolina.  After a 20 year history of success, demographic changes and a board that just couldn't keep up will result in closing the school. With half of its population depleted and a last minute effort to install new board members, some who have been board members previously (thinking "we did it before") there just apparently wasn't time, nor money (to pay for what perhaps should have been addressed earlier in previous year) nor expertise to get the job done in time before the state pulled the plug.

Failure to adapt to change is a common cause for the "end" where what was once great can no longer perform.  Life cycle theory helps describe this condition.  In my life cycle paradigm, this charter school board succeeded through its infancy, adolescencence, juvenile and even maturity stages but while in maturity, didn't keep up with what were the needs of the students and school and the changing demographics (market).  A mature board knows when it is time to reinvent the nonprofit and that includes reinventing the board.  This nonprofit did not and you know the rest of the story.....

From the Charlotte Observer:

Charlotte’s oldest charter school faces 2017 closing – and possible rebirth

BY ANN DOSS HELMS

 

Faced with dismal test scores, dwindling enrollment and leadership churn, a state panel decided Wednesday that Community Charter School should close next fall after 20 years in Charlotte.

The Charter School Advisory Board’s decision isn’t final; that falls to the North Carolina Board of Education next month. And the advisory board opened the door to the possibility that one of the state’s oldest charter schools could pioneer a new option that allows another charter school to step in and take over.

Details of how that might work remained fuzzy Thursday, as the school’s board notified staff and students of the possible closing after this school year.

 

Current leaders don’t deny that the small elementary school in Charlotte’s Cherry neighborhood had fallen into bad shape. But they say they had hoped for another year to turn it around.

 

Community Charter has only 82 students this year, about half full. It earned an F from the state, based on proficiency rates of 36 percent in reading and 22 percent in math last year, with growth not strong enough to offset the low pass rate.

Kathryn Greene, a former board member who returned this spring in hopes of reviving the school, said many of the students are transient and disadvantaged, but that’s no excuse for the failure.

“We should have been addressing it long before this year but weren’t,” she said Thursday.

The advisory board’s vote not to renew Community’s charter continues a trend of cracking down on low-performing schools, even as the state continues to authorize new charter schools. Earlier this year the state stopped funding to Kennedy and Crossroads, two longstanding Charlotte charter schools with low test scores and other challenges.

I CAME BACK AND SAW WHAT A MESS IT WAS HERE.

Kathryn Greene, former Community Charter board member who returned this spring

Community Charter School opened in 1997, when North Carolina first authorized the independent public schools run by nonprofit boards. But despite the long history, the school was undermined by changes in school leadership and the surrounding neighborhood, Greene said.

Greene says she was among a new group of board members named in the past few months. “I came back and saw what a mess it was here,” she said.

The Cherry neighborhood, on the outskirts of uptown Charlotte, is a historically black neighborhood where subsidized housing is being replaced by large, costly homes. As families who had enrolled students moved away, the previous leaders failed to market to the new ones, Greene said.

[READ MORE: How gentrification reshapes Cherry, other Charlotte neighborhoods]

At the end of this school year Community Charter School will lose the building it has leased from Charlotte-Mecklenburg Schools, which has put the property up for sale. Greene said CMS offered an extension but the Community board couldn’t afford needed renovations.

The Community charter is up for renewal in 2017, but the new board didn’t ask for a full 10 years. Instead, Greene said, the school sought a one-year extension, hoping to show enough improvement to win the state’s longer-term support.

“We really believe we have a good core group of people and we could turn it around in one year, this year,” Greene said.

The advisory board disagreed. But it voted to offer a yet-untested option that allows other charter schools to submit proposals to take over management of the school. That could prevent students and staff from being displaced. But given the fact that there won’t even be a building to step into, Greene said she’s not sure yet how that might work.

By Thursday afternoon, Greene said she was working to pull together a new board that can make a pitch to be chosen as the takeover team. “We’re going to keep our charter,” she said. “I am sure.”

Charter school advocates are watching the next steps, eager to see how the takeover option plays out if the Board of Education adopts the advisory board’s plan.

“It would be the first one ever,” said Eddie Goodall, a former state senator from Union County who is now a charter school consultant.

“I see it as sad in a sense that they would be closed,” Goodall said, but added that he is “energized” by the prospect of a new life for one of the state’s first charter schools.

Read more here: http://www.charlotteobserver.com/news/local/education/article115356978.html#storylink=cpy

Nonprofit Board Mergers #NonprofitBoards

Over the recent years core to my planning work with nonprofits has been a discussion about mergers.  Mergers "feel" onerous but the following article may be helpful and lessening the initial "feeling" and enabling the possible considerations. 

From the Nonprofit Quarterly:

Merger Magic: What Makes Mergers Work in Chicago?

By JEANNE ALLEN | 20 hours ago

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Plexiglaslandschaft / Waldemar Merger

November 4, 2016; New York Times

When can the merger of two nonprofits be a good strategy? The Metropolitan Chicago Nonprofit Merger Research Project analyzed 25 nonprofit mergers that took place in the Chicago metro area from 2004–2014, as well as a selection of mergers that did not succeed. One key finding was that in 88 percent of the mergers, both sides felt that the resultant amalgam was stronger in terms of organizational goals and increased impact.

Other interesting findings: Of the mergers studied…

• In 44 percent, donors paid for the costs of the merger.
• Eighty-five percent had a board member as the main advocate for the merger.
• Sixty percent of the acquired nonprofits initiated the merger discussion, leading to more proactive than reactive strategies.
• Over 50 percent of the mergers began during a time of leadership transition.
• Fifty-six percent asked funders and grantors to offer advice on the merger decision.

Some of the more difficult issues that arose from the mergers were staff retention and board member retention and transition. Naming and branding the newly formed organization predictively led to some contentious conversations. The top hurdle is organizational pride—the reluctance to let go or give up control from the shared sense of ownership.

One of the cases in the study was the merger of the Eleanor Foundation (EF) with the Chicago Foundation for Women (CFW), which was initiated by a board member from the EF. Although both boards focused on empowering women, they had different methods and programs. After eight months of active discussion, the boards were able to work out an agreement.

Why did they merge? EF traces its roots to the early 20^th century, in the time of the well-known social activist Jane Addams. CFW began in the 1980s by leaders in Chicago’s philanthropic community. When EF lost its CEO in 2012, the committed effort to explore options began. EF faced a future of choices: spending down its assets and going out of business, working with a partner, or reducing its expenditures.

CFW agreed to continue the work of EF in the area of funding work on economic self-sufficiency under the name “The Eleanor Network.” As a result, the Eleanor Foundation gifted its assets. Additional considerations included board composition: Six of the 12 EF board members ultimately joined the CFW board, and while CRW previously had an intentional all-woman board, some of the EF board members transitioning to CFW were men. The gender issue did not break the deal, but did involve serious discussions by both boards.

The study highlights and identifies four common types of merger, though many would not term all of these exactly mergers:

1. Acquisition mergers, in which one organization dissolves and merges into the other
2. Asset transfer mergers, in which assets are transferred to another organization, with the liabilities disposed of by other means
3. Merger of equals into a new organization
4. Change of control involving a transfer of control, such as management services contract or parent-subsidiary

Not all mergers go well, and the reasons for a merger’s success or derailment can commonly be found among the board members. Each merger needs board members involved with many decisions over an extended period. Board members should be cognizant of the organizations’ assets, programs, and donors. Boards need to determine whether they’re seeking a full merger or an acquisition of another nonprofit’s assets or joint programming.

“Often, board members get very inflexible about who the leader should be of the combined organization, or they can get very inflexible about the name,” says Jean Butzen of Mission Plus Strategy Consulting.

The study included both types of 501(c)(3) nonprofits—private foundations and public charities. Private foundations, often with small and insular family stakeholders, face different issues when merging becomes a consideration. Often, this discussion arises when members serving on a private foundation’s board do not agree on the current direction or simply don’t get along. Rather than merging, family foundations often choose to split or put the remaining money into a donor-advised fund.

The best takeaway is the hope that this study can diminish the negative anxiety around nonprofit mergers. Gillian Darlow, CEO of Polk Brothers Foundation, offered, “People might worry that it looks like kind of a failure, when actually it’s a strategic choice.”—Jeanne Allen