Nonprofit Board Crisis

Nepotism is not OK #NonprofitBoards

A legal case in New Orleans should remind boards that nepotism (the act of using your power or influence to get good jobs or unfair advantages for members of your own family (Cambridge Dictionary)) is NOT ok.  A story in the LENS tells of the Louisiana Board of ethics  leveling charges of nepotism against

two Better Choice Foundation board members and two former employees of the charter school it ran — Mary D. Coghill Charter School — for allegedly violating a state law prohibiting agency heads or members of school boards from employing their close family members. In a report from the 2018-2019 school year released Monday, auditors found that two board members “each had an immediate family member employed at the foundation in violation of R.S. 42:1119,” the state’s nepotism law.

Now, I would argue that a nepotism charge is not that simple to defend.  Proof of hiring on grounds of qualifications versus relationship must be made versus just relationship.  But the bigger so-what is that nepotism is another form of violating the conflict of interest fiduciary duty of loyalty whereby board members must act without personal gain.  Family gain is one form of personal gain.  

Certainly the board members involved are responsible for having declared their knowledge and/or relationship to those hired.  Failure to provide notification, i would pose even if the hiring is not direct to the board, violates the principles of duty of loyalty - yes, even if the board member was not aware of the application and the applicant did not make their relationship known so that administrators were aware.  If on the other hand, the applicant notified administrators of the relationship to a board member and administrators could prove their competency above other applicants and the board member admitted the relationship, it's possible that a conflict would be less.  However, what administrator wouldn't be hesitant to not offer the job knowing a board member was related?

Nonprofit Board Micromanagement #NonprofitBoards

In Dr. Fram's latest missive over how "community boards" have micromanaging in their DNA I would like to quibble over the term "community" board and DNA.  I believe Dr. Fram to err in the use of the concept of "community" boards.  I believe all boards are essentially "community" if not citizen boards.  It is citizens who organize to create a solution that fills the void left by the profit-seeking businesses and lack of mandate or demand by citizens of the public sector.  The remaining void then become the space where citizens step-up and create a solution to solve a problem some portion of the citizenry have identified or experienced.  Admittedly the model is not perfect whereby citizenry often under-represents the actual community affected or concerned by the problem to be solved but that topic is one many are now addressing, and rightly so, under the rubric of Diversity, Inclusion and Equity.  

So, no, I don't believe the challenge Dr Fram addresses, micromanaging is by definition something that "community boards" singularly face.  I believe instead that two dynamics occur that result in micromanagers.  One dynamic is squarely on the reality that the majority of boards don't have enough resources to achieve mission and often take-on the multivariate tasks necessary.  This micromanagement and action is a board in its early stage of development driven by necessity which in-turn is driven by resource issues.  A second dynamic is a failure of staff to communicate effectively enough with board to provide it with an understanding of how goals and strategies are going - effectively, poor accountability.  Such communication results in a board wanting to dig and dig until members understand and can even become actionable in its role.  Many execs discount the value of boards and/or don't provide substantive insights and data to engage the board - sometimes this is happenstance and others intentional as a vehicle for keeping the board in the dark.  The result is of course a board that feels compelled to dwell and dig until answers sometimes to unknown questions are asked and answered.

Please understand that I am a fan of Dr. Fram and believe he offers excellent sollutions to many governance challenges.  However, today, especially today, language and intent matter and hence, community boards differentiated from policy boards - nope.

Smart Agenda? #NonprofitBoards

I can't agree 100% with this recommendation by Robert C. Harris about a so-called "smart agenda" but there are some aspects with which I do agree like consent agenda.  But you be the judge.

I agree that meetings should be more than reports - I like organizing them according to the work of the board: fiduciary, strategic and generative.

I agree that reports should be channeled through a consent agenda and that discussion only be conducted when it is informed and comes from assignments.

The smart agenda is a break from how it’s “always been done” in favor of a format that improves governance and outcomes. Discuss a few tweaks to the agenda with the chief elected officer. If they are acceptable, add a few more improvements to eventually make it a smart agenda.

Harris suggests that the opening include a conversation about prospective conflicts of interest.  Perhaps although I would think these would arise as topics arise.

Harris suggests there be only one official copy of the prior minutes while suggesting destruction of old recordings and notes: uh, ok.

Harris further suggests that "The board does not need to “approve” nor dive into (financial report" details if they know there are safeguards, oversight and policies exist."  Perhaps although I think anytime the board fully discusses finances, it's a great time.

Harris suggests removing the practice of "new business" from the agenda by asking that new business be submitted before the meeting: I guess this makes sense.

Finally, Harris suggests the board take a moment to "recap" the meeting - I kind-of like this idea especially if there are folks that were given assignments.

Yes, there are always way to improve a board meeting.

Whose Board Is It Anyway? #NonprofitBoards

I frequently ascribe nonprofit boards as the surrogate "owners" of a nonprofit.  Surrogacy in this case is about the "people" or taxpayer for whom a tax status and subsequent tax exemption is given.  The idea in my opinion is that tax exemption is allotted where citizens have made the case that what they do and the purpose of the income and expenses are all received and expended in the "best interest" of some portion of the citizenry.

Meanwhile, nonprofits may well be created by governments and other entities to pursue goals that might not singularly meet assigned goals but may accomplish principles consistent with the public good while removing the overt political control that comes with a governmental entity.  Such, as I understand, is the status of the U.S. Agency for Global Media which seeks to counter internet censorship around the globe (and no, at this moment the US government does not appear to be overtly censoring the internet at this moment).

But, the Trump administration has recently appointed a guy to turn this nonprofit into a tool that will better serve the administration's propaganda (I'll leave you to decide what that is) and part of the process, to ensure compliance, has been to appoint a new board while the current board remains in place.  Of course, litigation is in play and today an appeals court has blocked this guy's efforts "to install a hand-picked board to replace the previously existing leadership of the Open Technology Fund."

From a governance perspective, what I am most upset by, beyond the goals of the Administration, is how the bylaws and processes actually enable an executive to simply replace members.  Who is working for whom and why isn't the current board just able to say "no"?  Isn't this the first question that should be asked and answered?  Is this nonprofit board constructed in such a way, yes, while recognizing that its funds, should they all come from the US Government (not a great sustainability plan) will be in jeopardy, not really its own organization?  Well, if this is true, this was very clever of the organization's organizers while being very threatening to ever pursuing mission completely.  

To read more, check out Politico.

A Price Tag for Board Members? #NonprofitBoards

The Independent Sector, in partnership with Do Good Institute, has just released the new Value of Volunteer Time of $27.20 an hour. 

Volunteers are critical assets to civil society and all of our communities, especially in light of COVID-19. Board members, committee members, and community volunteers contribute in unimaginable ways. This year, we've seen volunteers step up to provide front-line service as our nation faces crisis. Whether it is providing food to people experiencing homelessness during COVID-19 or water to protesters fighting racial injustice, nearly 63 million volunteers are working alongside nonprofit staff to provide essential services to the people who need it the most.

The recent update to the Value of Volunteer Time was done in partnership this year with the University of Maryland's Do Good Institute and recent graduate of the School of Public Policy, Michael Sousane, who revisited the methodology used in prior years and updated the assumptions behind the method. 

Learn more about the methodology behind the new Value of Volunteer Time, and get the updated figures for all 50 states, the District of Columbia, and Puerto Rico.

I will offer that given that few nonprofit employees, including benefits, make this rate of income.  So, that being that, one has to wonder about the value of this valuation.  I also wonder about applying this figure to board members.  Sure, if they do non-board volunteer stuff but board stuff?  I am not so sure.  

How many nonprofits will be left? #NonprofitBoards

Before discussing the findings from a study by Candid I need to comment on the name: Candid.  Yes, that is the name that the merged organizations of Guidestar and the Foundation Center came up with.  And yes, I scratch my head with trying to understand the "why" of such a name.  And, to be honest, when I was looking at the report I had to actually go to Candid's website to take a look at who they were just to ensure they knew something about the nonprofit sector (which they very much do).  

Ok, so now that I've got that off my chest (well probably not, but for this moment), let's look at Candid's findings which are based on an analysis of a set of 315,698 U.S.-based nonprofits by considering 20 possible scenarios.  I should say that this is indeed what Candid is best equipped to do, despite my total dislike of the name particularly because I don't know what it refers to nor have I found a way to remember who it is when I see it (ok, still not off my chest for the day).

Anyway, more interesting, here's a summary of their findings: 

• In our median baseline scenario, we found that 12,042 nonprofits (4%) would close in the absence of a crisis.
• Across nine “realistic” scenarios, a median of 34,472 nonprofits (11%) go out of business.
• In this median case, about 22,000 additional nonprofits (7%) close because of the COVID-19 crisis.
• In our most optimistic scenario, only 8,420 nonprofits (3%) shut their doors.
• In our most dire scenario, we lose 119,517 nonprofits (38%).

Remember, these numbers are projections based on scenarios.  There is however every reason to believe there is some semblance of real possibilities. 

Now the report is a lot longer and is a very compelling read which you can do here.  Nonrofit boards, this is the time to really step-up to analyze your nonprofit's realities and potential.  Ask yourself: how at-risk are you and if at-risk, what are your options?

Interim Director Appointment Announced #NonprofitBoards

I found this CDAPress announcement quite interesting as it describes an organization's appointment of an interim director following that director's firm having completed the organization's strategic plan.  I cannot actually think of a time I have seen an interim director selection being so press-announced.  I do believe this a good idea as it helps stakeholders know who is running things.  Good idea, just a bit unusual and maybe this should become the norm.

 

Nonprofit Exec Stays To Serve On Board #NonprofitBoards

The announcement in the Almanac News about a newly selected nonprofit executive closed with a line that stated:

"Leif Erickson, who led the Palo Alto-based organization for the past 16 years, will be working alongside Oommen during the transition. He will stay involved with the nonprofit as a member of the board of directors.

Yes, Leif Erickson (imagine his lineage :)).  But of course Mr. Erickson's name is not the focus of this blog.  The focus is on the question as to what is the impact of a 16-year exec retiring to become a board member effectively, the supervisor of the new exec.  Now this could go either way recognizing that the former exec.  clearly is passionate about the organization.  Yes, the exec knows all the ins and outs and might provide insights at least for a few months about how he ran the place.  But as a board member, how will he separate from the role he held for so long?  I smell major difficulties coming.

What could have been a better strategy: recruit an interim for six to nine months and THEN recruit and hire.  And of course, an alternative - don't permit the former exec to be on the board, at least not for a year like one might do when a board members' term limit is reached (e.g. 2 three year terms). The job of the new director will certainly be a challenge.  Boards would do better to consider how this would be for them were they in the same situation.  

Not an ideal situation.

 

 

Spaceship Earth #NonprofitBoards

Ok, this please accept this one-off post from what was a former client of mine.  Through this client, World Games, I came to know Buckminster Fuller who among other credits was the developer of the Geodesic Dome and a strong advocate of how vegetarianism would feed the world.  Board members of World Games spun off into another nonprofit, Spaceship Earth and the following press release includes a vimeo that tells the story, a story about protecting earth.  So please take a look and share.

 

We can reverse pollution damage to the Earth, and the world has now seen this for the first time in history.

Announcing New Video: Mira Lehr's Call to Action

High Water Mark extended through September

at the Mennello Museum of American Art

Play and download the video here at vimeo.com/433153035 There is also a horizontal/landscape version here at youtu.be/MKIyxtd4IKE

New Reconstructed Nonprofit Board Model? #NonprofitBoards

A guest columnist at Generosity (a community news service) offers the following insights about what is currently used as the model or construct for nonprofit boards.  She titles her article "Nonprofit AF: The default nonprofit board model is archaic and toxic.  Let's try some new models."

I believe the author to be largely correct in her assessment of the nonprofit boards summarizing their condition in one word: crappy.  She offers the explanation about how "could boards not be crappy?

We are talking about a structure where groups of volunteers who barely know one another, see one percent of the work, often don’t reflect the communities we serve, and who may have little to no experience running nonprofits, being given vast power to supervise leadership and determine values, policies, and practices. Why did we think this weird structure would work?

As a step toward changing the situation, she offers that:

What we need to do though, is (to) completely reimagine the board and experiment with some new structures. A while ago, I was lamenting the glaring failures of the default board model when colleague Vanessa LeBourdais, executive producer and creative director of DreamRider Productions, mentioned that her organization had been experimenting with a new model, which they called Evolutionary Governance. “It’s a little ‘woo’,” she said, which I think means hippie or touchy-feely. Among other things, it included the board and staff sharing power, the board being a supportive partner and sounding board for the ED, the board doing nothing if “nothing” is what is needed at various moments, everyone doing a lot of inner work. It requires an understanding of the minimum legal stuff the board is required to do, having that stuff done, and then being free to do much more interesting things. I know Vanessa and DreamRider are working to put their model down in writing, and I’m excited to see it. We need less “Robert’s Rules” and more “woo”!

She goes further to state:

 “We need to critically examine the very design of governance so that effective governance is not wholly dependent on maintaining an effective board.” The idea that the board is responsible for almost all governance responsibilities is pretty archaic and ridiculous if you think about it, considering again that the board oftentimes has the least amount of knowledge and connections to what is happening on the ground. I’m looking forward to seeing the experimentation and lessons that come out of this work.

Meanwhile, I am on the board of Creating the Future, a movement and experiment to change systems and create a more humane world, rooted in founder Hildy Gottlieb’s research and work. CTF has also been wrestling with the complexity of creating a new structure. We have been discussing a model where the formal “minimally viable board” fulfills the absolute minimum legal requirements and does little else. This may then be combined with a second, less formal but larger, more expansive, more inclusive (and more fun!) “integrity board” that reflects the community and its values.

A critical common theme among all three of these approaches is the recognition that boards have very few legal requirements. These vary from state to state in the US and I’m not sure about Canada and other countries, but often are just “have three people, set some by-laws, meet once a year, file financial records.” What this means is that most practices we’ve associated with boards over the decades are COMPLETELY OPTIONAL! They are traditions we’ve just passed down to the point where we think they’re legally required, but they’re not! The board hires the ED. Who says?! The board meets once a month. Why?! The board approves the budget. Not necessarily! Many practices are ensconced in by-laws, but bylaws are easily changed. (Creating the Future is trying to craft a one-page set of bylaws, because there are few specific legal requirements on what these bylaws entail!)

Yes, there are some good boards, and plenty of great board members. But the structure is archaic, weird, glaringly white, and full of corporate people who know little about nonprofits and often have less lived experience and who often are too busy to bother learning (but who still insist on being in charge!) So, it’s time to try some new stuff. This is challenging, because if we had an effective structure that works for everyone, we would already be using it. The important thing is for us to give ourselves permission to experiment.

This will require unlearning a bunch of no-good, very bad philosophies that have been toxic for our sector. For example, a deeply internalized belief is that the board is the “boss” of the ED/CEO and thus the entire staff team. This sets up a dynamic where the staff are often undermined by less-informed board members and must operate in a pervasive environment of permission seeking, which leads to inaction or ineffective actions.

The mission-centeredness of boards jeopardizes our sector’s ability to work together as an ecosystem of interdependent elements needed to do this work well.

......I would love to see boards that are ecosystems-minded and think about the entire sector not just individual missions, work in tandem with other boards, are focused on possibilities not liabilities, reflect the people the org serves, encourage risk-taking, take strong courageous public stances against white supremacy and injustice, are fully engaged in advocacy and systems change, and trust the staff and work in equal partnership with them.

Again, all-in-all, I agree with much of what is being described as the condition boards.  I however am not clear about the solution which begins with redefining the parity between ED/CEO and the board.  I would offer first that, as David Renz has emphasized, there is a deep difference between governance, the function of boards, and the board.  I would pose that the failings here aptly described with a solution that may have some element of promise, does not fully address the need for governance: ensuring that mission is indeed pursued and protection of the public's donated resources.  I would pretty much accept any model that guarantees these two outcomes noting that mission does not have to be pursued by only one organization and can indeed be pursued by the joining together, legally or cooperatively, by many - a process I deeply believe in.

So first of course, there is the need to convince those who govern that their approach is flawed noting that most are ok with the status quo, right or wrong.  yes, there are multiple challenges with the structure.  This can be fixed and possibly with a whole new structure but also keeping in mind that as boards are in widely various stages of development, so too, solutions may widely vary.

PS I am afraid i don't know what the "AF" refers to in the column's title.  Any insight is welcome.