Nonprofit University Blog

So, the IRS has added 155 new employees to its Exempt Organizations unit, bringing the total to 921; 100 of these new employees have been assigned to the division that does audits of nonprofits.  Yipee!  Apparently, brain drain has been happening within the Exempt Organizations unit, as many with long service in the unit are retiring.  So, whether this is an overall increase in bodies or not, it is clearly a loss of knowledge, experience and an expertise that comes only with years and years of doing something.

What is interesting in this set of facts is that this announcement was made at the 46th annual Washington Nonprofit Legal and Tax Conference, which is “dedicated to educating those in the nonprofit world responsible for all legal and accounting aspects as they pertain to exempt organizations.”  As the IRS speaker at the conference noted, legal and accounting professionals had complained to the IRS Exempt Organizations unit about the loss of employees with “decades of knowledge,” and she was pleased to announce that the IRS had replaced “some of the knowledge that we’ve lost.”

Phew!  I feel so much better.  I wonder if the IRS had added a series of questions to the new (in 2009) Form 990 about an organization’s succession plans for ensuring adequate expertise at all skill levels within an organization whether such a plan as hiring to replace “some of the knowledge” would have passed muster?  But, really now, who is to say that decades of knowledge is really necessary to answer those who counsel nonprofits on how to complete one of the most public documents used to judge the “goodness” of a nonprofit?

As the director of a management support organization that works very hard to establish high standards of performance and relies only on best practices models when teaching others and working with clients, and rejects, easily, 90% of the people who seek to be part of our pool of instructors and consultants, I am regularly appalled at how little attention and care others pay to the importance of standards, reliance on true expertise and the value of modeling those standards to which they are holding others.

It is true that I might have shrugged off the above statements from the IRS representative with an idle, “What did I expect?”  And, truth be told, I did, initially.  But later the same day, I reread her statements after hearing of one of the truly amazing feats of reincarnation.  This is the phoenix that has risen to teach others how to be a proper nonprofit out of the ashes of a failed—no, disgraced—nonprofit.  How is this possible, you ask?  In the absurdity of whose mind did this idea develop?  That an organization that violated almost every tenet of best practices of nonprofit management, a hydra which had lost control of its heads, should now decide that it will come back as an organization that helps and teaches others to run a strong nonprofit, is a tale that belongs on the stage of the theatre of the absurd and not on the stage of real life.

Nonprofits deserve so much better, and yet, more often than not, it is the nonprofits themselves that consciously make the ridiculous choices to give themselves less than what they deserve.  The subsidiary that almost tanked because of the (lack of) leadership of the parent, now chooses to take advice from that very morphed parent.  A nonprofit turns down the guidance of a skilled strategic planner preferring to do strategic planning with a human resources professional.  An organization that rejects a solidly vetted consultant on the complaint of single board member it never bothered to vet, for if it had they would have discovered the man never worked where he claims to be currently employed.  These are only three of the most recent examples in my twilight zone!

It is one thing if others try to foist their absurdity on us.  It is another if we create our own or accept that of others.  Not only do nonprofits deserve better; we should know better.

Yo, Board Presidents:  put aside your egos and listen up!  Are you really the best person for the job?

How do I dare even ask that question of someone who has been gracious enough and brave enough to volunteer her/his time to lead the leaders of an organization?  The many board members who are relieved that someone else volunteered to be board president so that they don’t have to, must be ready to ring my neck.  How can I suggest rocking the boat?  And how can I seem such an ingrate, challenging those who give of themselves to serve as board presidents and suggesting that maybe ego has driven them to the position?

How?  I’ve been around the block!

Board President is one of the most important positions in a nonprofit’s personnel battalion.  Right up there with Executive Director.  But before the smart organization hires a new executive director, it does a little homework.  It assesses what is needed in the next executive going forward, recognizing that the skills, talents and personality needed for the future isn’t necessarily what was needed in the past.  It understands that what will be important for the organization at this phase in its evolution is likely very different than what was important in the last phase.  Based on a newly developed profile, the board writes a new job description, conducts a search and hires the best candidate possible, where best means a match between criteria needed and qualities of the candidate.

The last time the selection of board president even remotely mimicked such a process will, most likely, be the first.  Normally, the selection process for the next board president goes something like this:  Anyone willing?  No.  Okay, whose arm can we twist most easily?  It is a “process” absent thought and context.  And it is a “process” that allows a person to ascend to this key leadership position without thought as to skills, motivation, agenda, ability, etc.

What should happen is more like this.  It begins with a board conversation to address several questions:  What are our strategic priorities for the next three years?  What kind of leadership will we need to help us achieve those priorities?  What are the challenges we will be facing over the next three years as an organization? As a board?  What kind of leadership will best help us navigate those challenges?   Next comes the writing of the job description for the next president, along with the determination of the time commitment needed to execute this job.  Then, and only then, is a board ready to look around the table at the individuals and ask, not who is willing, but who fits the bill?  Then, and only then, should every individual at the table ask of him/herself, do I fit the bill?  Am I able?  Do I share the collective’s agenda or carry only my own?

Serving as the leader of the board is a huge responsibility.  Filling that position should be given the care and attention it deserves.  To do otherwise defeats the purpose of having a leader.

People need to listen to Nancy Kolb, recently retired President and Chief Executive Officer of the Please Touch Museum.  A highly accomplished individual, who steered the Please Touch Museum through 21 years of growth and accolades, she was able to negotiate not one, but two deals (okay, the first didn’t materialize once the deal was “signed”, but through absolutely no fault of Nancy’s) with the City of Philadelphia (one is not an insignificant feat; imagine what two is!) for a new site for the museum AND pull off the renovation, relocation and grand opening, while the for-profit company supposed to build casinos in Philadelphia, (fortunately) hasn’t even been able to break ground—totally through its own fault.

In a recent interview in Philadelphia magazine, that covered everything from the move to Memorial Hall to negotiating with the City of Philadelphia to the Please Touch Museum compared to other children’s’ museums, Nancy Kolb was asked the following question by her interviewer, Sam Katz, local business man and former mayoral candidate:  “Is it fair to say that much of the really great stuff happening here is the result of the leadership of women?”

Now, contrary to what many of you might think, I am not saying people should listen to Nancy because she said, “Yes, isn’t it?”  She is right, but no news there.  What is important in Nancy’s response to this question is this statement:  “Why has the city—notably the Chamber of Commerce—failed to grasp the incredible economic development role of the not-for-profit sector?”

Why hasn’t Philadelphia understood this? and almost every other city in this country?  The American nonprofit sector’s economy is the fifth largest in the world! That is a pretty hefty economic engine!  And this is not a static group.  By 2005, the latest year for which the National Center for Charitable Statistics has complete data, the number of nonprofits had grown 27.3% since 1995, and had $1.6 trillion in revenue (a 57% increase, adjusted for inflation) and $3.5 trillion in assets (an 84% increase). Do these data pale in comparison to for-profit numbers?  Absolutely.  But that is not the point.  The point is that small percentage or large, the nonprofit sector has a role to play in making cities vibrant and financially sustainable places to live.  (And I don’t mean by taking their assets.  But that is another blog.)

But nonprofits—and not just the mega ones, like universities, hospitals, foundations—cannot play a role in the economic and “vitality” development of a region if they are not at the tables.  We need the small, community-based organizations as well as the mid-sized and large nonprofits at these decision-making tables—and not just when a hot issue arises, but consistently and constantly.  But there are two huge stumbling block to making that happen.

First, there is the ignorance phenomenon of “don’t know, don’t see.”  If I don’t know what I nonprofit is, how can I recognize a nonprofit?  So, nonprofits remain ghosts or shadows in our communities, turned to, everyone presumes, only in desperation and when someone is down on his/her luck.  On the first night of my Nonprofit Management class offered in La Salle’s MBA program, I always ask the students how many nonprofits they interact with on a regular basis.  Most say none.  (At best, I get one, from the one student who works for a nonprofit.)  Yet when I ask the students if they run/walk/picnic in a park, attend regular religious services, frequent any of the cultural spots of the region—or, wait,–where they are sitting, then, and only then, do the light bulbs start to go off.

Second, there is a presumption—false as so many are about the nonprofit sector—that employees of nonprofits are less skilled, less equipped—okay, I’ll say it—less bright—than employees of for-profits.  (I think people’s false logic goes something like this:  if they haven’t chosen to devote their life to the American dream of making money, how smart can they be?)  But the truth is that the nonprofit sector is just like the for-profit sector:  we have extremely bright, creative, talented folks, slackers and everything in between.  What differs, frequently, in these two pools of talent is the perspective each brings to a table.  And each perspective needs to be at those tables and both need to be equally valued.

While Nancy was challenging the City of Philadelphia and its Chamber of Commerce—and both deserve to be challenged—Philadelphia and its Chamber are not alone in ignoring the power and influence of nonprofits.  It is time that the full array of the nonprofit sector is included at the consequential tables of our communities.

Those of you who know me, know that I love the nonprofit sector.  Some might even go so far as to say I’m a missionary for the sector.  But that would be inaccurate, as I am not out to “win” anyone over or convert them to my way of seeing things.  But I have knowingly volunteered and worked in this sector since what we then called junior high school.  In the many decades since then, I’ve held one and only one job in the for-profit sector:  in high school, I sold the mobiles I made to retail establishments and worked one holiday season in a gift wrapping shop.

I have always had reason to be proud of the sector of which I am a part, despite the scandals that are periodically uncovered, recognizing that the for-profit sector has no shortage of scandals.   Despite the stupidity of leaders, as the for-profit sector has its share of those.  Despite the fact that we are not a perfect sector—which no one could accuse the for-profit world of being, either.  Despite all of this, I’ve always believed that the vast, vast majority of people in the sector—those who are paid as well as those who volunteer—want to do good and do it well.  They may suffer from ignorance or egos that blind them; they may think they know what they should do but do not really, but they listen when educated.  They may make mistakes, but they are not evil.

But today, someone in the sector, who I don’t even know, turned my stomach in a way that I have been spared up until now.

It’s been an especially trying day, rife with nonprofit horror stories:

• There was the executive director who failed to pay the organization’s withholding taxes, leaving the organization with an almost $500,000 bill owed the IRS—before penalties and interest.
• There was the consultant leading an organization through strategic planning without having helped (or should I say forced?) the group to focus on what its mission really is, so the planning was going forward with multiple views of the mission of the organization.
• Let’s not forget the board that allowed one board member to skewer plans to hire a consultant who the rest of the board and the executive director thought was awesome.
• And there was the executive director who told the development director to ask the program director what her strategic priorities are.

But none of these are the ones that caused the disgust.

The disgust came when a colleague told me about an email she had received from a  former colleague who was bringing her up to date on his life.  The former co-worker began talking about the holidays and the vacation he and his wife had taken right after the new year, noting that his boss—the executive director—forbids him from taking a vacation in the summer.  His boss also forbids him from hiring permanent help, but allows him to work 11 hour days, six days a week for the summer.    Quoting from the friend’s email, “[My boss] does let me get a temp for six weeks then sends his favorite around to urge me to get everything done in 3 weeks to save money.”  My stomach was still feeling quite fine at this point.

But then it began to churn, and as I continued reading, my stomach reached a crescendo.  In the words of the email’s author:

On Friday 29 January my boss called me into his office at 4 PM. …. Then he told me that my job was being outsourced to an accounting firm.

I asked when this would happen and he said they were coming in on Monday, February 1. I got no severance, no vacation pay and my benefits ended on Sunday, January 31. “Of course I will pay you for today,” he said. I had started that day at 7:30 AM, so by 4:00 PM I had a full day in at work. For once I was leaving before 6:30.

I was numb, mostly from my chronic tiredness. But I was also relieved to be out of there after almost 3 years of misery. The reality of it set in when I woke up on Saturday morning. I will miss the people I worked with and supervised, but I will not miss my boss at all.

I offered to email him my passwords for all the sites we use, but they had me locked out of the network while I was being let go. I have all my passwords in password-protected files and I was going to unprotect the files…

The charity is about to default on a $12,000,000 mortgage and turn a property over to HUD. Cash flow stinks and everyone was worried. [The Excutive Director] likes to confuse the Board (packed with relatives and in-laws) and blame everyone else when the entire mess is his fault. He can’t lead, he can’t manage, and no one likes him. He is vulgar and coarse. The people I worked with fear him because you never know what he will do next.

While I absolutely hold the executive director accountable for his own egregious behavior as a leader and manager, I hold the board accountable for its failure to do its job.  But where to begin on that one?  It was not providing oversight of the executive director, nor taking on the responsibility to strategically build itself as an independent body as opposed to being a stacked body of relatives.  It was not executing its financial responsiblities if it allowed the organization to default on a $12 million mortgage, and probably failed in this arena by taking on the mortgage in the first place.  And the board wasn’t doing very well in the governance arena, at least as far as personnel policies go, and I would only assume other ares as well.

I also hold the employees of the organization accountable as well for their failure to hold the organization to a fair and humane treatment of its employees.  I have no idea what organization this is and, therefore, what its mission is.  But nonprofits have a moral responsibility to treat their employees with as much care and compassion as they treat their clients, as their employees are their most valuable asset.

One of the things that makes the nonprofit sector so special is the recognition that the parts—the staff and volunteers, the executive director and the board—are all equally vital to the successful delivery of the mission.  When that lesson is forgotten, and one person is wrongly empowered to be above and beyond the others, we lose our specialness, and thus we lose our ability to do good.  For in that moment, we have violated the very parts that make us who and what we are.  And that turns my stomach big time.