Nonprofit Board Crisis

Are the Days of Ancient Rome Here Again? #NonprofitBoards

In the days of ancient Rome, the emperors built colosseums and brought in wild animals and gladiators to fight them and each other.  The idea: distract the masses from truly understanding and protesting their underclass realities.   Today, the incoming president is releasing TikTok from its ban so the masses can be free from their many other burdens and leaning toward not trusting or protesting "him".  The cycle continues.

And what has this got to do with nonprofit governance?  It's tangential.  Nonprofit boards are reliant on their Executive to be confident that their employees, volunteers and customers are getting their needs met.  Boards must of course ask the "right" questions but they should also expect if not demand that their Exec keep them informed about programmatic, hr, financial, legislative and other challenges. 

Knowing these challenges and successes of course, should enable the board to ask for and offer solutions to the challenges and successes.  But again, they rely on information produced for them.  It is on them, the board, to ensure that the information they receive is not just a distraction to allow them to believe all is doing well knowing also it's very easy for an exec to distract with only the good pictures and good results.  However, growth and progress come from knowing both sides.

 

Nonprofit Boards Caveat Emptor

While it is my firm belief that the purpose of nonprofits is to singularly do good and I struggle with understanding how the IRS can give tax exemptions to those whose singular purpose is to disrupt the good order or simply do bad, the times they are changing over what now will constitute bad.  Yes, the wealth will get wealthier and the not wealthy will write proposals or simply wither away.  But equally worse, the nonprofits that do do good will be looked at with a different lens by those whose values frame all the world differently.  For example from Philanthropy Daily:

The Texas Supreme Court heard arguments Monday over whether the state’s attorney general can shut down a Catholic charity that provides aid to immigrants and poor people. Attorney General Ken Paxton has sought documents from Annunciation House, and ultimately its closure, but was thwarted by a lower court. The state argues that the charity harbors people who are in the country illegally and that religious protections do not confer immunity for violating immigration laws. The charity says the actions violate its religious freedom and that officials have failed to show that it conceals people from law enforcement. (Courthouse News Service)

Nonprofit Board Member! Be aware - review your policies, mission and values; Ensure you have legal representation; consider what membership organizations have to offer; don't go this era alone - collaborate to have common voice and cause and perhaps even legal representation

Nonprofit Boards and Risk Management #NonprofitBoards

A federal judge has ruled that American Airlines violated federal law by emphasizing environmental, social, and governance principles in investment decisions for employee 401(k) plans (More).

What has this got to do with nonprofit governance you might ask?  The general rule of thumb in measuring board decisions/actions is prudence which in turn refers to a board being internally and externally fully informed.  Many decisions that raise the "prudence" question center around risk.  Questions that are included ask if the board fully understood and considered what was at stake with this or that decision.  Boards that have resources to invest are usually advised by financial and investment experts while also keeping in mind core values and policies.  Boards (and I would expect nonprofits to be among these) that care that their investment money not be used to directly or indirectly create harm generally adopt environmental, social and governance principles that shape how monies are invested.  

Of course I am a big proponent of do-no-harm values and equally so do-no-harm activities and actions like investing.  So, I would think for American Airlines, which I applaud for adopting these investment practices, would have been very prudent in safeguarding its employees' 401K monies but it appears some bodies disagree.  I further wonder if the ESG investments are REALLY the issue not the cause.  Much to be learned but as we arrive at a new era where all thing that might do harm are a-ok, we must be on our toes to stand by our values and practices and policies and not be bullied into, well, doing harm.  

This is a good time for boards to review precisely what they do believe and how they want to continue to exhibit these beliefs and practices going forward.

Time to Circle the Wagons Together #NonprofitBoards

The following Chronicle of Philanthropy opinion piece is worthy of a generative conversation by every nonprofit board:

https://www.philanthropy.com/commons/trump-attacks-nonprofit

 

Opinion

• Twitter
• LinkedIn
• Show more sharing options

How Trump Could Target Nonprofits — and How to Protect Yours

Expect donors and organizations to be attacked by name, harassed and threatened online, and investigated on questionable grounds, says the author. Here’s how groups can defend themselves.

By  Mike Berkowitz

January 8, 2025

Chronicle Illustration; AP, Library of Congress

Keep up with everything happening in The Commons by signing up for the Chronicle’s Philanthropy Today newsletter or our weekly Commons LinkedIn newsletter.

Since Donald Trump entered the political arena, federal and state officials and lawmakers have increasingly used legislative and regulatory power, as well as intimidation, to repress views and advocacy with which they disagree. Donors and nonprofits are attacked by name, smeared in the media and court of public opinion, harassed and threatened online, and investigated on questionable grounds.

Top Lines

Mike Berkowitz

• The re-election of President Trump has placed American civil society in its most vulnerable position in a generation.
• Those who seek to undermine U.S. civil society are borrowing the tactics of autocratic states that quash legitimate opposition and free debate.
• Philanthropists and nonprofits must confront the threat by, among other things, building coalitions of pro-democracy advocates.

Not since the Civil Rights era, when pro-segregation state governments attempted to undermine charitable organizations like the NAACP, has civil society faced such an acute threat. Now the re-election of President Trump has placed American civil society in its most vulnerable position in a generation.
President Trump has declared that nonprofits “get away with spending all of their time and money on ‘getting Donald Trump,’” adding, “We are watching these thugs and sleazebags closely!” The president-elect also regularly attacks philanthropists and Democratic donors, including George Soros, a frequent target of conservatives, and Reid Hoffman, who funded E. Jean Carroll’s civil litigation against Trump. A Trump-authored book published by his campaign accused Mark Zuckerberg of a “plot against the president” for providing local election offices with nonpartisan grants to address COVID safety concerns in 2020. “If he does anything illegal this time, he will spend the rest of his life in prison,” Trump wrote.

We can expect the new administration to target a broad swath of philanthropic organizations based on their ideological views or their efforts to hold the administration accountable. These would include organizations fighting mis- and disinformation, government watchdogs, voter engagement groups, LGBTQ rights organizations, environmental NGOs, and immigration and reproductive rights groups. My organization, the Democracy Funders Network, has cataloged the potential threats in this report.

To be clear, these organizations work on issues with legitimate policy debates. But governmental threats and other forms of harassment are anathema to individual liberty and an open society.

ADVERTISEMENT

Those who seek to undermine U.S. civil society are borrowing the tactics of autocratic states that quash legitimate opposition and free debate. They are working from a playbook that aims to discredit, drain resources, damage reputations, and instill fear and paralysis across the nonprofit and philanthropic sectors. These lines of attack spread online, take hold in partisan media, make their way to mainstream news, and then get taken up by policymakers using their offices to probe, investigate, and subpoena. We can expect attacks to come from congressional legislation and investigations, federal law enforcement and regulation, and state legislative and legal actions, among others.

Civil society should not be immune from criticism and oversight, and the media and government should help ensure charitable organizations operate ethically and within the law. My concern arises when those in power abuse their authority and threaten to silence and shutter organizations on the basis of their ideals, not the legality of their actions.

Defending Civil Society

While we can predict some of the targets of the incoming administration, it is worth noting that — by its own admission — the Trump administration will not stick to the norms that have governed past presidencies. Trump’s comments about being a “dictator for a day” and exacting retribution against political enemies should not be ignored. Instead, they suggest that the administration could use the Department of Justice, IRS, and other entities overseeing nonprofits to launch aggressive, politically motivated, and potentially illegal attacks against charitable organizations.

To confront the threat, philanthropists and nonprofits should:

• Spotlight the repressive tactics of the administration to build public support.
• Build or join coalitions of pro-democracy groups and advocates. My organization is one of many. Unified action can reduce risk for individual groups and strengthen the case for democratic values.
• Expand and deepen their community relationships to develop constituencies for their causes that can speak out when groups and issues come under threat. Nonprofit organizations should consider expanding their networks, including with local civic and political leaders, making it more difficult to take them “off the field.”
• Review programs, policies, and procedures to ensure compliance with the law and provide as few openings as possible for partisan investigations.
• Invest in federal lobbying, crisis communications, and legal support to monitor potential threats and build relationship with key lawmakers.

While defending against the likely threats of Trump’s return to office will be difficult, the philanthropic sector cannot disengage from pro-democracy work at a time when American democracy is at its weakest point. Instead, funders and advocates should redouble their efforts to strengthen the pro-democracy movement and preserve our institutions. The cost of inaction is too high.

ADVERTISEMENT

The Commons is financed in part with philanthropic support from the Arthur M. Blank Family Foundation, Einhorn Collaborative, the Freedom Together Foundation (formerly the JPB Foundation), and the Walton Family Foundation. None of our supporters have any control over or input into story selection, reporting, or editing, and they do not review articles before publication. See more about the Chronicle, the grants, how our foundation-supported journalism works, and our gift-acceptance policy.

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

Keeping the Board Informed #NonprofitBoards

Just how much info is too much or too little information remains a challenging question for nonprofit boards.  Boards have different levels of responses ranging from wanting to know so much they are essentially micromanaging to wanting to know so little they begin to fail in fulfilling their fiduciary duties.  Clearly the balance is reached by not one approach but is also affected by multiple factors that include stage of development, size and complexity of organization, history and relationships (between the exec and board).

My associate Dr. Fram offers his own consideration on this subject as follows.  By the way, I am fond of the approach Dr. Fram refers to at the end of his blog.  The CEO should regularly schedule a meeting with each of the board members to update them on "what's happening".  This approach captures the relational and transactional elements of what I believe should occur between an exec and board/board member toward increasing productivity by both parties.

Once Again: How to Keep Nonprofit Board Members Informed.

Once Again: How to Keep Nonprofit Board Members Informed.

By: Eugene Fram.          

With high performing nonprofit organizations, board members will rarely be invited by the CEO to participate in operational decisions. As a result, management will always have more information than board members. Yet the board still needs to know that is happening in operations to be able to perform their overview process. The name of the game is for the CEO to communicate the important information and to keep board members informed of significant developments. Still, there’s no need to clutter regular board meetings by reporting endless details about operations.

Following are some practical suggestions: • An executive director, in response to a blog post I presented, provided a most creative approach. He and the board chair have a weekly conference call, usually on Thursday. Other board members are invited to join the call if they have time. A few days later, the ED sends a brief e-mail to all board members highlighting the important events that took place during the week. (He joked that his high school English teacher would never approve of its format, but the board is always full informed.)

• Probably the more traditional way of keeping board members aware of what is happening within the organization is to have staff frequently make short presentations. I have seen this approach used in dozens or nonprofit board meetings without success. Two problems frequently occur. First the staff person is so enthusiastic about an opportunity to interact with the board members that the presentation continues well beyond the allotted time, and, second, board members raise “micromanagement” level questions, that further extend the presentation session. To solve these problems, the board chair needs to suggest to those seeking more than appropriate detail that the questions can be answered “offline.” In addition, the chief executive should meet with the staff person well ahead of the meeting to make sure that the material to be presented is succinct, and the staff person is well aware of the time constraint. A “dress rehearsal” might even be appropriate for some staff personnel

• Another technique is to use a consent agenda. With a consent agenda, routine and previously agreed upon items are organized together in the pre-meeting agenda and then, hopefully, approved as a group. If one or more board members question an item in the group, it is placed on the agenda for the next board meeting. This process eliminates the time consuming effort of having a separate discussion for each item.

• A third, but controversial way, is for the chief executive to meet with board members informally about every quarter. Occasionally, these meetings are with two directors at one time. At the sessions, the chief executive can discuss the more “entrepreneurial or wild ideas” that might need testing and update directors on operational decisions in greater detail. Some of the meetings can happen quite informally, before or after a committee meeting or after a monthly board meeting. Others can occur at appropriate social events. It is important to have the executive’s assistant keep track of the meetings and then to have authority to make new appointments to meet the quarterly schedule. Obviously, the CEO would need to meet with the board chair more often. If the board is a national one, meeting less frequently or a scheduled phone call are appropriate. One veteran CEO I know meets frequently with two board members. One is a long serving member, and the other is a newly appointed board member. The controversy involved with this proposal is that it takes too much of the CEOs time.  Perhaps my experiences are unique, but the the highest performing CEO I have encountered all use it and enjoy the effort involved.

Keeping important information flowing to the board is critical to having a high performing nonprofit. It is a significant responsibility for the CEO.

Trying to Connect with A Nonprofit #NonprofitBoards

Some nonprofits want only to have a one-way conversation and value you only as a prospective donor.  They do not appear interested in your interests and seem to think your only desire to converse is for the purpose of giving them money.  The Sierra Club is a good example of what I am speaking.   I was reaching out to discuss an interest that the Sierra Club itself cites as one of its own.  But instead, as you can see, all I get is an invitation to "sign-up for an email updates".  Is this what I wanted to do? NO!  Is this THE optimal way for a nonprofit to develop a relationship with a prospective volunteer or donor?  NO!!!  PLEASE STOP THIS APPROACH you nonprofits who believe my role is to just give you money.

 

Take a look at what happened when I clicked-on the "envelope" in the connect link on the website.

 

SIGN UP FOR EMAIL UPDATES