The lingering poor economy is wreaking havoc on the fundraising efforts of even the strongest non-profit organizations in communities all across the country. Numerous articles have addressed this issue. The purpose of this article is to address the potential for mergers or disbanding and to advocate a proactive approach within the community to take full advantage of all opportunities.

Our organization, The Center for Ethics, Governance, and Accountability (CEGA) regularly speaks in support of proactive ethical and governance standards as mechanisms to promote effectiveness and highlight positive differences among organizations in the non-profit sector. The issue of merger or disbanding properly falls within our mission under the subject of accountability.

Do we have too many non-profits operating in our community? Well, that depends on who you ask! Anecdotally, we suspect those within the non-profit sector would argue their organization should continue its existence; we suspect those outside of the non-profit sector would argue there is duplication of effort, lack of coordination, and too few charitable contributions to sustain all of the current organizations. We also suspect public opinion is not linked to need or performance, per se, but rather toward the perceptions of too much expense, not enough resources, and not enough results.

Also, anecdotally, we are of the opinion that non-profits are generally not good communicators of the services they provide to the community. If true, poor communications fosters a lack of understanding and appreciation within the community. The vicious circle continues: donors do not support what they do not understand and appreciate.

So, we believe the time is ideal for communities to take a hard look at disbanding certain non-profits and merging others. Every opportunity to improve performance should be explored.

While this is hardly a unique idea, actually developing a process to fairly assess performance and need is politically difficult and socially taboo. However, starting with a realistic understanding of the difficulty is the best approach and should yield the most positive outcome. No cookie-cutter approach will work for all communities.

We suggest that an important axiom be kept in mind: who says merging non-profits – or even disbanding several – is a bad thing to do?! Isn’t it entirely possible that selected reorganizations should actually better serve the community and strengthen currently weakened organizations? We definitely advocate a positive approach to any such community review.

In keeping with the counsel we provide through CEGA, the best-case scenario would be for open-minded, forward-thinking boards of individual non-profits to actually conduct  an internal dialogue and to proactively offer their organization for merger in a strategic manner. This approach demonstrates leadership and takes as much emotion and fear out of the process as possible. It is difficult to argue with an organization who has reviewed its mission and purpose, analyzed its financial strength and its program outcomes, and decided it would better serve the community by merging, or combining forces, with another non-profit. Generally speaking, it is impossible to argue that economies of scale cannot be found through mergers and that efficiencies and improved service delivery would not be realized. We continue to believe that there is not now – nor may there ever be – any less need for community services, so continuity of employment by non-profits entering merger discussions should not be a negative issue.

Is the time right for your non-profit to consider a major change? Have you thought about it? Have you discussed it with your fellow board members or your fellow staff members? If not, the opportunity is right for considering your options now. From the standpoint of accountability, it is your responsibility as a board member or an executive director to create the opportunity for this kind of dialogue in your organization.  

People with an interest in non-profit governance are aware that May 15, 2010 will be a sad day for thousands of non-profits who have forgotten to file their IRS Form 990 for the third straight year. (Actually, the problem date is May 17, 2010 since the 15^th falls on a Saturday this year.)

The purpose of this Non-Profit Tip is not to brief you on the details of the federal regulation that has resulted in this reality – you can do the research via the Internet – but, rather, the idea here is to give you a simple, easy-to-follow ‘fix’ that will keep you safe and sound – every year – on the filing deadline for your Form 990 filing.

Tip: use whatever ‘reminder’ mechanism you have at your disposal to make a note of the annual due date for the filing of the 990 for your non-profit.

If you use a pocket calendar, write it down! If you use Microsoft OUTLOOK, enter a reminder for the deadline! Calendars and reminder features come in so many forms that there is something out there for you, no matter what your technology preference. Even if your non-profit is large enough to have a staff member responsible for the 990 – or, even if you outsource the responsibility to a CPA – you must write it down! In the end, whether you are the executive director or the chair of the board, the ultimate responsibility for the filing of the ‘Number One Most Important IRS Document of the Year’ rests on YOUR shoulders!

The IRS guideline is simple and easy to remember, so you can quickly set your reminder notice: the 990 is due every year on the 15^th day of the 5^th month following the end of your fiscal year.

For calendar year-end accounting periods (December 31), the filing date is May 15 – the 5^th month (May) and the 15^th day (or the first business day after the 15^th if it falls on a weekend like this year). If your accounting period is June 30, then it’s still the same rule: 5^th month after the accounting period (November) and it’s still the 15^th day. This is very straight-forward. There are options for two extension periods, but both still require that you request the extension (i.e. take action) by the original filing date.

Because our organization – CEGA – believes in the importance of ethics, governance, and accountability as a proactive tool to enhance the image of non-profit organizations, let me offer a reminder of the importance of filing your 990 on time. Remember that your non-profit status (as a tax exempt, charitable organization serving your community) is a privilege granted by the IRS. In lieu of paying taxes and filing say, a Form 1040 (like you file for your personal income taxes), your non-profit is required to file, annually, a Form 990. It’s the law. And, it’s your responsibility. While everybody knows April 15^th is the magic deadline for your personal taxes, the non-profits have varying deadlines related to their year-end accounting periods, which makes forgetting all too easy.

The recent news stories tell us that thousands of non-profits will lose their status because they have forgotten to file their 990 for three years in a row. Three years?! Good grief!! I would submit that they deserve to lose that status: they failed to live up to their end of the bargain. And, again, in keeping with our recommendations at CEGA, wouldn’t you prefer that your non-profit be known as one who lived up to its responsibilities and did NOT forget to file? Doesn’t that say a lot about who you are?

Be proactive. Don’t trust your memory. Don’t rely on anybody else. Follow our tip: set a reminder – do it right now – for next year. I assure you that you – and your stakeholders – will be glad (and very proud) that you did.

Good articles need to inspire you to think, question, and take action. It is my hope that this article can be one of those.

Throughout my article series over the past couple of years, I have sought to give advice and encouragement to nonprofit organizations and their leaders about the important role they play in our communities. Nothing about my commitment to that effort has changed. However, today it has struck me that there is a ‘reckoning’ that all of us must ultimately address: is it time to walk away? That is the question. And, it must be framed as different from quitting – anybody can do that – and, walking away must be seen as different from walking away mad. With purpose and appropriate discernment, how do you know when it is time to walk away?

This article is devoted to laying the groundwork for you to explore this challenging – and oft ignored – issue. I would invite you to spend some quality time pondering this issue and, importantly, to share your thoughts with other readers. By creating a dialogue, you have an opportunity to harness the power of the written word and utilize the Internet to share your thoughts with others.

I’ve been thinking about this particular issue for years and discussing my opinions with people in dozens of meetings, but I always wanted to share my thoughts in writing. Yet I refrained. A recent piece of state legislation caught my eye and has helped push me to write this article. Believe it or not, a state code (it does not matter which state) was recently amended to allow a non-profit to set aside mandated term limits for certain board members. I read the amendment, was frankly surprised at the wording (while intentionally not a quote, the above paraphrase is extremely close!), did some research, thought about the issue for a few days, talked to several people, and I still cannot find any well-reasoned justification for ever needing such legislation. In fact, I feel very strongly that term limits on a non-profit board are healthy.

But, term limits could be the subject of another article. This article is about knowing when it is time to walk away. Obviously, the board that sought this state code change has a very different mindset for running its operation.

It’s no secret that I believe the non-profit sector holds tremendous potential for solving a myriad of community challenges. I believe that sentiment is truer now than ever before. Just this past week, in an hour-long telephone conversation with a trusted colleague about a non-profit gone bad, I asserted my standard non-profit governance observation: where is the board and, more specifically, is there no true leadership on the board that can address the problems that have been identified? Sure, executive directors can act up, make mistakes, upset folks – so can board members and even the constituents they serve – but, at the end of the day, the board runs the organization, so I always ask: where is the leadership? I suggest that, try as you might, you cannot get around the importance of the key governance issue of leadership.

I have observed over the years that true leadership on a non-profit is often in very short supply. Sometimes it does not exist at all. It saddens me; it concerns me; and, it often makes me irritable. I fear that too many board members want to feel good about their board service without investing the time and energy required to make a true difference. Come to the meeting (or not?), listen to what is said (maybe?), seek to understand the issues (really?), and be willing to offer genuine opinions, advice, and suggestions as to how to improve the organization (rarely?). In my opinion, a board member needs to work hard if he or she wants to feel good – and, the ‘feel good’ needs to be motivated from within, not without (as in seeking admiration from others for the board position they hold). Albeit anecdotal, my experience leads me to guess that 90% of non-profit board members are unqualified to serve and they make no genuine effort to engage. Everybody seems to want to feel good without doing the work.

Maybe this article is more about what to do if you are among the proverbial 10%, have done your best, moved things forward as far as you can, and need to make an informed decision about your own best interests and your future role. Yeah, maybe that’s the way to think about this issue. If, and I do stress IF, you are an enlightened board member and have done all you can, then you will recognize that you are nothing magic, or special, or required. This article is intentionally written to the person who is at peace with themselves – and, knows who and what they are not. We are not talking about making a decision based on pride but, rather, based on what is right.

A lot is being written right now – current day – about non-profits and the surrounding governance issues that are being raised. Examples include the de-funding of ACORN, the questionable spending practices of Feed the Children, and the high executive salaries at the national headquarters of Boys and Girls Clubs, just to name a few and make a point. So, I would suggest that non-profit governance is clearly an important and timely topic.

Let’s make this very personal: it’s about you; it’s about me; it’s about all of us. As you analyze the issues surrounding your own particular situation, you will find there are only a few categories: (1) you have messed up in some gigantic way and a wrong should be corrected; (2) you have incorrectly been accused and there is nothing that needs to be righted; (3) you have neither messed up, nor been accused, but your best efforts are increasingly falling on deaf ears and you question your ability to make any further positive contribution. Doesn’t this pretty well sum up your possible categories?

This article is NOT about either of the first two categories. If you have messed up, then endeavor to fix it; maybe you can – but maybe you cannot – and your decision to walk away will be revealed as you work through the process. If you have been wrongly accused, then either speak up about it or let it ride – whichever way works best for you – and you can walk away or stay at the table, whichever you choose.

The biggest challenge, in my opinion, is determining when your role is no longer relevant. The key word here is relevant. Have you ever had somebody look to you for leadership, count on you to do the right thing and, when you do, that same somebody is unhappy because you did not do what they wanted you to do? Have you had experiences relevant to the discussion at hand, been brave enough to share them, only to have folks think you are trying to show off your knowledge and dismiss your thoughts without even giving you an opportunity for meaningful discussion? How does that make you feel? What if that seems to be happening over and over again – i.e. it’s not an isolated incident and you’ve consulted trusted advisors to make sure you are not being overly sensitive or paranoid? What if you are a past chair of the board, filled with knowledge of the organization (its good things and its bad things), and are genuinely trying to help the current leadership avoid the same mistakes of the past, but you are thought of among your fellow board members as ‘out of touch’ and living in the past? What if the organization gets itself in genuine trouble over an issue that you tried to counsel it to address differently, and you had the grace to keep your mouth shut when you were ridiculed and outvoted, but now everybody wants you to solve the problem?

Ask yourself: is your organization currently relevant and is your board service currently relevant? Is it time to walk away?

This is a good place to insert a disclaimer. I do not advocate running away! Walking away is the issue here – never running away. If there are issues which need to be resolved and if there are opportunities for legitimate service, then I do not suggest walking away. I believe that you should not walk away until the circumstances have been made right – and, for better or worse – only you can know when that time has arrived. This is not about being ‘holier than thou’ – nor is it about being selfish or uncaring – but neither is it about being untrue to yourself and your beliefs. It is about doing the right thing at the right time for the right reasons. Your thing; your time; your reasons. It may even be considered to be the ultimate act of leadership that you can demonstrate – both to yourself and others. And, almost certainly, it will not be understood by many people. That is precisely the point. It is also the challenge.

Let me provide an example. For those of you who have followed my previous articles, you know that I like to call these ‘case studies’ because the truth of the matter is that an actual example is always more instructional than anything I could possibly make up. I believe that we can learn a lot by studying examples. As it turns out, this example is about an experience I had – which I could have chosen to disguise in some third-person manner – but I have decided not to bother.

One of the first leadership opportunities that came my way as a young professional was to serve as president of a community service organization. I would like to think that I had worked hard on various projects over the years and risen to the leadership position because I had genuinely earned it. Who knows? It does not matter. The position was elected by the entire membership, so arguably the majority of the members thought I was worthy (at least at some point in time). Following my year as president, as was the custom, the immediate past president became chair of the board. I should mention this was an all-volunteer organization and there was no executive director, although we did employ a secretary to assist with administrative matters. She was sort of a ‘den mother’ or ‘fraternity mother’ – wise beyond the sum total of all of us members. Chair of this board was purely an honorary position – ostensibly an attempt to keep some continuity at the table as the natural leadership transition unfolded – and I cannot even remember whether the chair had a vote. It doesn’t matter.

But, I do remember that my first meeting as chair involved at least one challenging issue that caused the membership to look to me – not the president – for leadership. As my new role as chair, I was unsuccessful at pitching the issue back to the president. And, I remember it did not feel right. It was awkward. The current president was fully capable of leading, but the membership seemed not to have made that transition quickly enough. It was awkward, I did not like it, and I did not feel that I had handled the situation very well.

I sought the opinion of a trusted elder statesman, one who was himself long familiar with the organization, and his advice was (at least in my recollection) very sound. The advice served to build the foundation upon which I began to act, almost always, at the conclusion of all of my future community leadership positions: he advised me to get out of the way because my time was up (those were his words).

It took me quite a while to understand the importance of getting out of the way – or, as I have called it in this article, walking away – but, I was finally able to understand the concept well enough to proactively articulate it in future situations that I found to be similar. While getting out of the way is hardly a new concept – everything has its season – only change is constant – it still takes some doing to figure out if and how and when to get out of the way. Perhaps getting out of the way is not a very natural action for us to take. After all, we all want to be wanted; we want to matter.

My little speech went something like this. I would call my successor – or, depending on the situation, actually meet with him or her – and I would explain my decision to walk away, step aside, allowing him/her to fully enjoy the opportunity to lead, just as I had. I would explain that I had served my time, tried to do my best, hoped I had made a difference, still cared deeply about the organization, and would always be just a phone call away if I were needed. I would explain that I did not wish to run the risk of interfering with new ideas, being misunderstood for stating my opinions, or – even worse – running any risk of derailing opportunities new leadership had to make even better changes for the future of the organization.

I must admit that my little speech may never have been fully understood. Or, maybe it was better understood than I will ever know. Who knows? But, the point of the story is that I found – with the advice of a trusted advisor – and with my own inner counsel – the approach that seemed to be mutually beneficial for me and the organization. I walked away – I did not run away, nor did I walk away mad. I did not make myself unavailable to those who wanted a sounding board, or an opportunity to vent their frustrations, or the safe harbor to bounce around a wild idea in confidence.

I believe I now have about a dozen of these experiences. Do I ever worry if I did the right thing? Sure. Do I ever find it hard to let go and are there times when I wish I hadn’t? Of course. Do I feel a bit guilty, especially when folks call me up and talk to me about the way things used to be and they wish it could be that way again? Yep.

But, I walked away.

Let’s face it, the Non-Profit Sector enjoys a unique role in our communities. And, there is no time like the present to offer the hope that a non-profit’s mission can bring to the people you serve. By definition, your organization has a unique mission to share – were it not so, the IRS would not have granted your charitable status!

In a time where our communities are reeling from the effects of the economy, harsh rains, snow, wind, fire, floods, and the like, we would recommend you take a moment to rekindle your mission. What does your mission say? What does your organization do? Are there some community needs within your mission that can provide hope in your community? Is it time to reintroduce your organization to your community?

You do remember that you have a mission statement, right? While it was likely conceived a good while ago, and while it is probably a little broad or maybe too vague or the words don’t say exactly what they should, we are living in a time when your organization is needed more than ever to bring new hope and ideas to your community. That’s why you exist!

To ‘rekindle’ your mission, as we say, start with finding it and reading it. Actually, spend some quality time studying it. Does it give you hope? Does it empower you to instill hope and take action on issues of importance in your community? If the words are not clear, then ponder how you could tweak your mission statement and make them clearer – actually, really clear – so that your constituents readily understand why you exist and what your role can and should be.

You have a truly wonderful opportunity in the midst of challenging times.

Although the focus of this article is serving your community, through hope, within the unique mission you provide, we suggest that you not miss the opportunity to reinvigorate staff, volunteers, and board members as you rekindle your mission. We know that without dedicated workers and volunteers in your non-profit, you will fall short of your mission, so the act of providing hope and a renewed level of excitement within your organization is an important key ingredient to achieving your mission in the community.

So, exactly how would you go about organizing a ‘rekindling activity’ inside your organization?

We will only suggest an example that you can control entirely, that will cost nothing, and is guaranteed to work – if for no other reason than it has probably not been done before!

After you, presumably as the board chair or the executive director, have studied your current mission statement and developed some initial thoughts about how to rekindle it, call a meeting of your key internal advisors – that may be key staff, all staff, a few board members, devoted volunteers, whatever is appropriate for your unique organization – and conduct the meeting in a way that is intentionally different from the norm in your non-profit. For example, if you have staff meetings on Wednesdays at 10 a.m., call your special meeting at some other time! If your board meetings are always at lunch, then call a special meeting for breakfast! You are trying rekindle excitement, dedication, and commitment, so make sure you do something that is very obviously different from the norm.

Prior to your meeting, send out your mission statement, with your thoughts and notes on what jumps out at you that can provide hope to your community at this precise moment. We are not particularly suggesting that this exercise results in a revision of your mission (although it might) but, rather, we are suggesting that all missions provide room for creativity and excitement when intentionally interpreted in that manner. In your cover note, tell the participants that you are excited about some opportunities you have been thinking about and that you want to get their input. Remind them of the importance of your organization and your mission of community service. In short, prepare them for an exciting meeting that will have one or two specific outcomes – opportunities for hope – that will get done.

What are those outcomes? Let them flow from the meeting participants! To be realistic, monkeying around with a sacred mission statement can be a tricky thing, so you really want to rise above all of that. Quite simply, you are looking for a much-needed, easy-to-implement idea, which fulfills your mission in the community in your own unique way. You know your organization can make a difference and you are about to provide the leadership to make it happen. So, while you may arrive to the meeting with a couple of ideas, or you may have some participants that have some other ideas, let the group flow toward consensus. If you facilitate properly, this will happen. The main ingredient in this meeting is excitement (an attitude) that leads to hope (by a specific doable thing).

Who knows? You might get lucky and end up with several great ideas. But, the most important thing is that you come away from this special meeting with one solid idea.

Our organization teaches through case studies, or examples, so we will provide an example. Let’s say your non-profit is a museum. Any museum. You have a mission to share your collection and your unique way of educating the public within your community. You already know that. Is there a constituency within your community that is underserved? How about an event that brings in a group from a local retirement home? Imagine the excitement and hope that such a visit could instill! What does it cost? Probably nothing. Most retirement homes have transportation for groups of residents. If not, call a bus company and ask for a one-time donation of services. It is pretty amazing how donors are willing to make a one-time gift of their services for an unusual idea that will bring hope to the community. There’s a certain good will component for the donor. Ah, and for your organization. After all, that’s why you exist.

Your local media might even find your project of hope to be of interest! Your community needs your non-profit now more than ever. Good luck. Make it happen. And, please let us know how it goes.

I continue to urge the study of ethics as a proactive exercise for all non-profit organizations. In my previous articles, I have stated that I find ethics to be among the most important business issues of our time (and all time). The purpose of this article is to draw distinctions between the options for ethics introspection and to urge an active and thoughtful approach to the study of ethics and its resulting application to your organization.

Simply stated, nobody can define ‘ethics’ for your organization. Sure, it’s a pretty easy thing to provide you with a list of things that are obviously wrong that you should avoid, but the power of a ‘study in ethics’ lies primarily in the active study of the issue, not in the passive reading of standardized prescriptions, books, or series of articles. In other words, to really study ethics, you must truly give it some thought and, most importantly, you must apply your thoughts to the particular circumstances of your own organization. If you take the time to do that, you can raise the issue of ethics from the level of ‘compliance’ to ‘excellence’ – and, your non-profit will have an opportunity to positively distinguish itself in a time of unprecedented funding competition among your contributors and grantors.

Fairly common is the notion that ethical behavior may be defined as ‘doing no harm’ and, while I do not disagree with this premise, I do not believe it is appropriately proactive for the kind of study in ethics that I advocate. There is just something about the phrase ‘doing no harm’ that immediately leads me to wonder about going a step beyond. And, in any commitment to excellence, going the extra distance is always the determining factor. It just seems that the notion of ‘doing no harm’ only take us to a point of achieving some minimum standard, of erring on the side of caution, of not stepping across the line, of playing it safe. This interpretation of ethics falls short of its full potential.

If your study in ethics leads you to adopt a mantra of ‘doing what’s right’ then it becomes considerably more proactive. While only you can define what ‘right’ means for your non-profit organization, it is entirely logical that discerning what is ‘right’ becomes a more aggressive and positive study than avoiding what is ‘wrong’ (i.e. the notion of ‘harm’).

I was once consulting with a quasi-governmental housing agency and was in a meeting with a number of its top managers. The issue at hand was the development of a relocation policy for residents about to be effected by the renovation of a housing development. The management staff was struggling with the specifics of the development of the policy – which was a very appropriate subject for discussion, debate, and decision – after all, the policy would need to be fair, anticipate all manner of unforeseen contingencies, and be applied consistently among several hundred affected residents. In other words, although unspoken, the policy needed to be ethical (however that was to be defined). It needed to either ‘do no harm’ or at least minimize the amount of harm inherent to the naturally disruptive activity of relocating a household. The challenges of developing the policy were real and the angst surrounding the discussion was appropriate.

After a healthy and open dialogue session, the enlightened executive director summed up staff’s various concerns, issues, and suggestions by simply stating that he wanted the organization to be firmly grounded in ‘doing what’s right’ in the application of the policy. To this day, I recall the positive and transformative shift that occurred in that meeting once the notion of ‘doing what’s right’ was introduced as the guiding principle.

Now, of course, ‘right’ means something a little different to everybody, so how does ‘right’ really provide direction for staff when determining proper policy interpretation? Well, I can tell you this, without any reservation, I do not recall a single incident when ‘right’ did not result in exceeding expectations and tipping the scales in the appropriate direction whenever an interpretation of that policy arose. The person selected to head the activity had no experience in that area – nobody on the staff did – but she understood the concept of ‘right’ and she applied it fairly and consistently. She also completed her tasks on time and on budget, so the daily performance of her duties required difficult decisions; it was never intimated that ‘right’ would always be easy. The notion of ‘right’ turned her daily application of a much-dreaded relocation requirement into an award-winning, unprecedented fulfillment of a critical activity that was a very early step in the scope of work for a large multi-year project. Had the initial relocation part of the project gone poorly, the success of the overall renovation would have been potentially irreparably jeopardized. Quite simply, though, it worked. And, it worked very well. Through this case study, I now have a realistic understanding of ‘doing what’s right’ and knowing that it works.

I would recommend that your own study of ethics include some research and some quiet time. Does your organization have an ethics policy? If so, get it out and review it; if not, find a couple of examples and study them. Then, spend some quiet time and ponder how you would craft your own ethics policy for a presentation to your board of directors. I believe that this approach will provide you with a successful study in ethics and will begin to shape a draft policy that can transform your organization – from ‘safe’ to ‘excellent’ – and, I believe the future of your non-profit depends on it. Endeavor to make it so.

It’s any non-profit’s worst nightmare: a February 18, 2010 CBS News 6 p.m. national story by Katie Couric that highlights a complaint of misused funds by a charity. Where are the policies that guide the governance, ethics, and accountability of the non-profit?

This article will serve as a case study to highlight the importance of several very obvious issues that could have been easily prevented. It is not intended as a review of “Feed the Children” or an evaluation of the need or the effectiveness of its program. Rather, it is a reaction to the elements presented in the news story and an illustration of how proper policies can prevent and/or guide an organization during a time of accusation or investigation, neither of which should necessarily be bad for any non-profit. CEGA believes that all non-profits need ‘a seal of approval’ and the problems highlighted by the “Feed the Children” news story provide an excellent learning opportunity.

By way of brief background, “Feed the Children” was reportedly the fifth largest charity, with annual contributions of over $1 billion. CBS reported on a very public dispute between its founder and his daughter, who is now employed by the charity. Allegations of misuse of funds have been made public in various lawsuits and countersuits. A watchdog organization reports that the charity has been questioned for over a decade about its operation. Among the very serious allegations are that only 15% of the funds raised directly support the need for which the charity was established. Recent allegations include disaster relief efforts in Haiti, whereby camps have been established to feed hungry children. The investigation by CBS into the operation of a Haiti relief camp indicates considerable confusion and misinformation surrounding performance of the charity and the role it was to play. The United Nations alleges falsehoods by the charity. It has been reported that no meals were served by the charity to any children after two weeks of camp operation. Amid the investigative reporting for the CBS story, the Haiti-based coordinator for “Feed the Children” resigned last week.

Let’s start with what we believe is the single most important policy for any non-profit: its conflict of interest policy. Such a policy could be very brief – or very inclusive – or it could include specific subpolicies, but the conflict of interest policy should guide an organization whenever there is an issue, for example, between its founder and family member who is an employee of the charity. Such a policy may rightly prohibit the employment of a family member, and may describe the types of financial transactions that are and are not acceptable by the charity. For example, spending charitable funds on the lifestyle of any employee is not good policy for any non-profit. If such a policy is in place, the governing body, presumably its board of directors, has a working tool in place to measure compliance. And, if the policy has been adopted and is on record, it states, for all donors to see, the intentions of the organization.The absence of such a policy does not mean the intentions were not appropriate, but it sure makes it difficult to prove, to measure, and to govern. Having any policy in place before a problem occurs can only be considered wise and proactive. CEGA believes that such proactivity will become increasingly important as donor contributions become more and more discerning.

While the conflict of interest policy should provide the cornerstone for any set of non-profit policies, many other policies can be customized to meet the specific needs of an organization. Examples include: investment policies, policies that guide administrative costs versus direct services (which are required reporting for non-profits in many states), employment policies that restrict the hiring of family members and, more specifically, establish an arms-length distance between the board of directors and the staff, so that family members cannot serve on the board that appoints other family members as staff.

Other examples include strict guidelines on appropriate expenditures, particularly all that fall under the category of “entertainment and expense reimbursement” and policies that outline the compensation methodology adopted by the board. Absence of such policies leaves open the opportunity for allegations and does not provide the board with the tools for making clear determinations when circumstances arise. Let us hasten to add that the mere adoption of policy does not ensure the proper operation of the non-profit; the intent of the policy must become part of the fabric and culture of the organization, which accrues to its benefit over time.

When a non-profit faces an accusation that would destroy the public trust placed in that organization, it is nothing short of tragic to learn that the operation was not guided by sound policy and guidelines. In the wake of Enron and Madoff, a wise non-profit would do well to anticipate increased regulation of the likes of Sarbanes-Oxley and to move boldly toward self-regulation as a competitive advantage over its peer organizations. Why? Because enlightened self-governance is always the right thing to do. And, compliance with the IRS regulations that enabled the establishment of the charitable organization is the law.

In our study of ethics, governance, and accountability at CEGA, we find that certain principles are more readily comprehendible and applicable than others. For example, ethics and governance seem to be more definable than, say, the issue of accountability. Why is that so? We believe it may have to do with the fact that accountability is a bit more amorphous: is it something that you heap upon yourself, or is it something that is done unto you? We will explore the importance of defining executive accountability in this article because we suggest it can be an instructive leadership tool.

To the extent that a non-profit organization clearly understands that the IRS is its regulatory agency – a very different function than the IRS serves for either individuals or for-profit organizations – then the issue of accountability connotes ‘penalties, recompense, and consequences’ for unacceptable behavior. A ‘punishment’ of sorts. At CEGA, our goal is to move issues such as accountability to the proactive level where it can become an attribute of the non-profit in its competition for funding dollars and program excellence.

Let’s take a look at a couple of pertinent examples. We selected these examples to make you think and they may not immediately appear applicable to a discussion on accountability. But, they truly are.

In a recent Newsweek magazine article, Rowan Williams, Archbishop of Canterbury, shares his thought that “Being human is learning how to ask critical questions of your own habits and compulsions, and it’s learning how to adjust them against a model of human behavior – an idealized truth about the purpose of our humanity.” He goes on to talk about “balancing acts” and “calculations of self-interest and security” and “resolution of buried tensions” and directs them toward an ultimate end: “as a means to finding our way to a life that manifests something, a life that doesn’t just solve problems of survival and profit.” (Newsweek, February 8, 2010, page 11)

In her book, “How to Get Your Wiggle Back,” author Nan Hoy Shaw tells a story she says has been around for a long time. She calls it the “White Horse” story and it’s about an old man, the son he loves, the white horse he finds, the king that wants to buy his white horse, the white horse that leaves him and then returns with even more white horses, and so on. It’s a story about life and our outlook on life; a story that could go on and on, without end. And, as Shaw says, “The point is that the old man was able to focus and identify what he knew without judging the rightness or wrongness of the situation.” She goes on to say, “Many of us often have pieces of information that we judge as good or bad when we really don’t know very much of the story at all.” (“How to Get Your Wiggle Back” – Nan Hoy Shaw, Mattermatics Publishing, © 2009, page 49)

Executive-level leaders need to solve an equation. An equation just for themselves. We suggest that it could look like this: Proactive Leadership Excellence + Asking Critical Questions + Gathering Buried Information + Avoiding Judgment = Executive Accountability. That's not THE equation, but that's AN equation. Simply a starting point. Some of the components in this ‘equation’ are subjective and some are objective, which adds to the challenge of coming up with your own personal solution. These challenges serve to strengthen an outcome that can best be derived through your own reflections and pursuits. 

How does ‘executive’ accountability differ from what is expected of others? Simple. If you are in a position of authority – in particular, we would suggest, in a non-profit organization where your very existence is a regulatory privilege (your IRS exemption letter) and your primary mission (per your IRS excemption application) is community service – then you (as executive director) should bear an appropriately heavier burden on issues of accountability in keeping with the position of responsibility you hold.

There simply must be no denying this fact. (If you harbor any doubt whatsoever, ask yourself if the governance structure of your non-profit is solid.)

I was recently given a real example by a long-time board member of a local non-profit organization (who was also a former chair of that board, so he had good experience -- both in governance and with the mission of the specific organization). He shared with me that he recently attended an executive committee meeting whereupon the executive director was openly berating a staff member about whatever issue was being questioned by the board members. However you would choose to define ‘executive accountability’ for yourself  -- and within the context of your organization -- we would suggest this true example serves to epitomize a leadership behavior and an accountability style that you should not emulate! Please consider: if you were to ponder this example -- and demonstrate an accountability style that was the antithesis (absolute opposite) of the example shared above, then do you think the board member would have shared a different and more positive story?

When you found this article, were you hoping for a prescription that would lead you to one of those ‘one-size-fits-all’ definitions of executive accountability? If so, then we were not likely successful as you reach the conclusion of this article. However, if you have found a few tid-bits in this article that you feel are thought-provoking and realistic, then hopefully these issues will better inform your own personal search for the solution to your very own and unique ‘equation.’ If so, then this article has accomplished its purpose.

We would invite and encourage you to participate in an instructive dialogue with your peers by replying to this blog post and sharing your actual experiences as well as your thoughts. We believe that actual examples -- and real dialogue -- is of major benefit to everyone as we seek to move closer toward excellence.

Ethics is among the most important business issues of our time. Many believe we have reached the tipping point. Given the similar – yet important differences - between non-profits and for-profits, an informed dialogue about the issues of non-profit ethics is of growing importance. This article will serve to frame the issue of ethics in the non-profit arena and, specifically, will illuminate challenges that the unethical status quo poses to even the best intentioned aspiring practitioners of ethical behavior.

A word of caution before we begin: being a student and devotee to the principles of ethics should not be misinterpreted as any ‘holier than thou’ stance. Just because I believe ethics to be critical to success in our world today does not anoint me in any way, nor does it mean I have found the perfect style, nor does it mean I should be empowered to discern the choices made by others. Instead, what I intend to accomplish with this dialogue is a realistic assessment of the role ethics should play in our daily decision-making process, together with an honest admission that it is tough to ‘play by the rules’ when it often seems that others do not – this is particularly challenging when it appears that others have no apparent conscience about their decision to ignore the importance of ethics in their lives. These are real issues – true challenges – and it seems to me that the very best we can do is be willing to talk about the issues, learn from our experiences, and define our own personal commitment to ethical behavior.

Readers of my articles know that I like to use actual examples – which I often call ‘case studies’ – to provide insights into the situations we are attempting to analyze. I believe very strongly that the use of actual examples takes us away from an ‘opinion-based’ approach and allows us to enter a ‘fact-based,’ carefully researched, informed approach. The differences between opinion and fact, I believe, are very important. Quite frankly, when it comes to learning about issues as important as ethics, I am not much interested in opinions – I want the facts and I want examples that help me make the tough decisions. So, that’s what this article is all about.

Example 1: I was driving on a divided highway and a car approached me in the opposite direction, slowed down, abruptly made a U-turn onto my side of the highway, stayed in my lane, did not accelerate, and nearly killed us both. Guess what? There was not a car in sight behind me! That was a real situation. The fact that we both could have died was real as well. But, importantly, that was not an ethical situation! There was nothing unethical about a person making that particular stupid decision. It’s of no use to analyze why that driver did what they did. After I got my wits about me, I thought to myself that it was entirely likely that the driver did not even know what they had done. This example provides some guidance on what ethics is not.

In the absolute, ethics is not about ‘shades of gray’ – it’s a clear-cut (right or wrong/yes or no) outcome – either it’s ethical or it’s not. However, to the extent that our society wants to create distinctions of gray, the challenge of ‘living ethically among the unethical’ is heightened. The societal penchant that yearns for ‘gray’ makes it all the more important that a personal process for determining ethical behavior be defined as precisely as possible in order that it may be practiced with clarity and purpose.

The study of ethics must be founded upon a system, or a set, of moral values; or, you may prefer to consider them to be principles. We know from other bodies of research and many popular self-improvement programs that we are supposed to view ‘principles’ as fundamental laws – unchangeable – clearly understood – that provide us with certain rules of conduct that can serve to provide assurances about our behavior which enable us to transcend all shades of gray. To be guided by such principles, those very principles must be inherently interwoven into the very psyche of the individual. The knowledge, practice, and application of those principles must be initially a conscious decision (as we seek to learn) and then morph into an unconscious foundational component (as we seek to apply). No list of ethical behaviors exists; we are left to be guided by what we know (fundamentally) to be a disciplined approach to dealing with good or bad, right or wrong. It is not, thankfully, unethical for people to be in dispute, to have differences of opinions, and to fiercely defend their beliefs.

Example 2: A current issue of great national confusion – the Wall Street Bailout and Bonuses – is a useful example. The day-to-day test of ethical behavior must be (emphasize: MUST be) distinguishable in the simple question that should always be in the back of our minds: ‘Am I doing the right thing?’ Without intending to assign any absolute meanings to any description of the Wall Street example, the majority of the American people likely understood that federal funds ‘bailed out’ Wall Street, may have believed that economic stability was at stake, and probably felt that a successful outcome necessitated action (even if the majority of us don’t really understand the science involved), but few Americans seem to accept the ongoing bonus payouts and high salaries that continue among those companies that were bailed out. Legal? Probably. The right thing to do? Doubtful. But, most importantly, was it ethical? No. Here’s why: to the extent that conscious decisions, strategic plans, CEO and board-driven actions were guided by the need to return stimulus money to the feds in order to restore the payment of bonuses, then those decisions step across the line of principle and indicate an ethical breach was consciously made. The likelihood that this is true is exacerbated by the fact that the programmatic public purpose of the stimulus funding plan has been a failure by any measure. Applying the simple question: ‘Am I doing the right thing?’ the Wall Street example is very instructive in any dialogue concerning ethics. And, let us not forget, what is ‘legal’ is not always what is ‘morally right’ (ethical), even though the opposite is not true (nothing can be illegal yet ethical).

Suggestion: if you have to ask yourself if an action is ethical, chances are it is not. You should recheck your moral compass.

But, how do you draw a distinction between legal/illegal and ethical/unethical? My third and final case study actually involves a non-profit situation that is directly related to the issues of ethics in the daily life of an executive director. The great thing about case studies is that they are real. You simply cannot invent anything nearly as good as a factual example.

Example 3: A relatively new non-profit organization was on the verge of consummating its largest deal. The organization was to sell a non-performing real estate asset to a buyer/donor whereupon the proceeds would become the lead gift in what was the ‘quiet phase’ of a yet-to-be-publicly-announced capital campaign. The deal was years in the making. A letter of intent had been dated three years previously. The closing was set and, as things happen, a breakdown in communications resulted in the deal being called off. The breakdown was related to the terms of the funds that had been designated by the donor. A meeting was requested by the donor with the volunteer board chair. The executive director attended the meeting as well. During the meeting, the chair of the non-profit board explained that the non-profit was truly trying to be accommodating, but that the donor had caused the problem by changing the terms of the deal at the last minute. Confused, the donor looked at the executive director for clarification, but got none. Realizing that the chair was genuinely concerned, well-intentioned, yet uninformed, the donor sized up the situation properly, decided to acquiesce, and the deal went through. What happened? The executive director had never shared the donor’s letter of intent (which was three years old – and – spelled out the precise wishes) with the board. Realizing what had happened – and desiring to rise to the charitable cause that the deal was created to serve – the donor did not point out to the board chair that the executive director had withheld the written documentation that substantiated the very issue that the donor was trying to resolve. To this day, that piece of information remains known to only a very few people. So, was there a legal issue? Yes, there sure could have been – in other words, the donor would have had legal grounds not to close on the deal – the letter clearly identified the terms. But, beyond the legal issue, and desiring to do the ‘right thing’ the donor rose to the occasion, focused on the charitable issue, and decided not to point out the obvious ethical breach: namely, that the executive director never shared the information with the board. How does this happen? At any point over a three-year period, would not an occasion have arisen by which the facts/intentions of the donor would have been communicated by the executive director to the board? But, unfortunately, poor communications is not an ethical issue.

When did this situation become an ethical one? I would suggest that the ethical breach took place on the part of the executive director at least by the time the donor questioned the confusion that surrounded the deal, called the executive director, and requested a meeting with the board chair. It was not ethical for the executive director to continue to withhold information from the board about the terms of the deal nor was it ethical for the executive director to allow the donor to believe the board had known the true facts. At that particular point in the meeting, the donor did not know what the board chair did not know. Nor did the donor have any reason to suspect that a three-year-old written document had not been shared with the non-profit board by its executive director. One must question why the executive director never told the board – not even when there was significant opportunity for embarrassing exposure in the meeting. The question ‘is it right?’ continues to resonate. And, it’s ‘not right’ to withhold pertinent information, watch a disagreement unfold, make no attempt to set the record straight, and continue to act as if there was never clarity on the matter. Currently, there stands a donor that will always wonder what else that same executive director has not revealed about other deals. That’s a fair concern for this donor to have – and, it undermines the entire charitable process for the non-profit organization. How does this donor go about ‘living ethically among the unethical’ executive director?

It is my hope that continued dialogue on the importance of ethics can be stimulated by this article. The organization to which I belong, The Center for Ethics, Governance, and Accountability (CEGA) is committed to creating ongoing opportunities for non-profit leaders to share case studies on issues of ethics. Given the complexity of the subject matter – and the importance that ethics plays in the overall existence of any non-profit organization – it is my desire to see the level of consciousness and awareness raised to the point where ethics is on our minds every single day – especially, the simple yet powerful question: “is this the right thing to do?”

Happy New Year to all the executive directors of all the non-profit organizations across our country! Actually, it’s not just a new year, but it’s a New Decade. Endeavor to make the most of it. I am increasingly of the opinion that ‘ethics’ is the key issue that will set your organization apart from all the rest.

Sadly, we are not having to look far to find examples – actually, case studies in-of-themselves – of serious ethical breaches all around us. Do you follow them? More importantly, do you analyze them and seek to apply them to your organization? Have you led a fact-based (i.e., actual example) discussion with your board of directors on an ethical issue that could be related to your own organization for the purpose of being instructional, defining leadership, and differentiating your organization from your peers? Is this something you could do in the New Year? If you did, do you agree it would serve your organization well in the New Decade?

Let’s face it, as an executive director, you are in the most challenging situation that you have likely ever experienced. While you are definitely not alone, the fact that there are so many non-profit organizations – of extremely diverse mission and purpose – actually minimizes your opportunity to develop a meaningful support network. The non-profits in your community, while conveniently located around you, are your fierce competitors for precious (and dwindling) contribution funding. Finding non-profits of like kind across a broader geographic area takes time and still locks you into a competitive situation. But, connecting yourself with a diverse non-profit executive director network need not be such a challenge – use the power of the technology available to you – use the web and its powerful networking opportunities.

Our organization, The Center for Ethics, Governance, and Accountability (CEGA), has but one focus: to provide a safe-haven opportunity for dialogue and reflection among non-profits using ethics (and governance and accountability) as the foundation for strengthening your skills and the reputation of your organization. We have no other priority. No seminars, no library of broad-based information, no national meetings, no field trips – just a full focus on the most challenging issue of our time: ethics.

What examples of ethical breaches have you noted in the first three weeks of this New Year?

What is the modern day equivalent of “sacred honor?” Virginia just inaugurated its new governor who quoted our Declaration of Independence: namely, that we pledge “our sacred honor” – what does that mean today? Let’s avoid the national (and especially the political) examples that everyone is likely to have already seen or heard; instead, let’s take a look at some real examples – on a smaller, personal, local scale – that all executive directors can incorporate into their thinking. The Harvard Business School has long utilized what it calls a ‘case study’ approach to teaching. CEGA is committed to case studies because they are real, highly instructive, and promote dialogue and thought.

In this article, three different examples are offered for your consideration. One involves a non-profit, another is a department of a small local government, and the last is a membership association – but all can be instructional if you apply the situation to your own.

1. A contractor signs an agreement that contains recitals (promises) that are consideration (an inducement to enter a legal contract) but then decides, without explanation, not to honor those promises – and tells you “to sue him” – which is always your right, but is not your desire. Your organization, which is typically the ‘little guy’ in such a disagreement, probably cannot afford to sue – you don’t have the time or the money – so what do you do? Are you in a legal dispute? Sure. But, I would argue the foundational element is ultimately an ethical one. How do you get somebody to behave ethically and honor their word if they have chosen not to do so?
2. A local government entices a successful non-profit organization to relocate across jurisdictional boundaries with the promise that substantial local funding will be provided annually. The executive director works hard on the deal and the board carefully considers the move and approves it. Barely two years later, in what is termed a regretful cost-reduction decision due to the severity of the economic times, the local government eliminates its funding support of the non-profit. The executive director and the board struggles with the situation and is ultimately forced to make the hard decision to close its doors. But, it gets worse. The economic development folks of the same local government approach another non-profit about partnering to offer the same services as it had promised to the previous organization. Wow! How do you even start to understand the issues entangled with this example? Does it make a difference that the non-profit that was driven out is a nationally award winning performer – or – that the ‘new’ non-profit partner has no experience at all? Again, I would argue that the foundational element is an ethical one.
3. An association ‘goes to bid’ on some required professional services. The ‘bid’ is received from a client and friend of the president of the association. When compared to the existing service provider, there is a substantial cost savings, which on the surface sounds like a good thing. Under closer scrutiny, especially since the professional services are regulated by state government, it turns out that the cost savings are the result of a reduced scope of services by the new provider. Worse, the association collects on a claim with the existing service provider even after it knows it will not be continuing its contract. The members of the association are not fully informed of the details; they are told there is a new service provider who is offering more service for less money. Everybody seems happy, right? Wrong! The now-previous service provider has been used and dumped. The savvy association members have asked questions but they cannot get answers. The silent majority does not even know to ask questions. In the end, the association president has done business with a buddy, contracted for inferior services, and left the membership at a disadvantage. Yet another ethical dilemma has occurred in a routine, day-to-day, organizational decision-making process.

As executive directors, you have no doubt read about such examples – in fact, you may have even had the misfortune of being involved in such a mishap. There is a common theme that I find very disturbing as we analyze these case studies: the decision maker would argue vigorously that he or she was doing the right thing! Unbelievable. But, unfortunately, very true. And, from my experience, I believe that those committing these unethical acts have deluded themselves into believing that they are correct. Do you see the criticality of focusing on the issue of ethics as we move forward?

In order to develop successful strategies for saving or growing your non-profit organization, I would suggest that you should be totally invested in the inward and outward demonstration of ethics. Only you can highlight the importance of ethics among your staff, board, customers, and contributors. Not only is it the right thing to do – and not only is it among the key problems facing our country today – but, a commitment and dedication to ethics can give you an honorable and well-deserved competitive advantage among your peers.

Happy New Decade!

It has been said that the status quo cannot sustain itself.

Let’s accept that to be true for the purposes of this article.

It’s a timely topic for all non-profit organizations (NPOs). Can leadership influence status quo? How about management? If we were to refer to the Board of Directors and its Executive Director (ED) as ‘The Management Team’ (TMT) who would lead and who would follow?

Let’s take a look at a reasonable way to distinguish ‘leadership’ from ‘management’ but let’s also start with the premise that both are needed for any organization (even if, at this point, we don’t even know what ‘both’ means) to be successful.

Most people begin their professional lives as ‘doers’ of some activity. (i.e. doctor, lawyer, engineer, accountant, teacher, writer, artist, etc.) After demonstrating competency in a given set of tasks, a person typically begins to move up the ‘management ladder’ as a supervisor, manager, director, administrator, mentor, etc. Usually, a manager is expected to oversee a group of people who execute various specific tasks. He/she is expected to help the individuals render results that exceed what each could produce unguided and without a capable team.

A common description of a supervisor or manager includes overseeing the work that has to be done today and planning for the work that has to be done tomorrow. It might even be said that you can only manage what you know, especially if we maintain a narrow definition that expects that a manager will direct the specific output of team members toward a specific goal that requires knowledge of the tasks to make course-corrections along the way.

We’ve grown accustomed to accepting that ‘managers’ (as in the case of the highest organizational manager, usually known as the CEO – or, in the non-profit world, the Executive Director) can move about from one organization to another, taking with him/her the set of ‘management skills’ that can be universally applied to any given organization. Let’s take, for example, the ED of any particular non-profit organization: haven’t we witnessed the movement by EDs from one NPO to another in our very own communities? Sure we have. For this ‘movement’ to be successful, it assumes that an ED need not necessarily know about the issues of the new organization but, more importantly, must bring the management success from the old organization (and have good people at the new organization who know the details).

Has the assumed ability to shift organizations served us well? Anecdotally, some would cite positive examples and others would be able to point to negative examples. But, what does the data say? I don’t know – I am not knowledgeable of any comprehensive research that would provide meaningful data, particularly for NPOs. Accordingly, everyone who reads this article is going to have to apply his/her own specific community experiences to the notion of ‘management portability’ as we further outline these concepts.

So, how (exactly) does a ‘leader’ differ from a ‘manager’ and how do we agree to distinguish one from the other? Is one ‘better’ than the other? Is one born and another acquired? Is one inspired and another taught? Can a manager become a leader or can a leader never become a manager? Are the two mutually exclusive (which is what the ultimate ‘academic’ question is really about)? It seems we need some agreed-upon understanding of the difference between the two (assuming, of course, that you believe there really is a discernable difference between the two…).

I believe we have already done a fair job of describing a manager in the paragraphs above. (Managers make things happen – on time, on budget, on schedule – within areas of specificity that are well known to them and their team members.) Now we need to focus on understanding what constitutes a ‘leader’ before we can move the discussion forward.

A useful approach to defining leadership (vs. those who ‘follow’ or those who ‘manage’ as directed from higher above) may lie in an exercise that I participated in during a month-long ‘management development course’ (isn’t it curious that the course was not termed ‘leadership’ development but ‘management’ development?).

Our group was divided into teams of about five or so. We were to be ‘survivalists’ and we were given a list of about a dozen items of which we could choose maybe three or four to sustain and guide us out of the wilderness. In our assignment, we were to discuss the issue, select the items, and report back to the larger group. I distinctly remember two things from the exercise: (1) this was a real survivalist experience and there were, indeed, a correct number of items that experienced survivors recommended; and (2) the ultimate distinction was not so much what the team picked (right or wrong) but how it came to agree on the items picked.

Perhaps this was the ‘leadership’ lesson…

As it turns out, we were in fact conducting a ‘leadership’ exercise – not a ‘management’ exercise. The point to be learned (at least for me – and I literally think about this point a couple of times most every week) was how the team came to agree upon the items picked. On the one hand, the very best scenario was the emergence of a ‘leader’ that guided the team toward the selection of the exactly right items; the very worst scenario was a ‘leader’ that successfully guided the team toward the wrong selection of items. In the proverbial end, the successful team was alive and the unsuccessful team was dead. Both had ‘leaders’ – but only one prevailed.

To this day, I recall coming away from that exercise with the understanding that the most frightening outcome to any situation that I would experience in the future was to be the ‘leader’ who guided the team toward the ‘wrong’ outcome. Please ponder this situation and apply it in your own life. It was carefully pointed out that the appropriate combination (whatever that means) of ‘persuasion’ and ‘knowledge’ was resulted in the winning edge. Hence, the critical importance of maintained both at the same time.

How does a group go about ‘choosing’ a leader? Actually, in my opinion, there are very few opportunities for us to do so during our lifetimes. Let’s think of a number of real-life examples where we (the common ‘we’) have no particularly meaningful input into our ‘leader’ selection. These include: (a) your place of worship – did YOU select the leader? (b) the large corporation where you are employed – did YOU select the leader(s)? (c) your government – actually run by professional, life-long bureaucrats – while YOU may have voted AND your candidate may have won – did YOU really select the actual day-by-day leaders?

One of the true ‘leadership selection’ scenarios that fascinates me is the grouping of twelve individuals to serve as a jury – by default, the twelve are almost assuredly unknown to each other – and the manner in which the head juror is selected is fascinating. (Now, here would be an exciting piece of data collection that could yield interesting results...) But the point we are trying to make here is that there are relatively few opportunities for any of us to choose our leaders. But, I would suggest, we choose managers every day.

For example, as I write this article, an ocean pier is under construction. Somebody designed it and somebody is now in charge of getting it built. Typically, we call that person a ‘project manager’ – there is a specific scope of work, timeline, and budget – and that ‘manager’ must make it happen. Decisions – by the score – are made daily and there is accountability.

So, again, how do we distinguish between ‘managers’ and ‘leaders’ – that is to be the outcome of this article – so, how does this happen?

In the survivalist exercise, the members of the group did not know each other any better than the members of a jury, so I think the analogy is reasonably pure. What emerged – inasmuch as I recall – was the exhibition of sheer passion, determination, commitment, persuasion, and the unrelentless drive toward action. Above all – absolutely above all – was the ability to inspire individuals to follow. I would suggest that this is the appropriate (short) definition of ‘leadership” – the ability to inspire others to follow. So, a ‘leader’ was chosen.

Follow who to where? For what? And why?

Given the above pier construction example, somebody chose a ‘project manager’ – who, in this type of exercise – is responsible, accountable, and very much in charge. Respect? Doesn’t matter. Agreement in the project and the approach? Doesn’t matter. A likeable leader (‘project manager’)? Doesn’t matter. You sign on for the job and the leadership/management structure is already set. You have no opportunity (and certainly no invitation) to question it.

Question it? Are leaders allowed to be questioned?

Ah, there-in may lay the applicability of non-profit boards to exercise proactive judgment between management and leadership as they strive to achieve superior outcomes.

Back to our article title – what are the ‘status quo’ issues that your non-profit must overcome? Is it leadership-based or management-based. Is it an ‘either/or’ or a ‘both/and’ opportunity? These are issues worthy of your focus but not answerable by any one article. However, again, please make sure you offer TMT of your non-profit the opportunity to work through the options.

Few dispute that any organization can/should ‘stand still’ (i.e. status quo). However, in this economy, most organizations – especially non-profits – would likely consider it a major success to maintain status quo, at least in the short term. But, leaders (and managers) know this is not acceptable. All organizations, including non-profits, must take the opportunity to move beyond the status quo and outpace all competition. It can be done.

Arguably, this is what differentiates ‘leadership’ from ‘management’ – and is an appropriate closure to this article. Leaders must look beyond the status quo – and the admittedly important management skills of TMT – and chart a course that holds the likelihood for much success. Disagreements can – and, particularly on non-profit boards – should occur and be encouraged. Broad participation should be sought by the board chair. I know an ED that firmly believes that everyone is a leader – everyone has influence (good and bad) toward outcomes in every organization – so it is critical to point that leadership energy in a positive direction.

From my point of view, I believe the messages that we are currently being sent by various experts indicate ‘leadership’ over ‘management’ (although I also believe you must have both to be successful) because it is recognized that all NPOs must find the ‘next’ way of achieving greatness – not just follow the current or former way. In that regard, in those terms, the argument for ‘leadership’ makes good sense to me. In order to jump-start such an important initiative (I am definitely NOT talking about strategic planning here), perhaps the Board Chair and the ED – or the Executive Committee and TMT – should spend a couple of hours discussing options for conducting a session devoted to future thinking and new ways of doing things. Yes, this is leadership – and – yes, it is needed right now.

In a previous article (http://ezinearticles.com/?expert=Rob_Glenn) we outlined some suggestions for distinguishing your non-profit organization from the competition when you write your “Fall Donor Request” letter.

This article will get VERY specific and provide a 3-part framework for your consideration. The entire letter should NEVER exceed one page, no matter how painstaking the editing process. Less is more. Focus on brevity. Your readers will be appreciative. And, you will reap the rewards.

First, we know that the economy and the jaded performance of a number of prevalent organizations, including non-profits, have captured the attention of the public and have caused a public outrage that has not yet peaked. You need to consider the following: 

“We request your continued financial support in these challenging economic times and we have worked to secure our position as a worthy recipient of your donation...”“While our organization has faced all of the challenges you would expect, we seized the opportunity to refocus and we proactively strengthened ourselves by conducting an internal self-audit whereupon we put cutting-edge governance, policies and procedures in place. As you would expect, we are committed to our mission and we 90endeavor to be recognized as ‘best-of-the-best’ in our governance and operations.

”Second, competition for contributions is tougher than we ever seen, so the middle portion of your letter must offer compelling reasons to contribute/invest in your organization. Please consider the following:

“We are passionate about our mission. Our focus is clear and we are able to demonstrate accountability via our internal controls. We have reviewed and strengthened our tracking of program outcomes. During the past year, we have not only served a record number of clients, but we have tracked the progress of these clients and are pleased to report that our programs have resulted in a 75% success rate, of which we are proud to officially report to our regulatory agencies. We know from benchmarking with our peers that this level of success is unprecedented.”

Third, from our experience, we know that short, but powerful, appeals capture the attention of your donor base. If you have followed our recommended format, you have provided the ‘macro’ organizational view in the first paragraph – and – have provided specific program/accountability details in the second paragraph – so, it’s time to close your letter in bold fashion. Please consider:

“As you can see, we are passionately focused on our future and we are striving to exceed the accountability of our peers, both in adherence to our mission and reporting our actual performance. Our research shows our performance far exceeds that of our peers (most of whom do not track specific performance indicators) and our commitment to excellence places us in a group that few organizations ever achieve.”

“We respectfully request your continued support. We invite you to call and visit us. We want you to see our organization at work. And, we invite you to a board meeting where you can see, first-hand, how we respect and appreciate you – the donor – in a manner that will make you proud.”

So…We urge you to make your ‘Fall Letter” as urgent and specific as possible. If you need extra assistance, please contact us, give us your specific data, and we will help you achieve a final draft that will make you proud of your organization. This is your time to shine. Take it. We are here to help.

Albert Einstein, the readily-recognized and noted intellectual, is oft-quoted. A recent Einstein attribution made me think of the untapped opportunities available to all Non-Profit Organizations (NPOs):

            “In the middle of every difficulty lies an opportunity.”   Albert Einstein

How timely. How true. But, how does an NPO take action? And, get results?

How many NPOs are missing the opportunity of a lifetime? Concerned about the current economic conditions? Worried about the new IRS regulations for NPOs? As an Executive Director, are you looking for the right synergy on your Board? As a Board member, are you looking for the right Executive Director to energize the organization and move it forward? As a Donor, are you looking for the right NPO to make your contributions?

Our articles generally cover 3 areas of emphasis for Non-Profits: “HELP” (a general discussion of issues at the macro/organizational level); “STRATEGIES” (direct guidance on issues at the micro/operational level); and “REALITIES” (specific suggestions at the action/application level).

This article launches our first in the “REALITIES” series, so we will endeavor to make it brief but useful.

Let’s dissect what Einstein says. First, if you are in the ‘middle’ then your NPO already exists? Second, if you have a ‘difficultly’ then you must have identified challenging issues? Third, if you seek an ‘opportunity’ then you must be committed to action?

Remember: (1) negative presumptions bring about negative realities; (2) all assumptions guide your perceptions about outcomes. So, without being consciously aware, you can doom your best intentions for failure – right from your initial thoughts. IF you do not already believe this to be true – and, IF you have not already experienced it – then I would ask that you simply accept it as true because many/most of your peers already know it is true.

As a starting point for any ‘realistic’ outcome for your NPO, your chosen action must be positively conceived and executed. If it begins in ANY other way (i.e. negative, unsure, wishy-washy and questionable by board or staff) it WILL deliver less than desirable results. Again, if you do not already know this to be true, do yourself a big favor and accept the painful experience being shared with you.

Just thinking positive does not a successful project make, albeit a philosophical prerequisite. Although a good subject for another article, there is growing belief that ‘technology’ is impeding our ability to communicate and that the ‘art of strategizing’ is becoming extinct. While this is a frightening thought, your NPO does not have to succumb to this ‘negative’ prediction!

Let’s get specific: Fundraising.

We are in the Fall season of the calendar year – approaching the Thanksgiving and Christmas holiday seasons – and end-of-year funding decisions are on the minds of literally thousands of foundation boards of directors and millions of individual donors. How will your NPO emerge?

Well, to be specific, let’s use the industry-termed “Fall Appeal Letter to Donors” – this is that ‘pre-end-of-year’ reminder that your NPO needs financial support from, supposedly, your ongoing fans and supporters. (i.e. a very different appeal from a first-time grant application to a foundation) What should you say in your letter? You know that your donors are receiving similar multiple requests – even downright pleas – from your competitor NPOs – so how do you do you set yourself apart?

We suggest your NPO take simple, straight-forward steps to be distinguishable from peers/competitors. If you research the IRS regulations NPOs – and – the foundational principles of our Center for Ethics, Governance, and Accountability (CEGA), you will find the expectations of all NPOs are, understandably, very high. It is the lack thereof that is leading to the exposure of so many national-level NPOs that are in violation of these regulations/expectations. At the very least – and, this is SPECIFICALLY important – you should be able to tout that your NPO has met and/or exceeded all IRS regulations.

We believe that donors are no less charitable than they have ever been, despite these arguably uniquely challenging economic times. However, we also believe that donors require assurance that the NPOs they support have either already achieved excellence or they are on a deliberate path toward excellence. If you follow IRS regs (and CEGA beliefs) then you cannot go astray as you differentiate your NPO from the competition.

So, write that Fall letter – with confidence – to your strongest donor base.

Don’t hesitate to point out that your organization is actively engaged in closely following the challenges of the NPO industry and that you have adopted a plan of action to achieve certification excellence as a fully compliant NPO. If you need assistance, we are here to help. But, the primary point is to distinguish your NPO from your peer/competitor organizations during this ‘end-of-the-year’ donor request blitz.

Let’s be even more specific.

Take a look at your ‘standard’ letter of request. What about it stands out as special? Probably nothing? If you are communicating with your tried-and-true donor base, how many times have they seen your letterhead with your handwritten notation requesting their support?

Give some thought as to how to ‘shake that up’ just a bit.

It could be as simple as an pre-mailing (post card?) ‘teaser’ that serves as a preview of coming attractions (i.e. your Letter). Jazz it up. Make it special. If you have a new initiative, by all means announce it. But, our strong recommendation is that you focus on your commitment to distinguish yourself by the pursuit of excellence in all things regulatory during this time where too many NPOs have lost their way.

 Accentuate your positives.

Being on the right side of compliance issues with the IRS is always a winner. We believe this approach demonstrates your NPO is fully committed to excellence. And, let’s face it, excellence is a national craving at this point in time!

Share your feedback. Working in team, we believe the Non-Profit Sector holds great potential for identifying, pursuing, and solving the problems of our nation.

Join the discussion.

A lot has been written lately about all manner of problems that have befallen the non-profit sector. I know; I have written my fair share. Not that the compliance issues are not important, but the non-profit sector needs to fully embrace the opportunities that are uniquely available to it. And the non-profit sector needs to seize this important opportunity to serve the community through its mission like never before. Simply stated, the non-profit sector needs to rise to its full level of achievement.

Enough executive directors are depressed, stressed, and unsure of their future. Enough board members are unclear about the vision of their non-profit organization. Enough communities and donors have lost faith and abandoned commitment to the mission of the multitude of non-profits striving to make a difference in various specific ways.

How does a non-profit organization go about turning a challenging situation into a true competitive advantage?

This article attempts to answer that question. And, comments from readers are very much invited – and needed. The opportunity for on-line dialogue is readily available through this web site and is much needed in these tough times. We need to commence a fruitful dialogue that leads to solutions..

Let’s talk…

One of the foundational elements of the organization I serve – and my true passion – The Center for Ethics, Governance, and Accountability (CEGA) – is that the Non-Profit Sector enjoys unique opportunities to solve problems and address issues in ways that the other two sectors (Government – i.e. public-sector – and Business – i.e. for-profit sector) cannot. That’s a pretty bold statement and holds high the expectations of non-profits!

Question: How does a non-profit organization achieve excellence in such a challenging time?

Answer:  Distinction from its peers + Demonstrated commitment to its mission.

In the remainder of this article, we will focus our attention on 3 issues:

1. What does the Executive Director need to do?

Almost without a doubt, if you are an Executive Director in today’s challenging atmosphere, you probably fear for the future of your organization. This is never a good feeling but, more importantly, it is also never a good strategy for achieving success. Today’s Executive Director needs to focus on leadership and measurable success and not become inundated or distracted by lesser needs. A strong focus on performing at peak ability provides a powerful force in leading the board and focusing the organization.

Discussions about Time Management and core management skills are a bore; the truth is, either you are equipped with the necessary skills to manage your time and manage your organization or you are not. Managing yourself and your team is a Requisite Skill for the position of Executive Director. If you cannot manage yourself and others, you need to find a new career. Sound harsh? No. Not overly so: non-profits (and all organizations) are expected to do a lot with a little – now more than perhaps ever before – so, you are either confident in your ability to manage and lead or you are not. You must decide. Whichever way you decide, you will be dramatically happier once this decision is made.

Let’s assume that your self-assessment determines that you are up to the challenge. You feel good about yourself, your skills, the mission of your non-profit, and the ability to work with your board. If so, you are ideally positioned to make one of the most dramatic steps forward in the history of your organization. Why? Most of your peers do not feel this way. They are either unsure of their mission, crossed up with their board, or confused as to how to best move forward, both professionally and organizationally. You have a decided advantage in a very confusing time.

You are uniquely positioned to rally your staff (which is probably shrinking in numbers and adding predictable stress to every member), the board (which may be shrinking also), the members, donors, and stakeholders of your organization, and the overall community, to achieve greater accomplishments than ever before. My advice is 3-fold:

(a)  Be nice, be cooperative, but be confident in your leadership role. You must enjoy what you do and be comfortable in doing it.

(b)  Review the mission of your organization, make sure it is on target, be sure everyone in your organization understands it and can easily explain it, and pursue it with every bit of passion you possess.

(c)  Commit yourself – and your organization – to the relentless pursuit of excellence in service to your constituency. Understand the difference between a stand-off, overly competitive and paranoid organization, and one that is confident in its mission, strong and calm, and able perform with confidence as a team member among other non-profits within the community. You must be able to fit your organization into your community structure. If you do not know the structure – or, where your organization is viewed – make it your top priority to find out. You are in charge of the day-to-day operation of your organization. You are the Executive Director.

2. What does the Board need to do?

The importance of board membership cannot possibly be overstated – neither in this article nor any other. However, current reality must be acknowledged: too few board members have time to serve due to their professional and personal constraints, and fewer and fewer companies are willing to support community service by their employees.

Let’s not try to ‘sugar-coat’ the realities of the challenge: as a board member, the likelihood that you are adequately knowledgeable on IRS-required non-profit governance issues is, unfortunately, pretty slim. Sad story; stark reality.

So, what can you, as a board member, do about your current reality?

How did you become a board member? Presumably, you are a good manager, an executive, a known community volunteer. But, almost always, you are perceived by your peers to be a leader in your community. Define that however you will, but that is overwhelmingly the primary reason you are on whatever board you are on: you have been selected by your peers to serve.

Reflecting back on observations over time – both serving as a board member and observing other board members – it has been surprising how many board members seemingly lose their management guts when they walk into the non-profit board room. How can this be? One would expect the typical business manager to be a secure and thoughtful individual, yet dynamic professionals often melt into ‘wall flowers’ once the board meeting is called to order.

Board members must resist shirking their responsibility; i.e. it is far easier to attend a board meeting, say nothing, contribute nothing, and leave. Why does this occur? Almost certainly, the board member is secure in his/her understanding of their business, but is not quite sure of the business of the non-profit. This is no excuse for not asking questions. If you are afraid to speak up in a board meeting, then you have no purpose for serving. My advice is 3-fold:

(a)  Be yourself. Participate fully. Bring all that you are, all that you have to offer, to every board meeting and do not let your feelings of lack of knowledge prevent you from asking the tough questions. After all, you would do no less in your ‘day job’ duties! And, you already know how to ask the tough questions without causing a rift among your board peers and the staff, so don’t be afraid to exercise your skills.

(b)  Do not get (unnecessarily) crossed up with the executive director, staff, or other board members – unless and until you have thoroughly done your homework. The most common ‘new-board-member’ example is the individual who is unfamiliar with the mission of the non-profit and its operating practices, who decides to ‘drill down’ on the financial statement. Almost always, this is a sign of discomfort on the part of the board member, not a problem within the organization. So, do your homework. Read the board material (arriving at the board meeting with an unopened board packet is a telling sign!). Talk to the board chair and the executive director and seek to learn and understand. Remember that you have only one vote on the board and that you are neither queen/king of the organization.

(c)  Understand fully your fiduciary, legal, and community duties as a board member. The fact that you are reading this article is very likely the direct result in the increased regulations the IRS is placing upon non-profits. The relationship between fellow board members is often challenging. Likewise, the relationship between a board member and the executive director is regularly misunderstood. A very fine line exists between demanding performance by the executive director and staff and trying to run the organization from the board level. Learn those intricate distinctions and apply them. But, also, make sure that your board holds the organization in full regulatory compliance. If you have questions about this, do not hesitate to ask.

3. What can the Executive Director and the Board accomplish together that far surpasses what either could do alone?

Ah, now we are talking about surpassing peer organizations and achieving excellence! It is sad to observe the number of non-profits that have all the requisite tools at their disposal, but fail to deliver excellence due to petty issues that arise between board members and/or staff members. While the Board is charged with directing the mission of the non-profit, and the Executive Director is charged with delivering measurable outcomes in keeping with the mission, the reality is that neither is a precise science and it is far too common for the Board-Executive Director bond to fail.

Let us not shrink from the obvious: board members and executive directors are fully capable of selfishly putting forth their own agendas and causing tremendous confusion. When such an issue occurs, other board members must rise to the occasion and refocus their fellow board member. The board must also be able to rise to the occasion and refocus its executive director. There are many reasons why this can sound simple but be very difficult to achieve; but, to achieve competitive excellence, the board and the staff must be capable of working well together. Let me offer 3-fold advice:

(a)  The board must be organized in a manner so as to enable it to do its work effectively. Do not hesitate to make use of specific committees (not too many; not too few) with carefully identified deliverables in areas of importance. These include Audit, Strategy, Compensation, and Governance.

(b)  The role of chairperson is extremely misunderstood. Per most bylaws, the chair rarely has any authority beyond conducting the board meetings; however, in reality, the chair is almost always the ‘point person’ for the organization. From a practical point of view, it is truly important for the chair and the executive director to bond – not to the exclusion of other board or staff members – but to enable the support required of each to the other. It may be critical to establish an executive committee – or a non-board advisory committee – but, importantly, both the board and the executive director must recognize the mutual need for reinforcement, coaching, and overall support/counsel in order to address the daily and strategic challenges of the organization.

(c)  Experience indicates that successful board/executive director relations is much more of an art than a science; and, unfortunately, too often a dream instead of a reality. Especially in today’s challenging climate, boards and executive directors must possess a workable dynamic that assures excellence within the organization. There are no rules or easy fixes by which to make these challenges easier. But, only the organization that can find the right mix between board and staff will achieve the excellence that we suggest is available.

So, let’s have some dialogue on these issues. Every non-profit can benefit from these introspective studies. While there will always be mediocrity, there is also opportunities for fully exploiting strengths in an appropriate and competitive manner. The issues in this article are meant to help you determine whether your non-profit is ready, willing, and able to achieve the success needed by today’s society. Let’s begin the dialogue. The non-profit sector has much to contribute toward the future success of our communities. And, very different from the opportunities you may have in the private or public sectors, you can become fully involved – in a cause of your choosing – and truly make a difference.

Here’s the setting. It’s Sunday night. Nearly 7:30 pm (EDT) as I start on this ‘stream of consciousness’ article – and – I confess, I am worried about where ‘we’ are going from here. Frankly, it is not within my bounds to worry so much about the collective ‘we’ but, rather, my focus is on the area in which I believe I can make a difference: The Non-Profit Sector.

I believe the non-profit sector holds the keys to our future success. See my earlier articles on www.cega.com. When compared with the governmental sector and the business sector, only the non-profits have the mission – and, I would add, the responsibility – to focus on solutions to specific problems.

Where are the non-profits (overall) just now? Well, I have been overwhelmed with cries about Acorn, comments about a non-profit who failed to submit its IRS Form 990 for the past 3 years, and tracking the actions of a major non-profit who is acting, for the entire world to see, as if it were a for-profit with no non-profit guidelines in which to adhere.

What are ‘we’ (those of us who are dedicated to the non-profit sector) to do? Well, as a number of folks in leadership positions have indicated: it’s time to ‘call people out when they are wrong’ – and, to be honest, many in the non-profit sector are so far out of touch in the lives of most people I am not clear how they can best be helped. But, I remain convinced that the non-profit sector stands to play a major role in our future as a nation, so I am committed to doing all I can to make the issues known, solvable, and REAL.

The title of this article is simplistic: Accountability. It’s a major issue. One of three that I strongly believe in: Ethics, Governance, and Accountability.

What distinguishes the notion of ‘accountability’ as a concept from ‘accountability’ as a function? I would say, quite simply, concept without function is useless; function requires action. So, accountability requires a pro-active commitment from the board.

Well, sadly to say, the ‘case studies’ regarding non-profit problems – serious problems – are plentiful and well-publicized. Any non-profit executive director or any non-profit board member can easily learn from the mistakes of others. All it takes is commitment to excellence on the part of the board member.

Current examples include: learning that a non-profit did not file its IRS Form 990 for THREE years leaves me a bit speechless! How would anyone associated with that non-profit organization begin to explain how such a thing could be allowed to happen? The IRS has a very good reminder system. I’ve never personally seen the paper flow that must occur when a non-profit fails to file for three years in a row, but I would think the measure would be in ‘pounds’ instead of individual notices!

QUESTION #1: Where in the world was the executive director in this mishap?

QUESTION #2: Where in the world was the non-profit’s board?

It is this kind of sloppiness that is plaguing the non-profit community and giving the good ones a bad name. The small non-profit organizations stand to suffer the most. Remember that a non-profit receives its charitable status because it has proved in its filing to the IRS that it offers a community benefit. Sadly, when a nonprofit ‘crashes and burns’ it is the community, by definition, that is left to suffer. As these recent high-profile examples indicate, the IRS is not able to police all non-profit organizations, so responsibility and accountability are required by each non-profit board.

I am still strongly of the opinion that a pro-active non-profit organization, striving for excellence, receiving certification that it stands apart from its peer group, has a competitive advantage in today’s marketplace.

The answers to the two questions posed above should be simple. It is unfortunate that those answers are apparently not so simple for too many non-profit organizations. I would suggest that any individual that cannot get the basics – Accountability 101 – should not serve as either an executive director or a board member. Certain knowledge is requisite for the positions of board member or executive director. If you do not have it, you should not be allowed to serve.

Recent discussions with numerous colleagues indicate that service on non-profit boards is certainly not getting any easier. How much does a board need to know? Can policies be crafted to guide the board and its management staff on this issue? Or, is it more of an art than a science? A judgment call rather than a rule?

This article will attempt to address this issue using feedback from several colleagues with many years of non-profit board experience. I believe there are more questions than answers, but the questions can serve to stimulate useful dialogue, much like the opportunity I enjoyed with my colleagues.

Let’s do the Stephen Covey thing and “begin with the end in mind.”

One thing is for certain: when it (whatever ‘it’ is) really hits the wall, the board will want to know (or, should want to know) why it did not know! This puts enormous pressure on both the board and the management staff. It also leads to another dilemma that has long been a personal curiosity: if the chair of the board is merely an officer of the board with one vote on the board, why is the chair often expected to be the leader and confidante (and keeper of more information than the rest of the board) in his or her relationship with the executive director? Isn’t that notion entirely contradictory?

To be sure, no amount of policy-writing can replace common sense and judgment that is founded upon relevant experience. In a related discussion with the same colleagues, we noted that one key attribute among us was the large number of ‘weird’ situations that we have experienced (enjoyed?) over the years – both in our professional endeavors and in our community service – that has shaped our thought processes, particularly as it relates to non-profit board membership. This makes a strong case for recruiting the most diverse and experienced board possible.

Similarly, on the executive director side, experience is vital as well. We note that an increasing number of unqualified executive directors seem to be emerging. Specific examples often relate to seemingly fiscally sound board decisions: revenues are down, executive searches are time-consuming and costly, so ‘someone’ in the organization becomes the new executive director. Off hand, I cannot think of a single situation where this has ultimately benefitted the organization – either in the short-term or in the long-term. Accordingly, it seems increasingly likely that the average small-to-medium-sized non-profit would have an executive director that may know much more about the subject matter related to the mission of the organization, while also having much less knowledge of running or managing anything. This makes a strong case for recruiting the most experienced, well-rounded executive director as possible. Conversely, the lack thereof increases the potential for the miscommunication, or lack of communication, of issues important to the board.

Our organization is strongly supportive of ‘accountability’ for outcomes in our ongoing efforts to provide helpful guidance to non-profit organizations. As we review IRS regulations and research various actual ‘case studies’ among non-profit organizations that are having problems, it does not appear that boards are being held ‘personally responsible’ (i.e. liable) for the problems of the non-profit organization on whose board they sit, although that is very often referenced in board seminars and the like. From a regulatory standpoint, the issue of personal liability was surely intended to make a strong point regarding the accountability and responsibility of non-profit board membership. However, we are not aware of a single incident in which this level of accountability has been applied, even in some rather high-profile cases. (This is also an example of the need for non-profits to check state laws under which they are incorporated because some states provide indemnification and others may not.)

From the standpoint of striving for excellence in non-profit governance, it does not matter if personal liability is being actively assessed; rather, it matters that the governance and accountability policies and practices are followed by the organization as if regulatory penalties would indeed be assessed. It pays to be safe rather than sorry.

In the worst-case scenario, information would be intentionally withheld from the board by its executive director. There are a number of scenarios whereby this could happen with no mal intent; however, should mal intent be encountered, the accountability for such action should be obvious even to the most inexperienced board. Trust between the board and its executive director is of paramount importance.

The ‘gray area’ exists when the unintentional occurs and the resulting repercussions are harmful to the organization and its mission. By raising the potential for such problems to occur, we are hopeful that non-profit boards will place this issue on an upcoming agenda and spend some quality time discussing potential issues and come to consensus on types of issues that must be communicated. These issues will certainly vary from one non-profit to another, but it is the dialogue and the awareness that can guide a non-profit to excellence.

At The Center for Ethics, Governance, and Accountability (CEGA), we only add value to the non-profit sector if we can identify well-publicized problems, dissect them into meaningful pieces, eliminate confusion or misunderstandings, and make recommendations for positive change. ACORN – with all its reported problems – must surely serve as an excellent ‘case study’ and represent some guidance to other non-profits with regard to issues of governance and accountability.

If we can study ACORN – and turn any problems into knowledge – then we have the potential for ‘ACORN’ to serve as an ‘acorn’ in its purest analogy of growth and strength with nurture and care – all of which are required for any non-profit to remain or become a going concern, particularly in today’s economic climate.

This article seeks to identify several important issues that can be applicable to all non-profits.

This article is apolitical – issues of ethics, governance, and accountability should transcend partisan politics and generalizations.

The problems associated with ACORN have been widely publicized. We will not concern ourselves with a comprehensive review of the problems faced by the ACORN organization; but, rather, we will address two specific issues that can serve to benefit all non-profits:

1.   Avoiding numerous ‘affiliate’ or ‘chapter’ offices

2.   Maintaining a solid focus on the specific mission

When an organization completes its IRS Form 1023 (recently revised by the IRS in its attempt to strengthen controls on non-profit organizations) the applicant must certify its specific mission and its geographically dispersed offices, if any. These two questions, as specifically addressed in the Form 1023 application, are critical not only to the granting of the 501(c)3 status of a non-profit, but also to the establishment of governance and accountability standards to be enforced by the board of directors of the non-profit.

Before moving forward, let’s take a backward look at ACORN’s formation.It is interesting to note that ACORN was reportedly formed in 1970, well before Congress sought to strengthen non-profit accountability in the wake of the for-profit Enron fiasco of 2001 or the non-profit United Way fiasco of 1991. The required annual filing by non-profits to the IRS is by way of its Form 990. It would be interesting to review the level of detail in the ACORN filings from years gone by. Similarly, it would be interesting to review ACORN’s Form 1023 filing to see if its mission changed over the years.

While these areas of interest are beyond the scope of this brief article, all non-profit entities are encouraged to conduct a periodic review of past certifications to the IRS and make any necessary modifications to remain in compliance.

As mentioned in previous articles – and, as well known by knowledgeable non-profit employees and board members – the awarding of ‘charitable’ status by the IRS is a privilege that comes with appropriate regulations. Note particularly the requirements of Form 1023:

Among other things, Part II of the application requires that Bylaws be produced, Part III requires certification that the organization meets the criteria for charitable status, Part IV requires a narrative that describes the intended activities of the organization – “past, present, and planned” – with a proviso that the narrative must be “thorough and accurate.”

But the application does not stop there. Part V, which includes several sections, seeks to identify employment agreements, compensation justification, potential conflicting arrangements between board members, staff, contractors, etc. Specifically required is a certification as to whether or not the organization has a Conflict of Interest policy. Part VI seeks to determine if individuals or members will receive benefits from the organization. The section also includes the “past, present, and planned” language.

Part VII seeks to determine whether the organization will be taking over the activities of another organization; i.e. becoming a “successor organization.” Part VIII requires the applicant to disclose “past, present, and planned” activities that involve supporting or opposing candidates in political campaigns and/or attempting to influence legislation (i.e. ‘lobbying’).

Additional sections of Part VIII require information on the types of fundraising that an organization receives, whether it is from ‘bingo or gaming’ or other more traditional types of ‘fundraising.’ The section also requires disclosure of any contracts with fundraisers, governmental affiliation, economic development, joint ventures, foreign country operations, a listing of all states and localities will fundraising will be conducted, relationships between any recipient organization, close connections with any organizations, provision of low-income housing, etc. As can be seen, the Form 1023 is a comprehensive document. This is as it should be; the IRS requests as much information as possible to make its determination of non-profit status.

With this background on filing requirements, let’s turn now to the two issues to be addressed in this article:

1.   It is recommended that non-profit organizations avoid having numerous offices, chapters, affiliate organizations, etc. Why? Because the more offices, the more complexity, and the more difficulty in maintaining proper records, knowledge of operations, and acceptable management procedures.

2.   It is recommended that non-profit organizations maintain a close watch on all activities to avoid ‘creep’ that would result in activities that are clearly beyond the scope certified in the IRS application. All staff members and board members must be able to speak with certainty when describing the mission and activities of the organization.

When the news reports of the ACORN organization are reviewed, it becomes immediately obvious why its ongoing management was challenging: offices in 75 cities; international expansion; allegations of embezzlement that occurred ten years ago; affiliation with other non-profit organizations; a political action committee (PAC); political organizing programs; alliances with Project Vote and inadequate documentation to determine non-profit and excluded activities; etc.

Of importance is the opportunity for leaders in non-profit organizations to see the specificity of IRS requirements mentioned in this article, compare against the challenges ACORN has created for itself (as widely reported), and make a determination as to how their non-profit organizations will be organized, led, and mission-based. While some may want to argue that it is easy to fall outside of the IRS regulations, the simple facts in this article seem to differ strongly. (The applicant must say what it means and mean what it says.)

From our youth, we are taught that an acorn (essentially a seed) represents a great thing for the future. Carefully planted and nurtured, an acorn can become a majestic oak tree, serving many purposes from CO2 sequestration, to shade, to food for animals, to furniture. The tree may grow in an unruly fashion, but it can be pruned. Disease may set in, but it can be treated. While care and attention can provide the nurturing necessary to see the acorn through to success, the most critical element is ‘paying attention’ to what is actually happening to the acorn.

This appears to be a major problem with the ACORN organization; formed in 1970, just when did it start to veer off course? Who was there to nurture it? What now will be the consequences? Will board members be held personally accountable?

Fortunately, every non-profit organization currently in existence today – or planning to emerge in the future – has the opportunity to be an acorn and not an ACORN. We urge all non-profits to take their charitable status very seriously and to demonstrate excellence in all aspects of their operations. So nurtured, your tree will certainly grow strong.

There has never been a lack of information for the measurement of private sector or public sector performance, but little is available to the nonprofit sector to guide effective performance through a system of measures.

This is very likely because nonprofits are not required to provide the multitude of filings that have become routine for the public and private sectors for many years. This article will serve only to whet the appetite (hopefully) for nonprofits to increase internal measures that will strengthen adherence to ethics, governance, and accountability standards.

The type of measures to which we refer are typically called ‘metrics.’

In order to be effective, a systematic series of metrics needs to be carefully defined, measured, and acted upon. Among the most obvious mistakes that organizations (of any type) make are the lack of specificity of the measure, its relationship to specific goals and objectives, and the ability to make comparisons of data over time. In other words, if the manner of measure changes every year, then the organization has no reference point (prior year data) with which to make current year data relevant. Another serious mistake (and a very common one) is the tendency to measure ‘outputs’ instead of ‘outcomes’ which tend to mask the true effectiveness to mission by the nonprofit.

Several issues should be noted:

1.    Data is not the same as Information.

2.    Measurements must be tracked over time to provide relevance.

3.    Only ‘outcome’ measures can judge performance.

So, where does a nonprofit begin? Who within the organization should identify data, outputs, goals, and objectives by which to measure performance?

The nonprofit should begin with its mission statement; if the mission statement does not contain the specificity that enables the creation of obvious goals and objectives, together with fundamentals of ethics, governance, and accountability, the quality of the mission statement needs to be addressed first. However, for the purposes of this article, it is assumed that an adequate mission, goals, and objectives are available to guide the measurement process.

The ‘who’ can vary widely among nonprofits. Ideally, the organization would be strong enough to have a senior staff that can handle the daily operations and the executive director could be the ‘who’ that tracks the measures. In still larger organizations, the board of directors may appointment a ‘Performance Committee’ to track and review the performance measures. But, for the purposes of this article, let’s take the worst-case scenario: staff is already bare bones, daily operations are a challenge, and fundraising is at crisis stage. Who has time to measure?

The primary thesis of this article is that you cannot afford not to measure, so in our worst-case scenario, this duty would fall on the already overworked executive director.

However, the attitude towards the benefit of measures determines the willingness and ability to make it happen. We argue that a nonprofit cannot afford not to measure! Why? Because the system of measures becomes the very data that tells donors and grantors your organization is on mission and making a ‘measurable’ difference through its programs in the community. Let’s face it, no nonprofit can afford to be viewed any other way, given today’s economic challenges.

How are ‘outputs’ defined differently from ‘outcomes’ and why does it matter? Well, an organization that consistently measures itself with outputs does itself a huge disservice: it suggests to donors and grantors that it cannot measure its outcomes. For example, if a jobs training organization enrolls 100 laid off workers, that is an ‘output’ and is an interesting number to track, but the measures become meaningful when the ‘outcomes’ are reported: of the 100 individuals enrolled in training, 75 remained in the program from start to finish, 60 achieved certification, and 50 are still employed after 12 months.

See how data becomes information?

And, how relevance over time is important?

After 5 years of collecting only ‘output’ data, an organization could report that it has enrolled (or, more commonly referred to as ‘served’) 1,000 laid off workers and that demand has consistently been rising for its program. But what if the program is non-performing? Non-performing relative to what? Relative to its ‘outcomes’ for example: over the 5-year period, graduation rates have increased 20%, job rates have increased 50%, and those served by the program who are still employed after 5 years is 80%. Data has now been turned into useful information!

This example vividly shows the power of metrics – as many as can be reasonably introduced into the nonprofit’s operational system of measures – in order to give the nonprofit a clear performance edge when competing with its peer groups for increasingly limited funding.

I was sitting in a meeting of young professionals last week and the subject of nonprofits, grant funding, grant writing, and fundraising arose. In addition, the continued subject of interest to me (ethics, governance, and accountability) was also mentioned. But, I found the thoughts of the group of young professionals to be fascinating, well-timed, and very thoughtful: those nonprofit organizations that are ‘irrelevant’ or ‘duplicative’ are no longer needed in our communities, are drawing funds away from other, arguably more viable, needs and should not be expected to survive.Interesting!

As the discussion progressed, it was clear that the young professionals truly have adopted ‘social media’ (LinkedIn, Facebook, Twitter, etc.) as their means for communicating. They do not attend the meetings – nor do they join the community organizations – that were the mainstays of the past. This phenomenon places large numbers of non-profit organizations in jeopardy. Where are tomorrow’s leaders? How does the mechanism of ‘social marketing’ find its way into the governance process required of nonprofits?  Countless articles have been written about the scarce resources that continue to spiral downward for organizations in the nonprofit (charitable) sector.

And, thoughtfully, this group of young professionals believes ‘survival of the fittest’ is very appropriate, particularly in this economic climate.

When you stop and think about it, the young professionals are correct – even by the standards of the ‘old timers’ (like this author). We have watched nonprofit organizations proliferate, compete, fuss and fight, refuse to collaborate, and provide ‘services’ that are no longer beneficial by the community. Curiously, communities have not proactively rid themselves of irrelevant and duplicative nonprofits. Ostensibly this is because even the most irrelevant and duplicative nonprofit organizations still have some modicum of interested supporters (and funders).

So, what does The Center for Ethics, Governance, and Accountability (CEGA) recommend?

Well, for starters, our entire focus at CEGA has always been on ethics, governance, and accountability – and so it shall remain. If a community or a funder or a nonprofit organization were to focus on the ‘accountability’ aspect of the equation, would not that identify issues of ‘irrelevance’ and ‘duplication’ among the nonprofit sector? Sure it would!Nonprofits are notoriously skeptical of measuring outcomes – not outputs – but outcomes. Why? Simple answer: outcomes speak directly to the viability and the success of the nonprofit as measured against its mission. CEGA advocates a proactive approach to accountability and we argue that those nonprofits who can demonstrate excellence in accountability (and ethics and governance) should stand above their peers in the increasingly difficult fundraising arena.

What is the difference between ‘outcomes’ and ‘outputs’ as tools of accountability?

Using an example of a nonprofit jobs training organization, ‘outputs’ would typically measure the number of participants in the program, along with program costs, etc.; however, to make the move toward ‘outcomes’ the organization would need to track the number of program participants (outputs) that actually (a) successfully completed the training, (b) found jobs that pay a living wage, and (c) stayed employed over a given period of time. Now, that’s accountability!

Let’s take a look at the two obvious ends of the spectrum of organizations in the nonprofit sector.

The ‘government’ (federal, state, and local), by the process it uses to distribute funds, is an enabler of ‘output-based’ measures. A good example is the long-standing concept of the “community action agency” and its myriad of funding mechanisms that ‘automatically’ flow to these groups every year. Many of the community action agency funds are actually codified in federal and state law. Opponents of community action agencies would argue the very point of ‘irrelevance’ and ‘duplication’ arrived long ago. Make no mistake that accountability is enforced by means of audits of community action agency programs, but the audit can only be as good as the required measures.  

While it is impossible to tally the numbers, considerable amounts of funding are not creating the desired outcomes. It is time to demand accountability from all nonprofits.

Conversely, individual donors and foundations are free to make contributions to nonprofit agencies of their choice, using whatever measures they deem appropriate. We would advocate both increased accountability by nonprofits and increased accountability by funders.Should we ponder merging similar nonprofits?

Most discussions that I have been involved in over the years that concern ‘duplication’ of activities among similar nonprofits have predominately centered on the issue of ‘job protection’ for the executive director. While this is entirely predictable, it should be recognized that the issues driving the missions of nonprofits are not easy to solve and there may never be enough people to get the job done. Accordingly, the merging of similar (duplicative) programs and agencies seems to be a very reasonable way of addressing the community needs and the individual protectionism among executive directors and even board members who have long-standing ties with certain organizations, despite the possibility that those organizations are now either ‘irrelevant’ or ‘duplicative’ to the objective reviewer.

So, where do we go from here?

Without a doubt, the discussion among the young professionals in the meeting I attended was thought-provoking. There is no better time than right now for nonprofits to look internally, get their house in order, cooperate with their peer organizations, and conduct themselves in a manner consistent with the privilege awarded them through their IRS charitable designation.

It has been too long since I have posted an article to this site.

My apologies.

However, I have not been away from the subject of nonprofit ethics, governance, and accountability for a single day. There is a lot going on at the national level and, together with the economy, I am more concerned about the viability of the nonprofit sector than I have ever been during my lifetime.

I have done a lot of reading and listening. Now it is time to resume writing with thoughts and feedback that I hope will be beneficial.

A number of nonprofit organizations have already failed. While we count the number of banks that have failed, we do not hear any mainstream news media accounts of failing nonprofits. To be fair, tracking the number of nonprofit failures is not the issue; rather, the focus should rightly be placed on what to do to keep additional nonprofits from failing. The harsh economic reality is that some nonprofits probably need to be closed.

Let’s check in with what sentiments seem to be coming from our elected officials at the national level and see what positions they are taking.

Earlier in the Summer, President Obama announced that he would travel across the country to find “the most promising nonprofits in America” in conjunction with ongoing administrative decision-making as to how to spend a new $50-million fund that is intended to help charities expand innovative social projects. (see June 30, 2009 White House press release)

Obama met with 100 philanthropic leaders at the White House. He wants ‘deep pockets’ and government and foundations to help his administration create a “new kind of partnership between government and the nonprofit sector.” You and your organization will have to decide whether this ‘partnership’ is good or bad.

The $50-million Social Innovation Fund will be managed by the Corporation for National and Community Service and was created by the Edward M. Kennedy Serve America Act, which Congress signed into law this past Spring. According to the president, Melody Barners, domestic-policy advisor, and members of the White House Office of Social Innovation and Civic Participation, would search for grant candidates in every region of the country. “We won’t just be seeking the programs that everybody already knows about, but we also want to find those hidden gems that haven’t yet gotten the attention they deserve,” according to Obama.

The president also noted that “Solutions to America’s challenges are being developed every day at the grass roots – and government shouldn’t be supplanting those efforts, it should be supporting those efforts.”

With this bit of background, let’s shift gears and talk about what individual nonprofit groups should be doing to save their organizations from extinction.

The Center for Ethics, Governance, and Accountability (CEGA) is a strong advocate for proactive management of nonprofits. The issues of ethics, governance, and accountability form the foundational blocks by which a nonprofit can expect to survive by convincing grantors and foundations that the nonprofit is based on key principles, following IRS regulations, and surpassing minimum requirements for its nonprofit status. If any nonprofit is not taking this opportunity to delve into these key areas and make necessary adjustments, I would suggest that a major opportunity is being lost.

As the future wears on, particularly in the light of the current economic conditions, I would suggest that not a single nonprofit can afford to have its ethics, governance, and accountability questioned – not by its membership, not by the public, and certainly not by the IRS. Almost assuredly, any nonprofit that would be considered by the federal government to have ‘solutions to problems’ that have not received ‘notice’ by those whom it is to serve would likely be a relatively new organization.

Why can we make that assumption? It is within the relatively new – and small – nonprofit organizations that the greatest potential for ethics, governance, and accountability to be sub-par. This condition is most likely associated with the myriad of organizational tasks and start-up pressures to seat the founding board, hire the founding staff, and solicit start-up funding to support its core mission.

We would not recommend that any organization pursue the principles espoused by CEGA for the sole purpose of qualifying for the $50 million in the federal funding pot. The financial needs of non-profits across the nation are far in excess of this minor funding resource. Instead, we have followed the issues, watched the painful demise of a number of formerly strong non-profits, and whole-heartedly suggest that each nonprofit strengthen itself from within before trying to compete with its peer groups for funding.

One last thought comes to mind.

It is very difficult to recruit world-class members for a nonprofit board of directors. I have discussed this issue for years. And, it is even more difficult to find a board member willing to serve as chair of the organization.

So, just how much power does (or should) a nonprofit board chair either be given or allowed to exercise? This is a very challenging question. While no nonprofit board officer, or board member, or key staff member, should have unreasonable control of the organization, the balance must be found between ‘dictatorship’ and ‘leadership’ with the latter being of paramount importance. In economic times such as those we face today, the mere survival of many nonprofits is seriously threatened, and board members and staff should support the chair and the executive director (consistent with strong adherence to ethics, governance, and accountability) in order to maximize the opportunity for sustaining the organization.

Please let me know if your organization receives any of the $50-million federal ‘pot of money’ but, more importantly, let me know how your organization is progressing with its policies on ethics, governance, and accountability. Also, please let me know if excellence in these key areas has, in fact, positioned your organization in a positive light with your funding requests.  

Board membership in a nonprofit organization is a serious job.

It’s not intended to be a resume builder. How many resumes have you seen where a person has pages and pages of boards upon which they have ‘served’ over the years? How many of you have served on boards where a quorum could not even be reached? How many have seen board members arrive with their board packets still sealed in the envelope they were mailed in? What about the board member who has such a strong stake, or bias, in the organization that rationality has been compromised? Or, the board member who is always asking questions about a financial report but does not even know anything about finances?

Sadly, these issues occur every day on nonprofit boards all across America.

Nonprofits that are serious about their futures would be wise to note the reality, deal with it head-on, and create a competitive advantage among their peer group.As the IRS states in its instructions for the new Form 990 and 990-EZ, many people rely solely on the information – which is available to the public – provided by the obligatory IRS annual filing to make decisions about the organizations required to file.

The IRS also notes that beginning with 2009 filings, expectations have been taken to a higher level. This should pose no problem whatsoever for the nonprofit organization that is at the top of its profession and takes its charitable status seriously.

Many funders and grantors are now asking questions about board attendance to determine the activity and involvement of the board. Does your organization maintain such data? It is recommended that every organization have a nominating committee that reviews applications or recommendations for board membership. The work of the nominating committee is very important in making sure that qualified individuals are selected for board membership.

As an observation, many nonprofit boards have a nominating committee and it is chaired by the in-coming chairperson/president. This does not look good. Instead, it comes across as the organization ceding its responsibility to the incoming chair and allowing him/her to select those board members with which they want to surround themselves with. Not a good idea. As an alternative suggestion, why not have the nominating committee chaired by the immediate past chair (or, better still, the past chair twice removed)? Obviously, these folks cared enough about the organization to serve as chair, learned a lot, and their knowledge could be of extraordinary benefit in selecting new board members.

At a minimum, several key questions are suggested:

• Does the prospective board member have experience related to the needs of the organization? For example, if the current board does not have a board member who is an accountant, a CPA applicant may be an important consideration.
• Does the prospective board member have an interest in the mission of the organization? How do you know?
• Has any prospective board member been solicited by a current board member and told, “don’t worry, this won’t take much of your time at all.” How will you know? Do you interview your prospective board members?
• Does the prospective board member serve on any other boards with conflicting missions? Are prospective board members currently serving on any other boards with existing directors of your organization? How do you judge conflict?
• Are any of the prospective board members currently serving as executive directors (key employees) of another nonprofit organization?
• Does the perspective board member currently serve on other nonprofit boards? How will you know if they are serious about serving on this board?

There are some interesting ‘checks and balances’ that can be utilized by nonprofit organizations that are truly serious about seating a first-class board of directors clearly superior to those of their peers. Several guidelines are suggested:

• How large is the board? Is it too large? How would your organization define what is too large?
• Look around the board table. What is the experience of each board member? If you were to look at the board list, would you see diversity – not just racial – but professional? Is there a balance of the various professions that can assist the staff and the board in issues of which the board member is extremely knowledgeable?
• Does the board member serve on boards of other organizations? Do those organizations compete with each other for funding? Does the organization consider this a conflict of interest and how would it know?
• Is the board member aware of the reasons they were selected to serve? Are they willing to provide pro-bono/volunteer counsel to the organization – or – are they willing to assist the organization in procuring those services? (Caution: use very careful judgment before hiring a board member to provide a professional service.) Does your organization have a conflict of interest policy?
• Has the board member expressed a willingness and demonstrated an ability to assist with the fundraising that is required by the organization?

In closing, a very interesting statement was overheard several years ago – specifically regarding a group of local elected officials – but, every bit as applicable to any nonprofit organization: “if this were your business, would you allow the board members (or staff, for that matter) to serve on your board?” Think about it; your answer should guide your decisions as board members are selected.

If you want your nonprofit organization to be the best, then seek to attract the very best board members you can find.

I received an email from a visitor to our web site asking my thoughts on whether or not the founder of their nonprofit – who is also its executive director – could be a voting member of the board. (Note that the question was ‘could’ be…)

Well yes, the executive director ‘could’ be a voting member of the board, but the question allowed me an opportunity to reflect on the perceptions of nonprofits as a competitive advantage for fundraising, as espoused by my own organization The Center for Ethics, Governance, and Accountability. Those three words (ethics, governance, and accountability) have such a strong degree of symbolism and expectations that I must take care to provide my opinions only after pondering what ‘could’ be and what ‘should’ be. (What ‘shall not be’ is always the easiest opinion to offer.)

My response? While the IRS is the regulator of nonprofits, the corporations of the nonprofits are governed by state law. So, answer number one was to check the laws of the state in question.

Answer number two: why does the executive director need to be on the board? Or, does the executive director just want to be on the board? How many board members are currently on the board and would the executive director help or hinder the voting of the board? Presumably, the executive director is the key employee of the board and is tasked with running the organization and attending board meetings anyway. But, I never did determine the answer to the basic question of why?

In my years of experience as a board member, it has not been unusual for the executive director to also serve as the corporate secretary and either ex-officio board member, non-voting board member, or voting board member.

Ultimately, my answer to the above question was to make the executive director an ex-officio (non-voting) member of the board holding the office of corporate secretary. This approach, assuming there is no conflict with state law pertaining to corporate governance, seems reasonable because it is highly likely that the board has tasked its executive director with maintaining all corporate records (minutes, resolutions, policies, etc.) anyway.

In addition, the articles of incorporation and the bylaws may, or may not, speak to the specific issue of board governance. It the bylaws do not spell out, specifically, how the board is to be structured, then I would highly recommend that appropriate revisions take place at the very next board meeting.

Remembering that it is my strong belief that ethics, governance, and accountability are the key measures of any nonprofit, the perception about these issues is every bit as important as the reality; the decisions of donors/grantors and contributions to the organization rest upon the 'good name' of the organization, its staff, and its board . Accordingly, it continues to be my strong recommendation that nonprofits avoid any possible misperception so as to maintain that competitive edge within their peer group.

There are two related issues that deserve discussion in future articles. One is the challenges of the founder of the non-profit serving as executive director or board member; the other is the increased scrutiny by the IRS on board members of nonprofits. In short, as a board member, you will be held personally liable for the affairs of the corporation. This responsibility is entirely appropriate: nonprofit board membership is not a ‘resume builder’ but it is a serious responsibility that IRS regulators have rightly decided to address. Nonprofit boards should take notice.

Every effort should be made by every nonprofit board to task either its executive director or, perhaps, a special committee chair, with a thorough review of the policies of the organization. The new IRS Form 990 is an excellent place to start – especially if your nonprofit is a number of years old --  it would be good to see the issues with which you will be required to attest at your next annual filing.

By now, news of the changes by the IRS to its Form 990 for non-profits has surely reached many executive directors and nonprofit boards. This article will focus on an issue that is easy to inadvertently misconstrue: the classification of a worker as an independent contractor versus an employee.

Making the correct determination between whether a worker is classified as an independent contractor or an employee can be a bit tricky, which is why so many non-profits make mistakes is this specific area. In fact, in past non-profit audits, this is cited as one of the largest areas of non-compliance, resulting in millions of dollars of penalties and interest on back taxes owed by the non-profit. Although this issue is not on the new ‘hot list’ of topics the IRS will scrutinize, it is likely to continue to be an ongoing area of interest during future audits.

What is an independent contractor and how is the classification different for employees?

Per readily available information published by the IRS: “The general rule is that an individual is an independent contractor if you, the person for whom the services are performed, have the right to control or direct only the result of the work and not the means and methods of accomplishing the result.”

The IRS further states:

In determining whether the person providing the service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.

Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the services may be an independent contractor, a common law employee, a statutory employee, or a statutory non-employee.

Facts that provide evidence of the degree of control and independence fall into three categories:

1. Behavioral control refers to facts that show whether there is a right to direct or control how the worker does the work. A worker is an employee when the business has the right to direct and control the worker. The business does not have to actually direct or control the way the work is done – as long as the employer has the right to direct and control the work. The behavioral control factors fall into the categories of:

·         Type of instructions given

·         Degree of instruction

·         Evaluation systems

·         Training

1. Financial control refers to facts that show whether or not the business has the right to control the economic aspects of the worker’s job. The financial control factors fall into the categories of:

·         Significant investment

·         Unreimbursed expenses

·         Opportunity for profit or loss

·         Services available to the market

·         Method of payment

1. Type of relationship refers to facts that show how the worker and business perceive their relationship to each other. The factors, for the type of relationship between two parties, generally fall into the categories of:

·         Written contracts

·         Employee benefits

·         Permanency of the relationship

·         Services provided as key activity of the businessThese rules and regulations may appear to be complicated, but reasonableness tests by a seasoned executive director, together with reading further information available on the IRS web site should enable the organization to make the correct decision.

If questions remain, the executive director should contact legal counsel, an accountant, or a seasoned consultant.

An easy example of an independent contractor that has been incorrectly classified includes: a worker that receives employee benefits, receives evaluations, is on the job for a long time, does not offer services to other employers, receives a paycheck and a W-2 instead of submitting an invoice and receiving a 1099, receives training provided to other employees in the organization, follows regular work hours, and receives daily supervision from the employer.

You can contrast this with an independent contractor that has been correctly classified and operates as follows: the work is actually a response to an RFP, with a specific scope and deadline, but for which the contractor is responsible; the contractor has several clients for whom services are being provided; does not attend employee meetings or receive any benefits; bills for his or her time through the contractor company, and received payment on those invoices and a 1099 at the end of the year.

Another good sign would be an incorporated entity, with its own FIN, making it obvious that the contractor is actually in the contracting business for the services provided.

We again point out that the IRS is the regulatory body for non-profit entities. Compliance with the laws and regulations is not optional, but neither do we believe that the typical nonprofit is adequately focused on the importance of IRS compliance. Accordingly, we continue to believe that excellence in compliance provides a tangible competitive advantage when individuals or foundations are making decisions on a nonprofit fundraising or grant request.

As all non-profits will ultimately come to know, the IRS has revised its Form 990 for 2008. The process has been open and inclusive, over the past several years, leading to the actual revisions. Take a look at the attached link and see how we got from where we were to where we are:

 

http://www.irs.gov/charities/charitable/article/0,,id=185892,00.html

Many non-profits, particularly those who receive grants from state and local governments, have fiscal years that begin on July 1 and end on June 30. If yours is one of those, it’s not at all too early to begin to put your organization’s affairs in proper order.Why? Because most non-profits are fighting for their lives and competing vigorously for precious, limited, funding dollars. Your organization needs every competitive funding angle it can find. Several easy ways to ‘tidy up’ by year end include:1.    Be sure your organization has a concise statement of its purpose. If a prospective funder asked anybody on the staff or anybody on the board to explain the mission of the organization, could everyone do it with ease? If not, or if you are not sure, then spend some time on this very important basic issue. 2.    Make sure your financial statements are in order. Do you have a board meeting scheduled between now and your fiscal year end? If not, schedule one and make sure your board understands and approves your fiscal year-end reports.  3.    Make sure you provide your financial information in a timely manner to your accountant. Does your organization have a finance committee or an audit committee? If so, be sure to call a meeting and go over the financial reports with the committee members. Does your organization conduct an annual audit? If so, make sure the information is provided to the auditors in a proactive manner because the audited figures are the ones you will want to use for your IRS Form 990. 4.    Regarding the IRS Form 990, take note that your Form 990, filed in 2009 for fiscal years ending in 2008, will be the first filing under the newer and stricter IRS rules. Now would be a good time to make sure your organization is up to date on its understanding of the new regulations. 5.    If you have reports and audits and Form 990s that are complete and speak well for the accomplishments of your organization, do not hesitate to provide an overview to prospective funders.It does not appear that free-flowing funding for non-profits will resume any time in the near future. While this may be merely stating the obvious, all non-profits are encouraged to conduct their affairs proactively and to remain in strict compliance with the new IRS regulations. Actually, it is not difficult to do. It’s just like most things in life: you have to be committed to making it happen. In today’s funding competition, your organization needs all the assistance it can get. Make it happen.

There’s no question about it:  we are seeing the most challenging economic times since the Great Depression. Every day, we read about lost jobs at this company or that, but when was the last time you heard about lost jobs and closing doors at a non-profit organization?

Well, it’s true; it’s actually happening. The non-profit sector is struggling in a big way. The timing could not be worse: we rely on so many non-profits to provide their services – from soup kitchens to health care – and the prospect of scaling back (or closing their doors) is happening when they are more desperately needed than ever in communities, both large and small, all over the country. As a point of reference, we must remember that an organization receives its IRS non-profit status only after proving its charitable benefit to the constituency it serves.

If we review the series of key events over the past months, several specific issues have combined to form that so-called ‘perfect storm’ – we have just completed the most expensive presidential campaign in the history of our country (and, before Obama could deliver his acceptance speech on election night in Chicago, many people were already very seriously concerned about the economy), state budgets have been squeezed, many of the failing private-sector organizations (even Freddie and Fannie) were large contributors to the non-profit sector, and individual donors have seen their savings drop more than any other time in their lifetime.

Let’s face it; the magnitude of the current financial situation – and its effects on the non-profit sector – is huge.

But, the purpose of this article is to provide some positive steps to help proactive non-profits achieve success (survival?) even during difficult times. True, just as in the for-profit sector, not all non-profits will survive. We cannot change that fact in a capitalistic society. However, we can encourage non-profits to exude excellence and compete successfully among their peers for precious funding dollars.

I received an email on March 26, 2009 from a group, whose information I try to follow, known as “IT Solution Journal.” The subject line read as follows: “Compliance Rules: Tools, Policies and Best Practices That Are Cost Effective”

Wow! That’s the subject near and dear to my heart: non-profit compliance in the areas of ethics, governance, and accountability. As I have stated in previous articles, I believe that pro-active compliance is a sure way for a non-profit, charitable organization to signal its commitment to excellence.

So, in part, here is what that email had to say:

“Organizations of all types and sizes, industries and professions have long been mindful of the need for legal and regulatory compliance. In the current economic environment, however, forward-thinking organizations now are shifting their focus somewhat. Mere adherence to laws and regulations is no longer enough. Thanks to tight economic conditions and a fiercely competitive business environment, proactive managers and executives are committed to implementing strategic email and Hosted Service management…”  

The good news: My experience has been that non-profit organizations have been extremely resilient over the years. And, my belief is that non-profit organizations are better-suited to address a number of our most pressing problems than either the government-sector or the private-sector organizations.  

And, the bad news: I am concerned that most non-profits have not been as diligent as they should with their regulatory compliance. To date, the critical document for a non-profit, charitable organization has been the IRS Form 990, filed annually. It is my opinion that this will begin to change more and more (as I have mentioned in previous articles) regarding the focus that Congress has placed on non-profit compliance and the increased scrutiny it has mandated to the IRS. Foundations are watching their endowments drop, thereby making the case for less grant funding and their boards struggle with eroding investment portfolios. The same is true with individual donors.

So, how does a struggling non-profit gain an edge?

I have five suggestions:

1.     Don’t panic. Now is the time for calm, cool, collected thinking.

2.     Make necessary changes. If there are board members or staff members who are not serving the organization adequately, replace them. Now is the time to rally your best and brightest minds and your most ardent supporters.

3.     Review your IRS compliance requirements. Make sure you have your policies in place – and, make sure you are following them. Ethics, governance, and accountability measures will speak volumes.

4.     If you are fortunate to have an endowment, use it. Avoid watching the stock market numbers every day. Keep your mind focused on the future.

5.     Talk to your donor base, membership base, and continue to seek grant funds. This time, however, do it from a position of excellence. Don’t be reluctant to tout the professionalism of your organization over your peers.

In conclusion, this is a time of tremendous challenge; however, it is also a time of exciting opportunities. It’s time for non-profits to compete like never before (not in petty terms) but in all things that exude excellence, confidence, and strong business acumen.

This article speaks to the challenges faced by the board of directors of a non-profit, charitable, organization in the selection and management of its executive director.

It’s hard to believe that it was 18 years ago (1991) that the United Way of America scandal began to unfold and its executive director, Bill Aramony, was convicted in 1995 of a number of wrongdoings including embezzlement and spending funds unwisely. United Way was probably the most recognizable public charity in the country and it remains so today.

The governance of the United Way was placed, appropriately, in the hands of its board of directors. The board was comprised of CEOs of large, well-known companies in corporate America. Unfortunately, its executive director was allowed to conduct the affairs of the organization with very little accountability. Hence, it was only a matter of time before problems were bound to emerge. It seems easy to overlook the fact that non-profits are business entities, quite a few of them are very large organizations, and many have large incomes.

Curiously, it has become common over the past decade to replace the title of ‘executive director’ with ‘president.’ This is technically incorrect; an executive director is the chief employee of the charitable organization and reports to its board; the ‘president’ is, by statute, the head (and often known as the chair) of the board of directors, supposedly elected by the membership of the organization or its board, depending upon the process outlined in the Bylaws. While also technically incorrect, using the title of ‘president’ in lieu of ‘executive director’ may even add to confusion among unaware board members, causing them to rely more heavily on the ‘president/executive director’ than is prudent. (However, this is no excuse for the board member not knowing precisely the duties of his/her board position.)

It may be useful to contrast the issues of accountability for executive directors in very large non-profits to those in small non-profits. Albeit purely anecdotal, it appears that large non-profits operate very similarly to large for-profits. CEO accountability and board oversight can be low while CEO control is demonstratively excessive. The Aramony scandal of 1995 has similarities to the Kenneth Lay (Enron) scandal of 2001 in that too much power and authority was vested in the top officers of the organization and too little accountability was required by its board of directors.

Beyond the scope of this article – but an issue worthy of its own discussion in the future – is the cronyism too often seen in the board room. CEOs tend to invite friends and colleagues to serve on the board – as do board selection committees – and the practice is common in both for-profit and non-profit organizations alike.

Systems failures, such as the United Way and Enron examples, clearly paved the way for the Sarbanes-Oxley (SOX) legislation that is intended to provide stronger oversight of for-profit organizations. The subject of previous articles, and the focus of the Center for Ethics, Governance, and Accountability (CEGA), acknowledges that Congress has moved swiftly to empower the IRS to step up its oversight of non-profit entities.

In a previous CEGA article, “Non-Profit Accountability: A Board Gone Awry,” the rude and irresponsible behaviour of current board members towards a former board member (with considerably more experience) was illustrated. There was also a promise that a future article would speak to the issues involving the executive director.

This is that article.

In this example – which could well become a full-blown case study – a tenured executive director retired after nearly 40 years of service. He was well known in his area of expertise and widely regarded as a man of great integrity and concern for those around him. His ego was virtually non-existent, he relied on his staff to do their jobs, and was supportive of creativity. He was highly focused on the mission of the organization. Replacement of such an individual is difficult for even the most ardent boards. In this case, a specialized search firm was engaged, candidates were identified, and finalists were interviewed by the board. A selection was made by a 5-4 vote of the board. (This is not a good sign when joining a new organization.)

Then the problems began...

Unfortunately, the selected individual did not have the requisite experience for the position of executive director. This was discussed with the board in the final interview and was highlighted by the search firm. While the candidate pledged to gain those skills on the job, once hired, he immediately reneged on his promise. Immediately upon arrival to the non-profit organization, the new executive director began to terminate employees, eliminate positions, dismantle programs and change the focus of the organization in a dramatic fashion.

The former executive director and the board of directors had worked well together for several years to define a very specific mission for the non-profit. It was immediately clear that the new executive director had ignored the direction provided by the board. There was clearly a personal agenda by the new executive director and, even worse, it was intentionally made public. When confronted by the chair and vice chair of the board, the executive director turned the board against itself and worked his 5-4 selection vote to full advantage. But such gross insubordination is not sustainable. In only 10 months, the entire organization was destroyed, the best board members had resigned in frustration, the executive director left town under a cloud of suspicion and was subsequently sued by the organization for misuse of funds.

Today, this charitable organization is being led by a new board with no experience, little perspective, and even less institutional knowledge. Adding to the challenge was the selection of a new executive director using a process further described below: tapping the number two person in the organization, who has even less experience than the now-departed predecessor. The future does not look bright; but, pressure to make it appear bright can easily lead to worsening conditions.

What can be learned from this example?

First and foremost, it is extremely difficult to be a board member. It is not a job that should be taken lightly. Governance, ethics, and accountability are critical and boards must expect and uphold the highest standards for the non-profit organization. Additionally, boards must move swiftly and firmly to deal with rogue executive directors that blatantly disregard board policy and mission. The most important lesson from this example is the severity and immediateness of the negative consequences to a non-profit organization – even one with a strong board, a known mission, and dedication to succeed. This example also illustrates the challenges, time commitment, and responsibility of a board member; particularly, when the board member is a volunteer of a non-profit organization.

One of the key jobs of the executive director is to implement the policies and vision of the board of directors. While there is often a natural tension between the non-profit board (at least if the board is truly engaged in the charitable mission) and its executive director, both need to work well together to successfully further the mission of the organization. And, the executive director is most often the ‘public face’ of the organization, so issues of credibility and ethical behavior are paramount to the perception of the organization in the community and constituency it serves.

With regard to the selection of executive directors in small and medium-sized non-profits, at least two methods are easy to characterize: (1) the use of a search firm to identify several top candidates for ultimate selection by the board of directors; and (2) the promotion of the ‘number two’ person among the non-profit staff for, supposedly, all the right reasons: he/she has been there a long time, knows the organization, time is critical, budgets cannot support the use of search firms (or the salary of the former executive director), etc. With the current economic crisis, arguably, funders are looking for the most worthy of causes and best-run charities before they make their contributions. Proper executive director selection is critically important. In addition, prompt discipline of executive directors is equally important.

If a disaster of this magnitude can occur with a strong board of directors in a charitable organization with a solid past and a promising future, it is clear what can (and does) happen to non-profits with weak boards and imprudent executive directors. There has never been a more important time for non-profit governance to be fully addressed, given the increased IRS scrutiny, economic pressures, and funding shortages.

As is usually the case, only the best will survive and thrive.

A colleague of mine recently attended a board meeting of a non-profit organization. As it happens he was a former board member, vice president, and president of that same board in a different era. His remarks to the board were previously prepared, delivered, suggestions made and questions answered. He was there to offer assistance in resolving a major regulatory issue that had been lingering for quite some time. Interestingly, not a single member of the current board was involved with the organization when the regulatory issue arose.

Even more interestingly, the board summarily dismissed his offer of assistance! What? Are you kidding? Nope. The board president and vice president made it clear that his assistance was not welcomed. And, the message was delivered rudely and disparagingly in a public meeting. Other board members sat by and said nothing.

What in the world is this board thinking? Obviously, the members of the board are not thinking at all. And the behavior of its officers is not acceptable.

But the title of this blog post is about the issue of Accountability.

Let’s see, this board seems to have pretty well missed it on all counts: unwillingness to accept offers of assistance – particularly when offered by a former (and knowledgeable) board member – would seemingly be welcomed. My experience has been that the inability or unwillingness to accept offers of assistance stems from anxiety, lack of knowledge, and/or the fear that something unpleasant is going to pop out and have to be dealt with. In this case, particularly when the issue is a regulatory one, the board has a legal and moral obligation to its stakeholders (a rather broad group, in this case, since public funds are involved) to at least determine the facts and accept the assistance of an experienced board member.

One can only imagine how that former board member felt – particularly given the fact that all are volunteers. (Is it any wonder why it is difficult to find good board members?)

I fear that this board is not atypical, which is exactly why the federal government is stepping up its oversight of non-profit organizations. When institutional memory is lagging or, as in this case, basically non-existent – and – when a board president does not understand the role of the board and cannot articulate the complete mission of the organization, it is virtually certain that any comprehensive evaluation, compliance audit, or overall assessment of the operation would reveal serious accountability problems.

How many board meetings have you attended where board members seemingly want to just ‘feel good’ or ‘act important’ when they don’t even know the total mission of  the organization – and, worse yet, don’t appear to have any interest in learning? Who controls the board’s accountability? Unfortunately, in my experience, accountability is almost always lacking.

When discussing the issue of accountability, it is critical to identify to whom we are accountable. In my opinion, from my non-profit board experiences, accountability must start with self. If a board member is not knowledgeable, willing to learn, spending adequate time in the governance of the organization, or scared to death that some problem might arise that requires work, then that board member is just not board member material. While this seems to state the obvious, it is my opinion that too many of these board members exist. The net result, at a minimum, is that the organization falls short of its potential to meet its mission.

In addition to accountability to self, a board member must be accountable to the organization and its stakeholders. What does that mean? Who does that include? Actually, the list is quite long: employees, vendors, customers/members, fellow board members, the executive director, and (particularly in the case of non-profits receiving public funds) the public itself. The organization may also be accountable to other peer organizations and regulatory agencies (in addition to local, federal, and state governments – and the IRS).

A long-time executive director once asked me a question about a board of directors that was behaving equally as poorly as the board used in this example: he asked, “Who do they think they are serving?” What an excellent guiding principle! A question that certainly deserves answering! Whenever I see board membership listed on a resume, for example, the first thing I want to know is what that person actually contributed to the accomplishments (if any!) of the organization during their tenure on the board.

By the way, the arrogant and dismissive behavior of the president and vice president of the board cited in the above example is unacceptable. In my opinion, it qualifies as a breach of ethics and no such person should be serving on any non-profit board, let alone serving as an officer. The remedy in this case should be resignation because the public trust has been violated. Who would dare offer to assist this board now?

You might wonder why I have not mentioned the executive director in this case…

That’s the subject of my next blog post!

I just spent the last two days with a number of non-profit organizations. Not surprisingly, all are looking for funding. All are asking me what they should do. And, curiously, not a single board member has been present – all of those asking for help are executive directors.

We do not look for the funding outlook to be good for non-profits for quite a while. The economy remains an elusive unknown. Just how bad is it? We cannot know just yet.

We do know, as per our foundational principles, that our charitable, community-based, non-profit sector (NPOs) represents the best, and the brightest -- and the most focused and knowledgeable – individuals and organizations available to address the serious problems facing our communities. And, importantly, we know from experience that neither the government nor the private sector is well-equipped to deal with the challenges that lie ahead.

Again, we believe you can distinguish yourselves from your peer group by touting your understanding, commitment, and achievement of Certification on the key issues of Ethics, Governance, and Accountability. And, we definitely believe that such a Certification can enable you to receive funding when others do not.

So…

Let us hear from you. Do our suggestions make sense? If you agree, why do you agree? If you disagree, why do you disagree?

At this particular point in time – perhaps more than ever before – YOU can play an incredible role in the future of our country and our communities.

Again, please opine. We’d love to dialogue with you.

Tuesday, December 16, 2008

A story in USA Today makes clear that times will be tough for non-profits, particularly the big ones who relied heavily on Freddie, Fannie, and Wall Street firms.See the article, "It's a hard time to be a charity" below:

http://www.usatoday.com/money/economy/services/2008-10-26-fundraising-crisis-donations-charities_N.htm

The article makes clear that non-profits, particularly the large ones, are in for tough times. Organizations like Freddie, Fannie, and other Wall Street companies will not be making contributions this year. As all charitable organizations know, many individuals and foundations wait until the end of the calendar year to assess requests and determine contributions.

CEGA was formed to serve. Our mission is to help small to medium non-profit organizations. This may be the most challenging time ever for non-profits to survive and thrive. Take a moment to read the article and ponder the challenges -- and, the opportunities.

We recommend that non-profits use this opportunity to separate themselves from the pack, become poised for excellence, and demonstrate a commitment to Fundraising Focus by working with us on Certification.

No doubt, the non-profit sector is in for some very difficult times as the economic challenges continue to unfold.

We are here to help.

The economic events of the last few weeks have certainly captured the attention of most Americans. What effect will the economic recession have on the fundraising and operations of the Non-Profit Sector?

Well, that depends.

At CEGA, we believe that our Mission is more timely than ever: non-profit organizations (NPOs) can derive economic benefit by excelling in areas of Governance, Ethics, and Accountability, particularly in times of economic uncertainty, cutbacks, and increased competition for contributions and grants.

Just this past week, we were made aware of a non-profit that saw an enthusiastic donor's $150,000 pledge become a reluctant $20,000 pledge. It's tough to argue with a donor! The man stated, "the value of my portfolio is dropping by the minute. I'm in my 70s and I just don't feel comfortable right now."

This prompted us to ponder the effect the economy will have on Major Donors and National Foundations. Likely, it will be substantial. Competition will be tougher than ever. But, the missions of so many NPOs are so important to the ongoing success of American that we, at CEGA, still hold to our belief that the Non-Profit Sector is going to be called upon to fix serious problems in ways that neither the Government Sector nor the Private Sector can adequately address.

Will some NPOs fail (i.e. 'go out of business') during these troubled economic times? Absolutely; some will not make it. That's the basis of our capitalistic system. Will some NPOs be 'rescued' like the banks? Perhaps. But, that will depend on the generosity of individual donors and individual circumstances; we would not predict that to be the norm.

So, how is your non-profit organization situated as we continue to move into these times of economic uncertainty? Take a look around you at the issues that are driving the national debate. For example: (a) if CEOs on Wall Street are being hammered for excessive compensation, how does your NPO executive compensation review compare with your peers? (b) if Boards are being criticized for lack of oversight for bank operations, how does your NPO compare? Are your policies up to date? Is your board active and informed? (c) if Accountability and Regulation are at center stage among private sector firms, how does your NPO demonstrate leadership far beyond the norm?

As with all things, the future belongs to the prepared. We urge your organization to take action now to be a leader in what promises to be an exciting new chapter in the greatest country in the world.

Please let us know how we can be of assistance.

In this post, we will continue our discussion about regulatory expectations and your ability to keep your organization in a proactive mode.

Although it may have been a long time ago, your non-profit organization received its IRS determination letter. Requisite in your role as a charitable organization -- serving the community well-being -- your fund-raising (income) must be directed toward your charitable mission (expenses).

The greater the percentage of income directly devoted to the specific mission of the charity is all the better. How do your administrative expenses and overhead compare with the funds directly supporting the activities of your mission? Have you taken a look at those numbers? Do you have a process by which you track those numbers?

As we have predicted, these types of internal reviews are going to be increasingly important as the IRS steps up its reviews of Form 990 filings.

If you need an internal audit process, CEGA can help you.

Excellence in the non-profit sector demands that charitable organizations demonstrate that they are indeed charitable.

Another "CEGA pointer" before we move on to Part 3 in this series...

I recently received an email from an executive director who had been contacted by the IRS regarding the late filing of its Form 990 and associated penalties. The 990 was indeed filed late, but to make matters even more challenging, the executive director could not find a copy of the 990 that he had mailed. Oops.

This immediately brings to mind the critical importance of keeping good records at your non-profit organization. It is, for sure, part of your Accountability responsibility as a charitable organization. Just a few thoughts:

1. With non-profit executive director (ED) turn-over a fact of life, is your filing system well established and not dependent on any one individual?

2. Do you have back-up copies (hard copy or electronic) of critical documents?

3. Is your legal counsel or your CPA familiar with your records and record-keeping practices?

4. If, as a board member, you were called upon to produce documentation on your non-profit, would you know what documents were required annual filings for your city, state, or federal compliance?

CEGA believes the non-profit world is poised for excellence. Your organization can be a leader. Excellence is an important defining element: take your Documentation responsibility seriously.

Before moving on to Part 3 in this discussion series, I would like to take a moment and share a quick thought that I believe is important: Accountability for members of the board of directors of a non-profit organization.

What a challenge! But it must be done. Several questions that should provide food for thought on governance, ethics, and accountability issues for non-profit boards:

1. Do your board members attend the meetings regularly? (Many grantors are beginning to require documentation of board attendance.)

2. Do your by-laws include attendance requirements?

3. Is there a formal process for removing inactive board members? Is your board afraid to use it?

4. Do board members show up at the meeting with their packets still sealed? Or, have they read the material provided to them and are they ready to engage in the discussion?

5. What percentage of your attending board members rarely, if ever, have anything to say or anything to contribute during the meeting?

As a past chair of several non-profit organizations where I have had to make that uncomfortable telephone call to invite a non-participating board member to resign, I certainly understand that it is not a pleasant experience. But, for a number of critical reasons, when it must be done, it must be done! The board has an important job to do. Make board accountability a priority at your non-profit organization and you will, indeed, be on the path to excellence among your peers.

Issues related to the governance of Non-Profits have intensified -- just as we anticipated 3 years ago.

However, our commitment to you is not focussed on the Past, but focussed on the Future. In this post, we will continue our discussion about regulatory expectations and your ability to keep your organization in a proactive mode.

Specifically, this post follows Part 1, where we examined the issues related to Executive Pay and the long-standing IRS regulations for documentation that supports decisions of the board.

So, what is a 'non-compliant' activity?

Let's start at the beginning...

When any non-profit applies for its tax exemption, the organization is required to specify the activities it plans to conduct and to make the case that their mission qualifies for charitable, tax-exempt status. Upon review, the IRS either grants or denies the application and issues its 'exemption letter'.

If your planned activity falls outside of the specified mission of your non-profit, then the activity may be non-compliant. Non-compliant? With what? Your IRS-approved exemption! How do you know, for sure, if your planned activity is within your compliance parameters? Easy...just ask! Who? The IRS (your regulatory reference)!

Please ponder the following hypothetical example: a local community Food Bank is deciding whether or not to purchase a national fast-food chain restaurant adjacent to its main food bank facility.

It sounds like a great idea when presented to the board for approval:

• the fast-food restaurant brings in lots of customers who would learn that the food bank is located right next door;
• the profitability of the restaurant could subsidize the operations of the food bank

Good idea? Bad idea? How would you vote if you were on the board?

This is a good example of the challenges of a non-profit board. Let's take this scenario a step further before we try to deal with the dilemma.

This Food Bank was organized 30 years ago and received its IRS approval as a charitable, tax-exempt organization serving the public good. The founding executive director (ED) led the organization for 20 years until he retired.

Following the retirement of the founding ED, the board conducted a search and hired a replacement ED. Unfortunately, their new ED left after just one year, accepting an opportunity at a larger food bank. Since that time, the organization has suffered rapid turnover among four EDs, but the board believes the tide has turned: the current ED is an experienced manager, who was looking for a career change, and is committed to remaining in this position for quite a few years.

The idea for the purchase of a fast-food restaurant took shape during a scheduled fund-raising call between the new 'out-of-the-box' ED and the owner of the fast-food chain. The owner, a former board member of the Food Bank, suggested the purchase as a mechanism for alleviating the ongoing financial challenges of the Food Bank and as part of his estate planning. The deal was a gracious opportunity; the owner would even provide the financing. To answer any questions, the owner offered to attend the board meeting with the ED.

Okay.

An opportunity presents itself: a former board member offers to be unbeliveably philanthropic and an excited ED presents the idea to the board at its regular meeting. You are a board member. You hear the presentation. The opportunity sounds great! What should the board do?

(We could spend quite a bit of time strategizing, but that is beyond the scope of this post.)

Question #1: Yes, you are a board member; however, are you qualified to analyze the deal and make an informed decision? Would you be willing to be that 'lone voice in the wilderness' that dares question the deal? Are you willing to admit your lack of knowledge?

Question #2: Did your ED research the language in your original IRS determination letter as a guide for what your scope of services can be? Did your ED consult with legal and accounting counsel?

Question #3: Are you familiar with 'unrelated business income' - whereby income-producing activities can result in taxable revenues (even for a non-profit)?

Question #4: Do you understand 'noncompliant activity'? Has your ED mentioned that issue in the board presentation?

Per usual, a lot is happening at this (hypothetical) non-profit board meeting. This seemingly good idea of purchasing a fast food restaurant is almost certainly outside the description of the activities of the food bank. The IRS could approve the deal; but, failing to request a definitive ruling would be irresponsible on the part of the board and could literally jeopardize the charitable status of the Food Bank.

A lot to worry about? Nope. Not really. Just remember to ask the right questions. If you do not know the right questions, you are probably on the wrong board.

NEXT: We will talk about the proper balance between contributions spent on charitable needs versus all other expenses of the organization.

This blog post follows the previous "INTRODUCTION", whereby it is suggested that Non-Profit Organizations can distinguish themselves and gain a competitive fundraising advantage from their peers by proactively complying with the key issues of the Sarbanes-Oxley Act (SOX) to demonstrate organizational excellence.

While SOX does not (yet) apply to the Non-Profit Sector, the IRS has taken an aggressive position (in keeping with recommendations from the U.S. Senate Finance Committee - please see the "Introduction" post below) by enacting changes to its Form 990 (the annual filing by all Non-Profits) regulations.

Readers should remember that the IRS is tasked with (a) 'collecting taxes' from individuals, corporations, and other for-profit entities; but, (b) it is also tasked with 'regulating' the non-profit sector (in keeping with the determination issued by the IRS that the organization serves a charitable purpose and is, therefore, exempt from taxation).

Important point: as a Non-Profit, your regulatory agency is the IRS. (Remember that your grant applications require a copy of your 'IRS Determination Letter'?) And, most states now have non-profit regulatory requirements and annual filings as well.

Enough background.

On to the topic of this blog post: Executive Compensation.

In addition to being the #1 issue identified by Senate Finance, the determination of Executive Compensation for Non-Profits has previously required analysis, comparison, and justification for the pay rates and benefits of top executives (and independent contractors). As with most IRS compliance issues, documentation is advised.

So, can your non-profit organization justify its executive pay with studies, comparisons, and peer-benchmarking? Is that justification on file and ready for inspection?

If your organization does not have proper compensation documentation, it is already at risk, and will be at further risk with the implementation of the revised Form 990 requirements for Fiscal Year 2008 being filed in calendar year 2009.

Is the IRS 'boogey man' out to get your organization? Not at all. Provided you are in compliance. Or, as suggested by our organization (CGEA) you become proactive, document your compliance, or (better still) exceed both current and future compliance regulations. This approach will ensure you have (1) nothing to fear; and, importantly, (2) an opportunity for 'competitive advantage' in fundraising by demonstrating to donors that the Governance, Ethics, and Accountability regulations are of fundamental importance to the operation of your organization.

Remember, the point is to be proactive -- to go the extra mile -- to take seriously and truly demonstrate your understanding of the responsibility that comes with your charitable status as a non-profit.

Is the issue of Executive Compensation a problem? It does not have to be! Actually, it's quite an opportunity; especially for small non-profits, where compliance can be easily achieved if you take the time to do your homework.

Regulatory compliance offers a competitive advantage that is well worth your investment of time and energy. And, this is an opportunity for the Non-Profit Sector to demonstrate leadership in the aftermath of numerous scandals that have led to increased regulation in the for-profit, government, and non-profit sectors.

Please don't miss this opportunity.


NEXT: the challenges of 'non-compliant activities' will be explored...

Increasing scrutiny by the IRS among large non-profit organizations provides smaller non-profits with an opportunity to proactively model successful Governance, Ethics, and Accountability initiatives on a voluntary basis.

This blog post -- an Introduction -- will set the stage for a series of related blog posts in the coming days and weeks.

A bit of background will be helpful:

• Concerned about the lack of reporting and transparency among non-profits, the United States Senate Finance Committee began to look at revisions to non-profit reporting and regulation a number of years ago. The IRS Form 990 had not been revised in decades.

• Note that this review is relatively coincident with the enaction of the Sarbanes-Oxley Act on July 30, 2002. Commonly referred to as 'SOX', this legislation followed the corporate scandals involving Enron and others.

• The Finance Staff Discussion Draft was released on June 21, 2004. The Committee heard testimony from a number of non-profits prior to the Draft and again after its release.

• The Committee issued a press released on June 14, 2007 announcing the intention of the IRS to amend its Form 990. The amended Form 990 is scheduled to take effect in 2009 for fiscal years ending in 2008.

• On May 29, 2007, the Committee Chair and its Ranking Member co-signed a letter to the Secretary of the Treasury Department requesting that particular attention be paid to the operational complexities of non-profit hospitals and universities and the critical need of greater reporting and transparency among non-profits.

• That same letter outlined seven specific areas of concern: (1) Executive Pay; (2) Endowments; (3) Related Organizations; (4) Joint Ventures; (5) Governance; (6) Dollars Raised vs. Dollars for Charity; and (7) Hospitals.

The question that must be answered is clear: can the non-profits, particularly the small to medium ones, adopt self-audits and regulatory oversight before (and if) Congress decides to include non-profits in the SOX regulations?

Maybe the better question is: why would the small to medium non-profit NOT be proactive in its attempt to avoid costly regulatory oversight?

Since the enactment of SOX in 2002 for ALL publicly traded companies (large and small), much concern has been expressed by the small for-profit firms about the costs of compliance with SOX while, arguably, the large companies have been able to absorb the additional compliance costs more easily.

I would suggest that this dilemma can and should be avoided by the non-profit sector; excepting, however, that it seems clear that the hospitals and universities are so large and complex that they will not likely be off the radar screen in the near future.

I will continue the discussion on this issue in the days to come. In the meantime, please feel free to participate. Let us know how you feel. The purpose of our Center is to give the Non-Profit Sector a competitive advantage, so your thoughtful feedback is invited.

Well, today I have just returned from a one-day visit to my home state of NC and am back in VA. During my discussions with various individuals today, we focused on concerns about the declining economy and the uncertainty that lies before us as a country.

We talked a lot about the 'good old days' and, specifically, whether our country would ever again come to recognize, appreciate, and support 'Extraordinary Customer Service'.

Hmmm...

As I think about that, it seems to me that the Non-Profit Sector is (once again) best positioned to provide solutions for issues affecting our society -- in this case -- extraordinary customer service! Can the Government Sector beat you? Can the Private-Sector beat you? No way!

For it is the MISSION of the non-profit sector that allows it to rise to the fore. Keep your focus. And serve your customers in an extraordinary manner.

How can we help your organization rise to its full potential?

We are only a couple of mouse-clicks away. Please do not hesitate to call on us. And, focus your sights on being Number One in customer service!

I just had lunch with a friend who was remarking that there is no accountability for elected officials. He was, of course, currently fixated on the presidential elections. Promises get made, plans unfold, then nothing happens, nobody knows why, everybody and anybody else is to blame -- and, then, we start the cycle all over again!


Well, fortunately, our client base is exclusively focused on non-profit organizations. So, how does accountability work for non-profits? Two specific scenarios come to mind:

1. At the Staff level, it is important that the executive director understand Authority, Responsibility, and Accountability and take ownership of all three. Since the staff reports to the executive director and the executive director reports to the board, then accountability to the board for daily operations is always the responsibility of the executive director. As in most organizations of any size, the executive director may/must/could/should delegate to staff members under his/her direction. But, it should be clearly communicated that Authority requires Responsibility and, ultimately, Accountability. Within the government sector and the private sector, many people believe Accountability seems to be in shorter and shorter supply. Let's work toward a level of excellence in the non-profit sector that is worthy of following!

2. At the Board level, Accountability can become very elusive. What volunteer board chair, board member, or committee chair wants to be held 'accountable' (or 'responsible') for results gone awry? Well, certainly nobody wants to shoulder this burden but, should it occur, he or she must. Why? Because it's the right thing to do. After all, the board position was either elected or appointed and the board is accountable to its membership (for example).

Here's the deal: only in very, very rare situations will anything go so astray that it cannot be fixed by a group of well-intentioned folks working together. Accordingly, executive directors and board chairs need to understand their Authority, fulfill their Responsibility, and never hesitate to be held Accountable for anything that goes awry.

It's amazing what a group of humble servants, clearly focused, and committed to a cause greater than themselves, can accomplish when there is no 'blame game' and the level of personal leadership is so deeply instilled that there is no need to to shirk from Accountability.

Want to know more? That's our mission. Please visit www.centergea.com.

In these tough economic times, many non-profit organizations face the same challenge: an increasing demand for their services, with decreasing availability of funds. Non-profit organizations are poised to tackle some of the world’s more important challenges, but it will take even more money to help them grow and accomplish their missions. That’s why fundraising, an always important operation, is perhaps more critical now than ever before.

In a recent conversation, it became clear that many non-profits underestimate the importance of board governance in their fundraising operations. The relationship between board governance and fundraising goes two ways: board oversight and participation in fundraising, and acknowledging the strength of a board’s governance practices when seeking funds.

Board members in non-profit organizations have an obligation to get involved in fundraising activities to ensure the financial health and long-term viability of the organization. From making calls and arranging meetings, to setting up events and volunteering, their efforts and participation are vital. At the same time, the board of directors has an obligation to closely monitor and oversee fundraising operations to ensure that the organization is compliant and appropriate in its actions. A committee structure is often a very effective way for certain board members to become very familiar with all fundraising activities, while offering insight and guidance for improved success. The committee members can provide excellent suggestions that help diversify and enhance the development efforts of the organization. This is a responsibility that board members should not and cannot take lightly – it is vital to the long-term viability of the organization.

Additionally, development professionals need to appreciate and recognize good board governance as they seek to raise money. As demand for funds increases while availability of those funds decreases, funders are putting more and more pressure on organizations to demonstrate their competitive advantages. Non-profits should take this opportunity to acknowledge and tout the good governance, ethics, and accountability policies and procedures they have in place. A potential donor would likely be more inclined to fund an organization that can demonstrate strong board governance over an organization that has lax or nonexistent practices.

So, as non-profits go forth to solve some of the world’s most critical challenges, they have an opportunity to maximize the strength of the board of directors through good policies and procedures. Then, they can take advantage of the wealth of resources that the board can bring to the table, and tout the fact that they have a board with the policies and procedures necessary to ensure fiscal health and responsibility. That’s one powerful competitive advantage.

In keeping with our Center's commitment to the critical issue of Governance, let's make sure we understand how to handle the role of the absentee board member.

In most Non-Profit Organizations, the executive director is the stable and guiding factor. Board members come and they go; board chairs come and they go. In my experience, good board members are hard to find and excellent board members are even more rare.

Any way you want to look at it, the relationship between a board member and an executive director is complex. The two may be friends; the two may not even like one another; the two may find themselves at loggerheads on a lot of issues or very few issues. As with most everything, the relationship is what it is all about.

It would be curious to know with certainty how many Non-Profit Organizations have functioning boards. What is the attendance rating of the board members? Do they assist with fundraising? Are they available to the executive director and other staff members? Do they seem prepared when they arrive at the board meetings?

Rule #1 is straight-forward but very hard for organizations to address: the board member must attend the board meetings. If the board member is not attending, it is impossible for them to be performing their role in a responsible manner.

Now what?

If a board member is not attending meetings, then somebody -- hopefully the board chair -- will demonstrate leadership, call the board member, discuss the issue, and come to a mutually agreeable decision. Asking a board member to resign from a board should not be as difficult as we tend to make it.

Even if board attendance was not a prerequisite for excellent non-profit governance, many Grantors are now requiring a minimum attendance percentage as a prerequisite for funding consideration.

So, don't be afraid to expect the best from your board members and don't hesitate to discuss board member performance.

The future of your organization can only be as good as your board.

We are hearing more and more that readers believe the information contained in Blogs is more reliable than the print news media. (I don't think a direct comparison between the electronic media and Blogs makes much sense, so my comparison is direct: written material vs. written material.) While I find this shift in 'believability' to be somewhat surprising, I must admit that I don't think I personally know anybody that reads the newspaper without a nagging suspicion and a bit of doubt. Even more, I continue to be amazed at the growing number of people I know that do not even bother to read the newspaper.

Well, how does this relate to the subject of ethics?

I recently had the opportunity to speak with a person who serves on a national group that investigates allegations of breach of conduct by the news media. As a professor of journalism, it was clear to me that he wants the profession to uphold the highest standards. When does a misquote become more than a minor issue? How about reporters that leave out details because they don't understand them or don't believe their readers could understand them? Or, editors that cut out segments of a reporter's story and completely lose the intent? And, headline writers that mislead the readers by sensationalizing the story? Worse still, how about reporters who know that their information and their sources are tainted? Do these issues rise to the level of an ethical breach?

While I am very new to blogging (and admit some consternation about putting my thoughts into writing for the world to see), I am extremely fascinated that blogs offer the opportunity to say whatever you want -- in your own words -- without any opportunity for misquotes, editing, media bias, etc. This is what our First Amendment rights are all about. I know of one elected official that has launched a blog for the purpose of making sure his positions on issues are not taken out of context, twisted, turned -- or, even, unreported -- by the news media. This is a very interesting approach! If the media wants his input on an issue, he plans to post their question and his answer.

Perhaps the question remains: what does the print media need to do to regain the public trust and perform consistently in an ethical manner?

Like most complex issues, I believe trust and ethics are directly related to the quality of the individual and his or her commitment to excellence in their professional life. Thirty years ago, I was a corporate media spokesperson at a frighteningly young age. I took the time to get to know the reporters, rely on them for guidance, explain the subject in great detail; similarly, the reporters took the time to understand the issue and double-check facts and figures. Interestingly, I was never misquoted. Never. Not once. I considered these individuals to be seasoned professionals, mentors, and true professionals. No, their reporting was not always to my liking, but the manner in which they performed their job was beyond reproach.

But, that was then and this is now. What has changed? Everything.

I will offer one perspective on the issue of blogs vs. newspapers. A blogger, like me, is taking the time to write about an issue that I want to write about and that I feel passionately about. Question: so, what about the subject of ethics? Answer: I do not have a deadline, I have no editor that is biased, and I even get to write my own headline!

If we were to agree (for the sake of argument) to remove any allegation of intentional breach of ethics by the media, I would say that today's journalist does not have the same commitment to the profession as their predecessors. They seem to be in too big of a hurry, they don't take the time to get all the facts and double-check them, they are not well-versed in what is going on in their community and therefore have no context, institutional knowledge, or historical perspective. They very quickly make a public impression of themselves as either a credible reporter -- or, one that ought to find another line of work...

Poor reporting, just like anything else, becomes a behavior that the public ultimately recognizes -- and then the public reacts accordingly. For example, if the editorial page editor is extremely liberal, the public picks up on that, and filters (and, maybe, even ignores), the columns written by that individual (or his or her editorial team). Likewise, if a news reporter consistently 'gets it wrong' the public will pick up on that as well and tend to discount (or at least question) whatever that reporter writes. Once the public trust is lost, the situation spins further out of control because sources of information to the reporter become less and less willing to waste time with them; and, reporters, not knowing anything about the story they are required to write by their editor (to be fair), continue to turn out a work product (in this case, a 'story') that would be considered inferior by the standards of any other industry.

In the end, just like with any other job or relationship, you can forever lose your ethics in just a brief moment of lapse in judgment. Weirdly, this critical issue does not seem to apply to reporters -- or maybe reporters just think they can say whatever they want to say without consequence or accountability -- but, in reality, they are ultimately personally responsible (although not liable) for conducting themselves in an ethical manner.

As for me, I think the opportunity to say what I want to say about whatever issue is of importance to me tends to indicate blogging is the best source of information available to the thoughtful individual, both today and in the foreseeable future.

Friends,

I have come to a new level of concern on the entire issue of ethics. There is no longer any question in my mind that our society is embracing a vision of 'selected ethics' -- which, in my opinion, means that folks justify their own behaviors at the same time as they condemn the behaviors of others -- only, sadly, they apply virtually no standards to themselves and are quick to criticize even the most honest mistakes by others. From my vantage point, this is not what 'ethics' (as a doctrine, a set of principles, a way of life) is intended to be all about. So, I believe quite a few folks are practicing "disillusioned ethics" and we need to start pointing out their flawed thinking, albeit in a nice and productive way.

What is the Benchmark? Local politicians veering off course on silly things like misplaced campaign ads, unkept campain promises, or poor personal decisions that intentionally harm others and benefit themselves? State politicians who are unaccountable for short term decisions that have obvious long-term negative effects? Federal politicians who cannot even bring themselves to discuss (let alone address) SERIOUS issues like Social Security, Health Care, Immigration, or Energy Policy?

The benchmark, I would suggest, does not lie within the Elected Officials; instead, I believe our failings come at the individual level where the ballots that are cast (hanging chads and all!) seem to decrease more and more with every election cycle. Just a little while ago, I learned of an acquaintance with an extremely keen mind and a previously important executive position in my community that has decided to take a long vacation, leave the country, and avoid the entire presidential campaign charade. This is unbelievable.

We have to wonder at what point the public will rise to the occassion and start taking its right to vote and be heard very seriously. Hopefully, prayerfully, it will be much sooner than later.

[Tomorrow's blog will focus on how hard the media has worked to lose our trust -- a truly spectacular achievement! -- and the ever-growing opinon that blogs are dramatically more believable than the media.]

As you can imagine, ethical issues are very high on our list of priorities. Today, I spent 4 hours reviewing numerous articles and videos on the subject of ethics. And, if this is a subject you are seriously tracking, you will note the same thing that has crossed my mind: so 'close' (common sense?) and yet so 'far' (how confusing can we make it?). One of the Great Thinkers of our time (still alive) describes 'ethics' as just doing the right thing. More specifically, he believes that every single person on this earth deserves the right to happiness and well-being. Simply put: anything that you do (or don't do) to assist all others in attaining this right to happiness is 'ethical' -- conversely, anything you do (or don't do) to interfere with the right of others to enjoy happiness is 'un-ethical' -- how much more simple does it need to get? While it is enjoyable for some of us to delve into specific cases, one by one, and analyze 'who did what to whom and why' it is really unnecessary. Make today a great day -- be ethical -- "first, do no harm." You, too, will find that the definition is not nearly as important as the action.

[Tomorrow, I will write on the issue of 'Disillusioned Ethics' -- a far too common malady.]

I received an email recently that I believe outlines why we here at CGEA believe the Non-Profit Sector has more potential than any other sector to solve the world’s toughest problems.

“Remember Lee Iacocca, the man who rescued Chrysler Corporation from it's death throes? He has a new book, and here are some excerpts:

...The Biggest "C" is Crisis ! Leaders are made, not born. Leadership is forged in times of crisis. It's easy to sit there with your feet up on the desk and talk theory. Or send someone else's kids off to war when you've never seen a battlefield yourself. It's another thing to lead when your world comes tumbling down.

But when you look around, you've got to ask: Where have all the leaders gone? Where are the curious, creative communicators? Where are the people of character, courage, conviction, omnipotence, and common sense?

Name me one leader who emerged from the crisis of Hurricane Katrina.
Congress has yet to spend a single day evaluating the response to the hurricane, or demanding accountability for the decisions that were made in the crucial hours after the storm. Everyone's hunkering down, fingers crossed, hoping it doesn't happen again. Now, that's just crazy. Storms happen. Deal with it. Make a plan. Figure out what you're going to do the next time.

Name me a government leader who can articulate a plan for paying down the debt, or solving the energy crisis, or managing the health care problem. The silence is deafening.

If I've learned one thing, it's this: ‘You don't get anywhere by standing on the sidelines waiting for somebody else to take action. Whether it's building a better car or building a better future for our children, we all have a role to play.’”

It seems that non-profit organizations today are facing increased competition while the funding sources are almost shrinking. These two factors make it challenging to meet funding needs, and many executives find themselves spending the lion's share of their time on fundraising instead of other important tasks and operations. We hear this complaint frequently, and we certainly understand how frustrating this situation has become.

Fortunately for non-profits today, our Certification is designed to help. By completing our Certification Course, non-profits demonstrate their commitment to excellence in non-profit governance, ethics, and accountability. Funders, who always like to make sure they're working with professional and well-run organizations, recognize the Certification as an outward display of operational excellence. They understand that, by working with non-profits that have a Certification, they are giving money to a reliable and trustworthy entity.

Think of the Certification as a competitive advantage, in an age where a growing number of groups are seeking funds from sources that seem to be shrinking.

Almost all non-profit executives and board members will tell you that they don’t have enough time. Between fundraising challenges, managing operations, and keeping up with day-to-day errands, there is rarely time left to pursue other things. Additionally, most non-profits are not aware of or are unsure about their compliance levels with state and federal rules and regulations, and they don’t have the time to do the extensive research to find out. Evaluating compliance often falls by the wayside, which can have serious consequences in the short and long-term.

Fortunately, we’ve developed our Certification Course to solve that problem and more. Our self-paced, online, affordable training provides a comprehensive, concise experience that will ensure you comply with all state and federal rules and regulations. It provides a “one-stop” location for everything you need to excel, so you don’t have to worry about trying to find the time to do exhausting, and often unsuccessful, research. And, by getting a Certification, you are demonstrating your commitment to excellence, which is recognized by funders and stakeholders alike.

An east coast non-profit received a $50,000 strategic planning gift from a corporate donor. A west coast non-profit consulting firm was selected to provide the services. The initial report of the consulting firm was anything but encouraging; they found board members had not provided proper oversight, a former executive director had embezzled funds, policies and procedures were not in writing and/or could not be located, members of the community were not clear of the mission of the organization, and the current executive director was not certified. What was intended to be a good project has now become front page news. Oops!

This organization could have prevented this mess by ensuring they comply with all regulations, and by implementing superior policies within their organization. Our Certification Course allows non-profits to do just that. Do you know if your non-profit is complying with all regulations? Avoid situations like this one by signing up for our Certification Course today, and demonstrate your commitment to excellence!

More and more folks are talking about the incredible potential of the non-profit sector. Non-profits are in a great position to help bring about positive change on any number of issues. That is not particularly true for the public or private sector. The government can be so mired in politics and distrust that little is accomplished. For-profit companies tend to avoid social change issues because they are, in general, less profitable. So, that leaves the non-profit sector in an incredible position to really make powerful, positive social changes.

In addition, the non-profit sector is increasingly appealing from a career perspective. Quality of life is just one powerful benefit, along with the ability to really be proud of the cause toward which the organization is working. Interestingly, the growth of the non-profit sector and the aging of the current population means that literally hundreds of thousands of rewarding job openings can be expected in the near future.

Here at The Center, we understand the incredible potential of the non-profit sector. We're dedicated to helping organizations comply with the increasingly strict government regulations, while achieving and demonstrating excellence in operations. Our Certification allows organizations to tout their accomplishments, making them more appealing to prospective employees and the general public alike.

If any of you were watching CBS Evening News last night, you probably remember the story about the attorneys who kept Fen Phen settlement money from their clients, formed a non-profit to pay themselves -- and the Judge -- salaries for many years, and even purchased a professional, and well known, race horse. Unbelievable! You can read more about it yourself here: http://www.cbsnews.com/stories/2008/02/18/eveningnews/main3842859.shtml?source=RSSattr=HOME_3842859

This is one of the only examples in recent memory that involves all three sectors -- public, private, and non-profit. And, unfortunately, the non-profit sector was abused terribly so that a few individuals could pay themselves money that was not theirs.

What the news story did not mention was the outcome of the non-profit organization, and the harm it did to the non-profit sector as a whole. Scandals like these lead to increased scrutiny and stricter regulations for all non-profits. Here at The Center, we strongly believe that non-profits have incredible potential to bring about positive, powerful social changes. We work hard to help non-profits that are committed to excellence achieve and demonstrate that commitment, so they can distinguish themselves from scandals like this one and show the public that so many non-profits are focused on important and very respectable causes.

Business Week published this article a few years ago that is very relevant to the mission of The Center for Governance, Ethics, and Accountability. Essentially, it talks about the increasing scrutiny being placed on the Non-Profit Sector, and the growing number of state governments that have taken, or are taking, action to create and enforce stricter regulations and requirements for non-profit entities. In addition, the Federal Government is taking actions now to move forward with new, stricter requirements for non-profit organizations.

Many non-profit organizations do not even comply with existing regulations and requirements. In fact, many non-profits don't even know there are regulations with which they must comply. The increased scrutiny is making compliance even more critical today, while the stricter regulations make that compliance even more challenging. Our Certification Course is designed to help organizations make sure they comply with existing and forthcoming regulations and requirements. It also allows organizations to demonstrate their commitment to excellence.

If you haven't already, take a few minutes to learn more about our Certification Course. It is affordable and easy to use.

If your organization doesn't comply, there could most certainly be negative consequences; so, save yourself the trouble and make sure you exceed existing and forthcoming regulations by signing up today. You'll be glad you did.