14 May 2011

If anyone understood what nonprofit board membership entails, no one would ever agree to serve.

Have any members of nonprofit boards really thought through the legal and moral responsibilities involved?

I'm not a lawyer, so I won't attempt to terrify you by providing an authoritative account of the legal responsibilities that are vested in the boards of nonprofit organizations. You can look that stuff up. Read it and weep.

Though not a lawyer, I am something of an armchair ethicist.(1) And the more I think about the ethical demands placed on nonprofit boards, the more clear it seems to me that no one could ever manage to live up to the nominal duties.

Let's consider BoardSource's list of the “Ten Basic Responsibilities of Nonprofit Boards:”

  • Determine mission and purpose.

  • Select the chief executive.

  • Support and evaluate the chief executive.

  • Ensure effective planning.

  • Monitor, and strengthen programs and services.

  • Ensure adequate financial resources.

  • Protect assets and provide proper financial oversight.

  • Build a competent board.

  • Ensure legal and ethical integrity.

  • Enhance the organization's public standing.

Once I read the more detailed explication, it was clear to me that if anyone really fulfilled these duties, he would not only be unavailable for any other task, but would also be unable to get a good night's sleep.

It's #9 that clinches it for me: “ensure legal and ethical integrity.” How on earth is a board member supposed to be able to do that, when so often he is also mandated to keep his nose out of the day-to-day management of the organization? Reviewing the various job descriptions that are written for board members and chief executive officers, I realize that the division of labor seems designed for failure. The board members seem to have all the solemn responsibility of administering a public trust, and the CEO has most of the opportunities to abuse that trust.

Moreover, I know - and anyone who works on a day to day basis in a nonprofit organization knows this as well - that unless board members stand next to employees all day and watch them, it's difficult to ensure that everyone is really complying with policies set by the board.

In the long run, various kinds of audits and inventories can reveal patterns of ethical or legal violations. Moles and whistleblowers can also document bad behavior. But there's a real disconnect between the ultimate responsibility vested in the board, and its ability to ensure that high ethical and legal standards are met, and it's no wonder that liability insurance for nonprofit boards is a hot topic.

1) Like most nonprofit professionals, I am keenly interested in ethics, seeing it as a tool for constructing elaborate arguments that prove my utter superiority to the rest of humanity. I continually fail, but hope springs eternal.


Anonymous said...

I suggest you, we take a deep breath. The another. Then a third. The Board is not responsible to operationalize (sorry for the cumbersome term, but it works), it is responsible to create the overarching rules, expectations, and gross accountability for in this example, ethical behavior.
If any board candidate really knew what required of role, none would sign up? Gee, what about all those current board members that have served on other boards previously? Like me.
Is it a perfect system? No. But neither are for-profit corporations, organized religions or governments. TS

Peter Campbell said...

I don't mind the alarmist tone because I think a lot of people do join boards without considering the liability issues. It doesn't mean that you don't join boards; it means that you join boards of organizations that you believe are worthy of your trust.

When my son was three, we enrolled him in a Montessori preschool, but between the time that we enrolled him and the fall, when he was scheduled to attend, the school went out of business and was taken over by another Montessori preschool, who leased the facility and materials. They also agreed to grandfather in all enrollees, so we sent our boy to a school that we hadn't really signed up for. One surprise: The tuition was a quarter of what we had been planning to pay. A month or so in, we figured out that the new owners must be paying out one and a half times what they were bringing in each month. We knew the tuition, and, because we were friends with the previous owner, we knew what the rent was, and we could guess on salaries. So we crashed a board meeting, and made a lot of practical suggestions as to what they could do to recover. Their response? Begging me to join the board. I absolutely refused, telling them, get real about the financial situation, get out of debt, then we can talk. We pulled our son out shortly afterwards, and they didn't last the year, because the main 'force" on the staff insisted that raising tuition was out, and they could bridge the gap with more car washes and bake sales.

I'm on the board now of a smart and effective non-profit with a very competent CEO and staff.

Judy Nelson, JD, MSW, Certified Professional Coach said...

Just discovered you and love the challenging point of view. After 30 years as a CEO in the nonprofit world, I've seen a lot of sacred cows go unchallenged and become silly, sacred practices. While not all will agree with you, the field needs your help to stay vigilant in separating myth from facts from faulty practices. Thanks!

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