Nonprofit Board Crisis

Shared Leadership #NonprofitBoards

Being the "leader" of an organization carries many, many, many responsibilities.  One option: "co's".  Sharing leadership in the form of co-presidents and co-CEOs and co-chairs is becoming a "thing" outside of what has been a practice in many healthcare, arts organizations and environmental organizations and, you know, those progressive (so maybe not healthcare) institutions that recognize the need for differing leadership responsibilities (e.g. management capacity versus artistic capacity) with distinct skill sets.  So, it might surprise you when JP Morgan Chase, one of those sort-of old fashioned corporate icons announces that it now has co-presidents who will run the day-to-day operations.  Yes, there will still be a CEO and yes, the co's will be vying for the singular job of CEO (this is also succession planning) but in the meantime, appreciate the significance of the commitment to a shared leadership model.  One person in-charge: maybe a shared leadership model can lead to better outcomes.

Here's the story from Crains:

JPMorgan Chase & Co. named Daniel Pinto and Gordon Smith, who run the firm’s two largest businesses, as co-presidents, positioning them as the front-runners to succeed Chief Executive Jamie Dimon.

Pinto, a 55-year-old Argentinian who leads the investment bank, and Smith, a 59-year-old who runs the Chase consumer division, will take the president role from Dimon, who said he plans to stay in the top job at the largest U.S. lender for about five more years, according to an emailed statement Monday. Dimon, 61, has run the company since the end of 2005.

“The board and Dimon both believe that under all timing scenarios, whether today or in the future, the company has several highly capable successors in place,” JPMorgan said in the statement.

Nonprofit Board Sexual Harassment Policies #NonprofitBoards

 

The following materials were provided by Core Strategies, aka Terrie Temkin and her team.  Thank you Terrie!

PS, while the hard work of writing is done, your board can't just adopt these policies.  Part of the transformation is in the board's discussion and consciousness raising and then, implementation and training.

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Nonprofit Boards and Personnel Matters #NonprofitBoards

A recent story from the Pittsburgh Business Times centered on a new report by the Bayer Center for Nonprofit Management which identified "looming human resources problems for southwestern Pennsylvania's nonprofits".  Succession planning would be one of the buckets I would categorize the problem for boards and financial threats for those who will need to be succeeded.  And, HR (human resources) was identified as the overarching bucket of dillemnas facing the area's nonprofit boards.

 

Based on my consulting experience I am not surprised by this news - yes, nonprofit managers do face HR challenges that range from recruitment to orientation, training and management.  One pattern: folks who are really great providers are often "moved-up" to management positions and are frequently ill-prepared.

 

Beyond this though the article's author noted that "66% of the 229 nonprofit respondents to the survey said they had board personnel committees.   The author asked, given the challenges "what are these committees doing".  I would counter to offer that personnel management is not a governance responsibility but a board responsibility and that the failures in the systems lay with the CEO's except of course for the succession planning.  For this area, CEO succession planning lays singularly in the lap of Boards as this is their one employee.

 

So, great that this challenge is brought to the forefront but the solution does not lay with boards other than to say that training and evaluation are values and training must be built into the strategic plan and annual budgets.  We must be clear about structures and responsibilities when we seek solutions to common nonprofit problems and recognize that boards are not responsible for day-to-day operations - that's why they hire a executive director.

 

Study: HR problems mount for Pittsburgh nonprofits

By Patty Tascarella  –  Senior Reporter, Pittsburgh Business Times

a day ago

 

Only one third of Pittsburgh-area nonprofits have succession plans, but 69 percent of executives in the sector either plan to or could retire in the next decade.

“What Now?” a new report released Friday by the Bayer Center for Nonprofit Management at Robert Morris University, drove home looming human resources problems for southwestern Pennsylvania's nonprofits, from a pending leadership gap to a lack of financial preparation by many facing retirement. The report can be accessed by clicking here.

Nonprofits employ one in five people in southwestern Pennsylvania.

“HR in many if not most nonprofits is abysmal,” said Peggy Morrison Outon, the Bayer Center’s executive director. “We were thinking about what’s next, but it’s not next, it’s now.”

The Bayer Center has conducted a wages and benefits study every other year since 2002. Outon said this revealed “themes and pattern we needed to explore more deeply.”

Last fall, 299 nonprofit leaders were surveyed about retirement, resulting in “What’s Next?”It found that 66 percent of the nonprofit boards had personnel committees, but only 33 percent had a succession plan.

“What are these committees doing then?” Outon asked.

A question about savings for retirement resulted in another alarming response. Almost half of local nonprofit professionals, “not the executives,” Outon stressed, had less than $50,000 in savings, not enough to ensure a comfortable retirement and meaning many will have to continue to work.

“We are trying to raise the flag for the community,” Outon said. “We have to figure out more solutions.”

That includes providing resources and education to people and organizations and getting those who fund the nonprofits to encourage better HR practices.

Succession is also a problem. The next logical leadership pool after the baby boomers, Gen X, is roughly half as big, she said.

“We’ll have a war for talent unlike anything we’ve ever seen in the nonprofit sector,” Outon said.

Nonprofit "Policy Governance"

 

Below follows what I believe presents an excellent encapsulation of what is called "Policy Governance".  John and Miriam Carver claim credit for having invented this model and by all rights, if he has done anything he did an excellent job promoting the model and himself, in the bargain.  There are others though who deserve equal credit including Eugene Fram who for years, even ahead of Mr. Carver, were promoting this model.  And, to be honest, some things I like about the model, some things I don't like.  Probably the thing I least like: it doesn't work universally for every board.  Boards all experience different stages of development - in the beginning they have no staff then they might have a staff who does some stuff the board doesn't want to do and then there are other developments.  Policy Governance MAY work singularly best for boards in their Mature Stage of development (you can see my model of stages in the articles section of this blog).

That said, again, there are some merits to the model.  But bottom line, I prefer taking what is best from all models and fitting them to the nature and culture of a board to ensure in the end, that fiduciary and strategic duties are fulfilled.

Having served a summer internship at the UW-Extension Milwaukee for the senior home economist, I must say that I have some bias in giving a particular nod to the author of this article.

 

 

From the Kenosha News: UW-Extension: Policy governance in a nutshell

• BY AMY GREIL UW-EXTENSION
 
• Jan 26, 201

It is fascinating to me that learning just never stops.

This latest learning adventure has arrived as I am serving on a board of a local nonprofit that introduced me to some key governance guidance that I, regretfully, never knew was out there.

I am considering how, with governance, a group of peers become responsible owner-representatives, exercising authority over activities they will never completely see, toward goals they cannot fully measure, through jobs and disciplines they will never master themselves.

I am now wondering how a board fulfills its own accountability while not, at the same time, infringing unnecessarily on the prerogatives of management.

And even when board members among themselves disagree, there is a limited time for the task. There is an unending stream of organizational details demanding inspection — yet tough governance decisions have to be made.

This governance “stuff” holds true in business, nonprofit and governmental bodies, though the typical flaws differ some from one setting to the other. So perhaps you can find yourself in this learning adventure of governance among the many “hats” you wear.

A body of work simply called “Policy Governance” by John Carver and Miriam Carver is our path of departure from status-quo, “go-with-the-flow” governance on boards. It makes new sense of the board-staff relationships, planning, evaluation and all aspects of the board job.

Here follows a summary of the 16-page classic document.

The board job: It is the board’s responsibility to govern; the board has a commensurate authority to govern. Individual board members do not. That is, whatever authority is legitimately wielded by a board is wielded by the board as a group. Hence, a CEO is bound by what the board says, but never by what any board member says.

Existing on behalf of some ownership: Boards rarely “own” an organization themselves. They ordinarily are a microcosm of a larger ownership. The owners may be legal owners (stockholders for an equity corporation) or have more of a “moral” ownership (the whole community in the case of a local social service organization). But in any event, the board speaks on their behalf, a task that requires: (a) knowing who the owners are and what their desires are; and (b) being able to distinguish owners from customers (clients, students, patients) and other stakeholder groups.

To see to success: First, the board must describe “right” — that is, the criteria that would signify success. Second, the board must hold someone accountable for reaching these criteria. This is most easily done by using the CEO function, for that role allows the focusing of performance in one individual even though actual performance occurs due to many individuals. Third, the board must systematically and rigorously check to see if criteria are being met. That is, the board must monitor performance regularly.

Achieves what it should: In order to lead, boards must learn that services, programs and curricula have no value except as they produce the desired ends. Therefore, boards are well advised to look past these operational means and on to the ends that really matter.

I am grateful to the colleague who turned me onto this work, and I encourage all to read more and join me in learning best practice in governance by accessing the Carvers’ materials found at www.carvergovernance.com.

Amy Greil is community, natural resource and economic development educator for the Kenosha County University of Wisconsin-Extension.

Nonprofit Boards and the Prudence Standard #NonprofitBoards

Prudence is the standard applied to assessing how a board has fulfilled its fiduciary duty.  Basically, this standard asks the question: what would most "ordinary" folks (e.g. businesses, nonprofits, others) do facing a similar situation - in other words, what are the lines of what is acceptable behavior or response.  

In a Washington Post opinion piece, the author argues that closing the cell door on the not-so-good Olympic doctor should be the beginning, not the end of accounting for what happened to the athletes abused by Nassar in particular and likely others given the pattern of Olympic officials.  (PS, it is my opinion that jail for Nassar is a waste of public resources and not really a consequence for Nassar.  Were I the judge, an alternative consequence would be to castrate Nassar such that what remains now in his memories cannot be enjoyed).  

Anyway, I digress.  While whatever is the appropriate consequence for Nassar, it still remains that 150 athletes later, there was a system failure.  As the Opinion article writer noted:

Let’s put those pieces together — and understand why Nassar’s trial should be just the start of the investigation and not an end. His years of criminal sexual assaults on gymnasts could have happened only with the assistance of U.S. sports officials and coaches, such as Martha and Bela Karolyi and John Geddert, who let Nassar violate basic medical norms on their watch. It could have happened only because they were willfully blind to his “pelvic adjustments” on young women athletes, for which there was no good reason. It could have happened only because they failed to exercise the most basic, common, fundamental good sense in protecting children, allowing him to probe girls ungloved and sequester himself with them without any nurse present. Here is how negligent they were: The girls were required to see him in their hotel and dorm rooms at night. Alone. On their beds.

Prudence from management on up?  I think not.  I believe, like at Penn State, the conversation must continue to each of the higher levels at least to the US Gymnastics board and perhaps to the US Olympics organization where likely prudence (and past evidence suggests this to be true) has also not been a rule of thumb.  And yes, there's the University of Michigan that was actually Nassar's employer.

Nonprofit boards are the surrogate "owners" of a nonprofit.  It is on their watch that mission good and failure happens and accountability is central.  At very minimum it's about policy and evaluation.  The US Gymnastics board has failed.  It must be held accountable along with all the related persons who were responsible each day.

Nonprofits Have Major Money Problems #NonprofitBoards

Are nonprofit boards sooooo mission focused that they have lost track of the need to stay solvent?  This is essentially the yellow flag hoisted in the following Governing Magazine article titled: Nonprofits Have Major Money Problems. 

The Association that pretty much includes the family services organizations around the country conducted a survey of "executives at 40 government agencies and 177 nonprofits, plus a review of three years of tax filings from more than 40,000 nonprofits" to develop its report.  Findings indicated:

 

 

• On average, government contracts cover only about 70 percent of nonprofits' direct program expenses and less than half of indirect expenses.
• Nearly one in eight human service nonprofits are technically insolvent, meaning that their liabilities exceed their assets.
• Three in 10 nonprofits have cash reserves that cover less than one month of expenses.
• Nearly half have a negative operating margin over a three-year period. 
• About one-third also have no plans in place to deal with financial challenges. 

The Governing article notes that "though nonprofits aren't designed to yield excess money, they need a financial cushion for times when money comes in late or below projections, for settlement expenses related to lawsuits, for capital projects that cost more than expected and valuable government contracts that don't get renewed." 

And of course, no surprise, there are the frequently late payments by government and often excessive rules, by government and private funders alike, imposing regulations and reporting that distracts from providing services (and generating revenue).

Recommendations include:

• nonprofits need to be more selective about the contracts they pursue, and more assertive when negotiating the terms of a contract with governments.
• nonprofit executives also need to recruit more people with experience in financial and risk management to their boards of trustees, the report says, and hire a chief financial officer if they don't already have one.
• Governments can eliminate overlapping and unnecessary regulations and commit to measuring long-term outcomes.

I pose that nonprofit boards should begin generative conversations toward developing policies, strategies and action plans that will keep their nonprofits above water and pursuing mission.

Nonprofit Board Lesson #NonprofitBoards

Minnesota Public Radio is demonstrating, in my opinion, one approach to addressing unacceptable behavior conducted by its employees/contractors.  You may recall that two months ago one of MPR's "rock stars", Garrison Keillor, was fired for "sexually inappropriate incidents conducted over a period of years".  PS, I view a nonprofit rock star as someone who has an offering that produces a big following and generates lots of monies for the nonprofit).

It remains unclear why this action by MPR  didn't come sooner (like way back when this was first inappropriateness first occasioned) but perhaps that is another lesson the MPR board and all the nonprofit boards who are now audience to this activity, must discern and "right".

Meanwhile though, as reported in the Wall Street Journal, the President of MPR yesterday released an explanation about their firing Mr. Keillor.

In a 2,000-word letter to members and listeners, MPR President Jon McTaggart said the former host of “A Prairie Home Companion” had been accused by a former female colleague of dozens of sexually inappropriate incidents over a period of years. The firing, he said, “was “a painful decision, one that we did not make lightly.

Mr. McTaggart’s letter said the company began an independent investigation after receiving a 12-page letter from the attorney with details of the alleged incidents, “including excerpts of emails and written messages, requests for sexual contact and explicit descriptions of sexual communications and touching.”

 

MPR said Mr. Keillor was notified of the investigation and was given the opportunity to respond to allegations with his attorney present before the nonprofit made the decision to terminate him. MPR also said Mr. Keillor and his attorneys refused multiple requests for access to his computer, emails and text messages for the investigation.

“If the full 12-page letter or even a detailed summary of the alleged incidents were to be made public, we believe that would clarify why MPR ended its business relationship with Garrison and correct the misunderstandings and misinformation about the decision,” Mr. McTaggart wrote, adding that MPR won’t release the letter to protect the privacy of those involved.

In addition to the investigation led by an outside law firm, MPR said it began mediation discussions between Mr. Keillor and “the other parties involved in this matter” earlier this month but those “have not produced the final settlements we had hoped for.”

MPR also defended itself for taking months to disclose new information, saying it was “restrained in telling our story until we had the benefit of the facts from the outside investigation and had participated in the mediation process.”

 

Good process?  Please share.

Board Role Reminder #NonprofitBoards

An opinion writer at the Tallahassee Democrat offered two pieces of advice I believe important for every nonprofit board member to consider:

Don’t leave your business savvy at the board room door. Sometimes board members get wrapped up in the programs and services agencies provide, and forget to consider ways to add value from a business perspective.

Yes, this is a charity and you are technically a volunteer, but if all you want to do is read to children or decorate for the annual gala, consider finding an off-board service opportunity. Nonprofits need board members who think about P&L, market share, year-over-year growth, future needs, risk management, legal compliance and more. If you do day that for your business and don’t want to go there during your time off, avoid board service and look for another way to support the organizations and causes you care about.

 

Avoid the temptation to tinker. Chances are, the nonprofit staffer with a Master's degree in social work is going to be better equipped than you to oversee the agency’s single moms support group or food delivery program. Rather than second-guessing program staff regarding the organization’s services  — and potentially driving talented employees away — think about the big picture.

What does the nonprofit need to better fulfill its mission? What unique skills and relationships do you have that can help? I’ve seen boards kill staff morale by asking 20 questions about the location of the clothing drive instead of focusing on the strategic goals of the agency and leaning in to help meet them.

Nonprofit Board Performance-64 Principals #NonprofitBoards

This is not an endorsement - I have not seen the following report and am dubious about its promises and will take a closer look BUT, if you are equally curious that ALL the answers are readily available about what it takes to be a high-performing nonprofit board, then take a look for yourself and please let me know what you think.

Here's the link to and the promo:

While boards acknowledge they bear ultimate responsibility and accountability for their organizations′ affairs, governance quality is often far from optimal.The High– Performance Board offers pragmatic and candid advice about what your board must do to maximize performance and contributions. The authors provide sixty–four principles designed to help your board achieve peak performance. They describe every principle in detail and present best practices and practical applications for each one. Each section of the book concludes with a board check–up–a set of questions that can be used to assess your board in light of the principles. A quick read for busy board members, this book is the ultimate board "drivers′ manual."

Nonprofit Boards and Sexual Harrassment #NonprofitBoards

As we have witnessed with Penn State and a number of other institutions, nonprofit boards are accountable for when their people do harm.  Toward this end, do take a look at the following Forbes article that offers a 15-Point Plan for boards to consider (and hopefully adopt) after of course, considerable generative conversation toward making a fiduciary decision.

Here's the article.