Can one board truly fulfill its fiduciary duty if it has two nonprofits to oversee? How might conflicts of interest borne out through a "rob Paul to pay Peter" risk?
These are the questions that come to mind when reviewing the case of Tuachan High School and Tuachan Center for the Arts: two nonprofits operated by pretty much the same board. And yes, according to the students, they are getting the shorter end of the stick in what appears to be governance that favors the art center over the school where the school is effectively subsidizing the art center but not giving returns equal to the subsidy. And there lays the problem and the question: how does the board not have a conflict of interest?
I dare say that it does appear that the board is not fulfilling its fiduciary duty to ensure the mission of the school over the mission of the Center for the Arts (which is quite a place if you check-out their website). I suppose one might ask if the board really embraced developing a school for the purpose of education versus generating revenue (a social venture)? And if so, is this justifiable in the interest of the students? And if not, is this not a huge fail on the part of the board?
Charter Schools are important educational vehicles that provide opportunities otherwise not available through the regular public school systems. They are also entities that often require a lot of effort on the fundraising front. So, this does feel rare that it should be the school that is the revenue generator for the Center. But perhaps. Anyway, one answer is to create a board whose sole interest is the school and its students. This board and the school could become a subsidiary of the Arts Center ensuring that the board of the School would be focused. It clearly isn't optimal in the current arrangement.
It turns out the board who runs the arts center also runs the school. Nearly every member of the board, with the exception of one, makes up both boards. Merida said no one is looking out for the interests of the school.
We think that presents a conflict of interest because more times than not, the Tuacahn Center for the Arts, is the priority and Tuacahn High School gets left behind,” she said.
This lopsided arrangement has sparked the interest of the Utah State Charter School Board, which issued a stern letter to the school and is demanding Tuacahn leaders fix all the problems. The charter school board is also demanding the Tuacahn officials answer questions at the charter board’s next meeting in April. If Tuacahn doesn’t correct the issues, the school could face disciplinary action.