Nonprofit Board Crisis

Nonprofit Exec Fired For Pushing DEI to Board? #NonprofitBoards

I can't but help scratch my head over the following story about a nonprofit CEO of a relatively large nonprofit who claims he was fired because he urged the board to adopt diversity, equity and inclusion practices for the nonprofit.  Yes, I can believe that a board might feel awkward and uncomfortable with the subject and may not have been better prepared on the subject (although hard to believe in this day and age) but at minimum the firing appears to be about language used by the exec to the board and for me that means that what was really going on had more to do with the relationship between the board and exec than language.  No, that is not how the story is being told and yes, the exec is suing specific board leaders so for me, introducing a proposal and using specific language (e.g. white privilege) is simply the excuse by the board and nowhere near the actual facts.  There has to be far more involved and my guess is that the exec, now claiming to have been "harmed" may be more at the root of the situation than he offers.  I look forward to hearing the rest of the story.  At the same time, the proposal for integrating DEI, from what I understand, is basically one of common sense for this type of organization - it's not a radical idea.  From the Chronicle of Philanthropy:

Former Leader of Disaster Nonprofit Says He Was Fired Over Diversity Efforts

By Alex Daniels

FEBRUARY 11, 2021

The board of a major disaster-response nonprofit sacked its president after he pushed the organization to more thoroughly incorporate diversity, equity, and inclusion in its work, according to a lawsuit pending in U.S. District Court, Southern District of New York.

Gregory Forrester, the former president of National Voluntary Organizations Active in Disaster, said the group’s board members damaged his reputation before firing him in December.

The National Voluntary Organizations Active in Disaster was formed in 1970 to coordinate government and private responses to hurricanes, tornadoes, wildfires, and other natural disasters. The organization’s 150 members include state disaster-preparation and recovery organizations, charities, and religious nonprofits representing a wide variety of faiths.

The board members named in the lawsuit are Mike Manning, chairman, Mark Smith, and Warren Miller.

The three trustees hold prominent roles in other charities. Manning is president of the Greater Baton Rouge Food Bank, Miller is the national disaster field coordinator of the National Baptist Convention USA, and Smith is executive director of recovery operations at the American National Red Cross. Forrester does not make any claims against those organizations in his lawsuit.

Push for Equity

Forrester details in the lawsuit efforts he says he undertook to push the organization to take racial equity more seriously. The organization, he said, has historically excluded Black people and other people of color and has different tiers of memberships that don’t provide smaller organizations full voting rights.

In June, he presented the board and the organization’s members with a proposal to create an advisory board to respond to the needs of small disaster-relief organizations led by people of color and to encourage those groups to become members with full voting rights. Forrester says he was thwarted by a recalcitrant board.

 

Following Forrester’s use of the term “white privilege” during an online panel discussion, the suit asserts that Miller chastised Forrester in a June email, calling his use of the phrase “disrespectful, offensive, and very insensitive.”

Miller also wrote that in using the term Forrester was “tone deaf” and that Forrester’s “failure to understand cultural and racial sensitivity was damaging to our membership.”

Forrester, who had been chief executive of the organization for four years, says the board members retaliated against him for comments he made to a journalist 2020.

‘Verbal Coaching Session’

After he was quoted in an April Bloomberg Green news story saying that federal emergency managers and nonprofits including the American Red Cross were unprepared to assist in disasters while the nation was in the grips of the pandemic, Smith wrote to other board members requesting Forrester be reprimanded because Smith thought the comments put his employer, the Red Cross, in an unfavorable light.

In response, the board recommended Forrester participate in a “verbal coaching session.” Subsequently, Forrester says, Smith relayed the recommendation, which was part of Forrester’s personnel file, to other leaders at the Red Cross.

The board members “deny all of the allegations contained in the complaint,” said Daniel Gomez-Sanchez, a lawyer representing Manning, Miller, and Smith.

The next step in the case will be a conference call February 16 set up by the U.S. District Court, Southern District of New York.

We welcome your thoughts and questions about this article. Please email the editors or submit a letter for publication.

DIVERSITY, EQUITY, AND INCLUSIONEXECUTIVE LEADERSHIP

Alex Daniels

Nonprofit Board Doesn't Know What To Do #NonprofitBoards

In the following KY3 news story, the so-called nonprofit "expert" interviewed for a story about a nonprofit board that is wringing its hands over what next to do after its executive is indicted on federal fraud charges.  By the way, her crime is having "defrauded patients by claiming she was administrating stem cell therapies but administered amniotic fluid that contained no cells".  The exec has declared she is staying at the health care clinic where I can only guess is the location where the fraud took place.  

The "expert" suggests that the board has more authority than it understands and then also suggests that the board has to think about board composition and meeting frequency (it appears the board hasn't met for at least two years).

I mean really, the violations are over the top for this failed board.  But let's start with the biggest issue: fire or at least suspend the exec IMMEDIATELY!  This is not even a question.  And then, decide what to do about the trouble Tricia is in but only in light of what it means for the health center to go forward and simultaneously, address patient concerns and needs.  Reach out both to these folks and the rest of the community, NOW.  Oh, and maybe 3-4 months down the line, think about a board that has a clear job description, meets regularly and recruits new members who are mission focused.  And did I mention there will likely be a need to meet weekly until the public relations and legal storms are addressed and a new exec is selected and put in place.  Yes, likely will need a new exec not to mention a lot of insurance.

Nonprofit adviser explains problems Tricias Derges’s board of directors could face with her staying executive director

 

 

By Shoshana Stahl

Published: Feb. 4, 2021 at 5:22 PM EST

SPRINGFIELD, Mo. (KY3) - The future of Tricia Derges’s non-profit, Lift Up Someone Today, is still unclear after her indictment on federal fraud charges. One board member, Dr. Luke Van Kirk, says he doesn’t know how to arrange a meeting to discuss her position as executive director.

Tricia Derges’s attorney, Stacie Bilyeu, tells KY3 Derges plans to keep her role as executive director at Lift Up Someone Today. Managing nonprofit adviser Dan Prater says the other board members have more authority in that decision than they may think.

“In times of crisis if board members don’t step up or a champion doesn’t arise, they are in a situation where it could be the end of an organization,” Prater says. “They’re doing important work. Nobody wants to see that.”

When you become a board member of a registered non-profit, Prater says you become a legal officer of the organization.

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“It’s not just a good will gesture to put your name on the roster,” Prater says. “You actually can be held accountable.”

Prater says boards should have diverse members that represent the community the organization intends to serve.

“You want to have a well-balanced board,” Prater says. “You want to have a board who aren’t just friends and family. That’s a bad sign right there. You want to have a board that represents the people you serve.”

Before joining a board, Prater says you need to understand what you’re signing up for and that starts with a clear understanding of the position.

“If they don’t know what they’re supposed to be doing, it’s unlikely the organization can utilize their resources, their connections and their wisdom to actually make them a better group,” Prater says.

Prater says it’s important for board members to understand that the executive director works for them, not the other way around.

“Whoever is in a leadership position is not doing the work that needs to be done or there’s damage being done to the organization, it is the boards responsibility to decide whether that person stays or goes,” Prater says. “It’s not the founder or the individuals choice. The board absolutely must act, and this is actually one of the legal requirements, in the best interest of the organization.”

Van Kirk says he’s been on the board for two years and the members have never had a meeting. Prater says most boards meet every month and those meetings are very important.

“As a general rule, you should decide how frequently does the board meet or need to meet to accomplish the work we need to do,” Prater says. “At minimum you’ll find there are some boards that are not involved and they may only meet two times a year. Some boards will meet quarterly. It’s pretty common that boards would meet about ten times a year.”

Nonprofit Exec Justice and Board without a Backbone? #NonprofitBoards

In what at least for a moment feels like justice has been achieved (but not totally) Brian Gallagher, continuing to be supported by the board with no backbone, has resigned.  One might suggest that his performance as CEO of United Way Worldwide has caught-up with him.  While the Board recruited a law firm to conduct a "least-painful for United Way" investigation, I have to ask, what if any losses will Mr. Gallagher really experience from this departure.  Do we know what is his severance agreement - one that will likely be supported as no "evidence" has been produced to ensure the full and correct story is revealed?  No, we don't.  Mr. Gallagher has managed, with the support of a board that traditionally does not "do" messy, to slip into the night with only a surface, if that, scar.  Good for him but perhaps the rejoicing should be about that he is slipping away.  But the board is not slipping away and policies have not to my knowledge been modified to protect the best interests of employees.  How can we be assured that the current employees will find a new day at the United Way Worldwide?  With the board still either oblivious or blind, we can't.  Perhaps it's time for a Union perhaps to represent United Ways worldwide?  

So, a toast to the departure and no pat on the back for the board.  Let's hope that perhaps they can learn from their mistakes as though the even understand or accept what they were.

From the Chronicle of Philanthropy:

United Way Worldwide’s CEO Brian Gallagher Stepping Down After Sexual Bias and Harassment Complaints Roil Charity

By Dan Parks

 and Emily Haynes

FEBRUARY 9, 2021

Longtime United Way Worldwide CEO Brian Gallagher is stepping down March 1 following an announcement last week that an investigation conducted by an outside law firm found that the organization should improve its workplace culture, morale, and procedures regarding discrimination, harassment, and retaliation.

Despite those findings, Gallagher issued a defiant statement about his departure, saying “There is no evidence of a toxic or hostile culture. Is there room for improvement? Absolutely, just like almost any other workplace.” He also indicated that he has been planning his departure for years.

Three female former employees filed complaints over the past two years with the Equal Employment Opportunity Commission alleging misconduct at the organization and retaliation when they filed complaints.

In response to the allegations, United Way Worldwide trustees hired the Proskauer Rose law firm to investigate. United Way Worldwide announced last week that the firm found no “actionable harassment, discrimination, or retaliation,” but the charity acknowledged “the need to address the broader organizational and reputation issues.” United Way also said it would create a new “culture task force” to take on that assignment.

In his statement, Gallagher said he was “proud of my life-long commitment to diversity, equity and inclusion.”

He added, “Our commitment is real and our work is effective. This entire episode will not diminish United Way Worldwide’s commitment to the right of every woman, or any person, to come forward with any concern they might have, and to be heard and protected in that process.”

Lisa Bowman, former executive vice president and chief marketing officer at United Way Worldwide, and one of the three women who filed an EEOC complaint, issued a statement saying she was pleased Gallagher was leaving but added that it was “only the first step toward creating a safe, equitable workplace where women are treated with respect and allowed to reach their full potential.”

Ana Avendaño, former vice president for labor engagement at United Way Worldwide and another one of the women who filed an EEOC complaint, also praised Gallagher’s departure, saying he was “the first of many people” who should be held accountable for a hostile work environment at the organization. Avendaño said she and other women who worked at United Way Worldwide “were forced to face the indignities of having to operate within a system that valued toxic, abusive men more than it valued them.”

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‘Grateful’ for His Leadership

A statement released by Juliette Tuakli, chairwoman of the board of United Way Worldwide, announcing Gallagher’s abrupt departure made no mention of the investigation or the harassment allegations multiple women made about senior leaders at United Way that sparked it.

“We are grateful for Brian’s four decades of leadership and service in the name of the United Way mission,” Tuakli said in the statement. “Brian has always said that a great United Way leader is one who puts community interests first, their organization next, and their own interests last. Brian embodied that standard.”

She added, “We sincerely thank Brian for making United Way and our mission his life’s work.”

Tuakli said an interim CEO will be named to lead the organization during the search for a new leader.

Gallagher worked for two decades at United Ways around the country, including the United Way of Central Ohio, in Columbus, before he was appointed chief executive of the United Way of America in 2002. In 2009, he was named CEO of United Way Worldwide.

In his statement, Gallagher said he had been working with the board for two years on a succession plan and that a transition was planned “sometime later in 2021 at the conclusion of a CEO search process. But I and the board think it’s best for United Way if I step down as CEO sooner.”

Tina Tchen, CEO of Time’s Up, issued a statement praising the former employees of United Way Worldwide for stepping forward. “It is our sincere hope that this change in leadership is accompanied by a profound change in the way that the organization treats its employees,” Tchen said in the statement.

Update (Feb. 10, 2021, 10:14 a.m.): This article has been updated with a statements from Brian Gallagher; Ana Avendaño, one of the women who filed a complaint; and Tina Tchen, CEO of Time’s Up.

Where's The Board? #NonprofitBoards

After reading this extensively researched New York Times article about a New York homeless shelter oligarch I could only ask, where the ## is/was the board.  As a matter of fact, I don't even see the board mentioned in the article.  I should note, not only is this a story about one man who has built a city-funded empire and one who lives like he is king (with all the rewards) this is a man who has used his resources as a weapon against women currying unwanted sexual activity in exchange for, yup, shelter and safety.  For shame on the king but equally for shame by the board which as best as I can deduce could not have escaped knowledge of the abuses and in many ways either through action or inaction, enabled and supported the behaviors of this runaway train WHO is still in-charge and STILL getting City funds!  And yes, the City bears some responsibility but I would put way more responsibility on the board - it has simply failed to hold and be accountable.

Nonprofit Board Recruitment @NonprofitBoards

The following was shared by Dr. Fram regarding competencies that could be part of what are included in the search for new board members.  These characteristics are apparently included in what is included by Google in its hiring process.  Interesting and worth considering.

 

NONPROFIT BOARD RECRUITMENT: CAN GOOGLE’S PROCESS APPLY TO NFPS?

By: Eugene Fram               

Following are Google’s hiring attributes that might be helpful to consider, if applied to nonprofit board recruitment as well as employee recruitment. * Nonprofits should especially consider them for board recruitment. Although nonprofits traditionally use an attribute matrix emphasizing skills such as finance, marketing and accounting, here are some others to consider.

• Cognitive Ability – Is the candidate capable of gathering and processing information on the fly?
NFPs board members traditionally are volunteers whose major job and personal interests lay elsewhere. To gather speed as board members, they need be able to structure new organizational information quickly. Few are going to be on the board more than six years, with infrequent contact with organizational operations and its challenges. Consequently, an in-depth orientation program is needed for those who have these abilities.  Example: Have the CEO invite those with the abilities to attend local or regional conferences with him/h.
• Team Leadership –How well does the candidate lead a team to solve a problem?
NFPs often do not have staff personnel to handle problems alone and must team with board members to solve them and to plan strategically. Also, when “do you step back and stop leading?” This is especially important when the nonprofit moves from start-up-mode to growth stage. Many nonprofits fail to maximize their social potentials because board members continue to lead in a micromanagement fashion long after it is required. They hire C  level players when A or B level players are needed.
• Ownership and Humility – How easily will the candidate assume responsibility to solve a problem situation and at the same time be willing to try out new ideas? Also will he/s be willing to share credit for accomplishments?
Nonprofit directors offering part-time board service with broad overview responsibilities need to be comfortable in sharing credit with management, staff and board peers. Board members are not in positions to be authoritarian, except in a crisis station and then only with the concurrence of other board members.

Practical Applications of Google’s Hiring Attributions
I don’t think there are any nonprofits that have the power and cache of Google. Consequently, nonprofits that add these board candidates’ attributes will need to do more vetting via personal interviews. These attributes do no readily surface on a resume. However, in building a board recruitment matrix, NFP boards should add them to emphasize their importance. Eventually they might enter the DNA of nonprofit recruiting. Then happenstance might be reduced and board recruiting can become more focused.

*As reported by Tom Friedman: http://nyti.ms/1cDo7vD

Nonprofit Board Exec Succession #NonprofitBoards

As pretty much everyone is now aware, Jeff Bezos (aka Mr. Amazon, aka richest man in the world) is stepping-down from his position as CEO and taking on the position of Executive Chair.  Now I honestly had not, until this announcement, heard of this job nor title.  So I have done some homework and think that this arrangement could have some merit for nonprofit boards who must hire a new ED/CEO.  

According to futureofworking.com 

There are two ways to be an executive chairman in a modern company. The first is to be the most senior chairman on a Board of Directors. In this role, the individual would serve as the head of the Board. They would be elected on the same cycle as every other chairman, functioning like an executive, but more in an advisory role.

What makes this position unique is that the executive chairman is symbiotic with the chief executive officer. The Board of Directors will oversee the activities of the CEO, which means they serve as a check or balance over the C-Suite of the company. At the same time, the CEO controls the direction of the company, makes decisions that affect the company’s future, and may simply report on those activities to board members.

The executive chairman is tasked with presiding over meetings of the Board of Directors. If this role is obtained through seniority, there may not be any executive authority assigned to the position. If elected or assigned the position, the executive authority of this office would be equal to, if not higher, than that of the chief executive officer.

The executive chairman influences the company in an advisory role without taking on most day-to-day operational responsibilities. Some people in this role may prefer more influence in the company, which would shape the office to be closer to that of a CEO. Others may take more of a hands-off approach, which would make the role be closer to that of a standard chairman instead.

Now, assuming that the retiring exec, particularly a founder, continues to have much to offer to benefit the nonprofit, the idea of making room for an additional job of Executive Chair can be quite appealing and relieving (to pretty much any board that doesn't relish the idea of an otherwise loss of an important ingredient to success. 

Interesting idea, no? 

Executive Director Performance #NonprofitBoards

The following Tallahassee Democrat article is focused on executive performance.  It's a long article that gets some things, in my opinion, correct and others not so much.  Let's take a look.

Is your executive director doing a good job? | Notes on Nonprofits

Kelly Otte

Notes on Nonprofits

Today’s column is about evaluating the Executive Director, part of our continuing series on the top 10 responsibilities of a nonprofit board. Executive Directors have a complicated, fascinating, one-of-a-kind shared leadership relationship with the board.

The same board members who look to the ED for guidance and leadership also measure their performance. It should not be surprising that doing their evaluation makes some board members nervous. However, it should be surprising that more than half of EDs report they are not being evaluated at all.  

In general, how do you know your ED is doing a good job? Here are some of the areas Boards will want to evaluate:

Strategic or Action Plan: The ED should have met the goals assigned to them by the strategic or action plan or set for them at their prior evaluation.   Absolutely although annual performance measures are more quantifiable.

Board Relationship: The ED should be actively engaged in helping the board be effective and high performing. If the board is not high performing and the ED isn’t trying to figure out how to help fix it then you have a problem. Evaluate their responsiveness to the board’s requests and their efforts to support their work.   Maybe but the onus is on the board to be specific and to ask and I'm not sure this is a relationship as much as performance question.

Financial Management: The fastest way to cover up a huge financial mess is to not provide timely reports. Having worked or talked with far too many boards who didn’t know there was a problem until there was a $100,000 problem, I cannot say this too often. There is no such thing as a missing financial report being “no big deal.”

It requires explanation and oversight. Here are some very simplified expectations of the ED regarding financial management: (a) develops, a realistic and reasonable budget (that the board reviewed and accepted and is linked to program results) and balances it; (b) manages good? cash flow practices; and (d) ensures the organization receives a good audit when it’s required - I think timely, complete and accurate sums this area up.

Fund Development: Expectations for fund development include developing a realistic fund development plan and goal and meeting it. Funding should be from diverse sources. The ED should be actively engaged in nurturing donor relationships.  As long as this is clear to all.

Program Operations: The ED should have a method of evaluating the effectiveness of the organizations’ programs and provide services that are committed to funders to provide. EDs should be required to notify the board when corrective actions are issued by funders.  Uh, the program plan lives off the strategic plan.  Results should be measured accordingly and I would view this in an overal annual approach that is measuring org. success - not ED success.

Community Relations: An ED should be involved with local professional associations and service organizations, know elected officials, and participate with a statewide association if one exists. As an aside, boards or ED who don’t understand the value of these activities are missing the boat. Relationships are the heartbeat of a successful nonprofit.  Sure, but we want to evaluate the ED's performance - based on what data?  This is method not results.

Physical Plant: The ED is responsible for maintaining the wellbeing of the organization’s facility assets. Expectations might include the facilities being kept in reasonably good repair or having an improvement plan. 

Staff Management: The board should have an expectation that the ED has used a fair, legal, and equitable process for establishing and managing personnel and have a way to measure it.   Yes, how exactly will they measure this and is this an ED performance question.  Certainly non-compliance and or violations of law are a measure directly linked to the ED but otherwise?

Staff Salaries: The Executive Committee of the Board sets the EDs salary and the ED sets everyone else’s. The board should expect the ED to establish and maintain fair, equitable and market appropriate salaries and evaluate if the process is fair, including the difference between the EDs salary and the rest of the team.   There is board policy within budget that informs this.  It is the board that approves the policy.

Organizational Culture: The ED should create a positive organizational culture that enables staff to perform at the highest level of their abilities. Deciding how to measure this can be tricky. I wrote an entire column about this several years ago and will plan to talk more about this on this week’s Notes on Nonprofit Live on Facebook.  And on what basis might the board evaluate this?

Evaluation Tool: The ED assessment tool is developed at the start of the evaluation period and ties directly to the job description. The ED can be tasked with developing the first draft of the evaluation form or given the opportunity to provide input. The best evaluation tool a board ever used with me was developed by the President Elect and myself sitting at her kitchen table with my job description, several different evaluation templates, and an entire pot of coffee.   Yes, the tool should be established at the beginning.  Establishing goals for the ED is also done at the beginning.  Don't really need much of a tool to assess whether goals have been achieved. 

Evaluation Process: The process begins when the ED completes a self-evaluation using the form. It should be detailed and include attachments that support their assessment of their performance. The Executive Committee (EC) should request monitoring reports and salary information to ask pertinent questions about performance. While the ED is completing their self-evaluation, the EC should distribute the evaluation form to other board members and ask for their written comments by a certain date. Do not accept anonymous comments from board members as they are unproductive without relationship context.

The EC drafts the evaluation using the ED’s self-evaluation and board member comments, presents it in a conversation with the ED, adjusts if warranted and then finalizes the report, including goals and development expectations for the upcoming year. The final evaluation should go to board members as a confidential copy. It does not need to be approved or accepted by the full board. This is the job of the Executive Committee.

Maybe to this process.  Maybe an EC (still have one? Maybe the whole board.  Maybe a self-eval.  If just set goals at the beginning and measure against those at the end - what's to be complicated?

In closing, it is unfair to the ED and the community not to evaluate them every year. It is important to evaluate staff and document successes as well as areas of growth.

Kelly Otte, MPA is the Interim ED of The Oasis Center for Women & Girls and serves on the board of the Survive & Thrive Advocacy Center. Her column writing partner is Alyce Lee Stansbury.  Join us on Notes on Nonprofit Live on Tuesdays at 12:00 on Facebook and send questions to notesonnonprofits@gmail.com.

Investigating Nonprofit HR Irregularities #NonprofitBoards

As most who have read this column know, I am not a lawyer.  At the same time I am knowledgeable and practiced in the rules of the road regarding governance, human resource management and board/exec relations. I believe that laws matter as do policies as equally important, do practices (formal and informal).  My training and experience in the hr world and the systems, practices and policies that affect how hr management is implemented and my own sub-specialty of assessing exec behavior for nonprofit boards who have yellow and sometimes red flags i reasonably extensive.  And, my lens while familiar with all of the above, comes from a "do no harm" framing and that, I believe, makes a difference when trying to address the yellow and red flags.

I review all of this because the recent United Way Worldwide case involving employees claiming (and illustrating) experiences of sexual harassment leaves me convinced that conducting an evaluation, such as was done, singularly with a legal lens, can only produce the results that were indeed produced: fix the policies!  Sadly, while fixing policies, making them current (formal versus informal) and consistent with board values (don't think this was even a thought in the review) will produce a way different result that is best for all (well, maybe not the exec) and consistent with board values assuming the board has values that are in the "do no harm" realm.  

I pose that the conclusions and the process are a "for shame" moment that is even more profound considering the prominence, at least by name, of United Way Worldwide.  This process and findings should be likened to the way the Boy Scouts of America does business - do no harm as long as you don't get caught doing otherwise.  And finally, we turn to the United Way board to ask, where have you been throughout this trip?  Certainly not where you should be.

You can find lots of articles about the situation and findings but you might start with the Chronicle of Philanthropy.

Steps to Achieve Nonprofit Board Diversity #NonprofitBoards

I find the following Chicago Tribune Op-ed particularly helpful when considering steps for achieving goals to diversify nonprofit board composition.  Please read, share, and consider - proactively.

Rather than waiting for external pressure to catalyze change, nonprofit boards can take steps to dismantle institutional racism.

First, in partnership with senior management, boards must establish concrete and measurable diversity goals tied to their mission. Many organizations focus on the composition of their staff. While this is a good starting point, institutions must look at other ways that racism operates within institutions including systems, behaviors, perceptions and history. Boards should make their goals public and report their progress on a regular basis. Without transparency, anti-racism efforts will continue to be incremental and relegated to episodic calls to action that are forgotten when other priorities emerge.

Second, boards must hold their CEOs and senior leadership teams accountable for achieving these goals. One way to do this is to establish a committee on diversity analogous to standing board-level committees. Another is to tie diversity goals to executive compensation, a practice gaining traction in the corporate sector. Yet another is to implement consequences, including a willingness to dismiss leaders who are not meeting objectives.

Third, boards must reform how they select their own members. Most are self-perpetuating entities that fill vacancies through opaque processes. Meaningful change will require that boards decrease their reliance on personal networks and look to individuals without strong ties to the senior team and other trustees. Boards can mirror the processes that already exist to ensure fair hiring among employees — drafting a job description, publicly advertising vacant seats, casting a wide net to identify talent and developing fair processes to evaluate candidates. Boards should track potential members and groom current ones, including women and minorities, for leadership roles. A recent positive example: Mercy Corps, a Portland-based global humanitarian organization, issued a public call for new trustees.

Beyond demographics, many boards suffer from a homogeneity of background. Colleges and universities, for example, rely almost exclusively on alumni to populate their boards. Museums have been criticized for focusing on Wall Street, often restricting trusteeship to those able to make seven-figure donations. By focusing on a narrow sliver of the talent pool, boards risk groupthink and miss great contributors whose novel perspectives could spur innovative approaches to their work.

If nonprofits hope to make progress on addressing institutional racism, their boards will have to take a leadership role on diversity. This will require concrete and realistic goals, accountability for progress, and a shift in who sits around the board table. Our democracy will not be able to thrive until its very building blocks — which include nonprofit organizations — are thoroughly transformed.

Aly Kassam-Remtulla, Ph.D., is associate provost at Princeton University. An expert on access and diversity in higher education, he is co-founder of the Faculty Advancement Network, an Ivy League consortium to further equity and inclusion in the American professoriate.

Too Much Pay For Florida Nonprofit Execs? #NonprofitBoards

Ok, let's be clear, it's up to nonprofit boards to decide what is too big of pay.  And yes, donors too who might be offended that their money is not going to pursue mission.  But, wait for it, Florida (as though it doesn't have enough on its plate), is indeed acting like a donor, and it kind-of can, as it puts out money to lots of nonprofits.  Now, I can't say I'm not offended with some of these salaries so I won't be giving either.  But Florida? Anyway, I would say these boards have done a bad job communicating what their nonprofits get for these wages.

Here from the Tallahassee Democrat (yup, that's what it's called):

 

Florida nonprofits pushing back after state report says executives are overpaid

“The preliminary report is not accurate,” one nonprofit leader said.

Jeffrey Schweers

Capital Bureau

 

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Big Bend Community Based Care is one of nine nonprofits providing important child protection and mental health services whose executives were paid $3 million more than Florida law allows, according to a preliminary Florida Inspector General's report looking into misuse of state and federal dollars.

The report is part of a sweeping review of non-profits doing business by the state ordered by Gov. Ron DeSantis last year after The Miami Herald reported that Tiffany Carr, head of the nonprofit Florida Coalition Against Domestic Violence, was earning $761,500 a year as of 2017 — more than 2% of the board’s budget at the time.

Big Bend Community Based Care, based in Tallahassee, pays its top three executives $429,552 more than statutes allow for contractors getting over half their revenues from public sources.

The bulk of that, nearly $364,000, went toward the $577,573 annual salary of Mike Watkins, the nonprofit agency’s CEO since 2005.

Lakeview Center, a subsidiary of Baptist Health in Pensacola, topped the list with over $1 million in salary payments to eight executives, including the CEO, several vice presidents and the chief medical officer.

Eckerd Youth Alternatives was second, with $766,000 in salary costs, $654,000 of which was paid to the CEO as part of that person’s $868,000 salary.

Just two days after the report was released, Big Bend, Lakeview Center and other agencies cited are already pushing back hard.

“The preliminary report is not accurate,” said Reginald Johns, chair of NW Partnership for Better Communities, a private nonprofit administrative support agency for Big Bend Community Based Care.

“As a private corporation with a $130,000,000+ budget, we oversee multiple entities and are confident that the salary for our CEO and all management level staff is appropriate,” Johns said in an email. “No person on our management team exceeds any federal or state salary guidelines.”  

Lakeview Center President and CEO Allison Hill released a statement saying the preliminary report "contains significant errors in the interpretation of the information provided to the Governor's office." 

Hill said the statute under review applies to the nonprofit's community based care contract with the state only, "but is being broadly applied to the organization."

Nonprofit exec pay is the purview of the board.  Yes, the feds can challenge based on "outside-the-box" rates but I find this rare.  But meanwhile, and I must say I am fully chagrinned, the State of Florida has made a list of the execs that they believe are paid "outside-the-box".  Likely your own review might agree for many of these folks (like the domestic violence exec) but whatever - this is up to the board and if not the board, donors who may not give because they are so offended (not making this kind of money and wondering why funds aren't going to pursue mission).  But there you have it.  Oh, and did I mention that this is Florida?  They don't have other matters on their plate?  Really?

From the Tallahassee Democrat (even that has me wondering):

Under Florida law, executives of agencies in what are called sole-source contracts with the Department of Children and Families who get more than half of their revenue from the state or a combination of state and federal funds cannot pay their executives more than 50% above the salary of the DCF Secretary, which is $220,880.

Sole-source contracts are entered into most often when only one supplier can provide the services required.

Any agency caught paying its administrators more than $220,880 with public funds must either replace those funds with money from other sources, or reallocate the public funds.

Chief Inspector General Melinda Miguel was charged with identifying all the sole-source private entities doing business with executive branch agencies and those that receive 50% or more of their budget from public dollars. 

Miguel's team was told to review salaries, bonuses, cashed-in leave, cash equivalents, severance pay, retirement benefits, deferred compensation, real property gifts, and any other payouts for all members of the listed contractors' executive leadership teams for the past year. 

“If the compensation totals exceed limits set forth in federal or state law and regulations, the agency shall refer the matter to the Office of the Chief Inspector General for investigations and appropriate action,” the governor ordered.

Miguel's team found more than 900 entities that met one or both criteria of being sole-sourced and getting 50% of its revenue from public funds, earning at least $3.9 billion in state funds and at least $3.4 billion in federal funds.

Out of that massive group, the inspector general found 169 entities where the executive pay cap applied. And out of that group, they found 12 that were out of compliance. 

Nine contracts were with DCF, the violations of which were noted in previous reports of its own inspector general. Big Bend Community Based Care is not a sole source contractor, but bids on its CBC and managing entity contracts.

Johns said that using a Form 990, an Internal Revenue Service document that provides the public with financial information about a nonprofit, to accurately figure out executive pay "is not possible."

"The preliminary report incorrectly identifies our CEO as an employee, which he is not – he is the CEO of a private corporation overseeing a $130,000,000+ budget with revenues from multiple sources and with multiple enterprises across 18 counties," he said. 

Johns said the salaries of Watkins — also an unsuccessful candidate for a Florida House seat — and other executive staff are based on standard parameters and comparable compensation packages at similar nonprofits.

More:State House candidate's agency cited for financial improprieties

Even though he insisted Watkins isn’t an employee of a community based care lead agency, the agency has capped executive salaries at 125% of the DCF Secretary salary instead of the 150% required.

 

Johns said Watkins receives $175,000 a year from the state's Community Based Care contract, which was originally two separate groups, as well as $175,000 for the mental health managing entity for a total of $350,000 in state contract dollars.  

The final portion of Watkins’ pay is funded from other sources, Johns said.

But an examination of the Big Bend Community Based Care and NWF Partnership Form 990s for 2018 shows a dramatically different breakdown for Watkins, as well as the salaries of the chief operating officer and chief financial officer.

Watkins received $544,712 of his income directly from “the organization,” and $32,852 from “the organization and related sources.”

Likewise, COO Pam East and CFO Lori Gulledge reported their incomes of $221,472 and $211,673, respectively, from the organization, and the rest from related sources.

The 2018 Form 990 for NWF states that Watkins received $544,712 from "related organizations,” zero from the organization and the remainder “from the organization and related organizations.” The compensation for the COO and CFO were categorized in the same way.

Big Bend CBC also lists $110 million in gross receipts and $28.8 million in assets, while the NWF Partnership for Better Communities lists only $1.95 million in gross receipts and $5 million in assets, not the $130 million stated by Johns.

This is not the first time that Big Bend Community Based Care faced accusations of financial improprieties over its executive pay. A comprehensive, 122-page state Auditor General report released in January 2019 flagged Watkins’ salary as it looked into potential misappropriation of public contract funds. 

At the time Watkins defended the agency's use of state funds. 

"My relationship is not with the Auditor General, it is with DCF," he said. "And every contract I have with DCF is in good standing."

The statute doesn’t entirely prevent the boards from paying their executives in excess of the cap, just so long as it doesn't come from the publicly funded community based care contract. There is no cap on how much can come from the behavioral health contract and other public grants and contracts. 

Watkins and Big Bend's board have taken advantage of that legislative loophole. They've also further shielded the salary specifics from public scrutiny by creating a nonprofit limited liability corporation, or LLC, in 2017 — two months after the cap on community based care money was approved.

NWF Partnership is an LLC founded in September 2017 as an administrative support organization for the Big Bend Community Based Care. All the money for NWF Partnership comes through Big Bend CBC, however.

The Partnership falls outside the scope of the Auditor General's authority, according to Florida law, which means its finances are not open to public view.

In a letter to the CEOs of those singled out nonprofits that went out late Wednesday afternoon, Miguel emphasized that no investigation has begun, but the Chief Inspector General has the preliminary documents from those agencies and reviewed the initial documents.

The executive order states that if executive compensation exceeds the limits in federal or state law, the state agencies contracted with those nonprofits shall refer the matter to the IG's office for investigation and appropriate action. So far, the office has received no such referrals, Miguel said.

"Just to be clear, the intent for the preliminary report is to show where we may receive a request for further review or verification," Miguel said. "However, nothing within the document is final."

Miguel's team will meet with each of the affected entities next week to explain the process, she said. A final report is expected by June 30.

Contact Jeffrey Schweers at jschweers@gannett.com and follow him on Twitter @jeffschweers.