The Mission Statement: Review It Frequently

In New Year, Great Time to Get Your Nonprofit House in Order (January 29, 2020), Debra Raney of Independent Sector reminds us that from time to time, nonprofits should get their “house in order” and review policies and procedures. 

“Fortunately,” she points out, “Independent Sector’s Principles for Good Governance and Ethical Practice provide a roadmap of 33 sound practices your organization can follow to strengthen your commitment to ethics and accountability.” Among the four specific topics that Ms. Raney selected to highlight in her article is Principle 19: “Review of Mission and Goals.”  She asks: “How about your mission and goals? Do they need the once over?”

That struck a chord because of our recent post: Mission Creep Faced by Detroit Nonprofit (February 13, 2020). Detroit’s Focus: Hope finally confronted many decades of well-intentioned but out-of-control expansion. Its efforts were praised as an example of how to deal with this all-too-common problem of nonprofit organizations. 

[Note: This post was written just before the COVID-19 pandemic swept the nation.]

  Principle 19: Review of Mission and Goals  

In New Resource for “Keeping It Ethical” (May 17, 2019) we told you about these Principles. “The goal is to facilitate knowledge and application of these concepts as well as to highlight excellent examples.” The 33 Principles are grouped into four categories: Legal Compliance and Public Disclosure, Effective Governance, Strong Financial Oversight, and Responsible Fundraising. 

Along with important topics like Board Responsibilities, and Review of Governing Documents, Principle 19, Review of Mission and Goals is in the “Effective Governance” category. “The board should establish and review regularly the organization’s mission and goals,” Principle 19 begins, “and should evaluate, no less frequently than every five years, the organization’s programs, goals, and activities to be sure they advance its mission and make prudent use of its resources.”

The purpose of a periodic mission reevaluation is “to make sure your programs, goals, and activities continue to advance your mission and make wise use of your resources.” It’s a matter of the “obligation” imposed on a nonprofit as a steward “of the public’s trust.” 

Mareeja Niaz echoes this sentiment in Mission Critical (February 15, 2019) the official IS blog post accompanying Principle 19: “Nonprofit organizations are unique: ….we’re accountable to the public thus it’s vital our mission and goals remain relevant.” 

  Mission-Review Timing 

Notwithstanding the “no less frequently than every five years” reference in Principle 19, elsewhere in that document, there is an indication that this time frame is too infrequent. See, for instance – later in Principle 19:  “Every organization should review its formal Mission Statement and other informal references to its vision and strategy as part of an annual review.” And in Mission Critical, Ms. Niaz writes: “Your board is responsible for reviewing the organization’s mission and goals frequently and should evaluate the progress of the organization against these components consistently.” (emphases added) 

This mission reevaluation, performed regularly, is not the same as the “run of the mill board meetings and discussions of activities and updates.” While … “ discussions of individual program activities and accomplishments are typical of most board meetings, these are not a substitute for a more rigorous periodic evaluation of the organization’s overall impact and effectiveness in light of the goals and objectives the board has approved.”

An annual review is optimal, but “because of the time and cost involved” certain organizations – including those “whose work is not properly measured in one-year increments, such as scientific research or youth-development programs” – may have to rely on other time frames. In those cases, though, “interim benchmarks can be identified to assess whether the work is moving in the right direction.” 

  Not One-Size-Fits-All

The purpose of a periodic mission reevaluation is “to make sure your programs, goals, and activities continue to advance your mission and make wise use of your resources.” It’s not a one-size-fits-all matter because of the vast spectrum of organizations and their purposes. 

Generally, the items to review are:

  • current needs 
  • anticipated community and program area changes 
  • changing financial and human resource needs and 
  • an evaluation of your organization’s overall impact and effectiveness.

In particular, there should be special and timely scrutiny of the mission whenever an organization “considers taking on a new business or earned income opportunity.”  The board and staff “should examine whether and how that activity will further the organization’s mission and how it will fit in with the organization’s overall revenue mix and staffing allocations.” 

A critical part of this analysis should also be whether this new opportunity will result in “an unrelated business income tax and, if sufficiently substantive, could have ramifications for the organization’s tax-exempt status.”

  Conclusion

A “nonprofit organization encapsulates its purpose and direction,” Mareeja Niaz reminds us, “with one golden nugget, its mission statement.” This is “… the north star in guiding purpose, dictating goals, and ultimately impacting where your organization is allocating resources. Clear articulation and evaluation of this north star allows your organization to assess which activities remain mission critical.”

Mission Creep Faced by Detroit Nonprofit

Expansion to a Fault

“Detroit was still smoldering from the 1967 riots” when civil-rights activists Father William T. Cunningham and Eleanor M. Josaltis took the first steps toward creating what has become Focus: Hope.  

Now, fifty years later, the 501(c)(3) organization has an annual budget of over $30 million and a staff of about 200 people. The group has fought against racism and poverty over the span of its five-decade history through a robust and wide-ranging menu of social services, educational institutes and programs, and community development and redevelopment projects.  

But the respected organization is hampered by a common affliction of groups dedicated to remedying deep and intractable problems in society: namely, “mission creep.”   

Recently, the board and staff committed to important first steps to confront and tackle this problem. Focus: Hope will turn back to its core mission – social services and job training – and away from its real estate/redevelopment activities. It will begin this refocus path by spinning off a key senior-housing property to a new and independent 501(c)(3) organization.

The move has been lauded by The Nonprofit Quarterly as an example of how to confront this all-too-common, mission-creep, problem in the nonprofit sector.

   Mission Creep

“Mission creep is when your nonprofit organization expands its mission beyond the original goals that were set.” And, of course, there “is a difference between mission creep and making strategic adaptations to a mission statement to evolve as needs change around us.” Some of the worst cases of mission creep occur after “a rash decision or during a crisis situation.” But it can happen as well as the unfortunate result of an otherwise well-meaning and carefully planned move.

“Mission creep can negatively affect a nonprofit in a variety of ways.”

First, it generally causes an organization to stretch itself too thin. Funding has been especially tight for the last decade ago starting with that recession and made worse more recently by changes in the Tax Cuts and Jobs Act of 2017 that have caused a drop in individual charitable giving.  Expanding a mission also takes a toll on every aspect of an organization’s budget and resources; there may be added responsibilities for existing staff (and a need to hire more personnel) as well as training time and costs and expanded physical space and equipment.   

Second, it has the potential to harm an organization’s reputation, especially if there are problems and previously established (and already announced) goals are not met.  “Reputation means everything in the nonprofit industry.” While the good opinion of the community as a whole is critical to an organization’s ongoing success, there is a special danger as well from “stakeholders who may not agree” with an abrupt or significant change of direction and from donors who “may question the use of their financial donation.” Other casualties of mission creep are staff confusion and dips in morale. 

Third, it can result in an organization’s mission becoming too complex. A nonprofit’s mission should be “simple and focused.” Whenever there are new goals, the organization’s core vision can become blurred and diluted. 

   Reevaluating Mission Statement   

The Mission Statement on the home page of Focus: Hope is identical to the one adopted in 1968 by its founders, Father Cunningham and Ms. Josaitis. These two veterans of the civil rights movement of the early ‘60s gathered a small group of people together who were “committed to uniting a community that was sharply divided on racial and economic lines.” It reads: “Recognizing the dignity and beauty of every person, we pledge intelligent and practical action to overcome racism, poverty and injustice. And to build a metropolitan community where all people may live in freedom, harmony, trust and affection. Black and white, yellow, brown and red from Detroit and its suburbs of every economic status, national origin and religious persuasion we join in this covenant.” 

The website includes a decade-by-decade explanation of how Focus: Hope evolved, instituting audacious and impressive programs. For instance, in the 1980s, the organization expanded its original anti-poverty programs and focus to full-fledged educational and training institutes. The idea behind this change was that low-income and minority residents of Detroit needed not only food-assistance but the means to get good jobs to earn enough money to buy the necessities of life. 

By the early ‘2000s, the group saw a need as well for aggressive community redevelopment efforts, so it plunged into real-estate acquisitions for senior housing, among other activities.

To get a good idea of the broad scope of Focus: Hope’s recent programs, take a peek at the most recent Consolidated Financial Statements for 2017 and 2018.  Several pages long, its narrative description of the organization and its subsidiaries shows the result of long-standing, carefully-thought-out, and well-meaning expansion. It also shows a classic example of mission creep. 

The current board of Focus: Hope, recognizing this problem, has approved a key strategic turnaround.  The first step – the spin-off of its major redevelopment project called the Hope Village Institute – has resulted in the creation of a new and independent 501(c)(3) community development corporation.  The new entity called Hope Village Revitalization has the stated aim of tapping more into the community while “helping Focus: Hope shift away from real estate and refocus on its core programs of workforce development, early childhood education, and food for seniors.” There is a 12-person board of directors comprising mostly neighborhood residents and just a single director from Focus: Hope. The director of the original Hope Village Institute has transferred over to the new corporation; some paid staff and volunteers have moved there as well. 

   Conclusion

A nonprofit’s mission statement should be clear and concise.  It’s “the glue that holds a nonprofit together” and serves as the blueprint for internal decision-making as well as the public statement of its purpose and vision.

Is Your Nonprofit Ready for Hospice Care?

Hospice

Some time ago, Andy Robinson, an experienced nonprofit consultant and author, attended a 501(c)(3) event that gave him a perspective different from his usual expert perch. He trained for a day as a volunteer for a local hospice.   In that setting, there are standardized guidelines and checklists to evaluate when it’s the right time for a patient’s family to help him or her make an orderly exit from life.  

It suddenly struck him that he had recognized similar dire signs and symptoms in some of the organizations he had worked with over the years.  In Hospice Care for Nonprofits: Diagnosis and Treatment (June 28, 2019), he explains that it had never before occurred to him that the hospice analogy might be a useful tool to diagnose when a nonprofit might have to shut down – or at least be well advised to consider it. 

Later, he put that idea into action. 

   Nonprofit Lifespan 

Few charity boards ever think about closing up shop as a viable option for a severely ailing organization. Perhaps it’s because most nonprofits are set up as corporations which generally go on … well, … forever. Or maybe it’s the can-do, all-American, competitive spirit that makes us view the end of an organization as a “failure” to be averted at all costs.

In Thinking the Unthinkable: Maybe We Should Shut Down (September 15, 2008), Jan Masaoka (long-time nonprofit expert who later became the head of the California Association of Nonprofits) acknowledges that “for many nonprofit boards,” the mission and work of the organization is so important that it’s hard to view shuttering the group as anything other than “the ultimate disaster.” 

Sometimes, though, she explains, circumstances including “a lack of money or energy” force the question. That’s not necessarily bad in all cases. “…[J]ust thinking about closing can be freeing: a chance to re-think” the organization and how best to redeploy the available “human and other resources.” Of course, that kind of intense evaluation may not necessarily turn things around: “… when an organization becomes a heavy burden for staff, the board, and volunteers, it’s time to look at options.” 

Of course, there’s a critical distinction between – on the one hand – those organizations for which shutting down is not inevitable but may be a good idea to consider and – on the other hand – those groups which, objectively, have little chance of survival. 

   Back to that Hospice Checklist

Sometime after that long-ago day at hospice training, Andy Robinson gathered with a group of experts at a conference for the Alliance for Nonprofit Management. They considered the question that he had earlier pondered: that is, how to “… define an ‘end-stage’ nonprofit.” 

This team created a list of seven benchmarks as a diagnostic and analytical tool for the nonprofit sector: 

  • “Chronic under-funding and cash flow problems (emphasis on chronic)
  • Last-minute, crisis-driven attempts to diversify funding
  • Greater-than-usual attrition of board, staff, volunteers, clients, and program participants
  • Loss of programs or frantic adding of programs; one colleague calls this ‘desperate proliferation’
  • A sense of obligation—’We must soldier on’—rather than a passion to fulfill the mission
  • Organization-wide burnout: ‘Who cares?’
  • Rumors, bad press, and external questions about … viability”

Mr. Robinson acknowledges that applying this hospice-like diagnostic questionnaire may be alarming: “You may be thinking, ‘wow, our group would qualify on several of these points.” Bear in mind, though, that “…all nonprofits, even healthy ones, go through stages when some of these criteria apply, so you’re probably suffering the usual bumps and bruises.”

Of course, “if most of these apply and seem to be getting worse, it may be time for the end-of-life conversation.” 

We add our own words of caution too:  The existence of symptoms doesn’t necessarily result in a worst-case diagnosis. Surveys confirm that a majority of nonprofits have chronic cash-flow issues and insufficient reserves.  This sector-wide pattern has been made worse by an external force, that is, the 2017 Tax Cuts and Jobs Act. There’s been a demonstrated drop in individual giving in 2018 and 2019.  The best advice may be to make adjustments to ride out this – hopefully – temporary storm instead of throwing in the towel permanently.

Jan Masaoka emphasizes that an important step is “for the board to describe, or ‘declare,’ the situation a crisis or emergency, or at least an ‘urgent and unusual situation.’” It helps board and staff feel permission to hold extra meetings, cut costs, or ask for outside help. It creates an environment for open and candid discussion. “Declaring a crisis,” she adds, “also gives the board a chance to see if there are supporters” who can and will step up to help.

We’ve written about a number of recent well-publicized instances around the United States where interested “stakeholders” beyond the board and staff have come forward and resuscitated community organizations written off as beyond hope. Now – in the social media and internet age – this is an avenue that can yield results and should be seriously pursued.

   Conclusion

If, after consulting the necessary professionals, it becomes clear that your organization should pursue end-of-life planning, there is no one-size-fits-all course of action. Mr. Robinson and Ms. Masaoka present some of these options, and we’ll discuss some, too, in a later post. 

Help with Charity Board Meeting Minutes

“It’s not surprising that nonprofit board meeting minutes are often either overlooked or under-utilized,” according to the helpful folks over at Wild Apricot.

There’s too much to do in any organization, large or small, to focus on minute-taking and this duty may be brushed aside as a quaint formality or custom from a bygone era. And, of course, taking minutes is intimidating because the document to be produced from the notes during the meeting is an official record, evidence of what did or did not happen at an official meeting of the organization.

But they are important – and legally required – so the apricots (yes, they call themselves “apricots”) collected some of the best minutes-preparation aids and templates currently available online and free of charge. See “13 Meeting Minutes Templates to Help You Ace Your Nonprofit Board Meeting” (May 21, 2019). It’s not a one-size-fits-all matter; the best choice for a particular organization depends on “many factors such as the information you want to capture, and your aesthetic preferences.”

That’s why, several years ago, we wrote four blog posts in a few months’ time on the subject. One could say we were obsessed with the topic back then, but that term rightfully should be limited to YouTube videos titled: “Why I am obsessed with the new long-wearing lipsticks from Maybelline.”

Minutes Are Vital Records

Our introductory post back in 2014 was intended to be a guilt trip to jolt you into awareness of this otherwise snooze-worthy issue.

“Admit it. You’ve done it,” we wrote to open Breach of Fiduciary Duty by Ogling the Doughnuts (October 8, 2014), “The corporate secretary is asking for approval of the minutes from the last meeting. But you’re busy deciding between the maple-glazed doughnuts and the chocolate-topped ones. So is everyone else around the conference table.”

Writing board-meeting minutes is much more than “mere note-taking.” Nonprofit corporations can act only through the board of directors so minutes are vital records of the history of the organization; they are “presumed to be correct and are considered legal evidence of the facts they report.”

Well-kept corporate minutes serve as a record of corporate decisions, reflect director dissent where appropriate, offer guidance for future board action, serve as a valuable source of contemporaneous evidence in regulatory or judicial proceedings and reduce misunderstanding as to the intent of the board. Corporate minutes can document compliance by board and committee members with their fiduciary obligations.

Minutes should be prepared carefully and “with an awareness of third parties.” They may be read by outsiders who were not at the meetings, but are trying to understand – after-the-fact – what occurred.” And if IRS agents or state charity regulators come knocking at your door, they will ask to see your corporate minutes. When the Revenue Agent Comes Calling: Document Retention (September 26, 2016).  

More About Minutes

Next up: Fun Facts about Corporate Minutes (October 24, 2014). Key takeaway: Even we don’t think minutes are fun, but they are key records of your organization’s history that should be drafted carefully and consistently. That’s why templates are so helpful; we offer drafting tips and links to templates available online at that time.

In Nonprofit Corporate Minutes: What Not to Do (October 27, 2017), we offer six ways to fail Nonprofit Minutes 101.

In Just One More Thing About Meetings and Minutes (November 24, 2014), we give you the low-down on motions and resolutions: what each one is and how to draft them.

Conclusion

Don’t be surprised if you see an additional post or two on this sleepy subject coming up soon.

By the way, the Maybelline lipsticks are good for the price, but they have a weird, limited color selection (so you may have to buy more than one and mix them) and they last fairly long but are so drying you need to buy one of their glosses, too. So now with 2 lipsticks and 1 gloss, the price is suddenly not that great….


The Shocking Turmoil at the SPLC

“… UNTIL JUSTICE ROLLS DOWN LIKE WATERS AND RIGHTEOUSNESS LIKE A MIGHTY STREAM” – Martin Luther King, Jr.


The announcement was stunning – and cryptic.

Just below Dr. King’s stirring language on the header of the website of the Southern Poverty Law Center, Richard Cohen had posted a confirmation of breaking news reports that same day, March 14, 2019: “Our founder Morris Dees is no longer working at SPLC.

Continuing a few brief paragraphs down, the president of SPLC wrote: “We’re committed to ensuring that our workplace embodies the values we espouse — truth, justice, equity, and inclusion. When one of our own fails to meet those standards, no matter his or her role in the organization, we take it seriously and must take appropriate action.”

When you click on that link today, you’ll notice that Mr. Cohen is now listed as “former president” of SPLC. He stepped down from his post on March 22, 2019, a week after the firing of Morris Dees. The legal director, Rhonda Brownstein, “also resigned (around the same time) aalthough the reason for her departure is not yet clear.”

Apparently – for decades – there had been a cauldron of tension and discontent brewing just under the surface at one of the nation’s leading civil rights organizations. “The firing of Morris Dees … has flushed up uncomfortable questions that have surrounded the organization for years,” wrote former SPLC employee, Bob Moser, in The Reckoning of Morris Dees and the Southern Poverty Law Center (3/21/19), a stinging expose in the New Yorker.

This unraveling of a high-profile American charity, that had for so long aggressively promoted a pristine public image while hiding a toxic workplace culture (and other problems), is eerily reminiscent of another recent philanthropy scandal, the implosion of the Silicon Valley Community Foundation (SVCF) in April 2018.

Then – as now — the question is how and why this situation was allowed to go on for so long. While the Silicon Valley Community Foundation mess festered for almost ten years, the SPLC troubles were much more long-standing.

The Rise of the SPLC

Morris Dees, now age 82, has been the flamboyant public face of the organization he founded in Montgomery, Alabama, in 1971, with Joseph J. Levin, Jr., his law partner, and the late Julian Bond, a prominent young civil rights leader.

The organization was created to “ensure that the promise of the civil rights movement became a reality for all.” Mr. Bond, who died in 2015, served as SPLC’s first board president during the 1970s. He was also an accomplished state legislator and eventually led the NAACP.  Joseph Levin is still listed on the website’s board of directors page as a co-founder with “board emeritus” status.

At the time he was fired, Mr. Dees’s official position had been “chief trial counsel” although in recent years, he had stepped back somewhat from his earlier prominence in the organization. According to the Southern Poverty Law Center’s most recent Form 990, he was still being paid over $400,000 a  year. On March 14, 2019, SPLC “scrubbed” his bio from the website.

Richard Cohen (now former president) earned several thousand dollars less while officially leading the organization since 2003. He had joined the group in 1986.

As a “legal advocacy organization specializing in civil rights and public interest litigation, [the SPLC] is known for its successful legal cases against white supremacist groups, its classification of hate groups and other extremist organizations, and for promoting tolerance education programs.”

“The SPLC has been engulfed in controversy for decades on everything from its fundraising practices to its designation of certain organizations as hate groups over which there has been litigation.”

Mr. Dees reportedly crushed, in a heavy handed manner, a proposed, highly critical article about him. Other stories and rumors about his personal behavior and an alleged corporate culture of racial discrimination and sexual harassment were also squashed.

The Facade at SPLC Cracks  

The dizzying cascade of activities in March 2019 just before and after the abrupt dismissal of Morris Dees on the 14th are beginning to come into focus. It is “being characterized as a situation of workplace harassment, hostile workplace complaints and a lack of staff diversity.”

What appears to have prompted the abrupt actions on that day was a group letter by staff members sent around that time that indicated they had had enough. The signers “noted the small number of black people in leadership ranks and that many employees had observed that people of color had been ‘pushed out, fired, removed from positions of leadership’ or had to leave ‘due to discrimination and a lack of opportunities.’”

Earlier in the month, Meredith Horton, the deputy legal director and among the highest-ranking African-American women in the center’s history, announced she planned to leave. In a resignation announcement, she wrote that there was “more work to do” to guarantee that the SPLC was “a place where everyone is heard and respected and where the values we are committed to pursuing externally are also being practiced internally.” Mr. Cohen forwarded Ms. Horton’s resignation email to the entire staff. He wrote that executives intended to “ensure that our workplace reflects our values.”

After the center announced that it had fired Morris Dees, its charismatic co-founder, for misconduct, another group of employees sent a separate letter accusing the center’s leadership of being ‘complicit in decades of racial discrimination, gender discrimination, and sexual harassment and/or assault.’”

Notably, in Richard Cohen’s March 22nd email to staff titled “Stepping Down,” he wrote: “After more than 30 years at the Southern Poverty Law Center, I’ve decided to step down. Other legacy civil rights organizations have transitioned to a new generation of leaders, and I believe that we should, too.”

His email statement continued: “We’ve heard from our staff that we need to do a better job of making sure that our workplace embodies the values we espouse — truth, justice, equity, and inclusion.” He mentioned, also, that “back in October [2018], he had “asked the board to immediately launch a search for an interim president….”

The Future of the SPLC

By the beginning of April 2019, there were a number of important developments including the resignation of Richard Cohen. Tina Tchen, former White House chief of staff to First Lady Michelle Obama, was hired to review the organization’s workplace policies. In a statement released by the SPLC, Tchen was quoted saying: “Every workplace, including social justice organizations, must work hard to create a workplace culture that fully reflects their values and priorities, including when it comes to racial and gender diversity.”

On April 2, 2019, the SPLC board chair announced that Karen Baynes-Dunning, an African-American, had been named interim president and CEO by unanimous vote of the board. “A former juvenile court judge, [she] has dedicated her career to improving the quality of life for the disadvantaged,” having “served in numerous leadership positions in the public and nonprofit sector to help improve the policies and services that affect the lives of vulnerable children.”

Conclusion

As the story unfolds about the sad and highly ironic presence of a toxic workplace environment at a civil rights organization, there are legitimate questions including how the board and senior staff at the Southern Poverty Law Center allowed this to begin and then to fester for so long. This is particularly important to discuss since, apparently, these problems were more or less an open secret at least in some legal and philanthropy circles.


Stakeholder Revolts and Successful Comebacks

Back in 2015, we featured two stories about troubled nonprofit institutions on opposite coasts. The common thread in each tale was a stakeholder revolt which successfully challenged the board’s apparent emergency decisions to shut down operations.

The rebel force in each organization (bolstered by supporters in and beyond the local communities) not only averted a dissolution but also quickly regrouped. Old leadership was shown the door; new board members and senior staff got the group back up and running.  

First up in our reporting, in Sweet Briar College: Saved – At Least For Now, was a post about Virginia’s Sweet Briar College.  Those events reminded us of a similar situation the year before in our own neck of the woods, so we wrote Drama at the San Diego Opera: A Dynamic Different Than Sweet Briar.

At the beginning of 2016, we took a look at the progress of these institutions in Lessons in Charity Governance, Courtesy of Sweet Briar and San Diego Opera. Six months later, we visited these stories again in Corporate Governance Redesigned: A Sweet Briar College & San Diego Opera Update.

There were issues unique to each organization as well as common to both; most particularly, whether an organization’s board of directors always has the final say in matters even of the highest importance. To what extent can and should interested stakeholders have a voice in the institution’s direction or future?

Now – again – we update these success stories.  

Update: Sweet Briar College

In Back from the Brink: Sweet Briar Called One of Nation’s Most Innovative Schools (September 11, 2018), The Nonprofit Quarterly happily reported eager the good news about the apparently once-moribund women’s college located in the beautiful foothills of the Blue Ridge Mountains. Three years after it was prematurely declared deceased, “Sweet Briar College has been singled out as one of the nation’s Most Innovative Schools,” according to the “Best Colleges 2019” rankings of U.S. News & World Report.  “In fact, Sweet Briar ranked higher than any other college or university in the Commonwealth of Virginia.”

Founded in 1901, this institution was by no means assured of coming back from that brink. Though the newly constituted board and administration, backed by the stakeholder group including loyal alumnae, had survived the emergency events, the school faced a new academic year with no freshman class signed up. Many of the previously accepted high school seniors had to scramble at the eleventh hour to secure acceptance at an alternate institution.  

Now, Sweet Briar College has a total annual undergraduate enrollment of 319. That student-body size is somewhat smaller than before the 2015 crisis, but one of the reasons cited by the prior board for the need to close was a trend of declining enrollment that plaguing small, single-gender, liberal arts institutions for many years. So this downsizing may well be in the college’s long-term best interest; in any event, the current figure is a 42-percent jump from the past year.

According to a recent Sweet Briar publication, “innovation has been comprehensive and multilayered,” which likely accounts for the favorable U.S. News & World Report rating of “tied at #21” for “Most Innovative Schools.”

Remarkably, also, Sweet Briar offers tuition of $21,000 per academic year – a figure much lower than most other institutions of higher education. “In addition to curating an academic curriculum built on its areas of excellence, the College reduced tuition to make the superlative education at Sweet Briar affordable and the true cost more transparent. A sustainable budgetary restructuring positioned the size of the College’s administration to grow alongside student enrollment over the long term.”

Update: San Diego Opera

In July 2018 the San Diego Union-Tribune proudly ran a feature story that seemed all but impossible to imagine in 2014.  In Four years later, downsized San Diego Opera is stable, growing, the reporter described a new era for the prestigious performing arts organization.

There had been many problems plaguing this community institution in the period leading up to the crisis, not the least of which was a renowned CEO/musical director who had grandiose ideas for the organization which he apparently ruled with an iron fist.

The successful stakeholder revolt “… was a Cinderella story that briefly made international headlines, but the company’s challenges did not disappear right away. Many old-guard board members walked out along with their checkbooks and a new management team was tasked with downsizing and reimagining the company for 21st century audiences.”

The San Diego Opera has “stabilized,” finishing its most recent season “in the black.” “(T)the office is fully staffed, its edgy 2-year-old Detour series is a hit, and ticket sales for next season are significantly higher.”  General Director David Bennett was hired in July 2015 and has successfully “rightsized the organization.” His contract has just been renewed for another three years.

Conclusion

More and more, interested parties beyond the duly constituted board of directors of community organizations believe they should have a say in major decisions and have asserted these unofficial but, nonetheless, important “rights.” The stakeholder revolts vary widely in terms of success, but this type of participation is certainly the trend of the future.

How Big is “Too Big” For a Community Foundation?

In this fourth part of a series arising out of the recently exposed travails of the Silicon Valley Community Foundation, we consider the argument raised by a number of expert observers that, for a nonprofit organization, bigger is not always better. And, in the case of a community foundation, an unrelenting push to expand beyond the community from which the foundation takes its name, may be a particularly troublesome goal.

In Secrets and Lies at Silicon Valley Community Foundation, we explained that the Silicon Valley Community Foundation was started in 2007 as the merger of two smaller community foundations in the neighborhood of the nation’s vibrant technology hub. For its new chief executive officer, the SVCF board of directors recruited a dynamic philanthropy leader, Dr. Emmett D. Carson, who had led the Minneapolis Foundation and been associated before that with the Ford Foundation.

Dr. Carson’s ambition was to “‘make the Silicon Valley Community Foundation a national powerhouse’….[a]n ‘institution that could rival the foundations created with Gilded Age wealth a century ago.’” This “grander mission” became a reality. Starting out after the merger with assets of $1.4 billion, by early 2018, SVCF reported assets of over $13 billion. The new crop of Silicon Valley billionaires was ripe for the plucking; Dr. Carson’s selection of Mari Ellen Loijens as the foundation’s chief rainmaker maximized that opportunity. She was a brilliant fundraiser who also had the expertise in the complicated assets that uber-rich people acquired, held, and donated to charity. She was also, unfortunately, an abusive bully, the “boss from hell” who was left in charge to terrorize a decade of SVCF staffers, while Dr. Carson was reportedly absent much of the time, gallivanting around the nation, opening far-flung offices, and persuading wealthy donors from locations distant from Silicon Valley to make SVCF their charitable home.

   Debate About Community Foundation Role

It’s important to note that Dr. Carson was carrying out the philosophy already adopted by the new board of directors of Silicon Valley Community Foundation in 2007. He was not, in any sense, going rogue. He spoke and wrote on this issue frequently.

In Redefining Community Foundations in the Fall 2013 issue of the prestigious Stanford Social Innovation Review, Dr. Carson voices a full-throttled, bold statement about the new path being forged by SVCF. “For nearly 100 years, community foundations have defined themselves as place-based organizations concerned exclusively with improving a specific local geography,” he begins.  

The merger that resulted in Silicon Valley Community Foundation—a community whose geographic location, interests, and identity cannot be placed on any one map—raises profound questions about whether traditional definitions of place and community can or even should remain constant in a century when people are increasingly global citizens and issues come in and out of relevance.

In Keeping the “Community” in Community Foundations (October 23, 2013), Bill Somerville wrote a forceful critique, opening with the unequivocal statement that he had read Dr. Carson’s “essay with dismay,” noting that he had “worked onsite with more than 350 community foundations and experienced their dedication to their communities.”  

Mr. Somerville explains the 100-year history of “community giving in America,” concluding that “[w]hile a community foundation can give nationally and globally, we believe that its primary role is to serve the local community. Otherwise, it might be called a national foundation or a global foundation.” (ital. in orig.) Of course, it’s important to point out that Mr. Somerville was the founding executive director of one of the two community foundations that, in 2007, merged with another to become the new Silicon Valley Community Foundation.

In the issue of the Stanford Social Innovation Review dated Fall 2017, Marc Gunther – the same person who wrote the blockbuster article published on April 18, 2018, that blew open the #MeToo scandal – published The Charity that Big Tech Built in the Stanford Social Innovation Review, unfortunately behind a paywall, though. But the first sentence gives a whiff of what’s to come: “The Silicon Valley Community Foundation has grown to become of the world’s most well-funded foundations. But who in the Valley benefits from this largesse?”

Dr. Carson struck back, in an article dated October 2, 2017, in the Chronicle of Philanthropy: After a Decade, Lessons About How Community Funds Can Evolve Successfully. This piece was also, unfortunately, behind a paywall.

We do get a play-by-play, though, in Barbs, Jabs, and the Roles of Community Foundations (dated September 14, 2017, but somehow after the Gunther and Carson slugfest was published). This article is by Phil Buchanan, the president of the Center for Effective Philanthropy.

On April 12, 2018, David Callahan published a long article in Inside Philanthropy:  Why Is This Giant Community Foundation—and its Leader—So Controversial?  He begins: “The Silicon Valley Community Foundation may be the most intriguing—and confusing—institution in philanthropy today. It’s also surprisingly controversial.”  Mr. Callahan explains both sides of the debate that’s about to get the attention of the philanthropic community.

Just days later, we find out why the Silicon Valley Community Foundation is “surprisingly controversial.”  Marc Gunther’s blockbuster piece in the Chronicle of Philanthropy – A Star Performer Created a ‘Toxic Culture’ at the Silicon Valley Community Foundation, Say Insiders – was posted on April 18th.

   New Critique by More Experts

In the second post of this series, Scandal Erupts at Silicon Valley Community Foundation, we describe the facts as they occurred just before and after Mr. Gunther’s article was published. In our third post, Observations About Silicon Valley Community Foundation From Outside Its Bubble, we described the findings of the independent law firm hired by SVCF’s board of directors to conduct an independent probe. That firm gingerly and carefully suggested that the directors reconsider whether the foundation’s “previously defined long-term goals for the organization – including its ‘Vision 2025’ – remains a “good fit.”

We also noted a list of articles posted from “outside the bubble” by experts and commentators. They were, by and large, much less restrained and polite. Here, for convenience, is that list, once again:

In particular, on the specific question of whether a community foundation should pursue a “growth for growth’s sake” philosophy, the analyses by Alan Cantor in A Bubble Bursts and Professor Brian Mittendorf in Silicon Valley’s cautionary tale shows what can go wrong when charities get obsessed with growth are provocative and important reading. They also tie their analysis into the related matter of the dominance of donor-advised funds at Silicon Valley Community Foundation.

   Conclusion

Next up, we’ll tackle the thorny issue of donor-advised funds in the Silicon Valley Community Foundation as well as in others. The Nonprofit Quarterly has just published an article, Advancing a DAF Regulatory Agenda from Within the Nonprofit Sector, suggesting that it’s more than high time that the nonprofit sector considers and adopts some form of self-regulation of donor-advised funds.

Observations About Silicon Valley Community Foundation From Outside Its Bubble

In Secrets and Lies at Silicon Valley Community Foundation and Scandal Erupts at Silicon Valley Community Foundation, we began a multi-part series on the spectacular implosion of the nation’s largest community foundation. The scandal that blew open the problems at this charity was a #MeToo tale of a toxic workplace that continued for over a decade.

We continue now with a look at the findings of the independent law firm’s investigation into the allegations as well as commentary outside the bubble of the Silicon Valley Community Foundation (SVCF).

   Law Firm Probes Foundation

Just five days after Marc Gunther’s Chronicle of Philanthropy article was published, the Silicon Valley Community Foundation retained the prominent law firm Boies Schiller Flexner LLP to conduct an investigation into allegations by “current and former employees” of “accounts of workplace harassment and bullying [by Mari Ellen Loijens] as well as their “concerns about an unhealthy workplace environment….”

A day or so before publication of the Gunther allegations,  Dr. Emmett Carson, CEO, had retained a different firm to start a probe of the specific allegations against Ms. Loijens; apparently, some work was begun when the Boies firm was retained. The work in progress was reviewed and used to some extent by the second firm in its report.

In a press release issued by the Board on June 27, 2018, SVCF’s governing body explained the substitution:  “When the broader workplace concerns came to the Board’s attention, the Board hired BSF and directed BSF to assume responsibility for and expand the investigation, in an effort to preserve both the actual and apparent independence of the investigation.” Translation: One of the two people most implicated in the “toxic workplace” allegations should not hire the law firm conducting the investigation.

The Boies probe progressed rapidly and comprehensively – albeit within the specified parameters.  The Board had asked Boise to issue a summary of “its findings about SVCF’s work environment and its recommendations for improving workplace policies and procedures.” By June 15, 2018, the Boies team issued a detailed, confidential report; on June 27, 2018, a 14-page summary was released to the public.

Right out of the gate was the confirmation that Dr. Carson – who had been placed earlier on paid administrative leave – was terminated effective immediately with the Board of Directors’ June 27th public announcement.  The Boies report “has not recommended further investigation regarding … personnel” other than Ms. Loijens and the head of human resources who had resigned,” but elsewhere in the report, the investigators noted that the oppressive workplace environment was created and maintained by some (unnamed) senior executives beyond Dr. Carson and Ms. Loijens. The Boies team made clear that not only were the whistleblowers’ claims valid but that, on deeper probing, there were “worse” and additional instances.

The Boies report noted there was a pervasive “fear of speaking out or reporting workplace issues out of concern for retaliation,” a distrust of the H.R. department, and a “top down, ‘command and control’ management style.” The message, apparently, was loud and clear: If you don’t like it here, you’re free to leave right now.
The key recommendations of the Boies team report include a comprehensive review and overhaul of all systems and safeguards to avoid any kind of hostile workplace environment in the future, including a “zero tolerance policy” for retaliation.

The report also addresses the systemic problems that led to senior management being able to hide information from the Board. There had been no procedures in place to bypass the former CEO’s “tight control of the flow of information” which was often “incomplete and misleading.” The Board unanimously accepted the recommendations for change.

While the Boies team did not recommend “conducting an expanded investigation into areas of SVCF beyond the workplace culture,” and made clear that “no financial improprieties were discovered,” there were some additional, interesting, points made in the report.

First, the Boies team suggested that the Board “reevaluate … SVCF’s prioritization of growth, especially regarding assets under management.” This reflected a prevalent gripe by many workers – echoed by some donors, too – that SVCF’s servicing of its accounts had deteriorated precipitously as more and more money flowed into the Foundation. Management failed to scale up to meet the demand. First, the technology was outdated and entirely insufficient for the volume and amount of assets under management. Second, there were too few workers; employees were overworked and burned out.  

A related recommendation is to work with all staff to “assess whether” the foundation’s “previously defined long-term goals for the organization” – including its  “Vision 2025” – remains a “good fit.”

This last recommendation appears to push the envelope somewhat on the designated scope of the probe, but it’s an important point that reflects some of the criticism swirling in the philanthropic community about larger issues and problems of the Silicon Valley Community Foundation.

   Outside the Foundation’s Bubble

In the three months since the Silicon Valley Community Foundation scandal made headlines, it seems that almost everyone with an opinion or observation has published something on the subject in a full-blown article or op-ed or in a blog post.

Investigative reporter Marc Gunther wrote the key article published in the Chronicle of Philanthropy that broke open the scandal: A Star Performer Created a ‘Toxic Culture’ at the Silicon Valley Community Foundation, Say Insiders (4/18/18), with a follow-up blog post: Transparency, Accountancy, and a Troubled Workplace at the Silicon Valley Community Foundation (4/19/18).

He followed up quickly with additional posts: Emmett Carson’s credibility problem (4/23/18) and Emmett Carson: The endgame begins (4/26/18).

See also, for example:

Among the many useful observations in these articles are thoughts by Alan Cantor: “Many aspects of this story – with the unusual twist of having a woman, rather than a man, in the role of the sexual harasser-in-chief could have happened nearly anywhere in the business or nonprofit world.”

He added: “But the problems at SVCF went well beyond everyday poor management. This was an organization in dysfunction overdrive, thanks to three overriding characteristics: an obsession with pleasing rich donors, a striking lack of transparency, and an embrace of growth for growth’s sake. And I would argue that what amplified these characteristics into such a public meltdown was SVCF’s primary role as a sponsor of donor-advised funds (DAFs).”

Professor Brian Mittendorf has similar conclusions: “As a researcher who studies the finances of charities and their funders, I consider the foundation’s culture extreme. But I also find it a cautionary tale for all charities.”

   Conclusion

The next installment will focus on the course taken under the leadership of now-ousted CEO Dr. Emmett D. Carson; that is, breaking this community foundation out of the traditional limits of a community focus, with an emphasis of “growth, growth, and more growth.” It has been controversial for some time, but the SVCF scandal has pushed this debate out into the open.

Nonprofits: Adopt a Board Confidentiality Policy

There are certain types of formal written corporate policies that nonprofit organizations are well-advised to adopt and follow rigorously. Examples include a Conflict of Interest Policy and a Whistleblower Policy – two of the items that IRS revenue agents will ask to see during an audit.
There are other categories that are useful and recommended if they apply in the particular circumstances; for instance, an advisory board policy or a social media policy.
A third category is helpful as an educational device; that is, to spell out and remind people associated with the organization of duties and obligations. One such document is a board confidentiality policy.

   The Duty of Confidentiality

Members of a nonprofit board of directors have a fiduciary duty to keep private certain information learned in the course of board service. The legal obligation exists even in the absence of an express confidentiality policy written up and formally adopted.
Each state adopts its own specific corporations-code language spelling out the legal obligations of nonprofit corporate directors but, around the United States, the general standard follows a long-standing, common-law tradition: the twin duties of care and loyalty.
The description in the California Nonprofit Public Benefit Corporation Law is a bit longer; nevertheless, it boils down to these well-established fiduciary concepts:

5231(a) A director shall perform the duties of a director, including duties as a member of any committee of the board upon which the director may serve, in good faith, in a manner that director believes to be in the best interests of the corporation and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances.

A duty of confidentiality is inherent in this standard:

Like their for-profit counterparts, board members of a non-profit corporation are in a fiduciary relationship with the corporation [and must] act honestly and in good faith….The obligation has many components, including a duty to avoid conflicts of interest and a duty to avoid abusing their position to gain personal benefit. One component of board members’ fiduciary obligation is a duty to maintain the confidentiality of information that they acquire by virtue of their position.

  Developing a Confidentiality Policy

A breach of confidentiality can happen for a variety of reasons. During board service, members sometimes have access to personal information or sensitive material concerning fellow board members, donors and supporters, the membership of the organization generally, and charitable beneficiaries. This may come up in discussions involving health, employment, or finances of certain people, or in consideration of potential conflicts of interest.
While a board member’s general awareness of fiduciary responsibilities would – in a perfect world – be enough to prevent problems, there are several good reasons for taking the time and effort to create and adopt a separate, written policy document.
Considering an issue well in advance of the development of a problem is always a good idea. Many nonprofit boards give their attention to crafting a confidentiality policy only after a crisis occurs. When that happens, the board must manage a dangerous and delicate situation in the heat of the moment and without a reliable guide to follow. This type of event can also create a sense of urgency to draft a hasty and possibly incomplete or ineffective policy for the future.  
A confidentiality policy in place well ahead of time has multiple benefits: It educates the directors about their obligations and creates a clear standard of conduct. 

   Elements of a Confidentiality Policy

While, in a pinch, a short-form document may be useful – see for example samples suggested by the National Council of Nonprofits – this is the type of policy that should be thoughtfully developed with help from counsel. Each organization has unique features which should be addressed.
In crafting a written policy document, consider and include these items:

  • Identify the reasons a board confidentiality policy in your organization is needed or can be helpful.
  • List who the policy will cover. It may be advisable to cover not only board members, but also (in whole or in part) certain staff, committee members who are not on the board, and advisory board members. 
  • Explicitly state and define the directors’ (and others’) duty of confidentiality.
  • Define what constitutes confidential information. Since nonprofits vary substantially in their missions, activities, and structures, this content should be custom designed.
  • Specify which matters are not confidential, especially in terms of applicable open-meeting laws.
  • State whether audio or video recordings are or are not allowed.
  • Clarify if, and how, a board member can obtain written authorization to release confidential information.
  • Explain the consequences of unauthorized disclosures.

  Conclusion

Once the confidentiality policy is drafted, the board must formally approve it. It should be written into the bylaws and included in all board member handbooks. It should also be discussed as part of any new board member orientation, the new director should sign a statement indicating the policy has been read and understood. 
Fiduciary duties are the basic responsibilities of board members. It’s more likely that directors will meet their duties when there is a formal written policy or policies explaining them clearly.