We are our own worst enemies.  We perpetuate myths, we engage in worst practices instead of best and we straddle ourselves with behavior and attitudes that can do nothing but harm us.  It is time for the nonprofit sector to take control of itself and prove to the rest of the world that we deserve the respect that we so crave.

First, let’s bust the myth that our employees do NOT deserve livable, competitive salaries.  They absolutely do, and you know it.  While many nonprofits have begun to address this, adjusting salaries and bringing them in line with what the real market will bear, others still cling to the notion that nonprofit employees get their reward in the mission work and aren’t there for a decent salary that ensures a reasonable quality of life.   And as long as there are any nonprofits living that myth, the rest of the world will continue to cling to it.

To wit the current hue and cry over the 2008 compensation of the CEO of Boys and Girls Club of America.  According to the Boys & Girls Club of America’s 2008 Form 990, the CEO made $988,591 in total compensation in 2008– $593,926 salary, the rest “other compensation.”  She also had 8 colleagues who also earned over $100,000, for a total of $1,862,519 in salary and a bit more than $300,000 in additional compensation.  So, in total, this organization spent $3,151,937 on its nine highest compensated employees.  The organization also reported total revenue for 2008 as $107,150,617.  Which means that in 2008, the Boys & Girls Club of America spent 3% of its revenue on what should be presumed to be its nine most senior managers.   These nine employees report working an average of 58 hours/week, with a range of 45-70.

Too much?  When I googled the question as to what the for-profit ratio of salaries to revenue should be (as this is not an area I claim to know anything about), I got back all sorts of figures, with a low of 16% to a high of 50%, and much here seems to depend upon the industry.  No where, however, did I see a figure as low as 3%.

Yes, it is true, that Boys & Girls Club gets almost $41 million in government grants.  And yes, it is true that, as with many for-profits and nonprofits, the Boys & Girls Club experienced an almost $14 M dollar loss in 2008, approximately 13% of what it did bring in.

But still.  Compare this with the salary of the AIG CEO installed in the aftermath of the meltdown of America’s financial industry.  In October 2009, Obama’s “pay czar” approved the salary of $10.5 M, which included $3 M in cash, $4 M in stock options and $3.5 M in annual performance bonuses, to be prorated for 2009.  At the time, the pay czar said this package was comparable to other CEOs in the post-meltdown world.  Too much?  Too little?

How do you decide in a vacuum?  Shouldn’t the salary and possible bonuses be determined based on the scope of the work being required to perform and the quality of the performance of that work and not the whether the organization is profit driven or mission driven?  That mission-driven organization is just as dependent upon its leader running and managing a successful business as the profit-driven organization; its leader needs the same savvy, skills, smarts, and leadership essence that a for-profit organization needs, if not more.  For, after all, as we are regularly reminded (as if those in the nonprofit sector need any reminding at all) that we are using other people’s money—from taxpayers to foundations and corporations to individuals—to fulfill the promises we make in our mission.  It could easily be argued that it takes more skill and savvy to raise money and ensure that those promises are kept, and Peter Brinckerhoff states that nonprofit employees work much harder than for-profit employees.  So, who is to say that nonprofit CEOs deserve a lower standard of compensation?

My son recently had to write a paper either agreeing or disagreeing with the statement that went something like this:  Marx preached a philosophy of freedom.  As he so often does before he has to start constructing an argument, he asked me what I thought.

Well, it has been a long, long time since I read Karl Marx, but it was an easy answer for me.  Absolutely!  Marx was all about freedom—freedom from the systems and structures that alienated ourselves from ourselves and breaking away from a world view that didn’t really let us see the world very clearly at all.

I confess that I didn’t—and still don’t—always understand all of Marx.  But the part about cultural revolution, that I get completely.  It is cultural revolution that is needed to rattle the cast iron cages that contain so much of what people think, barring any new ideas or possibilities.  And cultural revolution is the answer to my current, though not new, frustration.

I am so far beyond tired of the nonprofit sector being treated as the stepchild of society.  The sector that tirelessly caters to the marginalized populations of society that those not marginalized are oh so relieved to have someone else looking after gets marginalized itself.  The sector that preserves the pockets and expanses of nature’s splendor so that all of us can run, walk, picnic, and restore our souls gets kicked to the side like the empty plastic bottle blighting the trail.  The sector that lifts our spirits and plays to our imaginations and creates the possibilities of “what if …” by bringing us museums and theatres and both experimental and tried and tested art, music, dance and more gets no standing ovations or rave reviews, as it wasn’t deemed worthy of sending a reviewer.

Just what am I talking about?  I am talking about the sector that ensures that our society remains human yet receives so little attention—or the right attention.

On the first night of my MBA class on nonprofit management at La Salle, I always ask the students to tell me how many nonprofits they interact with in the course of an average week.  Most tell me none.  But when I ask how many attend a religious service on a weekly basis, or run in a park, or attend a cultural event, or—and this is the one I love—attend this university—then, and only then, does the invisible start to become visible.

I am talking about the many people who put board service on their resumes to attract the right attention for themselves but who don’t have the time, commitment, passion, awareness, to give their right and proper attention to their role as board member.  (For the record, there are some who take their job as board member very seriously.  And to those, I say thank you, and join the revolution!)  I am talking about the people who drop the $25 check in the mail to their favorite charity while on the way to parking ($20), dinner ($110) and theatre ($260).

Mostly, though, I am talking about taking the nonprofit sector seriously and recognizing the contributions it makes to ensure the quality of life in all of our communities.  I am talking about being realistic about the cost of running these businesses and a willingness to pay for the “sexy”—the programs—and the mundane—the lights, computers, mortgage or rent, etc.  And I’m talking about bringing to the board table the same work ethic, level of commitment and intention to do the job expertly as is brought to the paying job.

Employees of the nonprofit sector are, for the most part, highly skilled, extremely capable and absolutely dedicated to doing both well and good.  And though this is great, it is not sufficient if we are to maximize the benefit this sector brings to all of us.  To achieve that, the sector must be embraced in public, not behind closed doors; it must be brought out of hiding and into the light; it must be truly valued as an equal player in the production of goods and services and as a contributor to the economic engine that drives this country.  And those who volunteer in this sector must understand the importance of their job and only take it on if they are willing and able to do so with the level of professionalism that drives them in their day job.

Unfortunately, I am not optimistic that such change will occur—shy of a major cultural revolution.  Marx would like that!

Are nonprofit boards antiquated?  I’ve give a lot of thought to this topic.  There isn’t a nonprofit executive director in this country who, frustrated beyond her/his last straw, hasn’t asked that question.  Or, let me correct myself, hasn’t made that question a statement:  “!#$%^&*!  Boards are so antiquated.  Why do we even need them?”

The reality, however, is that the theory of nonprofit boards is not at all antiquated; it is the practice that that gets in the way. But, truth be told, when boards are practicing as the theory says they are supposed to, they help a nonprofit beyond even the measure that the most gifted executive director could achieve on her/his own.

There really are three key responsibilities that nonprofit boards need to be executing, and executing well.  Unfortunately, most do all poorly—if at all; some do a bit here and there well; and only a handful really do all three and do them equally well.

1. Oversight: this is really clear and simple and yet one that far too many boards do so badly to their own detriment.  How hard is it, truly, to provide financial oversight?  Granted, it does mean that every board member needs to take the time to understand the financial status of the nonprofit at the time s/he joins the board and then how to monitor that status on an on-going basis.  That includes understanding the financials, reviewing them monthly, asking questions when things do not appear right, taking the risk of being viewed as the “troublemaker”, etc.  To do otherwise means that his/her organization could be tomorrow’s headline because the board treasurer, executive director, CFO or any combination of the above or others have embezzled, robbed Uncle Sam, or some other wrongdoing.  And trust me:  it isn’t hard to be the overseer.  The board collectively, and each individual member on her/his own just has to commit the time.

How hard is it to oversee the executive director?  Unlike the executive director who probably has multiple direct reports, each of whom has to be evaluated on a regular basis, the board only has one employee to supervise:  the executive director.  It is far easier to catch missteps or intentional bad behavior if a board is providing oversight of its one employee through the development of a clear and open process for regular performance assessment and development.  And yet, anecdotal evidence tells me that the vast majority of executive directors do not get regularly evaluated by their boards of directors.

I will, however, grant you that overseeing—by which I mean creating it and then on some regular basis reviewing/monitoring—policies is the most cumbersome in the oversight arena, as for most nonprofits there are lots of policies that the boards have created.  But even this doesn’t have to be onerous.  A simple system that sets up a calendar of what year each policy should be reviewed allows a board to spread this oversight responsibility over several years.  This prevents the situation, for example, of being in 2010 using personnel policies that were last looked at in 1999; and that prevents unwanted problems.  And all of this isn’t to say that some times circumstances arise where a policy needs to be reviewed out of its “regular cycle,” such as reviewing investment policies when the economy is crashing all around you.

1. Strategic thinking:  most people join boards because they think they can help the organization and because they really want to help.  Bringing their strategic thinking capabilities to every board meeting is a crucial way to help, and yet it so frequently doesn’t happen.  And quite honestly, most of the time it isn’t the fault of the individual board members but the fault of the way board meetings are structured.  The vast majority of board meetings are not set up to allow for strategic thinking.  Just look at the agenda for, I’ll be kind, 80% of the board meetings around this country.  The agenda is simply a list of reports from committees and individuals (the Executive Director, the Board President, etc.).  This is the mistake that too many boards make.  They equate doing board work with receiving the data (all those reports) instead of understanding that the data is a tool they need to do their real board work.  Board meeting time should be spent questioning the data, making sense of the trends in the data, asking the tough questions the data reveal.  In other words, applying strategic thinking at every board meeting as opposed to doing what so many boards do:  reserving strategic thinking to the once every year or several year strategic planning retreat.  No organization, big or small, profit or nonprofit, will be sustainable if strategic thinking is a tool only periodically pulled from the box.

1. Revenue generation:  yes, one of the key responsibilities of nonprofit boards is to ensure sufficient revenue to execute organizations’ mission promises.  But before a board is ready to engage in this revenue generation, it should have first assessed all of its programs to be sure they are a good fit with the mission, to determine if they are built on a sound business model, to assess whether they are, indeed, delivering on the promises they claim.  Because you cannot be a successful fundraiser for a program that isn’t worth it.  So, step one is to make sure the nonprofit is doing only what it should be doing and doing it well.  Then, the board’s responsibility is to determine how the money will come in—and the only “correct” answer is through a diversified revenue generation strategy.  What combination of raised and earned dollars is the right fit for the organization at this point in its life cycle?  And how will board members make this happen?  Will they bring their friends’ checkbooks to the table? host a gathering? cultivate relationships? support the business planning for a social venture? bring in that large gift?  But, as with the financial oversight, it truly isn’t hard to be successful at generating revenue, but it does take time—and training and practice and knowing the options.

None of these three areas of board responsibility is hard to do.  But two key things are generally missing at most nonprofit board tables, which leads to the lack of execution.  There is an unwillingness to say, “Despite being a superbly accomplished person in my day job, I do not know how to be a good nonprofit board member.  Could you please teach me?”    And there is an unwillingness to recognize that being a board member is a job, albeit one which every board member volunteers for, seeking intrinsic rewards rather than looking for monetary ones.  And like any job, success at the job requires a commitment of time.  When, and only when, these two impediments are overcome will we see nonprofits truly flourishing.  And then no one will waste any time asking the question:  are nonprofit boards antiquated?

Recently, my brother became the CEO of a rather large, international, publicly traded company.  And when I received my first e-mail from him over his new signature, I was a little surprised to see that he was still using the diminutive version of his name.  So, I shot him an e-mail back saying I would have thought he’d now switch to his “real” name.  His response came back equally quickly, stating, “God, no.  Imperious, egocentric corporate cultures are the hobgoblins of hurting companies.”

My brother and I have clearly taken very different career paths, but the worlds in which we travel are not so very different, as witnessed by his comment.  He has spent much of his career turning “hurting [for-profit] companies” around and then handing them off to new, permanent staff.  I have spent a fair amount of my career helping nonprofits become stronger organizations in order to maximize their ability to fulfill their mission promises.  But like my brother, I have found that it is “imperious, egocentric” individuals and the cultures they create that undermine nonprofits’ good work.

When I hear of things having gone wrong at nonprofits—the kinds of things that make headlines—I’m always struck by how incredibly “stupid” the act was:  obvious conflicts of interest, misuse of raised funds, embezzlement, failure to pay the IRS, and the list goes on.  My immediate question, sometimes to myself, sometimes out loud, is:  was this person/board stupid or arrogant?  And the answer always is arrogant.

How do I know this?  Because I have seen too many people, the brilliant ones as well as the not quite there ones, who want to be really successful at their jobs do their homework.  They find out what they need to know to run their nonprofits the “right” way so that they can get on and fulfill the mission work they signed on to do.  They ask the questions about restricted dollars and understand, from the gitgo, what can and can’t be done; they understand the importance of complying with all of the rules and regulations, filing the right papers, paying the right taxes.  They understand that they are responsible to their clients and the public and that earning and maintaining their trust is paramount, and they want to do it all well.  And doing it well has nothing to do with being smart or stupid; it has to do with being honest, understanding the rules and playing by the rules, because you know that no matter how wonderful you are or your organization is, rules must be obeyed.  Smart, not stupid.

But there is, however, a cohort of individuals who have risen to–or put themselves at–the top of their org charts that know all of the rules, know how the game is supposed to be played and yet choose to go their own way.  This is not stupidity; this is arrogance.  This is arrogance that is so consumed with self that it thinks it impervious to being caught or punished and cares not about the consequences of such behavior to the clients and public whose trust has been betrayed.  This is arrogance that is so blinding that it cannot see the eventual downfall to self and the organization.  It cannot see that s/he is leading a hurting company.

I am a huge Jim Collins fan; he got me on my second reading of Built to Last. So, I periodically go to his website to see what new things he might have posted.  The home page currently opens (and may have for quite some time) with a series of four quotes, two of which strike me as key ideas that those who suffer from a large dose of arrogance should ponder, as should those who employ these arrogant leaders or have elected them as their peers at the board table.

Greatness is not a function of circumstance.  Greatness is largely a matter of conscious choice and discipline.

Humility+will=Level 5.

(Level 5 refers to the highest level of leadership.)

Discipline, conscious choice/free will and humility, all present together, are the characteristics of a great leader and, in turn, what will build a strong organizational culture.  Arrogance has no place in that equation.