I have a delicate question. I am on the board of a very small social services non-profit. We operate a special trust that helps people get government benefits. Our non-profit has the potential to be abused for profit. There is another non-profit that does what we do, but for a less than charitable cause.
The person who started this non-profit is the Executive Director and not a board member. He set up the non-profit to have as few conflicts as possible and chose to be an employee in effect and in actuality. He could eventually lose his job if the board so decided. Our board to this point has been little more than a Garden Club.
Our non-profit could be the manager of millions of trust fund dollars and is growing monthly. This sort of money can cause many bad things to happen. The one I fear is rogue board members’ collusion (I’m sure you’ve not heard of that) on taking out the ED (and Founder) and replacing him with a less mission oriented person who will do their bidding.
Is their a way to assure this does not happen? Is it inappropriate for the ED to be on the board and have a vote? Is there another board structure we could adopt that would keep this from happening?
Fretful in Florida
If you’re concerned that people will try to steal the nonprofit’s money for non-mission uses, that suggests the nonprofit doesn’t have appropriate financial safeguards in place. The Nonprofiteer is not an accountant, but she knows a few basic rules of forensic accounting, like every check over a minimal amount should require two signatures. If your agency doesn’t have a bookkeeper, accountant or CFO who’s implementing these rules, you should hire one.
But it appears that your concern is actually that the Board of Directors has the power to fire the Executive Director. That’s absolutely true, and there’s nothing whatsoever you can do about it: from a legal standpoint, the agency belongs to the Board of Directors and the Board gets to hire and fire staff pretty much at will (though not, of course, for legally proscribed reasons like race or gender).
It’s not totally inappropriate for the ED to be on the Board and have a vote, though the Nonprofiteer prefers a bright line between governors (Board) and executives (staff). But the simple addition of the ED to the Board roster won’t prevent the scenario you fear.
So what’s to prevent the Board from firing the Executive Director so it can loot the agency’s resources? Well, the Board has a legal responsibility not to loot the agency, regardless of what the Executive Director says/does/doesn’t say/doesn’t do. Assuming your agency is a 501(c)(3) charity, this responsibility is laid out in the bylaws and enforceable by the Internal Revenue Service. So the members of the Board who don’t want to end up making little rocks out of big rocks in a Federal prison will be sure to keep their hands out of the till.
Nothing, however, will prevent the Board from firing the Executive Director for some other purpose, unless you and the Executive Director and any other current Board members committed to the agency’s mission get off your collective duff and recruit additional Board members who will be more than “a Garden Club.”
This is a common problem in nonprofits: people who lament that their Board “won’t do anything” or “isn’t really committed” but who neither train nor replace the current Board members. No one is born knowing how to be a nonprofit Board member–knowing what the responsibilities are and/or how to discharge them. Is there really some reason to think that your current Board is dishonest and opposed to the mission, or has it merely not responded to generalized requests for its help, e.g. “You people should be raising money”?
So try the following:
- Create or activate a Board nominating committee to summarize the agency’s mission and the Board’s role in a piece of paper suitable for use in recruiting new Board members.
- Decide how many new Board members you want and have the nominating committee go find that many people who are committed to the mission and willing to work on its behalf.
- Once they’re recruited, schedule a Board orientation for veteran and new Board members alike, including a presentation by the Executive Director about the mission and discussions by you and other active members of the Board about the Board’s role in implementing that mission.
Or, to put it more briefly: the best defense is a good offense. Don’t wait for the current Board to come after the Executive Director and change the mission; pack the Board yourself with mission-loving newcomers.