The Center for Ethics, Governance, & Accountability

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.