Nonprofit Board Crisis

Nonprofit Strategic Plan is the Answer #NonprofitBoards

Following a sexual harassment scandal and the subsequent departure of it's two Directors, the largest theater company in Toronto, Canada has hired a new executive who says that one of her top priorities is to develop a strategic plan.

Good enough I suppose - new management wants to put its stake in the ground and define the organization's future.  I am presuming that in the selection of this new director, the board agreed that revisiting the theater's direction was indeed a priority.  Yes, a strategic plan is a 'going forward', marching orders so-to-speak statement by the board, the owner, to its staff about the future.  Yes, staff need full engagement in the planning process - their knowledge of the day-to-day and the field are essential to helping inform the board in its thinking and decision-making.  But again, the resulting plan must be a product of the board's - a document that holds the board accountable for pursuit of mission and is then implemented by staff.

This distinction about who owns a strategic plan and what is the process matters for every organization facing this not-so-easy-if-it's-done-correctly and essential task of a nonprofit board.  Best to the new ED of the theater company and equally "best" to the board. 

Executive Transition And...... #NonprofitBoards

Replacing any nonprofit executive for every reason is one of the, if not the, most challenging tasks a nonprofit board ever faces.  There are so many factors to be considered not the least which is politics.  Yes: board members do have internal politics that very much influence the next "pick".  Think Big Brother or one of those other TV shows where a bunch of unrelated people are put in a house or on an island and have to find ways to be cooperative despite disdain or jealously and the individual goal of staying on long enough to win whatever is the prize.  Yes, I believe these dynamics, maybe not so deep, are often most played out when it comes time to determine who will be the paid "leader" - the individual most capable of carrying-out the vision of the board and ensuring the board fulfills its fiduciary duties.

The National Gallery board is now facing this task of replacing its 26-year Exec.  And as if the challenges I just described aren't big enough, the nature of the Gallery ( a quasi-governmental entity) and the nature and composition of the board, AND, the in-house intrigue of mostly federally employed staff, make this process one certainly not to be envied. According to the Washington Post some challenges (perhaps not so untypically identified in a transition include:

The gallery’s next leader faces significant challenges. The museum’s digital strategy is undeveloped and trails its peer institutions. Poor management across multiple departments has caused high turnover and low staff morale, resulting in missed deadlines and budgets that waste taxpayer dollars, according to staff. Long-standing problems of sexual harassment, retaliation and favoritism persist because senior executives and personnel officers ignore or cover up complaints, according to seven current and former employees, most of whom requested anonymity because of fear of reprisal.

The National Gallery’s conventional approach stems from its unusual structure as a quasi-federal organization. Chartered by Congress and federally owned, the gallery is a nonprofit corporation that receives about 75 percent of its annual $190 million budget from taxpayers. Most of its 1,100 employees are federal workers and federal funds allow its 5 million annual visitors to enter free.

Sharon Percy Rockefeller and Frederick W. Beinecke, two members of the gallery’s nine-member board, declined to comment through a spokeswoman. (The board has five general trustees serving staggered 10-year terms and four ex officio members: Chief Justice John G. Roberts Jr., Secretary of State Mike Pompeo, Secretary of the Treasury Steven Mnuchin and Secretary of the Smithsonian Institution David J. Skorton.)

There’s a moment for reinvention,” said Gail Anderson, a museum consultant, about replacing a veteran leader. “How do you change the culture of an institution, its position in the community? You have this moment to pivot.”

Museums around the country are grappling with diversity and inclusion in staffing, especially at senior levels. A 2015 Andrew W. Mellon Foundation report found that only 16 percent of museum leaders were people of color. The American Alliance of Museums highlighted diversity, equity, accessibility and inclusion as a top priority in a 2017 report titled "Facing Change."

 

 

 

 

I think it enough to say: read the Washington Post article.  An executive transition of this nature doesn't get more difficult.

Nonprofit Board Success #NonprofitBoards

A contributor to the Tallahassee Democrat regularly offers her observations on nonprofit board governance and in her most recent article engaged a colleague (Robert C. "Bob" Harris) in sharing his experience.  I've highlighted his "points" for your own consideration.  The topic: why boards fail and what to do about it.

Here's the list with my own thoughts added.

• Boards can fail when the don't understand their role.  That's why board orientation for new members, on-going education, and mentotring about the role of board members is critically important.  Don't assume board members know what they need to now, even if they've served on multiple boards.  Working in partnership with the board chair, it's the ED's job to educate them.  
• Yes, for sure, board members need to understand what is expected of them and how to meet these expectations. And yes, being a board member is not knowledge with which one is born.  I might however quibble over how much of the task of education is the ED's and Board Chair's.   I would offer instead that a Governance Committee, supported by staff, is in the best position to recognize needs, plan, and act.
• Boards can fail when they don't plan.  Donors, board members, and funders want to invest in organizations with a clear vision and bold plan.
• Even though I have spent a significant portion of my consulting career as a strategic planner, I must say that I am not 100% certain about what has been the difference made with the resulting plan.  I do very much believe that the process matters as a unifier and cohesive-builder but getting members to keep the plan in front of them does not always stay constant especially with the other competing priorities.  Getting a plan completed matters but equally important is having the board hold-up the plan as their guidepost.
• Boards who are not willing to raise money or personally give money are less likely to succeed. 
• I must say that there are many, many nonprofits not dependent on the giving/getting activity of their board.  And, I recognize there to be a good and maybe bad to this reality.  Bottom line, I don't believe this dictum to be an absolute for every board.  I believe it to be true for many and further believe it necessary for members to agree that this is their strategy - not a requirement because they are told it is. 
• If there's no recruitment or training of diverse, capable board members, the organization stagnates which can lead to failure.  That's why term limits are critical and governance is the most important boar committee.  Otherwise expect failure or very low performance.
• I fully concur.
• Creating a financial and programmatic dashboard to track key indicators is one way to identify warning signs when they develop.
• I agree and would further offer that his is all made possible as a result of good strategic planning.  Also, recognizing warning signs is pretty much what is the fiduciary responsibility of a board.

 

• It’s also important to ask hard questions. Boards who avoid them may find themselves dealing with bigger issues that can lead to resignations, declining donations, and in some cases, closing the doors. To prevent this, create a culture within the board where hard questions are welcomed and addressed in a timely manner.
• Certainly and this is where the Chair becomes and important player - to facilitate, encourage and ensure that the governance committee has done its job in skill and process building.
• Finally, boards fail when they don’t diversify funding sources. I was contacted by a nonprofit who receives 98% of it’s funding from one source which was about to be dramatically reduced. Until then, they had rarely hosted community events or engaged in relationship building beyond its existing funder and constituents.  As a result, they were scrambling to create a fundraising program with no donors, no community visibility, or public awareness of their mission or impact. That’s a steep climb that could have been avoided by steadily building a giving program.
• Yes, diversifying funding matters for longevity.  Again, back to planning remembering though it is here, I believe, that the board sets the direction and hires a great exec who in-turn executes and is accountable for doing the actual diversification. 

Nonprofit Exec Fired for ? #NonprofitBoards

 

 When a big plan fails must someone's head be on the chopping block?

 

The answer regarding a big music event is "yes".  The CEO of GO Cedar Rapids is basically accused by the board of having exceeded his authority which in turn led to a 2.3 million dollar loss and of course, his firing.  Some of the details are offered below in copy from the Cedar Rapids Gazette.  

Bottom line, event was big financial failure.  The Board says it did its job putting in place, for the most part, checks and balances that could have prevented the financial disaster.  The former CEO says he did what he was supposed to - it just didn't go as planned.

 

But should the former CEO not have been given a second chance?  Is the board just not wanting to take ownership of it's own failings?  Clearly the answer to date is "no" and "no".  What would your board have done different in a similar situation?  The learning of course is what constitutes the measure of living up to fiduciary responsibility - prudence.  And could the Go Cedar Rapids board have acted more prudently - the evidence suggests, maybe.

CEDAR RAPIDS — The former chief executive of GO Cedar Rapids refused to cut expenses as “newbo evolve” neared contributing to a $2.3 million loss for the event, the board’s chairman John Myers said on Friday.

The board was unaware of and didn’t approve several expenses, such as the last-minute signing of rock band The Wallflowers to open for Kelly Clarkson on the event’s opening night, Myers said, and top act Maroon 5 was paid much more than it should have been. Things like stickers on the street and lockers outside the concert grounds could have also been cut to minimize losses, he said.

“A prime example was the signing of The Wallflowers because there was no contractual obligation to sign them as opener for the festival,” Myers said, declining to say how much individual acts were paid, citing contractual restrictions. “That was made the last week before the festival. It should have been avoided. It should not have happened.”

Jamee Bruening (left) of Decora and Tavi French of Fort Dodge embrace after seeing each other for the first time in years during the opening act, Robert Delong, for Maroon 5 on the second night of the Newbo Evolve festival in Cedar Rapids on Saturday, Aug. 4, 2018. (Hannah Schroeder/The Gazette)

He cited “excessive spending on unnecessary items” and breaking protocol in signing contracts as factors when asked why the event lost so much money. The board is in process of finding a firm to conduct a full audit of the festival, he said.

As more details are released about newbo evolve — part music festival, part speaker series, part wellness, fashion, design and culinary series on Aug. 3-5 in downtown Cedar Rapids and the New Bohemia District — the oversight board continues to distance itself from the decision-making that led to the loss. Myers describes an engaged board that questioned information from the beginning, and he put the blame squarely on former chief executive Aaron McCreight and Scott Tallman, the creative director of newbo evolve.

Others question why the board allowed the tourism bureau to take on such a great risk with little experience in putting on such an grand event.

“They are playing with other people’s money, and it makes you wonder if these board members would put their own money up for something so risky,” said Daniel Borochoff, president of Charity Watch, a Chicago-based watchdog in the nonprofit sector. “Saying they got bad information says they didn’t do enough to get their own information.”

Nonprofit vs. For-Profit

A Letter to the Editor in the Wall Street Journal serves to remind all that one of the primary differences between a nonprofit and for-profit is who is the beneficiary of "ownership". The focus of the letter is credit unions and a reality that banks are continuing their effort to have credit unions taxed under the premise that credit unions offer the same services as banks.  And it is true, credit unions offer the same services but mission is about members and access to financial opportunities that banks do not hold true for similar customers.  Banks take little risk.  Credit Unions are cautious but are willing to take risks.  Bank profits go to shareholders.  Credit Union "profits" are distributed in one fashion or another to the members.

Nonprofit status matters when it comes to being a credit union.  Profits matter when it comes to being a bank.

Nonprofit Board Confidentiality and Compliance Agreement #NonprofitBoards

The following was included as part of a letter to the Editor of the Virginia Pilot:

    "nonprofit boards, almost all of which require the signing of confidentiality and compliance agreements by members, with punitive measures taken for     noncompliance."

This line gave me pause as I reflected on a) whether I have actually signed such agreements on the boards I have served and b) what type of punitive measures would be taken for noncompliance if I had.  I for sure have signed conflict-of-interest agreements (a promise to disclose if/when) but confidentiality and compliance?  Not so certain.  And other than removal and MAYBE a law suit (not a healthy approach to resolving board issues), what types of punitive options does a board have?  

This might be a good time to ask an attorney about both the necessity to have and the nature of a policy that informs these agreements and punitive measures.  But one can start with this article by BoardEffect which provides guidance regarding a confidentiality policy (helpful starting point).  Foraker Group also offers some wisdom on this subject of confidentiality.

But punitive measures for noncompliance - that's a whole other subject...

 

 

Nonprofit Board Accountability #NonprofitBoards

When maybe "bad" things happen in a nonprofit, what should be and who should tell the "story"?  This is the question that arises for me after reading the following (Ohio) bizjournal story about an exec's relatively short tenure as CEO of a nonprofit.  

The short of the story is that after only four months in the position, the CEO is no longer in the job.  The board's (and yes, this is who I think should tell the story) says that basically the hire wasn't a good fit and they are rethinking what they need while continuing to do service.  

Good enough?  For sure, the board is taking responsibility and taking control of the message.  Smart PR stuff.  Are all the questions answered - is there not a feeling of some kind of cloud?  Perhaps but does the board really owe more of an explanation?  I believe donors in particular will be the judge and who knows, given how savvy this board appears, it is probably taking care of this audience as well.  Clouds of course do go away and I am sure the board has learned a lesson they will eagerly apply with their next hire.  Maybe it's good enough to know they "cut bait" while the time was best.

 

 

By Emily Bench  – Staff reporter, Columbus Business First

Aug 20, 2018, 11:43am

 

After less than four months on the job, Mary Cusick is no longer CEO of The Women's Fund of Central Ohio.

"Mary is a compassionate, committed leader within Central Ohio, and we appreciate all she does on behalf of women, children and families," The Women's Fund said in a statement.

"While we are all disappointed that this relationship wasn’t a fit, we are grateful to Mary and look forward to seeing how she continues to advocate for social change through her ongoing community involvement."

Board members for The Women's Fund said they would not discuss Cusick's exit.

Cusick took over the post in April after Nichole Dunn left to assume the CEO job at Flying Horse Farms, a camp for children with serious illnesses. Cusick began the role there April 30.

The organization is “fiercely committed to igniting social change for gender equality,” according to its website.

Before the Women's Fund, Cusick was the director of TourismOhio. Over four years there, she was credited with helping the tourism industry in Ohio grow into a $43 billion industry.

"During this period of transition, we will operate on parallel tracks – evaluating leadership needs and opportunities for growth, while continuing to do the critical work needed to spark social change for women and girls in Central Ohio," The Women's Fund said in the statement.

Cusick has served on nonprofit boards including South Side Learning and Development Center at Reeb Avenue, Ruling Our eXperiences (ROX), Action for Children, Nationwide Children’s Hospital Development Board, German Village Society and Public Relations Society of America.

She had worked at Bob Evans in various public relations and marketing post for 32 years, including 5½ five years as chief marketing officer before she left in December 2010.

In April, The Women's Fund said, "With her passion for the mission, depth and breadth of experience, and proven track record of scaling organizations, Mary will continue to build on the current vision and take us to the next level in creating lasting social change for women and girls in our community."

We are seeking comment from Cusick as well.

Mission, Strategy and Prudence #NonrpofitBoards

In its pursuit of mission, the Abraham Lincoln Presidential Library Foundation board in Springfield, Ill. sought to add rare items to its collection to better tell the Lincoln story.  Yes, it acquired the sought-after collection while at the same time it took on a huge debt thinking folks would just give - albeit, a strategy but was it prudent - the standard held for what is "good" decision-making by a nonprofit board?  

The answer re strategy and prudence by this board remains to be seen as the next step is to prepare to auction some of the very items that drove the board into debt.  One might have suggested prudence would have been acting when assurances of money were in-hand.  Or perhaps borrowing the collection for a long-term lease or partnering with another entity to make the purchase or.....  Well, I'm not in the museum business and I understand there to be many complications but I do know governing and I would raise the yellow flag here to say that this board - well, it needs some help.  

Here's the Washington Post story.

 

The Abraham Lincoln Presidential Library Foundation, which supports Lincoln’s museum in Springfield, Ill., has found itself $9.7 million in debt on a loan it took out 11 years ago to purchase a collection of rare artifacts from a private collector. Now, hundreds of Lincoln’s personal possessions, including a beaver fur stovepipe hat that Lincoln purportedly wore, as well as letters and other artifacts, are at risk of ending up on the auction block if the foundation can’t pay off the hulking debt through state funding or private donations. Or even a GoFundMe campaign titled, “Save Lincoln Artifacts. Donate NOW!”

On Wednesday, the foundation and its board members agreed to begin hunting for prospective auction houses. The move is a necessary precaution in the event the foundation cannot make the payment deadline in October 2019, the foundation said. 

As of early Friday morning, the Lincoln Museum’s GoFundMe page to help save the collection from auction has raised $10,239, still well short of the $9.7 million goal. 

“It’s certainly not a day any of us wanted to see come to pass,” Carla Knorowski, the foundation’s CEO, told The Washington Post about Wednesday’s decision. “Having said that, it’s something that we internally have been preparing for just in case. But every day that I wake up, that my colleagues wake up and our board wakes up, we are working to figure out how we can raise money towards this, and how we can successfully bring this campaign to a conclusion.”

Perhaps the most recognizable item at stake is a beaver fur stovepipe hat that Lincoln purportedly wore as a state lawmaker in Springfield. The famous top hat is just one of three of its kind preserved over time, Knorowski said, although some have questioned its authenticity. The collection offers rare items, such as bloodstained white gloves the president had in his pocket the night he was assassinated, as well as his billfold, eyeglasses and presidential seal, still checkered with red chips of wax wedged into the cracks. Knorowski said there’s also a page from his 1824 “sum book,” in which Lincoln scribbled long division and wrote a poem in the top corner, bearing the earliest known example of his handwriting.

“Abraham Lincoln is my name,” 14-year-old Lincoln wrote, “and with my pen I wrote the same. I wrote in both haste and speed, and left it here for fools to read.”

Abraham Lincoln’s bloodstained gloves he carried on the night of his death, photographed at the Abraham Lincoln Presidential Library and Museum in Springfield, Ill., June 14, 2007. (AP Photo/Seth Perlman)

The artifacts are all part of the Louise and Barry Taper Collection, one of the most comprehensive collections of Lincoln’s personal belongings. In 2007, the foundation acquired more than 1,000 artifacts valued at $25 million from the Taper collection. The money came in the form of a $2 million donation and a $23 million loan, which the foundation expected to pay back in private donations.

At the time of the purchase, the Abraham Lincoln Presidential Library and Museum was still relatively new, having opened its doors in 2005. The library offered tourists a chance to see rare copies of the Emancipation Proclamation, the 13th Amendment and the Gettysburg Address. But what it lacked, Knorowski said, were Lincoln’s everyday belongings or prized possessions that would make the museum come to life.

That’s why the Taper collection was so important, she said, as it brought so many of Lincoln’s possessions out of private hands and into the public realm.

“Abraham Lincoln is our nation’s greatest export,” she said. “People might say it’s corn or the U.S. dollar or whatever. But it’s Abraham Lincoln.”

Since the foundation acquired the collection, private philanthropists have donated more than $13 million to pay off the loan, Knorowski said. But donor fatigue in the 11 years since the purchase of the collection has left the foundation and its supporters wondering what’s next. 

Once the loan is paid off in full, the state of Illinois, with license plates that proudly say, “Land of Lincoln,” is expected to become the owner of the collection once the loan is paid off in full, according to the foundation. This move would come despite the state not providing funding to the foundation. 

“Many of the donors or prospective donors have come to us and said, well, what is the state doing to help?” Knorowski said.

The foundation met with Illinois Gov. Bruce Rauner’s office in May to talk through their options, but the governor’s office “made no financial commitments,” the foundation said at the time. A spokeswoman from the governor’s office told the State Journal-Register that it would continue to work with the foundation and is “listening to their business plan,” but wouldn’t elaborate on any help the state might offer.

The foundation is hoping for a $5 million grant from a state tourism fund, believing it could then challenge private donors to match the rest. However, state Rep. Tim Butler (R-Springfield), who represents the same area that Lincoln once did, told the Associated Press that state funding would be a last resort and questioned whether shopping for auction houses at this point was necessary.

“This is a really bad sign that they’ve started these proceedings,” he told the AP. “I realize they’ve got to do some planning, but I would hope that the foundation wouldn’t move to that step until the absolutely last minute.”

The foundation has already sold some items from the collection at auction — specifically, items that once belonged to Marilyn Monroe. She ended up in the Taper collection because of her fascination with the president, Knorowski said. Taper’s collection included a dress that belonged to the star that sold for $50,000 at auction and a bust of Carl Sandburg, who Monroe befriended after reading his biography of Lincoln.

Knorowski said the Las Vegas-based auction featuring the Monroe items took more than 10 months to arrange. 

“He is the standard-bearer for our nation, and it’s important that we honor him, and it’s our job at the foundation to honor his legacy every day,” Knorowski said. “That’s why we bought this collection and that’s why we’re committed to retaining it.”

Do Grants = Bribe? #NonprofitBoards

Does a grant mean a "bribe"?  That's the insinuation made by Crains New York in the following article describing the $10 million in grants given by Airbnb to a number of New York nonprofits (fairly influential nonprofits at that).  Is this a case that the "only thing wrong with tainted money is their 'taint enough of it" for the grant recipients (and no, I don't believe Airbnb to be a tainted source of money Except maybe intent)?  Or, is there really some influence peddling expected from the gift?  But wait, don't businesses generally give grants to either benefit their employees, employee environment, or their own corporate environment?  So what's the big deal.  Shouldn't this story be about a big hooray for Airbnb and the grant recipients?  OR, should we expect that the grant recipient board members will put in a "good word" to their connections?  

My conclusion, I think the article over-hypes the intention by Aribnb.  At the face vale, good deal for all around.  Or isn't it?

 

Airbnb hands over $10 million to nonprofits in new PR blitz

Tech firm hopes to advance long-stalled Albany bill

By Will Bredderman 

1 Comment CommentsEmail Print

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Photo: Bloomberg News

 

Airbnb aimed to prove Wednesday that its talk about the benefits of short-term rentals isn't merely hot air.

At a morning event in Manhattan, the company announced it would give seven taxpayer-funded nonprofit groups $10 million—a mere 10% of what it claims the city and state could reap in levies if they changed the state's occupancy law.

That statute, which bars the subletting of apartments for fewer than 30 days unless a primary tenant remains on site, was at the heart of the tech firm's recent policy fights in the City Council and state Legislature. The former proved unsuccessful, as city lawmakers in July voted to force Airbnb to disclose the names and addresses associated with its listings to authorities to make enforcement e

The organizations to receive Airbnb cash are homeless shelter operator Women in Need, the New York Immigration Coalition, the first-time homebuyer-assisting New York Mortgage Coalition, Harlem-based affordable housing builder Abyssinian Development Corp., AIDS-fighting nonprofit GMHC, the New York State Rural Housing Coalition and the tech education advocacy group Computer Science NYC.

“New York state is leaving $100 million in annual tax revenue from Airbnb hosts on the table by not allowing us to collect and remit these taxes—$100 million," said Margaret Richardson, Airbnb's director of global policy. "It’s a big number. And we recognize that the impact of such a large amount is hard to grasp in theoretical terms.So today, we’re making it clear by launching a $10 million initiative, representing just one-tenth of the tax revenue state and city officials are leaving on the table annually.”

Several of the nonprofits benefiting from Airbnb’s largesse are politically well-connected:  Abyssinian to Gov. Andrew Cuomo and a number of uptown politicians, and the New York Immigration Coalition to the city’s burgeoning left-of-center activist community, which largely supported the council legislation. Women In Need, meanwhile, enjoys ties to the governor, his state Democratic Party and numerous city officials through its CEO, former City Council Speaker Christine Quinn.

Quinn said her group would use the money to “triple” or “quadruple” its programs linking homeless women to good-paying jobs and to expand its services for victims of domestic violence.

She refused to take a stance on the legislation Airbnb has advanced in Albany, and insisted she had no compunctions about taking money from Airbnb that the company might have derived from illegal rentals. The former council speaker would only insist that the funding would aid those seeking refuge in Women in Need shelters.

“My sole responsibility is to those families, to do everything I can and bring every resource I can,” she said. “This very significant donation is going to make an enormous change and have a huge impact.”

But state Sen. Liz Krueger, D-Manhattan, a leading critic of Airbnb, said, "The potential tax revenue that Airbnb is offering is just a drop in the bucket compared to the massive cost of replacing the housing they've already taken off the market." She called it "unfortunate that organizations serving the homeless are being exploited."

This is not the first time Airbnb has looked to curry favor with nonprofits and civic-minded New Yorkers. Shortly before the city bill passed, the company donated $10,000 in housing vouchers to social workers and volunteers assisting in the reunification of families separated at the U.S.-Mexico border.

Roberts Rules of Orders #NonprofitBoards

I am NOT a fan of Roberts Rules of Order - the instruction book that enables the control of meetings by the few.  That said, many, many folks think Roberts Rules are necessary (they are not - think Roberta's Rules or Consensus as two alternatives).  So, for those with a real need for control or a real need to get a meeting under control or those who are obsessive compulsive (like me), BoardEffect, the on-line portal people, have created quick-study guide to the basic processes.  There is certainly nothing like this for a late-summer read.  Here's the link.