Nonprofit Board Crisis

Nonprofit Board Dominant Coalition #NonprofitBoards

It is likely an unacknowledged given that in a nonprofit board there are just a few (or several depending on the size of the board) who "rule the coop".  Rule the coop you say: impossible!  But not so says nonprofit governance researchers David O. Renz and Frederick O. Davidson  in the recent issue of the Nonprofit Quarterly.  These two researchers offer that there are actually six "dominant coalitions" where, but for one, the coop is ruled by a subsection of some combination of members.  I suppose the so-what of this analyses is that some folks are left out (or defer out" of their duties and rights of "ownership".  This reality in-turn means that decision is made by the few, wise or not, and that consequences for the nonprofit's beneficiaries could range from little or no significance to significant significance.  I would further pose that in organizations with mandated/prescribed board structures, the likelihood of a dominant coalition and subsequent disenfranchised means that the intended decisions are simply "not".  Renz and Davidson may also, through this analysis be helpfully offering another element for a board's self-assessment - a finding that can actually, with proper recognition and attention, be corrected.

Here's a description of the six "coalitions":

1. True Governing Board. In what some would consider an ideal scenario, the dominant coalition and the governing board are synonymous; there is 100 percent overlap. In this case, the entire board membership constitutes the dominant coalition, meaning that other governance stakeholders, such as the executive director, are not “in the game.”
2. Strong Executive Committee. Many boards have explicitly authorized an executive committee to act with all of the authority of the full governing board (sometimes without even any follow-up reporting or accountability to the governing board), and this committee becomes the dominant coalition because it has the power to make choices and decisions for the organization.
3. Founder-Driven Coalition. It is common to find that founders of nonprofit organizations seek to retain the power and influence they held from the founding of the organization, and they may exercise this authority with the support of a small cadre of their associates. This could take multiple forms, since founders may also sit on the board, or in the executive director chair, or entirely outside of any official formal role or structure.
4. Executive-Driven Coalition. Similar to the findings of many for-profit organizations, many nonprofits develop a situation in which an executive leadership team of the organization acts as the true governance decision maker. In such cases, the board often becomes a mere rubber stamp, and all leadership derives from the executive corps.
5. Funder-Driven Coalition. Many observe that “those who have the gold, rule”—and that is the essence of this dominant coalition. In some cases, this coalition may be exceptionally small (e.g., there is one dominating funder, and s/he drives all key decisions), but in others we will see a funder in the lead but working closely with some small segment of the board and/or executive director. Resources, of course, are at the core of this power relationship.
6. Profession-Driven Coalition. Some organizations have a strong professional component to their work (e.g., the field of medicine in hospitals), and the real power to make decisions lies (intentionally or not) with some cadre of the professionals (e.g., physicians in hospitals). In these cases, such coalition membership may be reinforced by external regulatory or accreditation conditions.
7. Blended/Diverse Stakeholder Coalition. There are several models of governance that rely upon the active engagement of key stakeholders in the governance decisions of the organization, and in these cases it is conceivable that a dominant coalition could emerge as a result of some set of these stakeholder representatives coming together to coalesce and exercise power.
8. Diffuse (and Ineffective) Coalition. Some nonprofits are not really governed by any actors with any significant power or influence. In these fragmented, shared-power settings, various constituencies come together to disrupt or blunt each other’s exercise of influence, power becomes very diffused, and no one is really in charge.

Nonprofit Accomplishments Will Not Be What We Remember #NonprofitBoards

No nonprofit manager or board makes perfect decisions.  They are human and/or are comprised of humans.  If we all had the ability to see the future, our decisions might be different, buts alas, we do not.  A community organizing group in New York made it in the news but sadly, not for some of the amazing outcomes it accomplished but for some of its lesser effective decisions and actions.  Should they be judged accordingly?  Please read the following accounting about for the Child Welfare Organizing Project with this question in mind: who are we to judge?  My answer: only those in the thick of it.

A Fiji Junket, a Padlocked Office and a Pioneering Nonprofit’s Collapse

The Child Welfare Organizing Project gave New York parents a voice in a complex system. Now it is mired in scandal.

By Nikita Stewart

• Sept. 10, 2019
• •  
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For 25 years, the Child Welfare Organizing Project, a group of mostly low-income black and Hispanic mothers in New York City whose children had been taken away from them, managed to turn their pain into policy.

The nonprofit is credited with pushing for changes that helped to steer the steep drop in the number of children in city foster care, now at about 9,000 from about 50,000 in the early 1990s.

Parents staged protests and made their presence felt at hearings in Albany and at City Hall. Two of the group’s proposals were approved this year by the New York State Legislature. And two former employees now hold key positions in the Administration for Children’s Services, the city’s child welfare agency.

But now the group is on the brink of collapse.

The New York City Council declined to fund the nonprofit this year. A city investigation is looking into the group’s expenditures, including a trip to Fiji taken by the former acting executive director, Ayo Haynes, to see the motivational speaker Tony Robbins.

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Board members say the nonprofit, once heralded as a national model, is regrouping; former employees say it is only a few thousand dollars away from disappearing altogether.

The collapse of the organization has sparked a larger discussion and an examination of race, gender and class within the close-knit world of child welfare agencies.

It also underscored how difficult it can be to maintain continuity, let alone accomplish growth, in a group where parents with little to no managerial experience were entrusted with making policy decisions, and had to collaborate with the larger child welfare universe.

At the heart of the group’s demise were internal disputes about the nonprofit’s mission and how best to achieve it. The tension peaked in August 2018, when Ms. Haynes changed the locks at the office in Harlem and prepared a letter to employees to let them know they would be furloughed.

Joyce McMillan, then the director of programming, showed up on a Sunday and got a locksmith to let her in. After Ms. McMillan called Ms. Haynes from inside the office, Ms. Haynes notified the police. Ms. McMillan said she was frightened by the experience. She soon resigned.

 

“I’m not sorry they are closing,” said Ms. McMillan, 53. “I will deliver the eulogy at their funeral.”

The nonprofit’s origins began in 1994, when David Tobis, then the executive director of the Child Welfare Fund, decided to try to increase parental involvement in the child welfare system.

With the financial help of a wealthy friend who wanted to remain anonymous, Mr. Tobis helped to create the Child Welfare Organizing Project. Recruiting parents was, at first, slow going, said Terry Mizrahi, a professor of social work at Hunter College, who was asked by Mr. Tobis to find parents.

But the climate changed drastically in November 1995, after the horrendous case of Elisa Izquierdo, a 6-year-old girl killed by her mother; child welfare workers had failed to intervene despite repeated reports of severe beatings. Suddenly, low-income parents were given more scrutiny, and there was a rise in the number of children placed in foster care.

The nonprofit organizers held a child welfare summit in Harlem in January 1996, on a day when snow blanketed the city. Parents nonetheless packed the venue.

“Three hundred people on a snowy — a blizzard — day,” Professor Mizrahi said. “That was really the start of knowing there was a constituency for us.”

Through their advocacy to keep families together, the group “proved to the child welfare community that parents not only could be heard but they could organize to bring about a coherent message,” said Jeremy Kohomban, the former treasurer of the nonprofit’s board and executive director of the Children’s Village, a foster care agency in Westchester County.

The nonprofit initially tapped activists like Mabel Paulino, whose family had been affected by child welfare, to take the helm, Ms. Mizrahi said. Then the organization turned to Michael Arsham, then a 40-something social worker. Mr. Arsham, who would go on to serve as executive director for 15 years, said the group was at its best when it acted as a friendly foe of the city Administration for Children’s Services.

“Not just to stand outside their house and throw rocks at them, but to be at the table,” he said.

Mr. Arsham left the nonprofit in 2013 to join the city child welfare agency as director of the Office of Advocacy, which serves as a sort of ombudsman fielding concerns and complaints.

With his departure, there was an opportunity to reset the nonprofit as a parent-led organization, and the board hired Sandra Killett, who was the board’s chairwoman and a parent advocate at Children’s Village.

Ms. Killett, 57, stood apart from her predecessors; she had a long personal history with the city’s child welfare system: Her sons had been removed from her care years earlier. She is also black; Mr. Tobis, Mr. Arsham and Professor Mizrahi are white.

In New York City, black children make up about 23 percent of the child population, but more than 53 percent of the children in foster care. Still, the power structure remains mostly white and male. Four of the six commissioners who have led the Administration for Children’s Services since it was created in 1996 have been white men. Few women or people of color lead the foster care agencies with the largest contracts in the city.

The power imbalance was one more strain for women who were already going through the worst periods of their lives, former employees said“There were these women of color and all of these men with so-called stature,” Ms. Killett, 57, said. “The women would do what the men said. I had to tell them, ‘Don’t tell me he knows better. No, you’re the expert.’”

But she said she got pushback when she wanted parents to be more aggressive with the city. “They thought I would come in and fall in line,” she said, adding later, “I started thinking this is not for me. Every day I wanted to quit.”

The nonprofit lost a bid for a city contract, beginning a downward financial spiral. The board fired Ms. Killett in 2016.

“I’m not sure she got enough training or accepted enough advice,” Professor Mizrahi said.

The organization once again had to reshuffle, and Ms. McMillan, a longtime parent volunteer, became director of programming. Eventually, Ms. Haynes, a board chairwoman and a mentor to Ms. McMillan’s adult daughter, became acting executive director.

Ms. Haynes, a real estate broker and actress, was an adoptive parent and had a master’s degree in business administration. “I was just coming from a place of someone who wanted to help,” said Ms. Haynes, 51.

In some ways, Ms. Haynes was an unusual choice. She had no experience in child welfare, professionally or personally. And some of her ideas to boost morale raised concerns.

In 2017, she took the staff to Newark see Mr. Robbins, the motivational speaker, in a session that cost the group about $2,600. She also took a trip to Fiji to see Mr. Robbins, for additional training for herself.“It was team building,” Ms. Haynes said, adding she had accidentally used the group’s credit card instead of her own to pay for the Fiji trip. “The cards look incredibly the same.”

Records show that she repaid $2,134 for her overseas trip.

Ms. Haynes described an organization that could turn parents’ personal trauma into tangible gains in child welfare. She said Ms. McMillan, who is facing accusations that she harassed other employees, had “good ideas about policy.”

But she said that carrying that pain could also become a burden. The most effective parents are able to build some distance between their personal experiences and their professional lives, she said.

“They’ve worked through their trauma. They’ve had therapy. They don’t explode,” Ms. Haynes said.

Ms. McMillan and Ms. Killett are now working as child welfare consultants; Ms. Haynes is a broker with Halstead Manhattan.

The nonprofit is exploring merging with another group, Ms. Mizrahi said. But with the group sidelined for now, two bills passed by the Legislature earlier this year are in danger of dying if Gov. Andrew M. Cuomo does not sign them.

Mr. Tobis, 75, who wrote a book about the nonprofit’s influence called “From Pariahs to Partners,” allowed that perhaps the group had run its course.

“Movements start, they rise, they have influence and then they abate,” he said. “Parents are parents. They are not administrators.”

Ms. Killett said parents are capable of both, but she said that leaders of child welfare agencies should not confuse a need for support with a relinquishing of autonomy. “You don’t have to follow their lead,” she said.

 

Nikita Stewart covers social services with a focus on New York City Hall. She has previously worked at The Washington Post, The Star-Ledger in New Jersey, The Journal News in Westchester County and The Courier-Journal in Louisville, Ky. @kitastew

Nonprofit Board Communication #NonprofitBoards

Ok, Pacifica Radio has had a storied history, so much so that there is even a book that chronicles, among other things, significant in-fighting by the board and staff:

Pacifica Radio: The Rise of an Alternative Network (American Subjects) by Matthew Lasar (1999-02-08) Jan 1, 1676

by Matthew Lasar

 

The storied history now continues with a New York Times headline: Layoffs and Canceled Shows at WBAI-FM, a New York Radio Original.

 

Behind this headline is the story of Pacifica's firing WBAI-FM's 19 staff and replacing programming with content from Pacifica.  Staff were notified the day of the firing - without warning.  The irony of course is that Pacifica began its existence, as the book title notes, as the beginning of the alternative radio movement, filling a void in the industry where stories that would not otherwise be told, would be told.  

 

There is Paulo Freire's phrace that the "oppressed eventually become the oppressor" and this turn of events truly represents this phrase.  The board of Pacifica should in my opinion, given its roots, should have at minimum, handled the consequences that drove this decision to disarm WBAI-FM, with civility and respect.  The board did not.  The Pacifica Board has also now continued a tradition of not making fully-informed business decisions.  Being fully informed would have likely had this type of decision made years ago or the development of a new strategy for financial survival.  That Pacifica has used a formula of franchising its news has appeared to proven a more viable approach to distributing alternative news appears to only be part of the approach toward achieving viability.  Making its network of stations independent and able to stand on their own while purchasing Pacifica's news programming would seem a win-win for all.  But so far this has not been the board's approach.  But then, other than slashing and burning, no other approach indicates a prospect for long-term survival - certainly not what the founders had in mind although Matthew Lasar's book might suggest otherwise.

 

 

Maximizing the Value of a Nonprofit Board #Nonprofitboards

The following is a piece on getting the most value from a nonprofit board.  There are some helpful points although I must say most is more common sense than research-based.  That can be ok - if someone has tried it then ok while acknowledging that board stage of development, size, composition, culture and history all matter in prescribing how to be effective.  Essentially, what is effective for one may not be effective for another.  That said, here's some of my takeaways:

a. one perspective about board composition: needed knowledge changes with the market - I would pose however that the market knowledgeable person doesn't have to be a board member - just a volunteer or even advisory person that can ensure staff understand and can convey to board what is needed for strategic decision-making

b. the number of board members is not fixed and specific for all boards - again, as I just noted, size is affected by a number of variables.  However, there is research on odd/even numbers.  You can write me to get this reference.

c. on-boarding is essential to getting a newbie member ready to contribute - absolutely!  the article refers to establishing a buddy system - again, absolutely!

 

EXECUTIVE BRIEFING 10/14/2019 11:00 pm ET

Maximizing The Value Of A Non-Profit Board

By Lisa K. MacDonald

 

The non-profit health and human service organization’s governance needs are changing – and becoming less similar to non-profit organizations in other sectors. Why? More of the organization’s total income is coming from services, there is more competition for that service revenue, which has more reimbursement tied to performance, and there are shifting standards for maintaining tax-exempt status.

The implications of this shift got a lot of attention at our recent 2019 OPEN MINDS Executive Leadership Retreat. My colleagues, OPEN MINDS Senior Associates Ray Wolfe, J.D. and George Braunstein, RN, FACHE, led a seminar on the implications for non-profit boards – Aligning Non-Profit Health & Human Service Boards For Sustainability With The New Market Landscape: An OPEN MINDS Seminar On Governance Issues In The Time Of Changing Reimbursement Models & Charitable Care Rules.

The seminar focused on sustainability issues – particularly the increasing pressure on operating margins in health and human services – for both for-profits and non-profits. And the increasing lack of predictability in revenue – and expenses – brought by value-based reimbursement. During the seminar, Mr. Wolfe discussed the challenge of ‘business as usual’ with non-profit boards. He noted that many non-profit boards operate with very active members meeting at a regular time, often two or three months apart, and limited knowledge of the implications of market changes on the financial management of the organization. In a value-based world, financial issues can change unexpectedly and timely attention to market shifts are necessity for success. Put simply, traditional models of governance are not effective.

That seminar led to the very natural question – what is needed of board members of non-profit health and human service organizations – and how can executive teams leverage the value of their board members? That was the topic of a subsequent session at the institute, Non-Profit Board Management: Keys To Attracting & Managing A Board That Can Operate In A Competitive Market featuring Spectrum Health Chief Executive Officer Bruce Nisbet, Aurora Mental Health Center Chief Executive Officer, Kelly Phillips-Henry, Psy.D., and Stephen Holoviak, Ph.D, OPEN MINDS Subject Matter Expert and board member of Summit Health.

Stephen Holoviak, Ph.D., OPEN MINDS, Subject Matter Expert, Summit Health, Board Member

The session facilitator, OPEN MINDS senior associate, Art Williams, opened the session with a summary of the key issue: The definition of what a board should look like has fundamentally changed. As the market changes, organizations need to attract board members who are competent, strategic, and understand the major environmental forces that affect the modern market. It comes down to remaining competitive. Board members need to have the industry knowledge to be aware of the resources required to meet the organization’s overarching mission.

In that context, the question was, how can executives increase the ‘contribution’ of board members to ensure future success? The panel’s advice—recruit the right members, think quality over quantity, and adjust the dynamics.

Recruit The Right Members—During the transition from volume-to-value, executive teams should adjust their expectation of board member roles to ensure strategic advantage. Board members require a new set of perspectives and skills, which makes recruiting individuals with business, financial, and entrepreneurial backgrounds equally important to recruiting those with clinical perspectives and the ability to raise money. These skill sets to help organizations navigate market forces with a commitment to the mission, and a willingness to learn new things.

M. Arthur Williams, PMP, OPEN MINDS, Senior Associate

“Healthy boards want ongoing governance training,” said Dr. Phillips-Henry. “Healthy boards want to learn and grow just like individuals.”

Mr. Nisbet agreed and said while it’s a challenging combination to achieve, it is possible and added:

As we move towards value-based reimbursement, we have a member who has experience working in managed care organizations and contracting, a chief financial officer/certified public accountant from a non-profit organization with value-based reimbursement contract experience, and a member with a legal background. We have strategically shifted our priorities in recruitment based on the key skill sets needed to position our organization for success.

 Think Quality Over Quantity— Another consideration – having more board members does not necessarily mean a better board. Quality trumps quantity. The goal shouldn’t be focused solely on meeting an arbitrary number. Having a smaller group of board members whose skill sets and experience align with the organization’s strategic plan and mission will better position your organization for success versus having a larger group of board members. Dr. Phillips-Henry explained:

Kelly Phillips-Henry, Psy.D., Aurora Mental Health Center, CEO

People are always asking about the appropriate size for boards and executives worry their boards are going to get too small but if you have eight to 10 really engaged, quality board members that board is much stronger than one with 20 members with low engagement. There shouldn’t be pressure to constantly recruit for larger boards. The trend I see is that smaller may be better.

To find the “right number,” Mr. Nisbet gave similar advice:

Our board is composed of nine people. The best advice? Select board members based on skill sets, not just on numbers. Half of our board has an immediate family member who struggles with mental illness or addiction, and the other half may not have an immediate family member, but they are very aware and understanding of those struggles. We ensure that board members have the appropriate skill sets and search for people who have a passion for the mission, the ability to work well with others, and to work toward consensus.

Bruce Nisbet, Spectrum Health, President, CEO

Adjust The Dynamics—Getting new board members up to speed on the mission, culture, and goals of an organization isn’t an easy task. It’s normal for a new board member to have challenges understanding the balance between the strategic plan and future goals – and understanding the board’s role in that. Dr. Phillips-Henry shared her organization’s strategy to pair new board members with peers in the first year to ease the transition:

The “buddy partner” approach involves pairing new board members with a seasoned colleague, who helps them understand the organization’s culture and pace of the board, so they become active members more quickly. New board members can be quiet for a while, but we don’t want them to be quiet. With a new and fresh set of eyes, new board members can ask disrupting questions that are important. We want them to feel a part of that process sooner and engage with the board to their full potential.

Now more than ever it’s critical to ensure that board members are ambassadors for your mission and active contributors to your success. Selecting them – and engaging them to bring critical skills to help the organization thrive in a changing environment is key. Mr. Wolfe summarized it well in his seminar: “The world we will soon face will require our organizations to develop new leadership skills and new knowledge sets. We will need to be able to do cost accounting, contract negotiation, build continuous improvement systems, buy and implement complex technology, and make key decisions in each of these areas. Can your board members provide wisdom and perspectives in these areas?”

For more on managing non-profit boards, check out these resources in the OPEN MINDSIndustry Library:

1. Advice To Board Members: Eyes On, Hands Off
2. Keeping Your Board “On Board”
3. Revisiting The Non-Profit Board/CEO Relationship
4. Measuring The Performance Of Non-Profits—What Yardstick To Use?
5. What Do Board Members Need To Know?
6. Managing Your Boards Of Directors: Strategic Advice For CEOs
7. The Board Doctor Will See You Now
8. Getting A Board On Board
9. Your Organization Is Ready, Are You?
10. Guide To Good Governance: A Quick Overview Of Governance Models

Join us at The 2019 OPEN MINDS Technology & Informatics Institute for the session, “Leveraging Technology To Expand Access, Enhance Consumer Experience & Improve Outcomes In A Behavioral Health Care Marketplace Dominated By Value-Based Models” with Alison Nelson, Senior Vice President, Optum Technology, Optum.

Nonprofit Boards and Fundraising #NonprofitBoards

The following "conventional wisdom" is brought to you by the Tennessee Democrat.  I cannot say I agree with all that is said here about getting board members to participate in the fundraising efforts of a nonprofit.  My primary argument: you can have reasonable expectations of board members IF, yes, IF, each board member, at their recruitment, understood and agreed to these expectations.  If they did not learn of, understand and agree to these expectations, they can do so later in their term or even a next term BUT ONLY IF THE CONVERSATION HAS BEEN HAD ahead of their next term.  We CANNOT expect board members to give and or get if this has not been their expectations.  They can get to this place but a process must be used that brings them along.  

Here's the article, again, from the Tallahassee Democrat.

Here's a reboot for reinforcing board giving requirement

Kelly Otte and Alyce Lee Stansbury, Notes on NonprofitsPublished 3:21 p.m. ET Oct. 12, 2019

 

We have both been asked many times about our views on board member giving so this week offering a freshened version of a column from 2015.  It’s always surprising to us, no matter how many times we know it happens, when board members don’t make monetary contributions to the organization. 

Nonprofits depend on the generosity of donors in the community and if the group most responsible for the welfare of the organization doesn’t give, why should anyone else? We believe board members should all make an annual personal gift.

Here are several ways boards choose to address this important board responsibility.

Our favorite is for the board to set a goal for 100% giving in which every board member is asked and expected to make a personal gift that is meaningful and significant to them. Meaning and significant can best be described as being a bit of a stretch to make. We’ve worked with board members where this was $100,000 and others where it was $10 a month.  100% giving significantly demonstrates the board’s commitment to people outside the organization. Most funders, and many savvy donors, ask about board giving as part of their application or decision making process. If your board’s answer is less than 100%, the likelihood of receiving a gift or grant is greatly diminished if not eliminated.

Alyce Lee: I encourage nonprofits to treat board members like any other donor and approach them individually for a gift. Avoid asking everyone as a group which is essentially not asking them because it’s not done from one board member to another. I also ask board members not to ask, expect or assume the Executive Director will handle this task. Board giving is a board responsibility and is best done on a peer to peer basis.

Another method is for a board to require a minimum gift amount. Some organizations use this strategy because it ensures everyone gives equally. The biggest challenge with this method is determining the required gift amount. Set the amount too high and you eliminate some people with other skills and perspectives from serving on your board.

Set the amount too low and you may shut down bigger gifts from board members with the capacity to give more. This method can also create a glass ceiling and discounts the 100% giving principle in which is everyone is asked to make a gift that is meaningful and significant to them. Human nature has demonstrated and donor research confirms 70% of donors give the lowest possible amount.

Kelly has told me she’s seen the big giver give more even when there’s no minimum giving level but the rest of the board won’t give at all or will give a very minimal gift without a required minimum gift.

We both agree the answer to 100% board giving is education. Board and staff leaders must continue to educate people before they join a board about what is expected. Every board should have written board expectations that are shared with prospective board members before they agree to serve. If you are thinking about joining a board, ask about giving expectations in advance.  Once you have joined the board, make your gift before asking others.

An area where we don’t agree is around board members raising their gifts. I believe selling tickets and recruiting sponsors to special events should be expected of all board members in addition to making a personal gift even at modest amounts. Events typically provide benefits back to the donor so it’s common for only a portion of the ticket price to be a donation to the organization. Contributing to and supporting special events is important for many reasons and has even greater credibility when the asker is also a donor.

Kelly: My favorite method for addressing board member giving is for the board to set a minimum “give or get” amount. In my experience, fundraising can be successful when board members can raise the money through sponsorships in addition to writing a check. It allows for more diverse members of the community to serve on the board. 

If you require a $1,000 gift and it has to be cash there are a limited number of community members who can do that, which means the organization loses out on the input and hard work of others willing to serve. I agree with Alyce Lee that selling tickets doesn’t count.  Every board member should sell tickets to big annual events and smaller ones if they can.

We’ve both seen boards waive the minimum giving requirement for one or two board members, typically because they are subject matter experts. Neither of us think this is a good idea and both agree it can create an unhealthy division within the board and beg board members to value their services above their giving, so we don’t recommend doing this.

Alyce Lee: I’m all about board members asking others to give but not as an alternative to making a personal gift. It all goes back to 100% board giving. Board members must be buying what their selling to have credibility when asking others and advises people not to join a board if they are not willing to make a personal gift.

We both agree in every example gifts need to be cash. In-kind goods and services are extremely helpful and welcome as a regular part of board service but they are not a replacement for a cash gift. Like any business, nonprofits run on money.  

Over the years, many board members have told us their time is valuable and that’s how they choose to give. We recognize the importance and contributions of volunteers who serve the organization by donating their time. Board members require an even higher level of commitment.

Board members agree to serve by giving their time, talents and financial contributions.  On this issue we both hold firm.

We absolutely agree board member giving is important. As with everything else about nonprofits, there are 1,400 examples of circumstances that might be exceptions. Start-up organizations are different than organizations that are fully developed. 

A small nonprofit might set a small giving level and then still have trouble identifying board members willing to join while a university or hospital foundation might have a waiting list with a $20,000 giving expectation.

A nonprofit mandated by statute to have elected leaders or client representatives on the board may have to navigate differently around this issue. A beloved board member might lose their job and be unable to make a gift.  But for the most part it’s not that complicated. Board members should financially support the organizations they serve.

Kelly Otte, MPA, and Alyce Lee Stansbury, CFRE, collaboratively produce Notes on Nonprofits and love to hear from you. Tell us what you think and send questions to [email protected].

Employee Wrongdoing #NonprofitBoards

The debate now renewed in the courts: which nonprofit has responsibility and liability for the wrongdoing of its employees.  Under the auspice of the US Olympic Committee is the USA Taekwondo (USAT) nonprofit.  Three former athletes have identified having been sexually abused by a USAT coach and filed against USAT.  This set of realities is not in dispute.  A number of matters are at dispute: how much control over coaches does USAT have; how much control does the Olympic Committee have over the USAT and well, you get the legal stuff.  The individual coach has been convicted but is unlikely able to pay the $60 million judgement award.  The USAT maybe has insurance resources and for sure the Olympic Committee does.  But both organizations have been freed from responsibility, at least until this re-opening of the case.

But really, where are the values and principles here?  Should not both organizations bear some responsibility for creating a structure that could result in this series of wrongdoings?  Who are these board members that see the health of their organizations more valuable than righting the wrongs done by an associate?

 

Metropolitan News-Enterprise

 

Thursday, October 10, 2019

 

Page 1

 

Court of Appeal:

Nonprofit Might Be Liable to Victims of Sexual Child Abuse

Olympic Committee’s National Governing Body for Taekwondo Had ‘Special Relationship’ With Coach, a Predator, Creating Duty, Under Facts Alleged, to Protect the Plaintiffs, Opinion Says

By a MetNews Staff Writer

 

The Court of Appeal for this district has resuscitated an action against the United States Olympic Committee’s “national governing body” for competition in taekwondo, a Korean martial art, brought by three women who were under the age of consent when their coach had sex with them.

Tuesday’s decision by Div. Seven reverses Los Angeles Superior Court Judge Michael P. Vicencia’s dismissal of the action brought by Yasmin Brown, Kendra Gatt and Brianna Bordon, now adults, against USA Taekwondo (“USAT”), a nonprofit corporation headquartered in Colorado Springs. Writing for the panel, Justice Michelle Feuer said there was a duty on the part of USAT to take steps to protect the athletes based on the “special relationship” it had with the coaches.

The federal Amateur Sports Act of 1978 (now known as the “Ted Stevens Olympic and Amateur Sports Act”) created the United States Olympic Committee (“USOC”) and authorized it to provide a national governing body for each Olympic sport.

While bringing USAT back into the litigation, Feuer’s opinion affirms the judgment of dismissal of USOC as a defendant, which followed Valencia’s sustaining of demurrers without leave to amend. Feuer said the committee had no special relationship with the coach, explaining:

“Although USOC had the ability to control USAT, including requiring it to adopt policies to protect youth athletes, it did not have direct control over the conduct of coaches.

Take a stand, win donors #NonprofitBoards

Despite encouragement from many of the nonprofit media sources and associations (e.g. Chronicle of Philanthropy, Nonprofit Quarterly, National Council on Nonprofits) nonprofit board members are most often uneasy in giving voice to political issues that negatively affect their nonprofits and their constituents.  I believe that board members giving voice not only is core to mission but may also be good for bringing in donors.

What does political advocacy have to do with bringing in donors?  Today's Chicago Tribune has an article about a spice merchant who has nationally spent the 2nd most resources on the subject of President Trump's impeachment with the number 1 spender being Mr. Trump himself.  The merchant is not a pro-Trump advocate it is important to note.  But while this news is interesting, more interesting to me is the part of the article that focuses on what happens when a CEO/business gets publicly involved over political issues. This topic is definitely, in my opinion a conversation for every nonprofit board.  While nonprofit execs can certainly represent the interests of nonprofits, it is the boards, the owners who might more effectively speak out and in doing so attract those who want to support the nonprofit's work.  Your thought for today.

Here's a bit from the Chicago Tribune.

Traditional business wisdom might caution Penzey (the spice merchant) against wearing his political heart on his sleeve. What if customers don’t share his political opinions and want him to keep his spiciness in the bottle? What if they stop buying his products?

Penzey isn’t worried. “This is our most successful ad on Facebook,” he said, basing success on likes, shares and comments. “It’s gotten twice as many comments with less spending," he said referring to his second most popular ad, that ran before the 2018 election. “We’re getting a lot of good value.”

Customers are like politics, according to Penzey. You win some and you lose some. What matters, he said, is figuring out how to keep them.

Penzey said he has figured out how to win them ― by sharing his values. “I think these are unusual political times,” Penzey said. “The politics of the right have become politics of anger, and our business is about kindness.”

Opinions about whether CEOs should voice their political views are varied and the research is largely anecdotal.

The CMO Survey by Deloitte and Duke University’s Fuqua School of Businesslast year found only 21.4% of consumers believed their brands should take a stand.

But a 2016 survey by global communications firm Weber Shandwick with KRC Research, found that nearly 38% of Americans believe CEOs had a responsibility to speak up on controversial issues. Another survey done by Sprout Social of 1,000 consumers found two-thirds of respondents said they wanted companies to take a stand on political issues, and 58% wanted them to do so on social media.

“At the end of the day, the emotional connection you make (with the consumer) is much stronger than saying, ‘Hey, my spices are tastier than the others,'" said Pradeep Chintagunta, a professor of marketing at the University of Chicago’s Booth School of Business.

If brands and their leaders have a story to tell or a stand to take, it establishes a connection with consumers that sets them apart from everyone else, Chintagunta said. In other words, if their ideas (and values) resonate, so will the product.

Because somebody needs to say this:

            It’s the end of the Republican Party as we know it—And we should all feel fine...

Posted by Penzeys Spices on Thursday, October 3, 2019

Penzey certainly thinks so, and has tried to get buy-in from other CEOs. In a Facebook post, he implored his fellow CEOs to join him in sharing their political values. “If, as a company, you have values, now is the time to share them. You may well lose a chunk of your AM radio-listening customers, but if you really are honest and sincere, don’t be surprised to see your promotions suddenly, finally, find active engagement with the Millennial generation,” Penzey wrote.

Penzey said his wife, “just about spit out her coffee laughing,” he said, when the couple heard that their Facebook ad spending was second only to Trump.

Penzey declined to be specific about numbers, but he said the company has seen high single-digit revenue growth since he got vocal in 2016, the year Trump was elected. He admits not all of his customers are pleased with his outspokenness. In fact, he does get blowback, he said.

One customer recently wrote that he was “quitting for the fourth time,” Penzey said. But the bigger challenge he said, is retaining the new customers he’s getting. It takes educating them on the spices, getting back to basics and thinking seriously about making new customers into regular customers, Penzey said.

“I think the luxury of not being on a side is something of the past,” Penzey said. “You lose some customers, you gain more customers. I think we’ve gained a lot more than we’ve lost.”

 

New Foundation Doesn't Want to Be Accountable #NonprofitBoards

Connecticut has a new Foundation - a partnership between a private sector entity and the public sector focused on improvement of schools.  Good idea and some money.  But this new partnership wants to not be accountable for its conversations or how it spends its money.  Its structure alone demonstrates this resistance to accountability.  For instance:

It wants to have an Exec Committee make decisions ;  meet frequently in Exec Session;  vote electronically (in CT they can not).  And why:  my only assumption is that they choose not to be accountable.  Now, it's up to the public to say: hey, wait a minute - my kids, my right to know and question!

Here's the story from the CT Mirror.

TUESDAY, OCTOBER 08, 2019

Partnership for CT Opens First Meeting to Public, But Transparency Questions Persist

By Kathleen Megan

www.ctmirror.org

The Partnership for Connecticut has invited the public to the first “organizational meeting” of its governing board on Oct. 18, but it’s unclear what portion of that meeting — or subsequent meetings — will be open, or what the board will be discussing.

The new partnership and its board — a private, nonprofit organization created to carry out a public-private collaboration between the state and Dalio Philanthropies — has been the subject of controversy since lawmakers exempted it from state disclosure and ethics rules even though taxpayer money is being used in the endeavor. Dalio Philanthropies is the philanthropic arm of Ray Dalio, founder of Westport’s Bridgewater Associates.

Andrew Ferguson, a senior staff member at Dalio Philanthropies, declined through a spokeswoman to be interviewed today.

The spokeswoman instead issued a statement from the partnership saying, “As with all nonprofit boards, portions of Partnership board meetings will happen in closed executive session.”

“We will communicate openly to the public about decisions made in these meetings and the rationale behind them. The website will also make meeting materials available to the public.”

Republican legislative leaders, who are two of five elected officials on the 13-member board, said they don’t know what will be discussed during the public and private portions of the first meeting, or whether future meetings will be open to the public.

“I’m not clear on that,” House Minority Leader Themis Klarides, R-Derby, said today. “You know there’s been a lot of questions and concerns we’ve had.”

Sen. Majority Leader Len Fasano, R-North Haven, said that he expects that “actions will probably always be in the public, I would think. It’s discussions that might end up being in private I suppose.”

Senate President Pro Tem Martin Looney, D-New Haven, could not be reached for comment, but said in a statement the partnership has told him the agenda and other materials for the upcoming meeting will be provided by Friday.

“I believe there must be openness and transparency in this process,” Looney said in the statement, “since the expenditure of public funds is involved.”

The private-public collaboration was announced in April when Ray Dalio and his wife, Barbara, joined Gov. Ned Lamont to announce that Dalio Philanthropies would donate $100 million over five years to help students in struggling schools.

That donation will be matched by $100 million in state funds over the same five-year-period, with the hope that another $100 million could be raised from other donor

All of the money will be overseen by the Partnership for Connecticut.

But Dalio Philanthropies also asked that the partnership be exempt from state disclosure rules, a request that was granted in June by Lamont and the Democrat-controlled legislature.

Since then, legislative leaders who sit on the partnership board have balked at some of the other proposed conditions, such as one that would create a five-member executive committee to oversee most of the partnership’s work while excluding all of the elected officials who are subject to the state’s Freedom of Information Act.

Lawmakers also objected to a request that they unanimously approve — via email — a tentative budget, nearly $250,000 in executive compensation, and various operating procedures before the partnership’s first meeting.

Max Reiss, a spokesman for Lamont said the governor, who is one of the elected officials on the board, “is thrilled that [the meeting is] going to be open, but also most excited that it’s getting off the ground. He’s so excited that the partnership is finally able to do the good work for Connecticut students and families.”

But it was clear from statements from the partnership today that a portion of the meeting is likely to be held in private.

“When a meeting goes into executive session,” the partnership said in a statement, “that portion of the meeting is closed to the public so that directors may develop a strong and healthy culture and discuss confidential information, policy discussions, and other items necessary to advance the Partnership’s mission.

“The basic design of board meetings having a portion take place in executive session is very common among nonprofits and will serve as the design for the partnership board going forward. We are confident that the board will work well together in reaching consensus around the particular practices for how they will operate together in pursuit of the Partnership’s mission.”

Klarides said she is so concerned about transparency that she refused when Ferguson asked her to meet with him last month to discuss the agenda for the upcoming meeting.

“I appreciated him reaching out, I did, but because I have such concerns about the ethics and freedom of information issues that surround this board and because there’s so much state money involved in it, I didn’t feel like having a meeting outside of the full board was appropriate before any committees or anything else is set up,” Klarides said.

A “transparency” explanation from the partnership on its website said that “meeting materials” will be posted on the website.

It also reiterated that the five elected officials on the board — called ex officio members — will comply with FOIA, noting that they are on the board “because of their position as public officeholders and their commitment to education and improving outcomes for at-risk youth and young adults.”

“Records in the possession of these ex officio members will be subject to disclosure under FOIA in response to a proper request,” the website says. “Records within the possession of Board members and staff who are not ex officio members as public officeholders are not subject to FOIA.”

The ex officio members are allowed to vote, a spokeswoman for the partnership said today.

The first partnership meeting is scheduled from 8 to 11 a.m. on Friday, Oct. 18 at 4 Science Park in New Haven.

Never Ending Search for Board Members #NonprofitBoards

Finding the "right" board member appears as a forever challenge to nonprofit boards.  There are so many criteria to be considered, by some boards, so few connections, by other boards, so little time and willingness for the hunt.

The following Forbes magazine article does not directly solve these dilemma but its wisdom adds a bit more thought for consideration: an added value I believe.

5 Questions Nonprofits Should Ask Themselves About Prospective Board Members

 

Timothy J. McClimonContributor 

Leadership Strategy

I write about the intersection of grassroots movements & philanthropy.

 

In a recent New York Times article about museum boards and their relationship with wealth and status, Darren Walker, president of the Ford Foundation, urged museum directors to re-evaluate the criteria they use to select trustees in a manner consistent with their missions, a suggestion that I made in an earlier posting that proposed ways for nonprofits to mitigate potential backlash related to both their boards and wealthy donors.

There are myriad books, articles and postings advancing selection criteria for board members for both for-profit and nonprofit organizations. Many of these emphasize traits traditionally associated with philanthropic work like “passion for the mission” and “generosity” for nonprofit boards, but business-minded skills like “innovation” and “problem solving” for for-profit ones.

I think nonprofits should take a cue from for-profit boards and search for individuals who can actually help guide the institution rather than just support it. That’s not to say that “giving and getting” aren’t important for nonprofit boards – they are – but there’s more to governance than money. So, here are some suggestions of questions to consider in order to attract board members who can make a difference in the strategic direction of the organization:

 

Today In: Leadership

·        Is this individual a strategic thinker and problem-solver? Today’s nonprofit organizations are extremely complex enterprises, and the challenges they aim to solve are increasingly complicated. They require the same kind of critical analysis, creative thinking, innovation and strategic planning as their for-profit counterparts. It’s too much to expect that this kind of thinking, planning and problem-solving can exist in just one or two people at the head of the organization. Board members must and should be deeply involved with fleshing out answers to difficult and challenging questions alongside their CEO and senior staff people. While some affluent individuals may be able to assist in constructive ways, wealth in and of itself is not an indication that this critical skill is present.

·        Is this individual one who will challenge the status quo or blindly embrace it? In order to move forward, nonprofit organizations need individuals who will challenge the “old” way of doing things, suggesting new approaches and exposing current weaknesses. Too often, nonprofit boards consist of individuals who simply go along with the wishes of their founder or CEO without really challenging current assumptions and posing new ideas. Board meetings can be full of nodding heads rather than raised hands. Nonprofits should strenuously guard against this kind of “get along by going along” attitude of their boards.

PROMOTED

 

 

 

·        Does this individual strongly embrace the mission and vision of the organization? As I’ve written before, I think “passion” is over-rated – it ebbs and flows and ultimately fades – while strongly held beliefs often endure. Nonprofits should seek prospective board members who are committed and rational believers rather than those who are simply excited about a cause. Embrace purpose rather than passion, and allow alternative suggestions on “how” to better serve the mission and vision of the organization rather than encouraging blind allegiance to it.

·        Does this individual represent a diversity of experience, background or point of view? The worse thing for any nonprofit board is to be homogeneous in appearance, skills, work/life experience and thought. Nonprofit organizations should embrace diversity and inclusion, and be serious about including individuals who can represent the interests of those people the organization is trying to serve. While it’s human nature for board members to attract their friends and business colleagues to join them on boards, nonprofits have a special obligation to reflect the communities where they live and work.

·        What value does this individual bring to the board besides money? While contributing and fundraising remain critical functions of a nonprofit board, if those are the only reasons an individual is being considered for membership, there are probably better ways to engage them in the work of the organization than serving on the board. Boards of nonprofits are charged with governing and monitoring the practices of the organization, ensuring that it is operating in accordance with its stated mission, and planning for its long-term sustainability. This takes the kind of commitment, leadership and practical experience that goes beyond simply contributing and raising money for the institution. Nonprofit organizations should expect more of their board members than simply writing a check.

The key to success in any organization is surrounding the CEO with smart, energetic, committed and creative people who will help move the institution forward through thick and thin. The stronger an organization’s board, the more likely it is to take advantage of opportunities, avoid pitfalls, discover efficiencies, and embrace innovative approaches. By asking a few simple questions about prospective board members, nonprofits can avoid the appearance of only embracing affluent and homogeneous governing bodies, and ensure more strategic and inclusive enterprises. 

Follow me on Twitter. Check out my website.

Timothy J. McClimon

I am president of the American Express Foundation and serve on the boards of Americans for the Arts, Independent Sector, Mark Morris Dance Group and Second Stage Theatre...

 

 

 

Nonprofit Competing Choices: Not Simple #NonprofitBoards

While the focus of this 10/7/2019 Wall Street Journal story centers around CFOs and transitions from for-profit to nonprofit, there's some great analysis of the competing choices and challenges that face nonprofits and a hint at some of the solutions.  A few examples include:

• nonfinancial ways of measuring return on investment can present dilemmas.
• Even the task of gathering reliable data about a nonprofit’s own operations can be tough.
• “Data is often slow, of uneven quality and consists of estimates rather than actuals,” Mr. Sands said, adding that the lack of information makes it harder for his organization to react to developments or target a specific result.
• Meanwhile, reliance on uneven donations and government handouts makes planning more difficult. Mr. Raposo of the International Rescue Committee said he finds it hard to forecast the organization’s annual budget as government grants fluctuate and often arrive late. To reduce the uncertainty, he said he plans how to respond to a range of different funding scenarios.
• Mr. Henrys of Feeding America said the organization’s finances are affected by regulatory changes such as the 2017 U.S. tax overhaul, which reduced donations to the charity. Feeding America receives around $150 million to $170 million a year in financial donations, alongside several billion pounds of food, he said.

 

Corporate CFOs in High Demand at Charities as Budgets Come Under Scrutiny

By 

Nina Trentmann

Oct. 7, 2019 5:30 am ET

 

After three decades working as a financial executive for General Electric Co. and the Depository Trust & Clearing Corp., Oscar Raposo took a career break in 2015 to go backpacking in Asia. When it was time to return to work, he decided to move into the nonprofit sector.

“I wanted to do something that I was passionate about,” said Mr. Raposo. He is now finance chief of the International Rescue Committee, a role he took last year. The New York-based refugee aid organization helps people around the world survive and rebuild their lives after natural disasters and conflicts.

It is a career shift more finance executives are making. There are no industrywide figures on the number of corporate CFOs making the switch, but executive recruiters from Stanton Chase, Heidrick & Struggles International Inc., Odgers Berndtson and Egon Zehnder say they are increasingly fielding calls from nonprofits.

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They attribute the trend to scrutiny from donors as more money flows into the coffers of American nonprofits. Giving to U.S. charitable organizations hit $427.71 billion in 2018, up from $424.74 billion in 2017, according to the Giving USA Foundation. Vetting groups like Charity Navigator want nonprofits to dedicate more than 70% of their funds to programs, rather than administration and fundraising.

As a result, financial management skills are at a premium. “Many nonprofit organizations are trying to behave more like businesses,” said Cathy Logue, head of the chief financial officers practice at Stanton Chase.

 

International Rescue Committee finance chief Oscar Raposo. PHOTO: IRC

In many ways, finance skills are “totally transferable” to the nonprofit sector, said Mr. Raposo of the IRC. The charity uses key performance metrics to run its balance sheet—its 2018 annual report details operating revenue of $744.43 million, operating expenses and net assets—and it has strong board oversight, Mr. Raposo said. He manages a sizable finance team of around 650 employees.

But at a nonprofit, the bottom line isn’t the end of the story. CFOs choosing to go to work for a charity are signing up for a new set of challenges. For starters, they often need to learn new ways of defining success.

“We measure financial and operational performance, but ultimately, the difference is the one we are making in the lives of people,” said Paul Henrys, chief financial officer of Feeding America, the U.S.’s second-largest charity by revenue, according to a ranking by Forbes.

Previously a senior vice president for financial planning at giant food supplier U.S. Foods Holding Corp. , Mr. Henrys moved to Feeding America in June 2013. He believed he could make a bigger impact working for an organization that provides food for more than 40 million people a year at pantries, soup kitchens and shelters, he said.

At U.S. Foods, Mr. Henrys would zero-in on earnings before interest, taxes, depreciation and amortization, the company’s debt ratio, costs per case of food, margins per case of food, product cost inflation and fuel prices. At Feeding America, he puts greater emphasis on helping the organization plan strategically for the long term and ensuring the organization is sourcing food as efficiently as possible.

 

Figuring out nonfinancial ways of measuring return on investment can present dilemmas.

Bhupi Singh of Direct Relief, a nonprofit that provides emergency medical services around the world, said his organization has had to weigh the benefit of helping people suffering from a rare disease against helping others rescued from a tropical storm.

“You cannot trade one life for the other,” said Mr. Singh, who previously worked as a senior director of finance for Apple Inc. and served as CFO of Direct Relief until recently moving into a senior advisory role. He said Direct Relief is trying to raise enough money to continue funding both rare-disease research and disaster relief.

On the other hand, focusing on nonfinancial impacts can make a CFO’s work more rewarding.

“Our analysis suggests that every dollar invested in ending HIV, tuberculosis and malaria delivers a 19-to-1 return on investment,” said Peter Sands, executive director of the Global Fund to fight AIDS, Tuberculosis and Malaria and the former chief executive of U.K.-based bank Standard Chartered PLC. “How often do you see that kind of return in the world of business?”

It isn’t just measuring results that can pose a challenge for CFOs. Even the task of gathering reliable data about a nonprofit’s own operations can be tough.

“Data is often slow, of uneven quality and consists of estimates rather than actuals,” Mr. Sands said, adding that the lack of information makes it harder for his organization to react to developments or target a specific result.

Meanwhile, reliance on uneven donations and government handouts makes planning more difficult. Mr. Raposo of the International Rescue Committee said he finds it hard to forecast the organization’s annual budget as government grants fluctuate and often arrive late. To reduce the uncertainty, he said he plans how to respond to a range of different funding scenarios.

Mr. Henrys of Feeding America said the organization’s finances are affected by regulatory changes such as the 2017 U.S. tax overhaul, which reduced donations to the charity. Feeding America receives around $150 million to $170 million a year in financial donations, alongside several billion pounds of food, he said.

“Governments have a habit of paying late, leaving the nonprofit trying to figure out how to pay for services upfront while waiting months to be reimbursed,” said Rick Cohen, chief operating officer at the National Council of Nonprofits, a body representing nonprofit organizations.