Demonstrating Donor Due Diligence

As a major donor to a large nonprofit charity or foundation, what due diligence do you perform to ensure the board leadership is making unbiased decisions as disinterested board members? If your answer is none, you are making poor investment judgments. Just as you would examine an investment prospectus, you should perform similar due diligence ensuring the board director's decisions are being made "at arm’s length." 

Especially during an executive search, directors may make decisions based upon their personal bias or connections, not solely on the ability and experience of the candidate who will best bring sustainability and move the organization forward.

As an "investor" in a nonprofit or foundation, ask for search committee and board minutes to examine their hiring policies, process and judgment. If the search committee is limited to too few members, lacks transparency, fails to include major donors, or other directors are told not to refer candidates, I would question the board’s process and lack of policy and transparency. If the evidence indicates any of these issues, at the least I would address these issues with the board - at the most I would immediately remove my investments.

As representatives of the public, 501(c)(3) corporation directors are ethically and morally bound to leave self-interest at the door, seeking only the interest of the organization, donors and those receiving public benefit. Your investments and your community deserve no less.

Online Assessment Tools for Identifying Organizational Issues

Nonprofit Leader,

As an Executive Director I often wanted to know how well my board and staff understood our organization’s mission and vision, and if they were being clarified well enough.  I needed to assess the awareness of my board of how critical their understanding our programs and networking was to the organization and to our position in the community.  

Each time I looked over an organization’s financials and fundraising, I found areas needing improving, and fundraising issues that the staff and board had not recognized had changed over time.  It was that process of discovery and analysis that helped me revitalize several stagnant nonprofits and help them thrive. 

It was the fresh perspective of an outsider that made the difference.  In many cases a consultant is hired to show an organization’s leaders what they have been missing and help them make the right changes.  Some of the leadership and/or staff may recognize the issues, but may not be able to be the agents for the needed change.  Thus, the third-party consultant is engaged.  But how do small, struggling under-funded nonprofits afford the rates for an experienced consultant?  They can’t, and so they keep struggling through tough organizational issues, ineffective programs, staff turnover, disconnect with the community, and loss of funding as a result.  And what are the options for well-run organizations to take an occasional fresh look at their organizational dynamics and leadership?

It was recognizing these issues that led me to create several online assessment tools that provide the data nonprofits need to get the overall view of their organization and start recognizing the needed changes to make.  By limiting travel and time of on-site interviews we reduce the cost and still provide a needed summary analysis to help an organization: 1. understand the stage in their life-cycle, 2. examine Staff-CEO-Board relationships, 3. measure their fundraising effectiveness.  

By developing anonymous surveys administered online, I have been able to assist a number of organizations of various age, size and budget.  The survey results are graphed for ease of understanding, and a brief, interpretive assessment is provided of potential action steps for further considerations.  The next steps are up to your organization’s leadership and funding capabilities.  You may decide to engage me or other advisor to help you move forward.  In any case, you will have this very important data with which to help change your organization for the better.

I invite you to take a few moments to examine my website and my background, and the four levels of low-cost assessment analysis tools I offer at jklewis54.wixsite.com/charisnp.  Whether you decide to engage my services beyond the surveys is completely up to you.  I am available to you to discuss how these can help your organization and help you lead quality change.

 

Serving together,

James K. Lewis, m.a., ccnl, cfre^®

Assessing Proper Board Oversight Limits Culpability

This article by Eugene Fram, author of "Policy vs. Paper Clips" is a good overview of critical board roles in providing due diligence. Too many nonprofit boards don’t realize their culpability for CEO performance. Appropriate oversight will provide for proper monitoring and fully understanding organizational issues.

The board must recognize their responsibility as an independent arbiter of facts, without prejudice. It may be that the board's monitoring of the CEO is minimal or non-existent, which puts a level of onus on the board for an escalating issue. Sitting down with the CEO to gain insight and discover what support he or she needs should be the first step when any issue is brought to the board's attention.

Your board and your community (which you represent) are too deeply invested to allow for a lack of proper oversight sidelining your CEO – and potentially your organization’s mission and vision. Remember, your role with the CEO is a partnership!

As a nonprofit consultant, I'm particularly cognizant of the issues raised by this article. I've heard that among the membership of just one national nonprofit association, in the last year there have been about 12 member organizations that have gone through tumultuous leadership shifts, with this being the primary issue.

While the board must step in when appropriate, there must be policy and procedure in place that is closely followed. Only when serious ethical or fiduciary malfeasance is found should a board step in directly.

Developing, protecting, and reconciling the relationship with their sole employee, the CEO, is their primary job.

In light of these concerns, one of the first assessments I recommend is a board survey to highlight any governance and policy issues or disconnect with the CEO. In a majority of my cases so far there have been indicators of a need for board/CEO training in monitoring and policy creation. Every effort at deepening the relationship and trust with your CEO will pay dividends.

Rights of the Individual vs Community

In light of recent conversations related to various rights being questioned as being in the community's best interest, I will make a brief comment on the veracity of the individual over the community. Dietrich Bonhoeffer brings critical thinking forward for us today. Claiming one's rights is counter to the self-renunciation we find in the Sermon on the Mount (Discipleship) . . . but we are to fight for the rights of others (Ethics), which – rather than renunciation – is a form of transforming initiative. I think that's what America's founders had in mind with the Bill of Rights as they set forth protection from an oppressive government – in order to provide for free personal and corporate (community) responsibility. That individuals would act with respect toward the benefit of community was part of their ethic . . . an ethic which has been tempered in our post-modernism. (I will preemptively add here related to the slavery issue: some Founders were proactive for the inclusion of extending rights to all, while others surmised that it would cease of its own accord given time and economics). The question remains for us: how to balance the rights of the individual and community. Bonhoeffer’s writings may provide some clues. From “Life Together” to “Letters and Papers from Prison” we glimpse the possibilities of community.