In the Chicago Tribune/Beacon-News (Aurora Illinois) there's a story about a Foundation whose executive director has contracted with his family business that "covers the cost of Dunham Fund employees' salaries, benefits, various types of insurance coverage, Social Security contributions and other expense". The family firm receives a fee of about 16% for its services. The executive director is an officer of the family business.
In many ordinary circles I might raise a yellow flag to the board and say: hey folks, you have the prospects of a conflict of interest here. Have you, the board, had a discussion about the bidding process and how does the price compare with the alternative options. This discussion would be what is expected from a prudent board.
Fund board chairwoman Wendy Hirsch referred questions to the fund's trustee at First Midwest Bank, saying
"the board would not approve anything without the trustee's approval." More interesting, the chair went on to state:
"There's nothing being done inappropriately, I can tell you that," Hirsch said. "We're just doing what we're directed to do."
While there may indeed be conflicts of interest (and the exec's own lack of willingness to share with the press the Fund's pertinent data) does raise suspicions but my biggest concern is from the board chair: we're just doing what we're directed to do".
I would not want to be on a nonprofit board where members gave this answer. After-all, fiduciary duty alone demands much more knowledge and responsibility. A nonprofit board is the surrogate owner of a nonprofit on behalf of the public's interest. Doing the bidding of an executive or others is not in the public interest.