CEO’S ARREST SHOULD BE NOTED IN THE MINUTES

Q: Our CEO was recently arrested for a hit and run that resulted in some property damage. The situation made the newspapers. While the incident itself has been both legally resolved and handled internally in executive session, the board is divided about how to record this in our minutes. Some feel the issue should be dealt with head on. Others would prefer to merely indicate that a personnel issue was discussed and so noted in the individual's file. There is a concern that we may be exposing ourselves to a charge of libel by naming the CEO as the person discussed. How private are such personnel issues?

A: I’m sure a lot of people out there are breathing a sigh of relief that they don’t have to deal with your situation. But, the reality is that this could happen in any organization at any time. CEOs are people and people can get into messy situations. What you’ve shared happens more often than you might think.

The privacy issue you raise actually varies from state to state, so you should definitely consult a lawyer in your community. Assuming, though, that this is not a concern where you live, let me offer some other important issues for your consideration.

Normally, I subscribe to the “less is more” school of minutes. However, in this particular instance, where there was a serious offense, an arrest, it made the papers and led to some sort of restitution, I think you have to be more explicit than “a personnel issue was discussed and so noted in the individual’s file” – unless, the board opted to do nothing about it. In that case, as a colleague of mine suggests, you want to bury the subject by making any notation in the minutes as weak as possible.

A critical question that should play a role in your decision-making is, “Did the hit and run occur while the CEO was on organizational business?” If so, your response must be stronger than if it did not. But, in either case, my concern is that donors and other supporters undoubtedly read about the incident – especially if your organization is a prominent one and/or your CEO is a fairly public figure. They will question whether and how the board acted on this. If they can’t be confident that you took this seriously and acted in a responsible manner, they may doubt the board’s ability to steward the organization during challenging times. This could lead them to jump ship.

There should be no exposure to a libel charge as long as you stay with the facts and avoid anything that is supposition, since libel requires misrepresentation. (Just a reminder for other organizations that may find themselves in a similar situation, an arrest is not a conviction.) Actually, according to Steve Nill, a lawyer I consulted on this matter, the more public a figure your CEO is, the less you have to worry because that person would have to prove you acted maliciously – that is, that you knowingly included false information in the minutes.

To protect both the board and the organization, though, I would also call your insurance company. Tell your claims representative about the situation. Often insurance companies require that they be notified so that they are not surprised if someone decides to sue. But even if your company doesn’t require such notification, the representative may have some excellent suggestions for proceeding forward at this time. Some insurance companies will even provide you with legal counsel to help you avoid potential pitfalls.

One last thought… If you don’t have crisis management policies already in place, your board should run, not walk, to grab its collective pen! It is especially essential to have a plan for dealing with personnel issues like this that have the potential for becoming public, because unfortunately, as I indicated at the beginning, incidents like this or embezzlement of organizational funds, sexual harassment, and child pornography – to name just a few – tend to crop up more often then we’d care to admit. And they can leave the organization with serious egg on its face.

The plan might be to sweep any such incidents under the rug (Not my recommendation, by the way!), wait for the media to find you and pray that they don’t, or get out in front of the incidents with the media. If you decide to speak out, the plan should indicate who will serve as the voice of the organization. The plan is a good place to consider consequences for wayward individuals, as well. It’s always easier to decide these things in the abstract, when the emotions tied in with any specific individual are not at play.



A special thank you to Stephen Nill, J.D., GPC. and the founder/CEO of CharityChannel.com, for his added insights to this response.

Note should be made that even though an attorney was consulted in the construction of this answer, the above should not be construed as legal advice. Questions such as these are sent with minimal information and the answers are necessarily broad.

Who Should Facilitate the Exit Interview?

The other day a respected colleague and good friend, Carol Weisman, sent a copy of her latest blog post entitled, “Don’t Just Whack’em and Plaque’em: Exit Interviews for Retiring Board Members.” As all of Carol’s writings, it dealt with an important subject, was informative and had me in stitches – Carol is one of the smartest and funniest people I know. She spoke to the value of doing an exit interview and shared five excellent questions to use in such a situation. My only quarrel was that she put the responsibility for doing the exit interview on the executive director. I have always believed an exit interview should be conducted by the board, in the person of the chair or a member of the governance/board development committee.

She and I went back and forth with our arguments. She felt that the executive director is the constant – the one who will be there after the entire board turns over. I reasoned that there is no guarantee that the executive director will be there tomorrow, let alone years down the road. I know too many organizations that make that position a revolving door. But even in the most stable organizations, a lot of long-time executive directors are reaching the point where retirement is starting to look pretty good. We’re also starting to see a number of less fortunate dying with their boots on.

Carol asked me to honestly examine how many boards step up to the plate and take on this responsibility. While I concede that the job often defaults to the executive director, by accepting that role, the executive director makes it that much easier for the board to abdicate its responsibility in the future. It is the board that benefits most from learning what it could/should be doing differently to maximize, or at least improve, its directors’ experiences. The interviewer should be taking notes that can be kept in a board book for easy referral by future boards. Carol argued that future boards won’t bother to look back. I of the “you get what you expect school” retorted that debriefing should be an expected part of the job. After heating up cyber-space for a couple of days, we agreed to disagree.

However, I was like the store clerk who gets in an argument with a customer. Long after the customer leaves, the clerk is whining about that customer to everyone else she comes in contact with that day. I ran the arguments by another colleague, Jane Garthson. Jane said definitively that it was the board’s job to conduct exit interviews. However – sneaky devil! – she said she understood if an executive director wanted to conduct his or her own exit interview to learn what he or she might do differently in the future. So, this brings me to the question of the day. What, if any, are the arguments that we are all missing? If you even agree that exit interviews for departing board members are valuable, who do you want to see facilitating them? Why?

Should Board Members’ Contributions Be Designated To Pay For Their Education?

I was speaking with a couple of colleagues the other day and the subject of board contributions came up. Later in the conversation we transitioned into the importance of ongoing board education and organizations building a sufficiently-large line item into their budgets for this. And then the idea bubbled up: What if one of the expectations of board service was that a portion of each board member’s personal contribution to the organization went to pay specifically for board education?

Such an expectation would do several things. It would communicate to the world that the organization believes an educated board is important. It would provide necessary dollars for such board education, without cutting into dollars dedicated to programming. And, it would help board members value the education the organization provides, because research affirms that people ascribe more value to something for which they pay rather than get for free.

There are some issues to consider. When my colleagues and I were talking, someone arbitrarily threw out $500 as the portion of each board member’s contribution that would go into this board education fund. While a substantial amount, with an average-sized board of 16, that only puts $8000 into the education coffer. True, $8000 is more than most boards currently devote to board education. But, $8000 won’t go far if the money is to be used for a true retreat, conference expenses or coaching, for instance. Asking for a number larger than $500 might be a non-starter for most boards – at least at this stage in the game. And, what happens in those organizations that ask for a personally meaningful gift from each board member instead of a contribution of a specific dollar amount? Yes, the leadership could opt to allot the entire board member contribution to its education fund, or designate a percentage, but how can any organization create an education budget if the ultimate total is an unknown? Perhaps the answer is that the board would still have to assign to the board education line a dollar amount from its general operating funds and use the contributions just to enhance its educational opportunities.

The biggest issue may be that some people will resent this set-aside, either out of principle or the belief that they do not need education – perhaps they’ve sat on many boards over the years and believe they have the job down pat. My guess is, though, this reality may be off-set by those that clamor to join a board that devotes so much attention to its board members and provides leadership training that they can then take back to their jobs or on to other organizations.

As someone who firmly believes in ongoing board education at every meeting, I love what this concept could “buy.” But I recognize it would require a major culture shift in most organizations. What do you see as the pros and cons? Is this an idea with sufficient value to push?

Should US Nonprofits Adopt a Patron System?

I worked recently in Singapore. While I found many similarities in the ways nonprofits do business both there and here in the United States, I found differences as well. One of the biggest was their use of a patron system. Besides having what we would consider the familiar board structure with a chairman or president at the helm, a large number of organizations there also have a patron. Some even have a patron and a patron in chief. These are powerful individuals who wield tremendous influence. For instance, the patron in chief of Singapore’s Lyric Opera is the President of the Republic of Singapore. Its patron is the Minister for Education and Second Minister for Defense. The intent is that these individuals will provide support – including, in many cases, political clout – and encourage others to support the organization as well.

In the United States, our honorary boards could be considered the closest equivalent to the patron system of Singapore. Some organizations here are able to engage major players, such as the Gerald R. Ford Presidential Foundation which counts among its trustees James Baker, Dick Cheney, Alan Greenspan, Henry Kissinger and Donald Rumsfeld. But the number of organizations with the capability of attracting names of this caliber are far and few between. Would it be easier for nonprofits to attract a single patron? Would a patron help nonprofits that feel they lack sufficient access to affluence and influence?

I do believe that it would be easier to find a single patron than an honorary board. However, I do not believe that it would necessarily be easy. Think of all the nonprofits that have tried unsuccessfully to find a celebrity spokesperson. And, we certainly know how quickly a good name can become a liability. Tiger Woods, anyone? Singapore has experienced this with the patron system as well. The patron of their National Kidney Foundation, the wife of Goh Chok Tong, former Prime Minister of Singapore and current Chairman of the Central Bank, was forced to step down after defending the pay of the CEO, saying that his $600,000 (S) salary was “peanuts.” At least with an honorary board, one would hope there will be others whose reputations remain sterling, even if one of the names on that board turns bad.

As to whether having a patron would be helpful to organizations lacking affluence and influence...I'm not so sure. Singapore is a very small country. People tend to know one another and a patron's name alone carries clout. Here, the individual would have to be willing to actively use his/her influence on behalf of the organization to bring others along. Research done by Herman and Renz suggests that this does not happen as often as nonprofits hope. Besides, the reach of a single individual versus a larger group is necessarily limited, especially in a country the size of the United States.

So, even though I believe nonprofits in the United States can learn much from their counterparts in other countries, I'm not so sure I'd suggest our turning to a patron system here. But, I’m curious as to what others think. Is such a system an answer for us, especially in these difficult times?

So You Think Your Communications Officer Isn't Important . . .

Just this year an illustrious professional career ends abruptly; a world-wide brand that spent millions of dollars over the years to build a sterling reputation, out in front of every one of its competitors, watches its status unravel; and an international conglomerate faces an industrial disaster and its iconic acronym stands to represent its biggest nightmare.

General Mc Crystal within a week – retired; Toyota within a month massively discounting cars and invigorating the US auto industry; and BP within a few days becoming the company formerly known as British Petroleum now known as BP -- Biggest Polluter.

Companies that have allocated enormous dollars to building a public face . . . the military and multinationals. And yet with their considerable resources, both financial and professional, they did not understand how quickly their reputation could unravel. How quickly their public profile could be tarnished and how extensive the damage could be.

Are you ready for this? Do you have the resilience to survive? It begs the question that as nonprofits perhaps we need to reconsider how we court the press. How important we think it is to be on TV or in print. Can we control our message more effectively using social media and web based outreach.

So you’re thinking of promoting your organization in the press anyway. Then be prepared. When you’re pitching a story, an interview or sending out a release do you know enough about the background of the reporter and the media outlet. Have you read enough of their prior stories or seen enough of their broadcast reporting to have an understanding of the nature and tone of their coverage? What is their writing style, do they have a personal agenda and does your message fit into that agenda. If not, beware – their agenda may take precedence over yours!

Are you prepared for a crisis? Do you have a communication’s plan that specifically addresses the conversation that you must have with your constituents the moment something considerable happens that impacts the community you serve.

Have you designated a spokesperson and is that person media trained. As a nonprofit whose financial health depends on donor participation public relations must be moved to the top of your agenda. Today, let’s ask ourselves could our organization survive a media hit. Then take a critical scan of your communications efforts and the persons responsible for this most important yet very delicate task.

Robyn Fern Perlman
Founding Principal
CoreStrategies For Nonprofits, Inc.

DEVELOPMENT AND PROGRAM REFUSE TO PLAY IN THE SAME SANDBOX

Q: In our organization the Program and Development Departments work in silos. What is disconcerting is that they have no desire to work together. Development constantly complains that Program doesn’t share “its” list of donors or turn in required reports. Program complains that Development siphons needed resources from the mission and that its requests and grant proposals unnecessarily add to Program’s work load. A number of us feel this is not the way to do business, but we haven’t been able to convince everyone to play together nicely in the same sandbox. Do you have any suggestions to change the culture here?

A: If it makes you feel any better, the situation you describe is, unfortunately, not that uncommon. However, you are smart to want to change it. People invest in impact and impact comes through effective programming. But, effective programming costs money. The greater divide between Program and Development, the less successful Development can be in bringing in the dollars that will support the program.

While there is no single or easy answer, there are a few things I suggest trying. All start with the organization’s vision for the community. I would bring the entire staff together to affirm both the picture of how the community will be different – better – as a result of the organization’s efforts, and the staff’s commitment to achieving that vision. Sometimes, merely reminding people of what they are working toward and that everyone shares the same goal will be sufficient to get them to work more cooperatively.

If it is not, I might ask each department to consider its role in turning the vision into reality. Specifically, for what steps must it be responsible if the vision is to be actualized? What conditions will it have to meet? What resources – monetary, human, physical, etc. – will the department require to accomplish each step? Once these questions are answered, each department will have a better idea of what it can do on its own and what it needs help to accomplish. Usually people realize rather quickly that they have to go outside their department in order to achieve their goals, again making them more willing to work together.

Of course, you can always acknowledge the divide you see, bring the bickering departments together and have them take turns asking each other why given procedures are in place or why certain information is requested. Insist that the group that asks the question really listen to the response! Allow people the opportunity to clarify the answers they heard. Only at that point, give members of that group a chance to share why they find the requirement unnecessary or onerous. Let them offer alternative approaches. Then, open the floor for discussion.

If you still face resistance after all this, ask the departments to take this next step. Give them pads of Post-It notes in two colors. Designate one color to represent the resources – both tangible and intangible – the department needs. Designate the other color to represent the resources the department has. Have each department begin jotting down resources – one per page. With the resources the department has available it is important to list all the assets, not just those it has that it has determined it will need to accomplish its own goals. Post these on a wall gallery-style, where representatives from each department can come by and see if any other department has the resources it needs. Be sure to note in some way which asset came from which department – e.g., by writing the department’s name on each page or by placing the pages on the wall under an identifying banner. In most cases, the needed resources will be available in-house. This opens yet one more avenue for collaboration between departments.

There may still be some additional resources required by one or more of the departments. You can have representatives from each department sit down and discuss who they know in the community that might have the needed resources. Based on the answers, they can then discuss who from within your organization might have an established relationship with that individual or organization and could make the ask. Such an approach emphasizes the “we’re all in this together” attitude that is so important.

These simple exercises remind everyone that they are each a part of something larger than just their own department and that they owe it to the community to cooperate with anyone – internally or externally – that can help them meet that commitment to the community. The discussion of who or what organization(s) outside their own institution might be able and willing to contribute resources acts as a not-so-subtle reminder that if others outside their organization are willing to work selflessly with them, there is no room for department-centric feelings within the institution.

The culture in your organization will not change overnight. Departments will have to be encouraged to share the results of their efforts with the other departments so everyone can recognize the impacts being made. The organization’s leadership will have to share organization-wide outcomes with all the departments and recognize and reward the sharing of resources. But, over time, the silos will begin coming down.

I'm Not Moving, I'm Stuck

So we're stuck. Why does it seem that "stuck" although not unique to the nonprofit sector seems intractable in many nonprofit organizations. Why is it that we artfully craft mission and vision statements that reflect our desire to change communities, change outcomes and change the world yet we refuse time and again to change the business of our organization.

Neale Donald Walsch known for his "Conversations With God," series discusses change in his most recent book, "When Everything Changes Change Everything." Walsh writes, "If when everything changes, you wish to change everything, the first thing you may wish to change is your idea about why change occurs." He continues by suggesting that, "change occurs because of who you are and why you are here." Is it not appropriate for us as leaders, donors and beneficiaries of the programs and ideas pushed out through our nonprofit organizations to ask the same question from a business perspective. Who are we and why are we here ... now ... today and into the future.

"Change occurs because you want it to occur," says Walsh. "Everything that changes, changes at your direction." His also suggests that until we become conscious of this change it may manifest itself through a silent shift. This shift, as a response to circumstances, instinctly begins to set change in motion so that, hopefully, we become aware and can successfully grow and adapt. How many times have we squashed the incubation of silent shifts in our organizations rather than picking up the mantel of change. How often are we given an opportunity to change, at our own direction, but we remain stuck.

Walsh describes life as being functional. When life moves too far off functionality it "puts in place an adaptaton . . . which assures that life remains sustainable." But not just as it was but rather "through it's new changed form . . . "

So I ask how will nonprofits remain sustainable and fullfull their promises if the calls to action are merely drowned out by, "I'm not moving, I'm stuck!