Archive for the ‘Executive Directors’ Category
January 27, 2011
If fundraising is concentric circles, as consultants often say (you ask your friends and then their friends and then their friends’ friends), then it seems to make the most sense to start asking right in the bosom of the family: from your staff and volunteers. Indeed, this is what most nonprofit executives think of when they hear the phrase “Charity begins at home”!
But staff and volunteers are in quite different positions with respect to your organization, and so they can’t be treated alike in terms of asking for money.
Often agencies are afraid to ask their volunteers for money on the grounds that they’re already getting the volunteers’ time, and it would be greedy to ask for more. But in fact no one is in a better position to appreciate the value of the work you do, or the scarcity of resources under which you labor, than a volunteer. Further, though not all volunteers are privileged, they are at least people who have leisure time to donate, which suggests they’re not grindingly poor. If your volunteers show up at the office with a cup of Starbuck’s in hand, consider what that represents: 1 Venti/day@$2.50 x 5 days/week x 52 weeks/year = $650. So they’re probably spending more on coffee than you’d think of mentioning in an initial ask.
Will any volunteers take umbrage at being asked to give money as well as time? Sure; a certain percentage of the population finds discussion of money distasteful and crude, and such people may well be represented in your volunteer corps. But you’re not any poorer for asking them, and there’s very little reason to think they’d stop volunteering at an activity they enjoy because you asked them a question to which the answer was “no.”
Don’t extend this blithe attitude, though, to asking your volunteers to ask for money. Direct-service volunteers are apt to be offended if they’re asked to do other kinds of volunteer work, such as fundraising, because the request suggests that they’re not already working hard enough. You understand the difference between time and money, and your need for both; your volunteers are equally sophisticated. So ask them for money, not for more time.
Staff members are a different issue. People who work in nonprofit agencies are already donating enormous sums to the agency, in the form of foregone income–-the money they could be making working in the for-profit sector. In this sense they are almost certainly the top donors to the agencies at which they work.
The Nonprofiteer took a nonprofit executive job for half the salary she had been earning as a practicing lawyer—a not inconsiderable sacrifice, though one she was glad to make. But when members of the Board suggested that she also write a check to the agency, her attitude was, “The very second the Board gives $25,000 a year to the agency–-collectively, let alone individually!—it will have the right to come back and ask for something more than the $25,000 worth of lost wages I’m already giving.”
To be fair, hers is a minority view. Many agencies regard staff donations as some sort of measure of staff commitment to the agency. But staff members indicate commitment every day through the work they do, the salaries they accept, the health insurance they lack. At some agencies they even demonstrate their commitment by working overtime for which they don’t get paid—and by not ratting out their employers to the U.S. Department of Labor or the state agency charged with regulating wages, hours and working conditions. The fact that our agencies do socially valuable work doesn’t entitle us to exploit our laborers, though of course for many years nonprofits have survived their lack of financial capital by consuming human capital instead.
So don’t ask your staff for money, and do ask your volunteers. Maybe they’ll donate enough to make it possible for you to offer the staff health insurance, or paid sick leave, or even a raise.
Well, one can dream, anyway.
Tags:501c3, Board of Directors, charity, donors, Executive Director, Fundraising, human resources, nonprofit, nonprofits, not for profit, personnel, philanthropy, Relations with funders, social services, volunteer, volunteering, volunteers
Posted in Boards of Directors, Executive Directors, Fundraising, Management Advice Day tip, Nonprofit management, Nonprofits--General, Personnel Issues, Private Philanthropy, Relations with funders, Social Service Agencies, Volunteers/Volunteerism | 7 Comments »
November 4, 2010
Dear Nonprofiteer:
Recently I started serving on a board of a small social service organization. In the last six months our board president has slowly retreated from his leadership duties due to a variety of personal issues that he’s facing and I find that I’m essentially left driving the bus. What resources are there that you would recommend for those seemingly newly anointed to oversee a nonprofit?
Signed,Nickeynewguy and Lost
Dear Nickey,
Of course the best resource is the Nonprofiteer it/herself–the site has no search function, I’m sorry to say, but if you just keep trolling backwards you’ll find numerous bits of advice for Board presidents. But here’s the central thing to remember: even if you’re suddenly the Board PRESIDENT, you’re not suddenly the whole Board.
So the first thing to do is call a meeting of the Board (with the Executive Director in the room—s/he will be your most valuable partner) and say, “Well, I appear to have become president by default. This wasn’t your choice and it certainly wasn’t mine; so let’s figure out what has to be done and divide up the tasks.” In other words, make it clear from the word Go that you’re not going to be in this alone.
Second, if you’re the sort of person who ends up leading by default, that means you’re a natural leader in one way or another. I’m going to proceed on the assumption that your leadership flows from quiet competence rather than noisy charisma (otherwise you’d have been Board president to begin with). So use that quiet competence to help the Executive Director and your fellow Board members think through:
- What do we have to do that’s urgent?
- What do we have to do that’s important?
- Are we letting the urgent get in the way of the important?
- If so, is the urgent really so urgent?
- If so, do we need more people to address things, urgent and important alike?
- If so, who will lead a brainstorming session to identify and recruit prospective new Board members?
Note that I’m not suggesting you do the recruiting, though you may be the most motivated to do so, having suddenly awakened to a whole set of unasked-for responsibilities. Nor should the Executive Director do it—s/he’s got plenty to do already. But the only way you can do your job is to make sure other Board members do theirs, and the best way to get them activated is to give them the fun job, namely, thinking about who else would just love the work you’re doing if only they knew about it, and then talking to those people with great enthusiasm about what you do.
Any Board member who can’t run, or at least participate whole-heartedly in, a recruitment campaign should be given some essential but boring task like reviewing budget vs. actual expenses or assuring compliance with the Federal and state filing requirements. That person should have to report at the next Board meeting, as will the recruiters. As soon as you’re having Board meetings where Board members talk to each other (instead of sulking, or reporting to the Executive Director or to you as though you were the only responsible parties in the room), you’ve got this presidency stuff down pat.
For more detailed guidance, the Nonprofiteer strongly suggests checking out any of the sites on the blogroll (in the right margin), as well as going to boardsource.org, which as its name suggests specializes in making Board service as straightforward and resource-rich as possible. The Boardsource “Knowledge Center” is chock-a-block with guidelines, forms and checklists to help you make sure the essential bases are being covered—even in the center fielder’s absence.
And as further questions arise, please feel free to write again!
Tags:501c3, Board of Directors, Executive Director, governance, human resources, nonprofit, nonprofits, not for profit, personnel, strategic planning, volunteer, volunteering, volunteers
Posted in Boards of Directors, Executive Directors, Management Advice Day tip, Nonprofit management, Nonprofits--General, Personnel Issues, Social Service Agencies, Strategic Planning (and the tactical kind, too), Volunteers/Volunteerism | 2 Comments »
October 21, 2010
Dear Nonprofiteer,
Several friends and I have started a new musical arts ensemble and are seeking to incorporate as a non-profit. There are 8 artists in the ensemble, so we are a very small organization. Since starting the ensemble was my idea, I have been serving as “Artistic Director,” choosing music, organizing rehearsals and performances, etc., as well as being an Artist in the ensemble.
We are currently working on our Bylaws and so have been thinking about how to structure our Board. We have decided to have all the usual positions (President, VP, Secy, Treas) plus an Artist Representative, and a variable number of at-large Board members (no more than 5). We have a provision in our (in-process-of-being-written) Bylaws where the Board can only select or remove the Artistic Director with a 2/3 consensus of the Artists.
At this point, all of our Artists will serve on the Board in some capacity (either as Officers or as at-large members), though we want to allow for a future time when the Artists get to be just Artists and let other people run the business side of things. The other Artists want me to have a say-so in the running of the organization since the group was formed by my “vision”.
So my question is this: Is it legal, ethical, practical, etc., for me to serve as both President AND Artistic Director (and an Artist in the ensemble)? Or should one of the other Artists serve as President and I (as Art Dir) be only ex-officio with no vote?
I should also mention that my husband is also an Artist in the Ensemble, and so would also sit on the Board (for now).
Thank you very much for any advice you can give. Signed,
Wearing Many Hats
Dear Hats:
Last issue first: it is never a good idea to have a married couple on the Board of a nonprofit, nor is it a good idea for one-half of the couple to serve on the Board while the other is employed by the agency. (I gather you’re not getting paid as Artistic Director, but if you can be selected or fired by the Board, you’re an employee.) A husband and wife on the Board stacks the voting since more often than not they will vote together, and the more important the issue the more likely they will march in lockstep. Majority or not, they constitute a bloc, and blocs or factions create trouble on any Board.
And if your husband’s on the Board and you’re the Artistic Director, you’ve stacked the deck in your own favor on every issue while at the same time guaranteeing the maximum damage to the Board (your husband’s resignation) in case of any disagreement. Don’t start out your nonprofit life with a built-in conflict of interest.
Further, as you seem to realize, no staff member (including the Artistic Director) should serve on the Board at all (whether President or not) except in an ex officio, non-voting capacity.
But let me suggest that you pause here to consider why you want to create a nonprofit structure at all. Don’t become a nonprofit because “all arts groups are nonprofit;” the Nonprofiteer did that for a client once and it was a disaster. As soon as there’s any money involved, you’ll find yourself fighting with the Board over whether those dollars should go directly to you, as Artistic Director; to the artists, in some proportionate way; or back into the institution. So imagine yourself confronting that question now, and build the structure that will get you the answer that you want.
It’s fine to fill your Board with ensemble members and thus guarantee complete artistic and financial control of the agency by its artists. But if you do, an “ensemble representative” would be redundant and should be omitted from your bylaws.
You might further consider that if you’re entirely ensemble-governed, you’re missing the opportunity to use the Board for its central purpose, which is to connect the group to the wider community (and, yes, raise money from that wider community to support the work you do). You do your art for people; perhaps some of them should be represented on the Board—not just to do “the business stuff” but to help you maintain perspective about the relationship of your work to its audience.
In other words, as the Nonprofiteer has said in other contexts: nonprofit and 501c3 status are not mere legal trivialities to permit you to collect donations tax-free. They’re statements about the kind of organization you are, namely, one answerable to the community through its Board. You’re trading a certain amount of freedom for a certain amount of stability. If you’re not ready to do that, skip nonprofit status and live hand-to-mouth til you’re ready to be a full-blown community institution–or until you figure out how to support your art entirely at the box office.
Tags:501c3, arts groups, Board of Directors, charity, Conflict of Interest, Executive Director, Fundraising, governance, nonprofit, nonprofits, not for profit, personnel, volunteer, volunteers
Posted in Arts Organizations, Boards of Directors, Conflict of Interest, Earned income, Executive Directors, Fundraising, Management Advice Day tip, Nonprofit management, Nonprofits--General, Personnel Issues, Volunteers/Volunteerism, Women's Issues | 8 Comments »
September 14, 2010
Long ago the Nonprofiteer had a client hire her to manage the transition from the founding Executive Director to—well, to whatever future awaited the agency in his absence. It was impressive, actually, that the founder himself was the one who realized first (and persuaded the Board) that transition planning was necessary.
But it turns out that recognizing the need for transition planning is quite a long way from being prepared for actual transition. While the founder was theoretically in favor of Life After Him, in practice he was working to set in stone the practices, policies, goals and programs of Life During Him. Though he would have denied this, his purpose was to prevent transition. The person at the helm would change but first the founder was going to assure that the new pilot’s heading would not deviate a single degree from his predecessor’s course.
The only surprise here is the Nonprofiteer’s failure to expect this absolutely predictable occurrence. (Well, no one expects the Spanish Inquisition, either.) But even the smartest consultant isn’t a mind-reader, and so we mostly undertake to do what the client articulates as the job. Of course there will be undercurrents and cross-currents and breakers and riptides, but at least we’re all sailing in the same direction.
Except in this case we weren’t. When the Nonprofiteer met with the Board and challenged its members to move beyond the founder and take true ownership of the agency as essential preparation for hiring a successor, she found them champing at the bit to do so. They had little experience with governance because they’d let the founder run things pretty much as he pleased; but that didn’t mean they had little interest in the subject. In fact, once they began to talk about things that could be done more or less or differently or better, they were neither to hold nor to bind. And, having gotten precisely what he’d said he wanted, the founder was furious—at, of course, the Nonprofiteer.
So here’s a warning to all you consultants out there: when you’re doing transition planning, assume that any founder who purports to be okay with leaving is lying like a rug. And to all you Baby Boomer founders out there, approaching retirement faster than we ever thought possible: if you’re serious about transition, find a consultant and go for it, but don’t expect the process to be smooth. Having a baby taken from your arms is a difficult experience, so don’t go through it til you’re confident that the nanny—your Board of Directors—can be trusted not to drop it.
What if you’re ready to retire and don’t trust the Board? (You shouldn’t have a Board you can’t trust, but that’s water under the bridge at this point.) Then shut the agency down. If the only way it can operate is your way, and you’re about to leave, end of story.
But if you want your creation to outlast your own tenure, brace yourself: with transition, you’re in for the ride of your life.
Tags:501c3, Board of Directors, charity, Executive Director, governance, human resources, nonprofit, nonprofits, not for profit, personnel, social services
Posted in Boards of Directors, Executive Directors, Management Advice Day tip, Mission, Nonprofit management, Nonprofits--General, Personnel Issues, Social Service Agencies | 6 Comments »
August 30, 2010
Dear Nonprofiteer,
One of our current issues is lack of short-term working capital. As with many organizations, our expenses always precede our revenue by weeks, sometimes months. We were carrying some debt into the recession, which worsened as the economy imploded. We’ve grown fairly organically through the recession and thankfully we have paid the debt down; however, that has left us without much in the way of cash reserves. Which leads us to a short-term crunch on working capital to bridge the gap between the time frames for our expenses and for our revenue.
With the current banking climate credit can be tough to come by so one of our Board members has offered to lend our organization some money to help smooth out our short-term working capital issues. We want to make sure, though, that we are not skirting any legal issues before we proceed. Should an organization accept a short-term loan from a Board member?
Also s/he had a secondary question about interest if we were to accept the loan:
One question I did have is regarding the IRS interpretation of not profiting from board activities. I should be able to do that as a no interest loan; though, would I still be able to do it as a below market rate loan? (Not that there is much of a distinction at the moment with interest rates pretty close to 0.5%) My thinking is that I could lend something around $3-5000 for no more than one year, and I would certainly want fund raising to continue in the meantime, but what would the IRS’s rules direct for this?
What would you advise?
Signed, Board-rich but Cash-poor
Dear Cash-poor:
It would be hard to provide a better summary of the pluses and minuses of borrowing from Board members than the one on Blue Avocado last year; it lays out all possible iterations of such borrowings, along with pros and cons of each type.
As you’ll see, there’s no legal obstacle to your accepting a loan from a Board member (see also this legal guidance, which makes explicit that what’s prohibited is Board members borrowing from nonprofits, not the other way around). But doing so may alter the dynamics of your Board in a way you don’t particularly want. S/he who has the gold makes the rules, of course, and a lender is apt to feel that s/he has a greater stake in the financial success of the organization than other Board members. This may lead to conflicts about whether, e.g., to do something artistically daring or commercially safe, with the creditor putting a heavy thumb on the “safe” side of the scales. The borrowing doesn’t create a conflict of interest, exactly, but it creates the potential for one.
Given the relatively small sum involved, it might actually be better to have a Board member, or members, co-sign a line of credit at a bank or credit union. Many reluctant lenders are willing to lend with personal co-signers, and this keeps the day-to-day financial decisions where they belong—with the staff—while keeping Board members in their proper fiduciary role.
As to the interest-rate issue, Nonprofits for Dummies notes that loans from Board members are only legitimate if they are at or below market rates. The goal is to prevent Board members from looting their agencies by charging exorbitant interest. To be sure that there’s no question about the validity of the interest rate, the full Board should approve the loan by a vote from which the lending Board member recuses him/herself. Under those circumstances, the IRS will not question the transaction—though it must be reported on the agency’s 990 form, and of course any interest income must be reported on the lender’s own tax returns.
Again, your difficulties are not legal, but managerial: if there’s truly no other way, you may borrow from a Board member. But the less you let Board members serve as your creditors, the better governors they will be.
Also—though there’s nothing wrong with borrowing for a defined short-term need like the one you’ve described—if there’s a chronic delay between expenses and revenues, you probably want a longer-term solution (like the credit line) instead of a Board member’s temporary willingness to tide you over.
And please make sure the lending Board member knows that, in the unlikely possibility that you go bankrupt, his/her loan will be the last paid. As an “insider,” his/her loan will be subordinated to everyone else’s, almost as though s/he were a stockholder. In short, make sure everyone on both sides of this transaction understands the risk.
None of these gymnastics would be necessary if there were a Nonprofit Business Administration which would lend to nonprofits the way the Small Business Administration lends to small businesses. But this hobby-horse of the Nonprofiteer’s doesn’t seem to be making any more headway in the Obama Administration than in any previous White House. Maybe there’s a reason—but she can’t imagine what it is.
Tags:501c3, Board of Directors, charity, Conflict of Interest, credit, Executive Director, governance, IRS, nonprofit, nonprofits, not for profit, philanthropy, recession, Relations with funders
Posted in Boards of Directors, Conflict of Interest, Executive Directors, Finances, Management Advice Day tip, Nonprofit management, Nonprofits--General, Private Philanthropy, Relations with funders | 1 Comment »
May 26, 2010
Dear Nonprofiteer,
I’m the ED of a growing nonprofit doing bridge-building work on a highly divisive social issue. Our work is getting rave reviews. Our Board, however, is really struggling with its role in fundraising.
All of the nonprofit literature I’ve read says that the Board of Directors is largely responsible for raising funds for the organization, and that they typically do this through their own individual contacts and influence. But everyone on our Board was chosen for their commitment to our cause and understanding of the sensitive nature of our work, not for their contacts or influence. They’re wonderful, passionate people, but they have no fundraising experience and no wealthy or influential contacts to speak of, and they’re all geographically separate from one another. When fundraising comes up in Board meetings, everyone agrees that it must be done, but no one is sure what exactly they can do.
Our Board does have a “give or get” clause, and our Board members meet and surpass that requirement by giving generously of their own money. There’s no question of their devotion! But I’m concerned that relying too heavily on our Board members’ personal finances rather than external fundraising is a dangerous long-term proposition, and I feel like we could be doing so much more if we had a real fundraising strategy. (We have been raising other funds, but those projects have been primarily overseen by our staff.)
What say you? Are there situations where a nonprofit Board shouldn’t focus on fundraising? Or do we need to rethink things?
Signed,
Empty Pockets
Dear Empty,
Of course the people you recruited to your Board were chosen for their passionate commitment to your cause–who else would you choose for such a task? That doesn’t mean they can’t raise funds; in fact, it means they’re the people best positioned to raise money for the group, because they understand it so profoundly and can speak about it with such depth and conviction.
And they’re going to be especially wonderful fundraisers because they’re so generous themselves. Many agencies struggle with fundraising because the Board thinks someone else should put money on the line while its own members fail to do so.
But Board members have to take on the fundraising task, and there are no exceptions–not for particular kinds of organizations, nor for particular Board members whom others may think can’t afford to be involved. There’s a misconception floating around the nonprofit world that fundraising can only be done by certain kinds of people, ones with those mysterious “contacts” and “influence;” when in fact, everyone can identify prospective donors, everyone can ask, and everyone can thank.
Here’s how you get started: bring to the next Board meeting a list of five prospects whom the staff has identified through your fundraising activities to date–the people you think are most likely to be convertible into serious major donors alongside your Board members. Then divide your Board into pairs and get each pair to contact one of these small-givers-who-are-big-givers-in-waiting. The pair should take the prospect out to lunch and ask him/her for money.
How? Please see the Nonprofiteer’s never-fail luncheon ask. And, because everyone you’re dealing with is so new to this activity, spend the rest of this Board meeting practicing the never-fail ask, doing in 10 or 20 minutes what in the real world you’ll do in 60. You practice by dividing the Board into groups of three, and then having two people ask the third; the second time, you have the prospect join the asking team.
Stay on your Board members between Board meetings to assure they actually take the prospects out and ask them for money, and then have them report back at the next Board meeting. Also tell everyone to come to that next Board meeting with the name of one–one!–person they know whom they can persuade to come to lunch to talk about your agency. Reassure them that they’re not going to be required to ask their friends for money–they’re going to ask EACH OTHER’S friends for money. You can practice that at this second Board meeting.
Then keep noodging and supporting them, but let there be no doubt that this is the main thing with which they should occupy themselves now. No matter how passionate–for that matter, no matter how rich!–no Board is able to support its agency single-handedly through its personal wealth. Fundraising is essential; it’s the job of the Board; and if the people you’ve got now refuse to do it (which the Nonprofiteer doubts), go get some people who will.
And if the guidance the Nonprofiteer has just molded into a brick and thrown at your head seems daunting, hire a Board development consultant [like, say, the Nonprofiteer; but plenty of people do this] to come in and train your Board–and read the fundraising Riot Act to its members, if need be. Often Boards will hear from a consultant what they won’t hear from their employee/Executive Director, namely, that they have a clearly-defined job; that the name of the job is “fundraising;” and that they have to do it.
Tags:Advocacy, Board of Directors, charity, donors, Executive Director, Fundraising, human resources, nonprofit, nonprofits, not for profit, philanthropy, Relations with funders, volunteer, volunteering
Posted in Advocacy, Advocacy groups, Benefit events, Boards of Directors, Executive Directors, Finances, Fundraising, Management Advice Day tip, Mission, Nonprofit management, Nonprofits--General, Relations with funders, Volunteers/Volunteerism | 2 Comments »
May 21, 2010
Dear Nonprofiteer,
The quick and dirty is this: a local AIDS charity has an ED who facilitates a hostile environment. She fires people and then back-fills their employee record with negative things. She makes her assistant accompany her on personal errands, such as to the fertility specialist. The entire executive team has turned over in less than two years, many of us leaving with no job lined up or taking a pay cut of $20-30,000 per year. She gives “presents” to herself and her favorite staff, mall gift cards, in excess of $500. She takes herself and co-workers out for dinner at a $100/head steak house because “we are working so we deserve it.”
In winter 2009, the Board conducted an investigation, wherein one Board member was in collusion with the ED and told her all of the items that were being investigated and in essence helped her to side-step the issues. The majority of the Board resigned, so as not to be tied up with her, with the expectation that her contract would be terminated in Feb 2010. However, the new Board president, her buddy who helped her through the investigation, has asked her to write up her own contract extension. The only reason we haven’t gone to the IRS is because the clients will pay the price.
The federal grant monies are allocated and spent correctly. She seems, however, to use the private donor funds much like they are her personal discretionary spending. The Board took away her use of the company credit card a year ago. One more issue is the fact that she has been promoted within the ranks to the ED position, and has had a personal bankruptcy that is not disclosed to anyone on the Board; she told me because I was the CFO (quit for ethical reasons) and the company was denied for a corporate credit line because of her personal credit history.
Her statement when she took the reins in Feb 2008 puts it best: “I am the CEO of my own company.” Unfortunately, it is my belief that she has fiduciary responsibility to the taxpayers and donors, a responsibility of which she seems oblivious.
Signed, Escaped From Alligators But Still Up to My Ass in Concerns
Dear Escaped:
The only exception to the rule that employees shouldn’t talk to the Board is when there’s evidence of mis-, mal- or nonfeasance on the part of the Executive Director. What you’ve described seems to include all three: interfering with personnel records, helping herself to unaccounted-for petty (and maybe more than petty) cash, and collusion with one Board member to evade the legitimate concerns of the rest. So even if you were still an employee, the Nonprofiteer would recommend that you draft a fact-intensive letter and send it to every member of the Board of Directors, outlining what you know to be true about the Executive Director’s mismanagement and suggesting that it may endanger the agency’s nonprofit status under state or Federal law.
Make sure the letter contains ONLY what you KNOW to be true; talking about other people’s misbehavior is defamatory if it’s false. Err on the side of leaving out anything you heard from someone else and didn’t witness yourself. Also err on the side of maintaining confidentiality from your days as CFO, which is to say, don’t announce the Executive Director’s personal bankruptcy. If you think it necessary, merely report on the agency’s inability to secure credit and suggest that the Board look into the source of this difficulty.
There’s no question that a nonprofit’s Executive Director–just like its Board members–owes a duty to the agency that precludes her using it as her personal piggy-bank, or even her personal source of doing good. People who find nonprofit governance restrictions too confining are welcome to take their chances in the for-profit marketplace; they’re not permitted to transfer the perks of sole proprietorship to the nonprofit arena.
As for “being the CEO of my own company,” that’s all very well; but any for-profit company with stockholders has a Board of Directors authorized–indeed, required–to keep the CEO under control. It may authorize expense accounts (even $100 steak dinners) but it’s also obliged to keep track of where the money is coming from and where it’s going.
For these purposes, there’s absolutely no difference between Federal funding and funding from private donors–it’s all accepted in trust (as it were) for the agency. Presumably some of that private-donor funding comes from members of the Board, and in your letter advising the Board of the Executive Director’s wicked wicked ways you may want to emphasize that. “I know your own generosity goes a long way toward supporting this agency, so you wouldn’t want to have your money wasted or spent on items that don’t benefit our clients.” You probably also want to emphasize that the agency’s reputation is being jeopardized by the behavior you describe, because eventually murder [i.e. financial shenanigans] will out.
Once you’ve done that, you’ve done all you can. (You’d actually done all you could by quitting, but this is the one extra mile you can go without becoming an officious intermeddler.) The IRS has bigger fish to fry, though your state’s Secretary of State or Attorney General may not. But as you’ve noted, the important thing is to restore the agency to its duties to clients, and that’s better accomplished by sounding a clarion call to the Board than by ratting the group out to the cops.
Tags:Board of Directors, charity, Conflict of Interest, credit, donors, Executive Director, Fundraising, governance, grants, human resources, IRS, nonprofit, nonprofits, not for profit, personnel, social services
Posted in Boards of Directors, Charity scandals, Disease charities, Executive Directors, Finances, Fundraising, Health care, Management Advice Day tip, Mission, Nonprofit management, Nonprofits--General, Personnel Issues, Social Service Agencies | 5 Comments »
May 4, 2010
Dear Nonprofiteer:
Our small organization recently terminated our Executive Director. There is one board member, Martha, who has been working long-term in the office to review books, grant applications, etc, who was instrumental in documenting our previous ED’s administrative mismanagement. Now that the ED is gone, the organization is in dire need of someone who can fill in, and Martha is offering to work in the capacity of Interim Executive Director for a monthly stipend.
I feel like this is a potential conflict of interest. Even if Martha resigns from the board in order to take this interim position, she was instrumental in the ED’s termination and will now benefit personally by taking money to fill the position, no matter the financial amount or length of the term.
Is it legal for a board member to take an interim staff role? Is it ethical?
Signed, Is Something Rotten in Denmark?
Dear Denmark:
It’s certainly legal for a Board member to take on an interim staff role, and in fact it’s quite common, because so few agencies have access to trained assistance at the very instant they need it. But your sense of the situation seems to me absolutely correct: neither Martha nor anyone else on the Board should benefit personally from actions taken as a Board member, and in this case she would be profiting from having blackened (however justly) the reputation of someone holding the job she apparently wanted for herself.
Your colleagues on the Board will doubtless say that there’s no one better qualified–maybe no one else qualified at all–to take on the Executive Director role; but that’s why Boards should have clear conflict-of-interest policies in place in advance: because there’s always a good reason to look the other way about a conflict of interest.
And Martha’s leaving the Board now wouldn’t cure the conflict, any more than her recusing herself from the decision to appoint her. It would simply make it more likely that she’d ask next to be appointed permanent Executive Director, thus magnifying the conflict to impossible levels.
What is to be done? If she’s really the best-qualified person to do the work of Executive Director temporarily, ask her to do it as a volunteer, in which case it’s just a natural extension of the volunteer time she’s already putting in as a Board member. This is, of course, a huge thing to ask of any Board member–making it likely that Martha and the rest of the Board will move expeditiously to find a permanent replacement, which is what this company needs if it’s going to survive the kind of trauma you’ve described.
Or–even better–if your city, like Chicago, has a program to train Interim Executive Directors, contact the agency that provides the training and ask for the names of program graduates who might be available to take on this task. The real benefit of having an interim ED at any nonprofit is not to have the day-to-day tasks taken care of but to have old problems and dead wood swept away by someone who isn’t a candidate for the permanent position and therefore needn’t fear offending any person or clique. Even if Martha is willing to become ED for free, she will inevitably carry with her some baggage from the organization’s past, which is just what it doesn’t need right now.
Don’t let convenience–”She’s right here, and she already knows the books!”–trump either ethics or the opportunity to set a troubled company on a new healthy path. Stick by your guns and keep Martha on the Board where she belongs.
Tags:Board of Directors, charity, Conflict of Interest, Executive Director, governance, human resources, nonprofit, nonprofits, not for profit, personnel, volunteer, volunteering, volunteers
Posted in Boards of Directors, Conflict of Interest, Executive Directors, Management Advice Day tip, Nonprofit management, Nonprofits--General, Personnel Issues, Volunteers/Volunteerism | 6 Comments »
March 26, 2010
The Nonprofiteer is preparing her April 6 presentation at Chicago’s Axelson Center for Nonprofit Management, the euphoniously-titled “They’re Not a Frill if You’re Using Them Right: How to Save Money and Get More Done Using High-Skill Volunteers.”
It should be simple: skilled and experienced people walk into nonprofits; nonprofits use them for their skills and experience. But everyone in the sector knows that it rarely works that way, unless there happens to be a space for the person on the Board of Directors. When there isn’t, lawyers and accountants find themselves stuffing envelopes, and soon nonprofits find themselves with ex-volunteers. And in nonprofits as elsewhere, someone who’s happy with an experience tells one person; someone who’s unhappy tells ten. So why do we keep creating unhappiness and misusing this resource?
Because she’s hopelessly addicted to acronyms, the Nonprofiteer has come up with the Big MAC approach for deploying high-skill volunteers; and if you want to know what that is, as we used to say at the end of our grammar-school book reports, “You’ll have to read the book”–or, in this case, come to the program.
So come spend a morning (9 a.m. to noon) with the Nonprofiteer at the Axelson Center at North Park College; there’s still time to register at northpark.edu/axelson. See you there!
Tags:charity promotion, human resources, nonprofit, nonprofits, not for profit, social capital, volunteer, volunteering, women, Women's Issues
Posted in Executive Directors, Management Advice Day tip, Mission, Nonprofit management, Nonprofits--General, Personnel Issues, Private Philanthropy, Relations with funders, Social Service Agencies, Volunteers/Volunteerism | 2 Comments »
January 19, 2010
Dear Nonprofiteer,
Can you please clarify for me about a paid Program Director having voting rights on the executive board? I am currently on a non-profit board that will be modifying the by-laws. The Program Director (paid position) insists that he should be a voting member of the board. I feel this is a conflict of interest. Do you have any guidelines etc that I can present to the board? I appreciate your help on this. Do you have any books etc to purchase that could serve as good training tools?
Signed, Conflicted
Dear Conflicted,
The Nonprofiteer doesn’t have any books or pamphlets or anything (though she’s thinking maybe she ought to try writing one), but please feel free to refer staff and Board members alike to earlier postings here, as the issue has come up more than once. See, for instance, “How do we keep it all in the family?” and also the first paragraph of the Nonprofiteer’s reply to “How to reconcile Board and ensemble.”
Your view that the Program Director doesn’t belong on the Board is absolutely correct: a nonprofit Board of Directors consists of volunteers, who supervise paid staff. I presume you have an Executive Director over and above your Program Director, in which case this holds doubly true: no member of the staff except the Executive Director should even report directly to the Board. The Board supervises the ED, the ED supervises the staff, and if there’s some staff-ED conflict the Board’s only choice is to back the ED or fire him/her.
If your Program Director is what would be called the Executive Director at another agency–that is, he reports directly to the Board and the whole rest of the staff reports to him–he serves on the Board ex officio only–that is, only in his capacity as a member of the staff, and without voting rights.
Tags:Board of Directors, charity, Conflict of Interest, Executive Director, governance, nonprofit, nonprofits, not for profit, personnel, volunteers
Posted in Boards of Directors, Conflict of Interest, Executive Directors, Management Advice Day tip, Nonprofit management, Nonprofits--General, Personnel Issues, Volunteers/Volunteerism | Leave a Comment »
