Nonprofit Board Crisis

Nonprofits as Personal Businesses #NonprofitBoards

Perhaps it is a more common "thing" than I would like to consider: nonprofits as the personal business of individuals.  For sure I recognize that there are faith-based institutions that are indeed the personal business of individuals (do I really need to name them?) but charitable nonprofits-I would have thought that the checks-and-balances inherent in the governance structure, aka board, helps limit this possibility.  But my Sunday blog and today's does move me to reconsider this possibility, that more than a few nonprofits are really the personal piggy banks for some.  Sunday's blog was about the sale of the Imus ranch and its sale at a huge loss (to the public) and the financial losses in general for the nonprofit.  There went money intended to do good, out-the-door benefiting no one except perhaps as a tax advantage to Imus.  And yes, there was barely a board - four people all "related".

Today though is a follow-up to a story I discussed last year.  The wife of the founder of Kundalini Yoga and other related faith-based charitable enterprises has been suing the managers of the nonprofit organizations.  Said wife wants her and her kids to be board members and to get a huge sum of money which she says she deserves because, well, she's the wife.  Funny enough, she's claiming the managers have basically gotten what she should have gotten.

Now, maybe the founding Yogi didn't leave his widow enough to live in the style she had grown accustomed while the Yogi was alive but the courts have consistently maintained, effectively avoiding the widow's case, that the Yogi's businesses are a religion and can't be interfered-with by the courts.  This doesn't at-all address the widow's claims but maybe that's the correct point.  You don't get to be on a nonprofit board just because you are getting the wealth you expected.  Nonprofit governance is not about the gaining of personal wealth.  Nonprofit governance is a duty to protect the public's interest.  At minimum the courts might offer that the widow's intention are anything but about protecting the public's interest.

From Oregon Live:

Judge dismisses lawsuit over rulership of Sikh business empire

Updated Apr 27; Posted Apr 27

 

 

By Maxine Bernstein

mbernstein@oregonian.com

The Oregonian/OregonLive

A federal judge has dismissed a long-running lawsuit brought by the widow of Yogi Bhajan, a spiritual teacher and entrepreneur who introduced Kundalini Yoga in the United States and who started an Oregon-based natural foods company with annual revenue of $125 million at one time.

She claimed her husband's advisers improperly excluded her and their children from the management boards of two nonprofit organizations her husband started.

U.S. District Judge Michael W. Mosman ruled that the court shouldn't become entangled in essentially religious controversies.  

Mosman's order dismisses the lawsuit with prejudice, ending for now a battle that has bounced between state and federal courts for nearly eight years, with an appeal heard before the 9^th U.S. Circuit Court of Appeals last year.

"In effect, Plaintiffs seek court interference in the membership of the boards that choose Sikh Dharma's highest level of leadership and exercise significant control over the direction of the Sikh Dharma religious in the Western Hemisphere,'' Mosman wrote.

Bhajan was a spiritual leader and entrepreneur who spread Sikhism and Kundalini Yoga in the United States beginning in the 1960s. In 1971, he was designated the Siri Singh Sahib, the Sikh leader for the Western Hemisphere, according to court records.

He founded or inspired the creation of numerous for-profit and nonprofit entities, including Siri Singh Sahib Corp. and Unto Infinity LLC in Oregon that are associated with the Sikh Dharma religious community.

Among the corporations under Unto Infinity was Golden Temple of Oregon, which built the Peace Cereal and Yogi Tea brands and was long a cornerstone of Eugene's natural foods industry.

Bhajan died in October 2004. His widow, Bibiji Inderjit Kaur Puri of Los Angeles, known as "Bibiji," and their three children alleged that the general counsel of Unto Infinity and Siri Singh Sahib Corp. conspired to exclude them from participating in managing the organizations.

They wanted to be on both companies' boards and were seeking about $150 million in compensation for their losses.

The widow accused the advisers of converting millions of dollars in assets from the organizations for personal benefit.

Mosman found that the Unto Infinity and Siri Singh Sahib board members have religious duties that allow them to shape the future of the Sikh Dharma religion, including the choice and removal of religious leaders.

The U.S. Supreme Court has long recognized the right of religious organizations to select their own religious leaders. Mosman cited the "ministerial exemption'' to the First Amendment, which ensures that a civil court won't control who will minister in a religious organization.

The case, though, likely won't end here.

Puri plans to appeal Mosman's dismissal, said her lawyer Surjit P. Soni on Friday. Soni will argue that Mosman relied on "irrelevant and inadmissible evidence'' presented by the defendants to  conclude that the Unto Infinity and Siri Singh Sahib Corp. boards are religious organizations.

"We have faith that the Court of Appeals will correct the errors,'' Soni said.

-- Maxine Bernstein

mbernstein@oregonian.com
503-221-8212
@maxoregonian

 

Nonprofit Board Fail On Behalf of Taxpayer #NonprofitBoards

What I am confident started out as an intent to do good and give-back has resulted in a significant failure in the taxpayer's interest and, in my opinion, really bad governance.  As the Nonprofit Times story below highlights, the Imus (the radio and TV personality) ranch has just been purchased for a paltry $12.5 million.  Originally placed on the market for $35 million, this is a really big loss.  And to top it off, the nonprofit ranch, overseen by a board of four (Imus, his wife and two friends/business managers), has been losing money over the past few years.   And, the ranch lost a good chunk (45%) of its charitable tax status because the family was benefiting from its use.

Is this the way to operate a charitable organization?  Certainly not!  I trust that the sale income must be put into a fund for charitable purposes but I would go further to suggest that Imus and his board, such as it is, should be put on trial for their gross fiduciary failings showing no prudence in the caretaking of the financial assets and only providing minimum benefits to those whose purpose the organization was created.  The public has taken a significant loss and should be compensated.  

 

 

Closed Imus Ranch Sells For $12.5M

 APRIL 27, 2018       ANDY SEGEDIN      

The Imus Ranch and surrounding acreage has sold for approximately $12.5 million, just short of one-third of the original asking price. The ranch, which was acquired by radio shock jock Don Imus in 1998, was used to provide an American-cowboy experience to children with cancer.

The ranch’s summer program ceased in 2014 after Imus broke his ribs in a fall and was unable to breathe at high altitude, Imus often said on-air. During its operation, it drew criticism for a relatively high ratio of cost to child served, upwards of $25,000 each, and reported personal use of the ranch by the Imus family. The personal use led to an only 55-percent property tax exemption, according to the Wall Street Journal.

The entire 3,400-acre, fenced-in property was included in the sale, according to the sale site. Sources say that the income from the sale will be granted to other charities

Patrick Gottsch, creator of the Cowboy Channel, is the reported purchaser of the property. The deal came less than a month after Imus signed off from the airwaves after 50 years as a DJ and personality.

An Imus spokesperson said that there was no stipulation as part of the sale as to how the property would be used and that the organization has not been active since 2014. Dollars have still rolled into the organization in the interim, mostly from Imus’ website, according to an email from a family account. The primary charitable purpose the organization has served most recently has been in grantmaking.

In 2016, the last year for which tax data is available, the ranch reported grant payouts of $250,000 to SKIP of New York for the assistance of chronically ill and disabled children and $100,000 to the Eileen Fund, also of New York, for medical research.

The organization explained in Schedule O of its federal Form 990 filed for 2016 that the ranch’s non-cash, non-investment assets were placed up for auction in October 2014 and that operations at the ranch had ceased with the exception of maintaining the land, livestock, and related equipment. The board of directors, according to the explanation, intended to further the nonprofit’s mission by contributing to organizations of similar purpose.

While the dollars from the sale will be distributed through grants to organizations that share Imus Ranch’s charitable purpose, it has not yet been decided whether the organization will continue to fundraise or cease operations once funds are spent, according to the spokesperson and a family source.

The Ribera, N.M. ranch, located 45 minutes southeast of Santa Fe, includes 3,400 acres and features 29,000 square feet of living quarters, according to the sale website. The reported asking price shrunk from $35 million to $29.9 million to $19.9 million then to the $12.5 million for which it eventually sold.

Imus Ranch, as an organization, reported losses in the three most recent years for which Internal Revenue Service (IRS) Form 990 data is available. The organization posted $264,255 in revenue and a $1.09 million overall loss in 2016, $241,619 in revenue and a $1.16 million loss in 2015, and $511,919 in revenue and a $1.21 million loss in 2014.

In 2013, the last full year in which the summer program was active, the organization reported revenue of $2.94 million, which exceeded expenditures by $898,293.

The 2016 Form 990 reported only Imus, his wife Deirdre, and the shock jock’s long-time agents Vincent and Robert Andrews– both long-time acquaintances and accountants — as board members. It also disclosed $19.5 million in costs and bases for land, buildings, and other equipment — including $11.8 million in land and buildings. Net assets, at the time, stood at $16.4 million.

Board Commissions Investigation and Retains CEO #NonprofitBoards

"This happened on my watch and I accept responsibility."  Ms. Laura Walker, CEO of WNYC (New York Public Radio).

"There are many ways in which we as an organization have fallen short and must do better.  But Ms. Walker is a committed and talented leader and has our full support." (WNYC Board of Directors).

"No systematic discrimination that was known to and tolerated by senior management but there is an understaffed and there is need to put into place policies and procedures." 10-page report by law firm recruited by board to investigate a New York magazine story that identified rampant harassment and discrimination and an exodus of women of color. 

In these three paragraphs is presented a story that leaves me asking the question: so, is this saga really over? 

Has the board really done its part (commissioning and investigation and saying all is ok but we will make some changes)?  Shouldn't the board designate a Task Force to ensure that change results or at minimum, add an agenda item to its meetings?  And, yes, it has to be careful not to step-into being operational or managing but maybe this is the time it should step-into some managing - maybe?

And is the CEO, not completely implicated in the report, A-Ok with no loss of faith by the board (nonprofit boards usually HATE messy situations that require their extra attention and particularly public attention)?

And what steps will now be taken to ensure not only that harassment and discrimination are obliterated but a new management team is recruited, trained and put in place to ensure a future without or with reduced harassment and discrimination?

I don't in fact see any of these resolutions in this New York Times story and as a result am seriously less convinced that change is pending.  At the very least perhaps the press can check-in in six or so months to see what steps have been taken.

 

 

Nonprofit Board Member Resigns and Un-Resigns #NonprofitBoards

Following issues at the American Humane Society where the CEO was accused of sexual misconduct and then ultimately resigned,  Marsha Perelman a Society board member and vice chair, resigned.  She the un-resigned and is back in her seat.  Ms. Perelman is a formidable individual having also held the position of president at the Philadelphia Zoo.  In an opinion piece in the Chronicle of Philanthropy she offers her thinking about why she returned to the board.  I am not sure I can fully do justice to her explanation so you might want to just read it yourself: https://www.philanthropy.com/article/opinion-why-i-returned-to-the/24319 in the April 23 issue. 

Meanwhile, I am interested in the process of exactly what should happen when a board member resigns and wants to return.  Here's my questions:

1. Do by-laws offer provisions as to what steps should be taken with those who resign and want to return?  E.g.: A board member can resign at-will and return at-will.
2. Is there a statute of limitations as to how much time someone's resignation stands?  And what if the board doesn't want the resignee to return? 
3. Should the board have a conversation, perhaps a called-meeting or executive session, to discuss the whole situation and the pluses and minuses of a return and could the board say "no, you can't come back"?
4. Boards are relational and transactional.  If a member leaves, principally because they are dissatisfied over something done or not done by the board, is there not left some relational impact on every member?  Is overall trust not affected to some degree? And will the board not need to take some healing or trust-building steps if they welcome the resigned board member back?

Yes, bottom line, resigning from a board for reasons based on dissatisfaction or disagreement, do, in my opinion require a significant amount of effort if an individual is welcomed back to the board.  Also, I would suggest that some healing is also needed if the person does not return.  It does the board members and the organization as a whole no long-term good to have in the world, those who only harbor unhappy experiences and feelings.  These ex-members have friends themselves and the impact could be much greater than one could even imagine.

Nonprofit Board Chair Resigns Amid Agency Crisis #NonprofitBoards

What do you do when, as Chair of the Board, you learn there were rampant misdeeds conducted by your CEO's management team?  The answer by the Chair of Save the Children: resign.  Best move?  This remains to be seen and does not completely nor satisfactorily answer the question of responsibility which went on in at least one country by regional management.  It is not clear how much Save's CEO really knew about the situation but as we learned from Penn State, this individual likely had some awareness and took no action.  It also seems unlikely that the Chair knew nothing but perhaps.....

Anyway, now the ball is in the next Chair's court but this does not mean that the now-resigned Chair is off the hook.  Much remains to be learned and hopefully the press will continue to follow the story.  The lessons for the rest of the nonprofit sector boards: set clear standards about what you must know to fulfill your responsibilities.  Remember, risk management and prevention are the first rules of fiduciary responsibility.  Setting standards and policies that inform this and establishing a scorecard that enables monitoring can help ensure a positive outcome.  And, don't let relationships (particularly between the CEO and Board Chair, interfere with the rules of prudence which likely include asking the correct questions.

 

WORLD NEWS

APRIL 19, 2018 / 3:59 PM / 4 DAYS AGO

Save the Children chairman quits, says urgent need to rebuild trust

 

Reuters Staff

LONDON (Reuters) - The chairman of the British charity Save the Children resigned on Thursday, eight months before the end of his term, after the non-profit world was rocked by allegations of sexual misconduct and harassment.

Alan Parker, the founder of communications group Brunswick, said in a letter to colleagues that he had resigned from the boards of Save the Children Association and Save the Children International because he believed that a change was now needed.

Save the Children UK apologized in February for inappropriate behavior by its former chief executive, Justin Forsyth.

 

“In the current environment, there is an urgent and pressing need to rebuild trust and confidence,” Parker said. “If we do not, some of the world’s poorest and most vulnerable children will suffer.

 

“This is an extraordinary time for the sector. With major ongoing conflicts and more displaced children than at any time in history, it is clear that children around the world need the full power of organizations like ours.”

Save the Children said in February that concerns were raised about inappropriate comments and behavior by Forsyth in 2011 and 2015. It said reviews in both cases had resulted in “unreserved apologies” to the women involved.

Forsyth resigned days later as the deputy director of UNICEF, the United Nations children’s agency, saying he did not want coverage of past mistakes he had made to damage the organization or other aid bodies.

 

“I apologized unreservedly at the time and face to face. I apologize again,” he said at the time.

Nonprofit Board Members Govern and Could Be Volunteers #NonprofitBoards

Good news for those nonprofit managers who place a cash value on the hours volunteers contribute to their organizations.  The figure now: $24.69 (as projected by the Corporation for National & Community Service. And in some states, the value is even higher.  So folks, do make sure you are keeping track of volunteer hours and including the value of these hours as both an income (resources donated)and expense (resources used) to represent the real value of what it takes for your nonprofit to do what it does. 

This is also an opportunity to remember that there is one exception, I believe, to valuing volunteers.  This exception would be your board members.  I do not calculate the cash value of board member time, as board members.  Yes, if they donate time for non-governing tasks, then by all means, include their time and place a dollar value.  But as board members, surrogate "owners" their time is distinct and not included as a volunteers.  I welcome other's opinions on my practice.

Here's the Nonprofit Time's article on the new value of volunteer time.

Volunteer Value Up 2.3 Percent, $24.69 An Hour

 APRIL 20, 2018       ANDY SEGEDIN      

The value of a volunteer hour continues to rise, up to $24.69 in 2017. The figure is a 2.3-percent increase from 2016 and is part of an overall 51.8-percent increase in the value of volunteer hours since 2001, according to data from Independent Sector. The value of volunteer hours has grown every year during that span.

If Americans were to repeat 2015’s volunteerism of 7.8 billion hours, the most recent Corporation for National & Community Service data available, the 2017 value of volunteerism in the U.S. would have exceeded $192 billion.

The figure is based on approximate hourly earnings of all production and nonsupervisory workers in private, non-farm payrolls. The average is further upped by 12 percent to include a buffer for fringe benefits. Matt Perdoni, counsel and director of business development for Independent Sector, said that — while not necessarily a driver of recent value increases — pro-bono services from lawyers, communications specialists, and other professionals have become increasingly common.

In areas in which the value of a volunteer hour is greatest, such as the District of Columbia at $39.45 per hour, the value of a volunteer might rival that of a cash donation. The D.C. Bar has been one professional association particularly good at securing pro-bono hours from members. In such locales the value of pro-bono legal services or tax assistance might represent greater value than the organization might otherwise get paying out of pocket.

“In terms of bang for the buck, if it was just cash those folks wouldn’t be at the table most likely,” Perdoni said.

State-by-state figures in the report show that volunteer hours are most valuable in Washington, D.C. ($39.45), Massachusetts ($31.17), Washington state ($30.46), Connecticut ($30.24), and New York ($29.19). Rates are most modest in Kentucky ($21.17), West Virginia ($21.10), New Mexico ($20.58), Arkansas ($20.01), and Mississippi ($19.81).

Women (27.8 percent) are more likely to volunteer than men (21.8 percent), according to 2015 Bureau of Labor Statistics demographic data, and Caucasians (26.4 percent) are more likely to volunteer than African Americans (19.3 percent), Asian Americans (17.9 percent), and Latino Americans (15.5 percent). Employed individuals (27 percent) are more likely to volunteer than those who are unemployed (23.3 percent) or outside the labor force (21.4 percent) and the rate of volunteering increases with education. The holder of a bachelor’s degree (38.8 percent) is more likely to volunteer than a person with some college experience or an associate degree (26.5 percent), a high school diploma (15.6 percent), or no high school diploma (8.1 percent).

Kristina Gawrgy Campbell, director of strategic communications and public relations for Independent Sector, said that organizations typically utilize volunteer-value figures to articulate contributions to mission. Corporations might use the information similarly to show the impact staff make in local communities.

“People traffic our website for grant proposals, annual reports . . . It’s when people are trying to articulate the value of their volunteers,” she said.

Nonprofit Board Chairs #NonprofitBoards

One of THE most important positions in a nonprofit organization, I believe, is the Board Chair.  BUT, as we know from experience and as one of the research team members who conducted the study on Board Chairs referred to in the Associations Now article below, there is so much to be learned and done to create board chairs who are effective.  On thought offered by the author is that a board chair would do best if chairs "were not commanders but facilitators".  To be honest, the "commander" farm has not really entered my mind for chairs as much as visionary or one who inspires as well as one who is the chief of coalescence of the board team.  Whatever, we know the chair is not manager and yes, facilitator is certainly an appropriate and needed job.  But I would indeed quibble over the chair not having some role in team leadership as I would over getting rid of team-building exercises.  Does a board not have to function in a team-like way to address its tasks?  Anyway, interesting article and appreciate the reference to the research team's work.

 

HOW A BOARD CHAIR LEADS BEST

BY MARK ATHITAKIS / APR 16, 2018(PeopleImages/E+/Getty Images Plus)

A board chair wields a lot of power, but the role demands that power be shared. One expert’s suggestion: First, get rid of team-building exercises.

The board chair may be the most peculiar leadership position in any organization. It’s arguably the most powerful role available, heading the group that sets direction and has firing power over the CEO. But the chair wields virtually no control over day-to-day operations and commands a group of people that is routinely replenished with new faces. And you can’t get too comfortable in the job, since you’ll eventually be termed out as well. You’re the boss. But you’re not.

“Leaders have to shift away from defining team norms and building trust.”

So it’s no surprise that board chairs themselves are often at sea about what their job is, and how to do it. A 2016 study by the Alliance for Nonprofit Management found that half of nonprofit board chairs had no leadership training, and that nearly 80 percent said they sometimes or often feel frustrated in their role.

The nature of the board-chair role will always make it something of a challenge. But that doesn’t mean the chair lacks real opportunities to lead. In Harvard Business Review’s “How to Be a Good Board Chair,” INSEAD business professor Stanislav Shekshnia reports on the results of a study of a few hundred chairs, board members, and other stakeholders to better define success in the role. Much of the findings boil down to old-fashioned professionalism—poise, attentiveness, preparation, not filling the agenda with snoozy and irrelevant material, and so forth. But in one case Shekshnia identifies a novel and valuable way to approach the job.

The first step, Shekshnia argues, is to get out of the mindset that the board-chair job in any way resembles a traditional leadership role. “To be effective, chairs must recognize that they are not commanders but facilitators,” he writes. “Their role is to create the conditions under which the directors can have productive group discussions.”

However, that facilitation doesn’t involve trying to create a sense of community with a board the same way you might with a staff, he argues. Board members won’t be around for as long as the average staffer, and only see each other a few times a year. And the typical board member’s commitments to other jobs (and boards) is so broad that such gestures toward unity will likely be only moderately effective anyhow.

So instead, Shekshnia prescribes a task-oriented mentality, not a team-building one. That’s because boards aren’t traditional teams; they are gatherings of “experts in a temporary group to solve problems they may be encountering for the first and only time,” he writes. “To enable it, leaders have to shift away from defining team norms and building trust, and focus on quickly scoping, structuring, and sorting the collaborative work.”

For any volunteer leader who’s had it up to here with trust falls, hot-coal-walking, and other icebreaking/teambuilding shenanigans and just wants to get to work, a line like that is a cool breeze on a summer’s day. But it does make the board chair’s job more time consuming: The leaders quoted in the piece talk about the importance of one-on-one interaction with every board member, before meetings to make sure they’re up to speed on the issues, and during the meetings to make sure they’re engaged. One board chair said he makes a point to get a general gloss on where the board stands on an agenda item before the meeting, and will raise the issue himself if the board member won’t. This “often triggers a direct contribution,” Shekshnia writes.

Well, of course it does—nobody wants to be caught napping for fear the teacher will call on them. And the approach will test a chair’s people-person skills: Done wrong, it can come off as paternalistic. But done right, it can highlight one critical and peculiar element of the board chair’s job: Though you’re the person in charge, what you’re in charge of is making sure everybody feels like they’re in charge.

That distributed-leadership approach is one that Judy Freiwerth of Nonprofit Solutions Associates recommended in 2016 in light of that report on board disengagement. “The traditional ‘heroic’ model of leadership is for the board chair to hold all of the leadership responsibility as one individual,” she told me. “Research suggests that shared leadership produces higher quality governance decisions and should be considered by boards.”

If you’re not sure you’re distributing leadership well enough, Shekshnia offers a useful metric: A successful board chair, he suggests, takes up no more than 10 percent of the airtime during a board meeting. And in that, as in most things involving board chairs, there’s another irony: It’ll take a lot of time and a lot of conversations to make it look like you’re not the center of attention.

Nonprofits "srewed" Day #NonprofitBoards

Happy tax day 2018!  Today clearly reminds boards and their constituents that the public that elected the current Congress and Senate and President don't have the faith in the nonprofit institutions they once did have.  The pretty-much elimination of the charitable tax deduction for all but the "haves" in the new Tax Reform Bill, reinforces this message.  The institutions in the nonprofit sector have failed to be valued or at least make it clear how important their work is to the fabric of democracy and what makes this country more-or-less function.

So, nonprofit boards, this is your opportunity to make your organization valued, again.  I would recommend storytelling as the place to start and particularly at board meetings.  Don't let a meeting go by without one mission moment.  Ask lots of questions to be sure you fully understand what is happening at your nonprofit.  Have generative conversations that can provide insights as to how to be effective in the community and what are the needs your nonprofit can address.  Make sure, with your input, you have staff put together a nifty and possibly graphic, dashboard that helps you fully understand not only the dollars and cents of your operation but the numbers - what goes into making change and results and what is the change and results.  

It is on you, individually and through your organization's media to tell stories about your impact and activities, not just once-in-a-while but at every possible opportunity.  Your results must be the fodder of public conversation.  Your work must become more important than the tweets of the guy currently wearing the mantle of President.  It is on you, board members, to make your nonprofit valued again!  

Nonprofit Board Governance Committee #NonprofitBoards

Once upon a time nonprofit boards used to have what was called a Nominating Committee.  It's purpose generally included the tasks of going out and finding new board members and determining who would be the next board officers.  Thankfully, times are shifting to recognize that the care and feeding of a board demands a committee with far more responsibilities that nominating members and officers.  This "new" committee is called a Governance Committee and this body can address the many, many more tasks that largely went undone or fell to the responsibility of the Executive/CEO.   

The Nonprofit Law Blog folks have done a nice job of recognizing the Governance Committee as an essential structure for boards and have outlined what might even be incorporated by a board for its by-laws and board manual/policies and procedures.  Here's what they have to say.

Governance Committee: 12 Key Tasks

Published on: April 14, 2018 by Gene Takagi Category:BOARDS / GOVERNANCE

 

A nonprofit corporation is ultimately governed by its board of directors, but a board may create committees to assist in fulfilling the board’s duties. Among the most common and important committees utilized by boards is a governance committee.

The governance committee is generally responsible for reviewing the governance structures and practices of the organization and reporting its findings and recommendations to the board. This may include a careful examination of the board’s composition, the needs of the board to effectively fulfill its duties and responsibilities, the mission and vision of the organization, and its governing documents (typically, the articles of incorporation and bylaws).

12 Key Tasks for the Governance Committee

Develop a board member, committee* member, and officer** recruitment strategy, taking into account desired skill sets and diverse perspectives

Continually identify and recruit candidates for the board, committee and officer positions consistent with such strategy

Develop, and ensure appropriate implementation of, a board, committee, and officer orientation and onboarding strategy, which emphasizes appropriate respect of diversity, inclusion, and equity

Develop and implement a plan for continually educating the board, committees, and officers, and continually strengthening the bonds among such individuals to encourage independent expression of ideas and collaborative decision-making

Periodically review the defined and adopted mission and vision statements of the organization and whether they are consistent across documents and activities

Periodically review the governing documents of the organization and whether they are consistent with applicable laws and actual or desired organizational practices; amend such governing documents, as necessary

Develop and review other governance policies to guide effective oversight and thoughtful planning

Review the performance of the board and committees, including the effectiveness of meetings, and make recommendations, as appropriate

Review the performance of, and any perceived or actual conflicts involving, individual board members

Ensure timely and compliant elections of board members and officers

Recommend retention and re-election of incumbent board members, as appropriate

Recommend the request for resignation or removal of a board member, as appropriate

* Reference to “committees” above are generally to those committees with governance-related responsibilities that report to the board

** References to “officers” above are generally to those officer positions that are to be occupied by board members or other volunteers

Additional Tasks that May be Delegated to the Governance Committee

Develop a job description for the Executive

Conduct a regular performance review of the Executive

Approve any change in compensation of the Executive (possibly for recommendation to the Board before its final approval)

Legal Perspectives on the Governance Committee

Composition. In determining who should be members of the governance committee, a board should decide whether or not the body should fall within the definition of a “board committee” (i.e., one that is composed solely of board members). If the composition of the committee is not restricted to board members, which may be perfectly appropriate, the board should determine whether it is entitled to legally rely upon the information, opinions, reports or statements prepared or presented by the governance committee. Depending on state law, the board may only be able to rely upon a committee that is not a board committee if it is solely composed of board members, officers, employees, and/or professionals or experts who have competence on the particular matter at issue.

Delegated Responsibilities. In determining what responsibilities should be delegated to the governance committee, a board should exercise reasonable caution if the committee’s role is more than advisory. In such case, the board should also exercise appropriate oversight over the decisions and actions of the committee. For example, if the committee is tasked to develop and implement a board recruitment strategy, the board should review the written strategy before it is implemented. The board may also want to provide some guidelines to the committee up front so the strategy addresses areas of importance to the board (e.g., racial diversity, gender diversity, experiences relevant to the organization’s beneficiaries) that might not be factor into the committee’s plan (which might be focused more on fundraising capacity and professional skill sets). Similarly, if the committee is tasked to develop a governance policy, like a whistleblower policy, the board should ensure the committee has the capacity to develop a policy that is compliant with applicable law and appropriately addresses the organization’s risk areas. In addition, the board should have an opportunity to review the final policy before it is formally adopted.

Review of the Articles and Bylaws. The articles of incorporation and bylaws of the organization should be reviewed at least every few years and whenever the committee or the board is aware of a change in the law or governance practice that is inconsistent with one or more provisions of the governing documents. Perhaps the most important change to look for is a change to the purpose of the organization. Mission statements typically evolve over an organization’s lifespan, but it’s not uncommon for an organization to fail to update its purpose statement in its governing documents as its mission changes. Where the mission statement is inconsistent with the governing documents, the organization may be acting outside of its authority and breaching the charitable trust imposed upon its assets. See 7 Reasons to Review Your Bylaws Now and Amending Bylaws of a California Nonprofit Corporation.

Diversity and Recruitment of Board Members. Diversity has an expansive definition that may provide limited guidance if offered as a directive to a governance committee. So, it will generally be preferable to spell out more precisely the diversity mandate – whether it be to increase the representation of a particular race or ethnic group or of past or current beneficiaries or of some other category. And adding diversity is an insufficient goal in and of itself. The governance committee must consider how the board and the organization will build a culture of inclusion that does not treat any board member as a token or single representative for the entire group with which she or he may identify. Further, the governance committee should consider why and how a diverse board can (1) enhance the organization’s ability to further its mission, vision, and values; (2) better understand the challenges, risks, and inequities the organization faces and should seek to manage or address; and (3) contribute to the overall public good. It should be very clear that whether board members are meeting their fiduciary duties to act in the best interests of the organization are related in part to their action or inaction on matters of diversity, inclusion, and equity. See Diversity, Inclusion, and Equity (BoardSource) and Why diversity, inclusion, and equity matter for nonprofits (National Council of Nonprofits).

Nonprofit Leader Dissed #NonprofitBoards

Irony: Bill Hybels, the founder and long-term leader of the Megachurch Willow Creek Community Church (stepped down after a number of allegations involving sexual misconduct) will likely not get his books published.  The titles: "Who You Are When No One's Looking" and "Everyone Wins When A Leader Gets Better".  Rev. Hybels will also not be the key speaker at the Global Leadership Summit, an event sponsored by his church.