The Center for Ethics, Governance, & Accountability

I’ve recently been asked how to best go about advertising for a new executive director. The actual question was how to go about selecting magazines, newspapers, etc. to place ads for new executive directors. My short answer is simple: none!

I believe that executive directors should be recruited for the specific job skills that are needed by the Board for the organization at that time and the foreseeable future. This is especially true when the long-serving, founding executive director decides to retire.

Recruitment can take many forms; I have been part of search committees that pay for professional recruitment services that typically costs $25,000 to $50,000 for a national search. I will avoid any discussion on that particular approach because (a) most organizations cannot afford recruitment services in these economic times; and (b) these economic times present new recruitment opportunities that may be even better than a national search.

Let’s start with a simple checklist:

1. The recruitment process should be conducted by the Board of Directors and the retiring or departing executive director should not be part of the process. Top-notch executive directors will already understand why – you will not need to explain it.
2. An Executive Director Recruitment (or Search) Committee should be formed as a special committee of the Board and a member of the Board should chair it. (It’s healthy to get non-board members to participate in the search as well – an excellent source for informed individuals are the former board chairs.)
3. The committee should recommend to the board the specific skill set that is needed, together with any specializations. (Example: if your national accrediting organization has concerns with the quality of your exhibits and your accreditation is in jeopardy, it would not make sense to seek a new executive director who is especially gifted with outreach in the community.) Fit the need to the skill as closely as possible. Make sure the job description is current and approved by the Board.
4. Start by doing something unusual: write a letter to all the chairs of all the non-profits and the top executives of as many private sector organizations in your region as possible. The purpose of this letter is two-fold: (a) make the recipient aware of your organization’s executive director search; and (b) ask them if they are aware of anybody they would recommend for the job. People love to be included in important decisions like selecting a new executive director, so don’t be timid about seeking input.
5. Hold a committee (and board) discussion about the current state of the organization and exactly what you are looking for in a new executive director, making clear that a specific skill set is the goal. (I have seen executive directors moved from one organization to another, only to fail – and – I have seen executive directors overlooked for a position in which their specific skill sets were well-suited, but unknown by most people.)

Anecdotally, the economy that is challenging the Non-Profit Sector (and everyone else) should be the perfect time to seek executive director candidates. It is very possible that the executive director search could identify experienced candidates that are now willing to work for a non-profit (instead of a public-sector or private-sector organization) – and – energetic candidates willing to tackle the challenges of the non-profit world.

I really like the idea of asking people if they know of anyone they would recommend as your executive director. Please make this a specific request in your letter. I actually know of one case where a bank president (a recipient of a letter from the non-profit organization) replied that he would like to embark upon a new challenge and be considered for the job!

However, before the letters get addressed and mailed, a lot of thought really does need to go into the search process. When I mentioned the importance of being able to outline the precise skill set for the new executive director, most boards and organizations will find that is not an easy thing to do. It becomes easier if the Strategic Plan (or Long Term Plan) of the organization exists, is up to date, and is known to all the board members. The easiest way to lose the best executive director candidate is to have board members provided differing answers or, even worse, no answers at all.

In the case of a retiring (under good terms) executive director, I suggest the search committee spend some quality time and gain their perspective on how the job should next evolve. In the case of a departing (under not-so-good terms) executive director, the search committee should glean as much information as possible – perhaps from the exit interview – but be sure to filter that information through the future vision of the board. Why? Because the board always holds the ultimate accountability and its vision must be the determining factor. Gaining input from a myriad of sources is good; but, in the end, the board must act.

Perhaps the most important aspect of the recruitment (or search) exercise is that the Board stay involved and in control. Unless you just get lucky, the work of the search committee is hard and involves three parts: (a) the planning; (b) the searching; and (c) the interviewing. There is also follow-up work to do once the selection is made, particularly if a spouse and children are involved in relocating. (Hint: do not make the mistake of overlooking the needs of the family – I have seen a number of top choices lost to organizations who did not understand that it is a family you are bringing to town, not just an executive director.)

Let me speak to the issue of interviewing. For the sake of argument, let’s say you have three good candidates. Although it’s time consuming, take the time to make sure all of the arrangements for the candidate’s visit are in order (airport pickup, hotel reservations, itinerary, etc.). I do not recommend more than one interview per day. A well-planned, solid interview by a board committee is an all-day event. Let’s face it: if you have done a good job finding a good candidate, then that candidate deserves your full attention. I find that too many organizations try to sell themselves to the candidate; instead, I would recommend sharing some honest scenarios and ‘what-if’ questions and answers between the committee and the board. This is an excellent way to determine how the executive director and board member will interact. Please note this is not to say that you should not promote your organization as positively as you can; after all, you seek a top-notch performer, so you need to demonstrate you are ready and worthy of such a person.

In conclusion, I believe the timing is ideal for non-profit organizations to aggressively recruit executive directors like never before – primarily due to the economy – but, also due to the challenges and rewards that the public is beginning to identify with the community (non-profit) sector.

This subject – executive director recruitment – is a critical one; let’s see if we can get some good feedback and dialogue going from this article to the blog. Share some actual experiences. Ask some questions that you would normally not want to ask (everything is as anonymous as you want it to be). Let’s have a meaningful dialogue. Your input is requested.

Discussions with numerous parents, school administrators, and students indicate that more colleges are beginning to look for the “well-rounded” student – not just the ones with the highest grades or the best SAT scores. Outside activities and essays are two areas in which prospective college applicants can distinguish themselves from the competition in the eyes of the college admissions officers. When submitting a college application, it is important to get noticed; volunteering for a community non-profit organization (NPO) may be the ideal solution.

And, volunteering could provide a true ‘Win-Win’ for the NPO and the volunteer.

Most non-profits I know have lost their ability to attract significant numbers of volunteers. I have not researched this issue, so I do not know precisely why; I only know that I hear a lot of executive directors complaining that they cannot find volunteers like they could years ago. My guess would be that there are so many different volunteer opportunities (the numbers of NPOs have increased dramatically over the past few years) that the pool of volunteers has too many choices and, therefore, the volunteer resources are spread too thin for most communities. In order to change this paradigm, the pool of volunteers must be increased.

This article provides an idea for revitalizing the high-level volunteer ranks within a community non-profit.

Accordingly, it is time for NPOs to move into ‘active recruitment’ for the volunteers they want and need. As with any endeavor, the benefits must accrue to both parties – the ‘Win-Win’ I mentioned earlier must be tangible. For the type of program that is envisioned, one cannot expect student volunteers to sign on for menial tasks that nobody else wants to do – instead, the project must come with a high level of excitement.

Competition for volunteers will continue, in my opinion, to be challenging. But, that’s okay: NPOs compete every day for resources and services; they can position themselves to be attractive to high school sophomores, juniors, and seniors (although students waiting until their senior year to volunteer will not likely have significant experiences with which to include on their college applications). Also, competition works both ways: the NPO could announce that it will accept, say, three volunteers and make it a community-wide competition for selection.

As with any new program, a volunteer initiative must clearly define the opportunities open to the student and the non-profit must do a good job of promoting the opportunity and delivering what it has promised. Meetings with guidance counselors at various high schools would be an excellent start. A program of this magnitude could well be chaired and staffed by interested board members, which serves the dual purpose of getting them involved in a specific aspect of the NPO. It would be hard to imagine that the inaugural year of the program would be anything other than successful; the challenge lies in creating a sustainable program over time.

It should be obvious that a “Student Volunteer Program” can be wildly successful.

What would the student volunteers do for the non-profit? Let’s consider the purpose of the program – to assist students in becoming competitive in their college applications – and make sure we know what NOT to do with the student volunteers.

Examples of non-starter activities include:

• taking tickets at events
• soliciting funds
• running errands
• providing secretarial or clerical support

These are not examples of activities that (even though essential) would entice student volunteers, nor do they provide a non-profit experience that can assist in the college application process. A poorly structured program will certainly fail; hence, the suggestion to make this a board committee elevates the program to the highest level within the leadership of the NPO.

If we think ahead – to the ultimate benefit of the non-profit organization – a long-standing, competitive, successful student volunteer program could ultimately carry community prestige and, perhaps, become noted by certain colleges and universities as a designator of top-notch students (like a “Rhodes Scholar” for example). In order to reach this level of success, the student volunteer program must:

• be designed well from the beginning
• provide the edge students need in the application process
• be sustained and improved over time.

(In this article, I will not provide a 1-2-3 process of creating the program; those steps should be obvious to creative thinkers and innovators. Also, it should be understood that a student volunteer program will intentionally differ from the non-profit’s general volunteer programs.)

We should think about the ultimate outcome of the volunteer experience for the student. The goal, as we have already defined it, is to provide an extra-curricular opportunity to participate in a meaningful community service. The specific assigned tasks must be broad enough to encourage individual creativity and thought and significant enough to provide the NPO with an outcome that it could not likely achieve except for the volunteer involvement. In order to accomplish this task – and to explain it well enough on a college application – at least two measures of success must be eventually achieved:

(1) students should be able to make a compelling argument (in a short paragraph and in an interview) as to why the volunteer experience was both personally rewarding and provided a significant contribution to the community

(2) outcomes of the student volunteer program should be significant enough to serve as the topic for the essay that must accompany most college applications.

Designing and introducing a student volunteer program will not be an easy project – nor should it be – because the non-profit seeks to provide the leadership for a ‘Win-Win’ proposition that must attract talented student volunteers. With so many high school students unable to gain employment of any type – either full-time during the summer break or part-time during the school year – and with so many non-profits unable to attract volunteers, the timing appears ideal to roll out a student volunteer program in your community.

Since when did the title of Executive Director (ED) become undesirable by the person holding that position in a Non-Profit Organization (NPO)?

In my regular activities at The Center for Ethics, Governance, and Accountability (CEGA), I research non-profit organizations of all types. A disturbing trend is emerging: more and more EDs are receiving titles such as President – and, even CEO. From a corporate governance standpoint, I believe this is a mistake that needs to be rectified as soon as possible. And, quite frankly, without exception. This article will explain why.

Look at three technical issues that make the President or CEO title designation problematic:

1. Non-profit entities, while approved by the IRS, derive their governance structure from the states in which the corporation was established. Most states require only two officers: President (not Chairman or CEO) and Secretary.
2. Non-profits are also governed internally by their Bylaws and Articles of Incorporation. Within the bylaws of the non-profit organization, the required officers are designated.
3. The non-profit status from the IRS clearly designates the title of ED and draws distinctions between board members and staff (which includes the ED).

Also of growing concern is board service by EDs on peer boards of other community NPOs. This practice tends to make it look like there are not enough professionals willing to serve as volunteer board members in a given community. But, mostly, I believe the ED seeks more recognition, perhaps due to issues of competition with peer organizations in the community, whereupon the ‘need for importance’ begins to emerge. Almost always, these ‘needs’ are driven by fear, along with feelings of inadequacy (which are almost always unfounded). Never-the-less, to the extent these feelings lead to ‘title creep’ by the ED, we need to pay attention to the reality of the power structure within the community.

I see two technical issues that should give a non-profit board pause: (1) converting the title of President of the board to Chair of the board does not confer the required accountability of the title of President; and, (2) most NPOs will find their bylaws do not speak to the issue of delegating presidential powers to the ED.

Importantly, the Board should NOT cede executive responsibility and oversight to the executive director. To do so undermines (i.e., gives away) the authority and accountability intended for the board of directors. The importance of the role (i.e. responsibility and accountability) of the board in every NPO is ‘on the radar’ of the U.S. Senate Finance Committee, the Treasury Department, and the IRS from a regulatory standpoint. Even if the bylaws are innocently misconstrued by the board to permit naming the ED as president, I believe it is a bad practice, for the reasons outlined below.

Having served on many NPO boards of directors, I cannot remember exactly when this ‘title trend’ began to gather momentum. Anecdotally, I suspect it was back in the pre-Enron days (before Sarbanes-Oxley) when private-sector businesses were flying high, record profits were routine, and executive perquisites were sprinkled all around. In the ‘search for significance’ within the community leadership ranks, I suspect the EDs of the NPOs thought the President and/or CEO title would elevate their stature in the eyes of their ‘peers’ in the community. And, as is apparently happening too frequently, many boards have acquiesced – probably with little or no thought as to the Governance issues (i.e., the dreaded liability concerns).

I alluded to the U.S. Senate Finance Committee above. The committee has already acted upon its investigation into NPO governance issues and practices. Seven key issues were identified and Treasury and the IRS were instructed to act on them administratively. I believe were it not for the economic woes that are consuming most of the energy in Congress, that these seven issues would be well-known to the NPO community by now. I also believe that it would be wise to be proactive in the compliance with these key issues. This is the foundation of the mission of The Center for Governance, Ethics, and Accountability (CEGA).

While the ‘title trend’ problem concerns me from a Governance and Accountability standpoint, I think three issues are driving the proliferation of what we might call ‘title creep’ (i.e., dissatisfaction by the ED with his/her title and seeking the CEO/President title from the Board):

1. NPOs are becoming more and more important in the communities they serve. I believe this is a good thing, as espoused by the mission of our organization (CEGA), and highlighted at every opportunity I have to write and speak. I firmly believe that NPOs are positioned to address issues within the community that neither the private sector nor the government sector can solve. This opinion is proved correct as economic conditions grow worse and neither the local government sector nor the local private sector has the resources to assist in the manner it displayed in the past.
2. EDs, especially if they are serving on other community boards populated by private-sector business leaders, mistakenly begin to regard the private-sector board members (CEOs, Presidents, Vice Presidents, etc.) as their ‘peers’ on those boards. I would argue the private-sector leaders are not peers of the non-profit sector leaders. This is not to say that the NPOs are not important (perhaps, even more important to the local needs of the community) but it is meant to convey that the position of ED in a community NPO is extremely important, challenging, and requires full-time attention to detail; EDs should not have time to serve on other NPO boards – their value resides within the executive leadership of their own NPO.
3. There is a reason why we are seeing a proliferation of NPO leaders (e.g., EDs) on our community boards: the private-sector leadership is declining as companies consolidate in these challenging economic times and as globalization continues to reduce the corporate sector in the U.S. This does not mean NPOs should (or must) settle for ‘second-rate’ board members; quite the contrary – board recruitment is more important now than ever. I strongly suspect that difficulty in recruitment (or, even worse, lack of trying) is creating a void that EDs seek to fill by serving on each other’s boards. Scarcity of board members is a bona-fide concern, but remedying it with EDs serving on other NPO boards is a mistake.

The Non-Profit Sector is poised to solve the challenges of our communities in ways that the Private Sector and Government Sector cannot. Accordingly, I am no less of a fan of NPOs than I have always been; I simply believe that it is time to get the titles right (i.e., restore the respect of the ED position) and keep the organizational liability and accountability vested at the board level. To do any less is to misunderstand the manner in which a best-in-class NPO must function to be highly successful. Today’s ED is more important to the success of the NPO than ever before – and a full-time, properly titled leader is required for the day-to-day activities that enable success.

While it may seem that raising the issue of titles may appear petty and unwarranted, I suggest that an ED with a title of President or CEO is an indicator of deeper problems within the organization. Take a look. Let me know what you see.

The national dilemma of raising the debt ceiling provides an opportunity for the Non-Profit Sector to learn a critical lesson. The lesson is not about the standoff or a compromise. It is about accountability.

As of the date of this article, the debt limit issue looms large and there is no sign of a compromise between the House, Senate, and the President. Despite meeting almost daily for weeks, the sides have been unable to make progress toward a compromise. The merits (or lack thereof) on the differing ideologies are well beyond the scope of this article; however, the ‘debt ceiling issue’ offers a valuable lesson that should not be overlooked. Given the fact that I write regularly about issues of ethics, governance, and accountability, as they relate specifically to the Non-Profit Sector, I felt compelled to share some thoughts on the issue of accountability.

What prompted me to write at this particular time? Well, an article in “The Washington Post” explains that the Democratic leadership in the Senate (who, by the way, do not speak for all the Democrats in their caucus) has suggested that Congress authorize the President to raise the debt ceiling. Whether this is a one-time proposal or a permanent transfer of power for the all-important debt ceiling issue is unclear at this point.

What is very clear – and the subject of this article – is that ‘authority’ without ‘accountability’ is totally unacceptable. The fact that accountability is lacking and allowed to continue in the Government Sector (both in the elected positions and the administrative offices) is at the very core of our continued downward spiral over the past several decades. There must be no debate on this issue.

The criticality of accountability is a concept that applies to the federal debt ceiling issue and to all issues facing any charitable organization in the Non-Profit Sector on a daily basis. (In fact, generally speaking, it appears that the only place where authority does not require accountability is with the Government and Wall Street; consequences are meted out regularly to all other offenders.) Where is the disconnect? Why is this behavior so completely tolerated that it has become accepted practice? Where are the voters?

Simply stated, ‘authority without accountability’ undermines the root faith, belief, and support of any organization. Such a breach in policy also undermines the ethical and governance foundations upon which the non-profit organization has built its reputation.

The comparison between the Public (or Government) Sector and the Non-Profit (or Community) Sector is direct: voters are the donors and volunteers; Congress is the board of directors; the President is the executive director; laws are the policies; the public are the stakeholders; etc. The purpose of the organization that I founded, The Center for Ethics, Governance, and Accountability, is to champion the importance of appropriate and quality behavior – pretty much the antithesis of what we are seeing right now in Washington, DC.

Further, this issue could also provide a lesson on governance to non-profits. The Republican response to the potential for ceding the power to the President to set the new debt ceiling has been negative: termed the “Pontius Pilate Pass the Buck Act of 2011,” the idea is definitely not a good one. The founders of our nation set up a system to prevent any one person from making such magnanimous decisions.

Were Congress to proceed with this idea (and were the Supreme Court uphold what would surely be challenged as unconstitutional), the Responsibility assigned to the House of Representatives and the Senate would be shirked. In addition to key words like ‘authority’ and ‘accountability,’ the word ‘responsibility’ is critical to this discussion as well.

To take this real-life Congressional analogy back to the Non-Profit Sector example, the board of directors of the non-profit is ‘responsible’ for the governance of the non-profit organization; the board delegates the ‘authority’ to accomplish stated goals and objectives to the executive director, and the board should hold the executive director ‘accountable’ for his or her actions.

The purpose of this article is to draw attention to the issue of ‘accountability’ and to inform and encourage dialogue among board members across the nation. I believe sharing of thoughts on key issues will improve the awareness, and therefore the performance, of every non-profit organization.

Please join the dialogue. I would be very interested in what you have to say.

For the second year in a row, I was invited to speak to the graduating class of students in a technical field at a large state university. Three years ago, every graduate had a job already lined up following graduation. However, the past two years have been unique: not a single student had a job offer. And, believe me, they were depressed.

So, that’s what the students wanted to talk to me about – how to find a job? Who will give them a chance? How can you have experience if nobody will give you a job? All are good questions. Technically, I was invited there to discuss quality management practices but, honestly, that subject is boring and it was great that the students spoke up and told me what they really wanted to talk about. That was impressive to me.

It’s time for some out of the box thinking. I’ve been mulling this over for several weeks and this article will share my thoughts.

Internships. (aka Volunteers)

I actually told the graduates to walk into the company of their choice and offer to work for free!

It seems like a win – win scenario to me. The typical college graduate has now gone back home to live with his or her parents because job opportunities are just not out there. Rather than sit around and become depressed about economic conditions they can do nothing about, I told the group they might as well be proving themselves in whatever work setting they feel is their Dream Job. If they offer to work for a certain period of time for free, and assuming their work is better than average (maybe even excellent) – along with the proper attitude, communication, and teamwork skills – it seems to me that it would only be a matter of time before the company moves them from an Intern to an Employee.

I am aware of Foundations that provide funds for internships. During the initial “sitting at home period” – you know, the one immediately following the big graduation festivities (okay, after getting back from the graduation trip to the beach or wherever), the prospective intern could check out Foundations that support internships. With a paid internship in hand, it seems to me that it would be even easier to get a chance at that Dream Job since there is no cost to the company AND a foundation interested in the mission of the charitable organization.

For those students that are entering college (or have several semesters remaining), I would highly encourage an internship (it used to be called “co-op”) experience. Some quick research has shown me that there are many companies still offering these programs. Work a semester, go to school a semester; upon graduation there is a job available where the internship has paved the way. But, this line of reasoning is a bit off the intended subject, so let’s get back to Non-Profits.

As I have preached for years in various articles, via The Center for Ethics, Governance, and Accountability (which I founded to support the not-for-profit sector), I believe that a non-profit organization (NPO) – actually, the entire Sector of NPOs – holds the greatest promise for helping our country solve its many challenges. And, the non-profits need to attract young, bright, and energetic college graduates to their organizations.

What better way than to advertise for interns? Perhaps the NPO will offer a small stipend from within its own budget, or find a donor who will sponsor interns for a certain amount of money. The options are virtually unlimited. Just climb outside of the box.

I suspect, however, the graduates are probably a bit too timid to take the bold steps that I recommended when I spoke to that group (which is not such a bad thing). So, the non-profit sector needs to take the leadership role and announce its desire for interns. The NPO could even recruit interns from board member referrals or another method. The point is that there is no reason why the organization cannot attract the “best and brightest” using this “internship scenario” in these uncertain economic times.

Try it. Let me know how it works for you. After all, there is nothing to lose and a lot to be gained, both for your non-profit organization, the community of stakeholders it serves, and the graduate who wants and needs to get out of their parents’ house.

For all of the NPOs out there, remember your filing deadline is May 15 if you operate on a calendar year.

You know the rule: Form 990 (or other applicable filing) is due on the 15^th day of the 5^th month following the end of your accounting period. May is the 5^th month, so don’t forget to file.

You have options, but you still must act by May 15. For example, you can file the form to extend your deadline by 3 months. And, the IRS will even allow you a second extension of 3 months.

Remember the issue that had befallen the thousands of non-profits that had not filed for three years? They lost their charitable status (as well I think they should). Even that is fixable, but you have to know the rules and play by them. I have always found the IRS very cooperative and much easier to deal with than most people seem to think.

If your organization has gross receipts of $50,000 or less (even that has changed to the benefit of small NPOs – previously it was $25,000 or less) you may file Form 990-N. Some people call this the e-Postcard. Everything is done on-line via an IRS contractor. You must register (please don’t forget to keep your registration information because you will need it next year) and then you simply go to the site, complete the information, and hit SEND. You will promptly get a ‘receipt’ to print out that verifies you filed and when. It will literally take you less than 5 minutes the first time and probably about 3 minutes each year thereafter.

Since I believe so strongly that the Non-Profit Sector must take the opportunity to be the best of the best, there is nothing more important than the timely filing of your information with the IRS.