Nonprofit Board Crisis

Nonprofit Board Advocacy Matter #NonprofitBoards

Calling All Boards!  Calling All Boards! This is not a test!  The future of your nonprofit's donations could be in jeopardy.

The following matter should be brought to your board meetings for consideration with subsequent action taken by each member! This is not a test!

From the Philadelphia Inquirer.

by David Gray

As Congress and the administration prepare to take on comprehensive tax reform, they will be making changes that will impact individual taxpayers.

 Many proposals that have started to surface could have a detrimental impact on charitable giving. The Republican House "blueprint" for tax reform calls for tripling the amount of the standard deduction. Doing so would reduce the number of filers who itemize their deductions (and therefore receive the full value of the charitable deduction). This would reduce the number of itemizers from currently over 30 percent of filers to only 5 percent of filers with the highest incomes. While many people will still make charitable donations, various estimates predict charitable giving nationwide could be reduced by more than 10 percent, more than $25 billion annually!

It is not yet clear what President Trump's tax reform proposal will include, though in the past he has called for a cap on the amount of itemized deductions that can be claimed. The cap proposal, limiting itemized deductions to a maximum of $100,000 and $200,000 for single and married filers respectively, would be truly disastrous if combined with the Republican "blueprint."

 

I was one of the 200 nonprofit leaders to attend the Charitable Giving Coalition event in Washington. I was intrigued to hear arguments from a Republican senate staffer, who thought I simply had a cynical view of donors. I do not.

There is ample proof that the amount people give is directly influenced by the economic incentives created in the tax code. When the value of the incentive is reduced, so are gifts to charity. This was the case after the federal tax reforms of 1986, when the reduction in the top tax rate reduced the value of the charitable deduction.

State laws impacting charitable giving have also proven that total giving is influenced by tax incentives. In 1981 Hawaii placed a cap on charitable deductions. This move did raise an additional $12 million in tax revenue but reduced overall charitable giving in the state by $60 million annually.

 

The current plans being discussed in Washington miss an important point. They are solely focused on the benefit to the donor without considering the benefit to the nonprofits and the constituents they serve. In nearly all nonprofit organizations the largest single expense is personnel. Yes, a wealthy donor may receive a tax benefit for donating a million dollars, but that donation is likely to create 15 or 20 jobs in the nonprofit sector. Those nonprofit employees also pay taxes and generate economic activity in their own communities. Donations are truly an investment in our economy.

The diverse Charitable Giving Coalition, encompassing religious, educational, arts groups, and scads of others is intentionally seeking that Congress retain the full "scope and value" of the charitable deduction rather than requesting that "nothing change." We need to ensure that whatever tax reform looks like, taxpayers will continue to have an incentive to support their preferred charities, and have perhaps even greater or broader incentives as government revenue is reduced and support for the myriad service agencies is increasingly fragile.

Please let your elected officials know that you care about the nonprofit sector and the importance of retaining the full scope and value of the charitable deduction.

David Gray is the executive director of the Pennsylvania Ballet and a board member of the Greater Philadelphia Cultural Alliance. He has served as a board member and consultant to many nonprofit organizations and is also the author of "The Finance Arts Guide to Nonprofit Cash Flow." dgray@paballet.org

 

Nonprofit Ownership and Regulators #NonprofitBoards

 

"Celerity CEO Grace Canada said Wednesday that her schools were victims of an unfair oversight process by L.A. Unified. District staff repeatedly demanded copies of the same documents, made requests on tight deadlines and then accused Celerity of not being sufficiently forthcoming, she said.

“Had we known that [a lack of transparency] was going to be the reason for non-renewal … we would have really tried to work things out with the district,” Canada said." ( LA Times).

From my perspective, a nonprofit is not a personal business and hopefully, for the sake of the parents and students, this is what I believe to have been one of the elements that has contributed to the current situation where regulators are having "issues" with this charter school operator.  On the other hand, a board of directors truly empowered to set policy and provide oversight could make a positive difference although not, in this case, without the founder-owner recognizing their authority.  

Here's the full article.

 

State commission makes no recommendation on L.A. charter schools’ future

 

Anna M. PhillipsContact Reporter

 

The fate of two Los Angeles charter schools remained an open question Wednesday, after a state commission declined to make a recommendation on whether they should remain open or close this summer.

The move comes amid a federal investigation of the charter network that operates the schools — the Celerity Educational Group. In January, Department of Homeland Security and FBI agents, among others, raided Celerity’s offices as well as the headquarters of a related nonprofit, Celerity Global Development, and the home of its founder, Vielka McFarlane.No one at the schools has been charged with a crime. But for the last six months, questions about their governance and financial management have threatened the schools’ survival.

Opened nearly a decade ago, Celerity Dyad Charter School in South L.A. and Celerity Troika Charter School in northeast L.A. have test scores high enough to meet the state’s bar for renewal. In fact, the state Board of Education previously was so impressed with the Celerity schools’ performance on standardized tests that in November it voted to allow the charter network to open two more schools.

 

What’s changed since then?

The board knew in November that the L.A. Unified School District’s inspector general was investigating allegations of financial mismanagement by the Celerity network. But news of the federal inquiry has brought a new level of scrutiny.

Records obtained by The Times show years of questionable spending and potential conflicts of interest by Celerity at a time when former teachers said the schools lacked basic supplies and often leaned on students to raise funds.

The California Department of Education’s charter schools division chose to forgo making a recommendation on Dyad and Troika, a move its director said was unusual. Asked why, staffers said they had too many unanswered questions about potential conflicts of interest and newfound concern that Celerity’s schools might be paying “excessive” management fees

The state Advisory Commission on Charter Schools — which exists to review charter school petitions and make recommendations to the state Board of Education — also threw up its hands Wednesday.

“I don't want to shut down a school that’s performing well for kids, but the evasiveness and foot dragging … is a huge concern,” said Caitlin O'Halloran, a member of the advisory commission. “I can’t even cast a vote one way or another.”

Instead of a straight yes or no, the commission approved a conditional recommendation: If Celerity’s leaders answer all of the department’s questions, fully assuaging the charter staff’s concerns, then the commission would recommend renewal.

In October, the Los Angeles Board of Education voted not to give five-year renewals to the two schools. The board based its decision on a staff report that warned that Celerity appeared to have made questionable financial transactions and had a governance structure that hid much of its spending. The Los Angeles County Board of Education declined to consider the schools’ renewal petitions.

“We believe you can’t oversee what you can’t see,” Robert Perry, the administrative coordinator for L.A. Unified’s charter schools division, told the state advisory commission.

Celerity CEO Grace Canada said Wednesday that her schools were victims of an unfair oversight process by L.A. Unified. District staff repeatedly demanded copies of the same documents, made requests on tight deadlines and then accused Celerity of not being sufficiently forthcoming, she said.

“Had we known that [a lack of transparency] was going to be the reason for non-renewal … we would have really tried to work things out with the district,” Canada said.

Behind her sat rows of Celerity parents and former students who had made the trip to Sacramento to show support for the network.

“We hope the state will not deny renewals based on just the existence of an investigation,” Canada said. “That’s just not fair.”

The state Board of Education is expected to vote on Celerity Dyad and Troika’s renewal next month.

Nonprofit Board Theory of Change #NonprofitBoards

Nonprofit Governance 101: nonprofit boards organize around a set of beliefs, values you might argue, that define what is the problem or challenge needing address; what is the intervention that might effectively address that challenge, and, what is or are the results that should be produced as a result of the chosen intervention.  This set of beliefs: Theory of Change and the fundamental framing for mission and strategy.  And yes, there are many nonprofits around the country who share similar Theories of Change and many who do not.  I would pose that the "trick" to success for any one board's fully achieving their success is acquiring enough and effectively utilizing resources.   

 

Can an individual or a corporation, politically left, right or centric, use one or more nonprofit boards to achieve their own Theory of Change?  Absolutely! Individuals and companies are sanctioned through the tax rules, to utilize nonprofits as vehicles for pursuing their personal or corporate theories of change.  So, the Washington Post did research and learned that Steven Bannon, well, you know who that is, has managed to sync his theory of change with that of a number of other nonprofits.  But these were not one-way transactions.  These boards took action to approve utilizing Mr. Bannon's strategies to achieve their respective goals.  At this point we have only half the story.  The other half: these boards.

 

Here's the excerpt:

A Washington Post examination found that Bannon was able to produce more than a dozen conservative documentaries over the past decade by drawing on a network of two dozen nonprofit organizations and private companies. Bannon helped arrange donations from wealthy Republicans to the nonprofits that paid him for films and other work, documents show. At the same time, Bannon and his firms took in at least $2 million from the nonprofits and an additional $5 million from the private companies, records show.

Bannon, who had already made millions on Wall Street, often was paid in multiple ways for each project — a common practice in Hollywood, where he had worked as an entertainment financier. Because he was paid through the nonprofit and private companies, which have limited obligations to disclose details about their activities, the total pay to Bannon remains unknown.

In a personal financial disclosure released by the White House last month, Bannon reported his net worth as between $11.8 million and $53.8 million.

Bannon, the White House and Schweizer did not respond to repeated requests for comment.

Tax specialists told The Post that some of Bannon’s activities raise questions about compliance with Internal Revenue Service restrictions against using tax­-exempt charities to attack a political candidate or for excessive personal financial benefit.

“The appearance is you have a tight-knit group of friends and political allies working together to provide benefits, to Mr. Bannon in particular,” said David Nelson, a specialist on nonprofit organizations and former tax partner at the Ernst & Young accounting firm, who reviewed records detailing the complex ties between Bannon and the nonprofit groups.

Misuse of the tax-exempt nonprofit system for financial and political benefit has become widespread, but such transgressions rarely result in meaningful penalties, according to the experts interviewed by The Post.

 

“It is being manipulated so badly,” said Paul Streckfus, a former tax lawyer at the IRS and editor of the EO Tax Journal. “It’s a joke.”

David Bossie, who heads two nonprofit groups that collaborated with Bannon on some of his films, praised him in an interview with The Post.

“We stand shoulder-to-shoulder with Steve Bannon and our products. We’re very proud of all our films,” said Bossie, president of the nonprofit Citizens United and its affiliate foundation. “The First Amendment is an amazing thing.”

Nonprofit Board in the News #NonprofitBoards

Press coverage about who will now be the leadership of a nonprofit is a great event.  That a media would recognize folks for their passion and willingness to serve provides inspiration to and possibly motive for moving others to action and possibly even, donations.  So I believe the New Hampshire SPCA should be pleased that their local media has seen it appropriate to dedicate so much print space to introducing the organization's new officers and remaining board and in the process, promoting the organization.

Kudos to the Society and kudos to Seacostonline for valuing volunteers in their governing position!

 

NH SPCA elects officers

 Friday

Posted at 2:01 AM

 

 

STRATHAM — At its annual meeting, on March 22, the New Hampshire Society for the Prevention of Cruelty to Animals elected officers and directors for 2017-2018. In addition, the society recently added three new board members.

Board members are elected based on the broad range of experience and talents they bring, as well as their passion for the animals.

Officers

Joshua Scott was elected president of the board. Scott brings his expertise as a lawyer at Jackson Lewis P.C., a nationwide firm specializing in employment law. Scott lives in Rye with his family and has served on the board since 2011.

Patricia Bushway of Hampton was elected vice president. Bushway joined the board in 2015 after retiring from a 30-year career with the Army and Department of Defense. Before joining the board, her most recent volunteer project was directing a parish group supporting a mission in rural Nicaragua. She currently continues her work with local charities. Bushway lives with her two rescue dogs, Brady and Maggie.

Michael J. Murphy, CPA, begins his fourth year as board treasurer. Murphy is a partner at Murphy, Powers & Wilson, Certified Public Accountants, P.C. and brings his extensive financial management experience to the board in his role as treasurer. Murphy lives in Dover and has served on the board since 2013.

Stephen Demarais of Hampton was elected as board secretary. Demarais is vice president of investments at UBS Financial Services and has served on Abenaqui Country Club and Portsmouth Yacht Club boards and is very active at the Portsmouth Athenaeum.

Ex-officio: Julie Quinn of Exeter continues her service to the animals as immediate past president of the board. Quinn retired last year having served 17 years as director of the communications office at Phillips Exeter Academy in Exeter. Quinn has been a member of the board since 2008.

Recently elected board members at large

Sam Biddle, is vice president and co-founder of TradePort located in Somersworth. Biddle has extensive executive level business and marketing experience. Biddle lives in Rye, with his family and two adopted cats, Scout and Cocoa.

Catherine Blake is owner and founder of Sales Protocol International, a highly successful sales and business development firm. Blake has extensive experience on boards of directors, providing leadership and inspiration. She has served on the Harvard University alumni board and as a director for the New Hampshire high Technology Council as the TechWoman/TechGirls Founding Chair, as well as serving on several nonprofit boards. In 2016, Blake received the Outstanding Women in Business Award from The New Hampshire Business Review. Blake lives with her husband and two rescued greyhounds in Durham.

Carol Early is RN care manager at York Hospital. Early brings to the board extensive experience in community service and will help guide the N.H. SPCA as it builds more programs to reach people and animals in need of services. Early lives in Stratham with her adopted, 14-year-old Lab, Emma.

Continuing at large members

H. Alfred Casassa is the senior member of Casassa Law Office, a four-member firm that he started in 1960. He practices primarily in the areas of estate planning, estate and trust administration, real estate and business matters. Casassa lives in Rye Beach and joined the board in 2008. Casassa heads the governance committee of the board.

James J. Horne of Portsmouth is in his sixth year on the board bringing 25-plus years of expertise in real estate and property management. Horne is the owner of CP Management Inc., the largest third party real estate property management firm in New Hampshire. Horne chairs the building and grounds committee of the board.

Anne Jamieson of Durham joined the board in 2014. Jamieson retired from her role as chief executive officer of Portsmouth Regional Hospital in Portsmouth in 2015 and currently is an adjunct professor at the University of New Hampshire. Jamieson has enjoyed a 38-year career in health care having begun her health care career as a Registered nurse. Jamieson is an avid horsewoman and animal lover.

John MacGregor, DVM, of Durham, continues on the board as a representative of the veterinary community. MacGregor owns and operates New England Veterinary Cardiology a mobile, client-oriented animal cardiology practice serving six referral hospitals in northern New England. He also serves as adjunct assistant professor at Tufts University School of Veterinary Medicine.

Nonprofit Board:CEO Relationship #NonprofitBoards

I found the following article, pretty much word-for-word, printed in newspapers throughout the US.  Basically, the individual who oversees the nonprofit that is the private partner to the National Park Service in Pearl Harbor has been temporarily removed from duty while the board investigates the contents of a letter sent to the board presumably about the director.

Clearly the "letter" raised one or more issues significant enough to warrant the board's actions.  And the board has taken two steps: suspending the director and investigating.  Generally and without knowing the details, these are appropriate steps falling within a nonprofit board's fiduciary duty of care.  And, it's great that a board member is representing the board to the public (the way I believe these actions should be taken).  I would however pose that the lack of detail leaves much to be desired for public understanding.  I would wonder that certainly, the national public has so little information it doesn't feel like there's a "here" here. It doesn't strike me that the media has so little to report that this effort by the board should become newsworthy.  

And here of course lies a problem with the situation.  Did the board really need to announce anything at this point in the process?  What harm would come to the nonprofit if the board had kept silent until after the investigation was complete?  Would the public respond any differently?  I propose not thinking that now that the situation is actually on folks' radar, albeit briefly, there's little to be done or even considered. Hm...

Here's the newspiece:

APNewsBreak: Pearl Harbor nonprofit CEO placed on paid leave

 

By The Associated PressApril 5, 2017 9:31 pm

  

HONOLULU (AP) — The CEO of a nonprofit organization that supports the National Park Service’s operations in Pearl Harbor has been suspended while the group’s board investigates allegations made in an anonymous letter.

 

Pacific Historic Parks Board of Directors member and spokesman Jim Boersema said Wednesday Ray L’Heureux (La-‘ROO) was placed on paid administrative leave last week.

It wasn’t clear what allegations were made in the letter, which was sent to board members.

 “We have an obligation to look into things if somebody writes them. So we’re doing what’s required. And we’ll treat Ray fairly,” Boersema said. Most board members believe L’Heureux has been doing “a pretty good job,” he said.

 

L’Heureux said he couldn’t comment as it was a personnel issue, even though it involved him.

 

L’Heureux has been CEO of Pacific Historic Parks since late 2015. He served in the Marine Corps for 30 years, including stints as a helicopter pilot and commander of Marine Helicopter Squadron One, which flies the president. Before joining Pacific Historic Parks, he was an executive with the Hawaii State Department of Education.

 

Pacific Historic Parks runs a gift shop at the Pearl Harbor visitors’ center and raises money to support the USS Arizona Memorial. The Park Service relies on funds from the nonprofit to help maintain the national landmark, which is visited by 1.8 million people each year.

 

Pacific Historic Parks also supports public park and memorial sites on Molokai, Guam and Saipan.

Nonprofit Board Fiduciary Duty of Care and Prudence #NonprofitBoards

The rule of prudence is the standard to apply for fiduciary duty of care decisions.  The rule of prudence calls upon those invested with this duty to take actions that others in similar or like circumstances would take.  

For nonprofit boards, there are decisions, policies if you would, that can certainly change the way the organization has worked for many years but prudence dictates this to be the correct decision.  Such is the example of the New York State Dairy Exhibits.  Read the article from the Wall Street Journal.

 

Longtime operator of NY State Fair's Milk Bar pulling out

 

 

Updated April 5, 2017 7:40 a.m. ET

Associated Press

SYRACUSE, N.Y. — The dairy group that has run the popular Milk Bar at the New York State Fair since 1952 says it's pulling out because of funding issues with the Cuomo administration.

The nonprofit New York State Dairy Exhibits, Inc. tells The Post-Standard (http://bit.ly/2nDpgMg ) that it won't run the Dairy Products Building at the fairgrounds in suburban Syracuse.

Group leaders say the move comes after the state only came up with half of the $90,000 subsidy that was supposed to cover expenses for running last year's Milk Bar.

 

The state kicked in the funding after the group announced before the fair's opening that it planned to double the price of a cup of milk to 50 cents because it was losing money on the operation. The state money prevented the price from being raised for the first time since 1983.

___

Information from: The Post-Standard, http://www.syracuse.com

Nonprofit Board Values #NonprofitBoards

The following Philadelphia Inquirer article provides insights about the harsh reality that home health care workers are so underpaid they themselves are not provided or do not earn enough to have health care.  And, as noted, many of these workers are employed by nonprofits.  Of course it's easy to question the for-profits in the home health care business: the owners are making profits off the backs of their workers.  For the nonprofits though - workers often serve those without resources and the nonprofits themselves must likely do fundraising to even compensate their employees.  But does this reality make it ok for nonprofit boards to say it's good enough that they have employees even if they are barely better off than the folks they care for?  Can the boards not do and shouldn't they want to do what it take to do better?  Shouldn't their own values drive them to raise the funds needed to lift-up their own employees?  

 

Health workers who can't afford their own care: 'a social justice issue'

Updated: MARCH 31, 2017 — 11:10 AM EDT by Shefali Luthra, Kaiser Health News

 

For more than two decades, Celeste Thompson, 57, a home care worker in Missoula, Mont., had not had regular contact with a doctor — no annual physicals and limited sick visits. She also needed new glasses.

 

Like many others who work in the lower rungs of the health care system, she has worked hard to keep her clients healthy by feeding them, dressing them and helping them navigate chronic conditions.

But because of the low wages and the hourly structure of this industry — which analysts estimate is worth nearly $100 billion annually and projected to grow rapidly — workers like Thompson often don’t have health insurance. Many home health agencies, 80 percent of which are for-profit, don’t offer coverage, or their employees don’t consistently clock enough hours to be eligible. They generally earn too much to qualify for public aid but too little to afford the cost of premiums.

 

“It’s a social justice issue. We have a workforce that is the backbone of long-term [care] services, and they themselves don’t have coverage,” said Caitlin Connolly, who runs a campaign to increase home care wages at the National Employment Law Project, an advocacy organization.

In 2015, Montana opted in to the 2010 health law’s expansion of Medicaid, the state-federal low-income health insurance program. Thompson, who was making about $10 an hour, immediately signed up.

Her vision care was among the first things she focused on. She had not visited an eye doctor in nine years — though her job includes keeping track of patients’ pill bottles and making sure they take the right medications. “I had to use a magnifying glass to see small print,” said Thompson, who now wears bifocals. Her doctor has since warned her she may need a stronger correction soon.

The Trump administration’s attempt at replacing the Affordable Care Act would have reined in Medicaid spending in states like Montana. But the bill failed to get enough support in Congress and was withdrawn March 24. Many Republicans say repeal is still a priority, and Health and Human Services Secretary Tom Price could change key regulations affecting the current law right now, without Congress.

Thompson is part of a large population of home-based caregivers who might be affected by such changes. From 2010 to 2014, about half a million of these workers gained new health insurance through Obamacare, estimates PHI, a New York-based nonprofit that researches this slice of the labor force and advocates for improved working conditions, in a March issue brief.

Most home care workers’ gains came from living in states that expanded Medicaid. But even with Obamacare in place, many home health workers — perhaps 1 in 5 — remain uninsured. By contrast, about 8.6 percent of all Americans lack coverage.

Even catching a cold is risky.  “I would go to work sick, and that’s not good,” Thompson said, noting that her clients are frail and elderly. “But I couldn’t afford to be off. I needed the money.”

Many Republicans have long favored proposals to reduce federal costs associated with this state-federal low-income insurance program, saying that shifting funding from a per capita basis to block grants to states would make the system more efficient.

But many advocates for these workers take a different view, and the current air of uncertainty adds an extra layer of concern. Under the 2010 law, “at least we were on a path” to addressing coverage and access concerns, said Elly Kugler, the federal policy director at the National Domestic Workers Alliance, a coalition that represents home care providers. If it goes away, she said, it’s not so clear how these workers will access health care.

Currently, on average home care workers earn less than $20,000 per year. The federal government only recently ruled they qualify for overtime pay and minimum wage protections. And there’s another rub: Most of the money paying for long-term home care comes from Medicaid and Medicare, PHI estimates. If either of those sources is squeezed, “that will translate to hours cut,” Connolly said — because people who need home care will also have fewer resources to pay for these services.

“My clients won’t be able to afford me. I can’t make a living. It’s a vicious cycle,” said Kim Thomas, 52, a home care worker in Durham, N.C. She makes $9.75 an hour and has 32 clients — one of whom is almost fully paralyzed and needs help eating, dressing and moving. Her days start at 5:30 a.m. To make ends meet, she works nights at the local hospital. Thomas is diabetic.

For Thompson in Montana, the concern is similar. If Medicaid is revised or the health law repealed, she said, it’s not just her insurance at risk but her livelihood. Her medical history puts her at high risk of endometrial cancer, and her doctor recommends screenings twice a year. But without insurance, that’s not feasible, she said.

“We go to the food bank four times a month," she said. "Without Medicaid, it would be really hard on [our family], trying to come up with the money to go the doctor.”

KHN’s coverage of aging and long-term care issues is supported by The SCAN Foundation.