When was the last time your NPO held a board retreat? Chances are, you went through a SWOT analysis (strengths, weaknesses, opportunities, threats) or some derivation of it. While the practicality of the SWOT planning method is not the subject of this blog post, it does seem to provide a good starting point for evaluating issues related to governance (or any other issue for that matter) at the board and executive director level for an charitable organization.
It seems to me that we are too general with our planning discussions. And, that we rarely (if ever) take advantage of evaluating an outcome to learn from our mistakes and lost opportunities.
Example: "Okay," says the facilitator, "let's talk about our Weaknesses."
So the group starts talking about 'weaknesses' -- arguably, too much in the abstract: we don't have enough money; our membership is decreasing; fewer people are using our programs; etc.
We need to talk more about the specifics -- how long has it been since we conducted a capital or operational funding campaign?; oops, has it really been a year since our last monthly mailer went out to our members?; wow, time flies - our website is two years out-of-date?; and we really have not changed or updated our basic programming in over five years?
While specific questions about broad subjects can be uncomfortable, from a non-profit board governance perspective, such issues must be put on the table. The NPO needs to look internally, first and foremost, at its grants writing structure, its regulatory performance, and conduct a comprehensive evaluation of the internal systems (including programs and services). Informed with answers to these questions, the NPO can then look externally for assistance.
Obviously, some issues of non-profit regulatory compliance can be much more serious than others. What if the NPO missed the deadline on filing its IRS Form 990? This blog suggests that there is importance in looking at why that happened, who is responsible, and what steps will be taken to assure it does not happen again.
So, the suggestion is that issues of NPO governance should be discussed in greater operational detail than in the abstract. After all, the sucess of the non-profit organization and the fulfillment of its charitable mission to the community depend on it.
Tuesday, December 16, 2008
Sunday, December 14, 2008
What is More Ethical: Blogs or News Media?
More and more of our non-profit organizations tell us they are getting their news and industry-specific information online, via the Internet.
This specific title was one I was asked to write about, so I will give it my best shot.
Hometown newspapers continue a downward trend. Many have been sold to conglomerates and others have closed down completely.
The study of ethics and the media has long been an interest of this blogger. For a number of years, local newspaper writers have tended to start in small market towns and cities and then move up the career ladder by leaving town for a larger media market. This ongoing trend leaves non-profit organizations without solid media contacts that know about the charitable organization and can report on successes. Accordingly, an important issue for NPOs is the cultivation of positive relationships with media contacts.
Albeit anecdotally, it seems appropriate to draw distinctions between local media and national media -- and even newspapers vs. television stations (local radio news seems to have all but disappeared in small to medium markets). Traditionally, the television news has focused on what everyone has come to call 'sound bites' of information. To be fair, television news must cover a vast array of information in a very short period of time.
Executive directors of most non-profit organizations would be quick to notice that television news does not serve them too well. And, to the oft-uninitiated executive director, the sound bite may not come across as intended, inviting a phone call from members of the board of directors and the members of the charitable organization!
The limitations of the television news leaves the non-profit executive director with little choice but to focus on the local newspaper. However, efforts to get cooperation from the newspaper in getting information from the NPO to the community can be very frustrating. News releases are constantly being sent to newspapers and, as most people know, the majority of the news releases never make it into the newspaper. Most NPOs then conclude, rightly or wrongly, that the news media really doesn't care about their organizations.
Also, as previously mentioned, the majority of the remaining newspapers are in small to medium markets, where experience among the news writers tends to be less than the national newspapers with tenured and seasoned writers. And, let's face it, not many small-town newspaper writers will look to a non-profit to provide that "big story" that wins them the prize! (Unless, perhaps, it is a scandal of some sorts and they desire to become the next Woodward and Bernstein...)
So, is it really any wonder that the Internet has become an increasingly popular mechanism for NPOs to seek information and communicate their message? It's free, it provides full use of your First Amendment rights, no begging is required to get your story published, and it's popular! (There are still millions of Amercans who enjoy holding the newspaper every day.)
But, our question is about ethics.
While it is incumbent upon the writer of a blog -- in this case, let's consider it to be a non-profit organization that is writing the blog in conjunction with its web site -- to get the information correct and/or to share an opinion about an issue of interest to its readers. This is not necessarily the case among newspaper reporters. Arguably, if the NPO conducts itself in an un-ethical manner, its constituency will respond promptly and 'vote' with its contributions. Such does not seem to be the case among newspaper reporters, their deadlines, and the advertising-driven business plan.
Again, to be fair, newspaper reporters are typicaly handed daily assignments, about topics they generally know absolutely nothing about, and given a deadline for publication. The opposite is true for the blogger: it is not an assignment, the subject matter is almost always something that the blogger is very passionate and/or knowledgeable about, and there is no deadline. Over the years, personal experience has shown that the number of newspaper writers willing to seek information is dwindling rapidly; this is sad and does not bode well for the profession or the industry. One reporter actually told me once upon a time that the readers would not be able to understand the complex story, so the important issues were discarded in favor of a sensational twist. This is sad.
To the extent that 'ethics' in this case relates to accuracy, depth of knowledge, willingness to learn more about the subject, and personal responsibility and accountability (another key issue) for the blog of an NPO, it would be very interesting to hear the argument that would support the ethical superiority of the newspaper writer when it comes to these key factors.
Ostensibly, as the non-profit sector continues to wrestle with increasingly stringent oversight by the IRS and its funders, executive directors and board members will focus on ethics (and governance and accountability) in far more depth. Who will provide such oversight among the news media?
It seems to me that Bloggers need to take great care to write about issues that are of importance to their constituency. Everyone is on 'information overload' and running on and on (while clearly your right) is not likely to provide long-term benefits.
Feedback on this issue will be interesting.
Our organization is dedicated to assisting NPOs with issues of ethics, among other things, so a debate on this issue can also be instructive.
This specific title was one I was asked to write about, so I will give it my best shot.
Hometown newspapers continue a downward trend. Many have been sold to conglomerates and others have closed down completely.
The study of ethics and the media has long been an interest of this blogger. For a number of years, local newspaper writers have tended to start in small market towns and cities and then move up the career ladder by leaving town for a larger media market. This ongoing trend leaves non-profit organizations without solid media contacts that know about the charitable organization and can report on successes. Accordingly, an important issue for NPOs is the cultivation of positive relationships with media contacts.
Albeit anecdotally, it seems appropriate to draw distinctions between local media and national media -- and even newspapers vs. television stations (local radio news seems to have all but disappeared in small to medium markets). Traditionally, the television news has focused on what everyone has come to call 'sound bites' of information. To be fair, television news must cover a vast array of information in a very short period of time.
Executive directors of most non-profit organizations would be quick to notice that television news does not serve them too well. And, to the oft-uninitiated executive director, the sound bite may not come across as intended, inviting a phone call from members of the board of directors and the members of the charitable organization!
The limitations of the television news leaves the non-profit executive director with little choice but to focus on the local newspaper. However, efforts to get cooperation from the newspaper in getting information from the NPO to the community can be very frustrating. News releases are constantly being sent to newspapers and, as most people know, the majority of the news releases never make it into the newspaper. Most NPOs then conclude, rightly or wrongly, that the news media really doesn't care about their organizations.
Also, as previously mentioned, the majority of the remaining newspapers are in small to medium markets, where experience among the news writers tends to be less than the national newspapers with tenured and seasoned writers. And, let's face it, not many small-town newspaper writers will look to a non-profit to provide that "big story" that wins them the prize! (Unless, perhaps, it is a scandal of some sorts and they desire to become the next Woodward and Bernstein...)
So, is it really any wonder that the Internet has become an increasingly popular mechanism for NPOs to seek information and communicate their message? It's free, it provides full use of your First Amendment rights, no begging is required to get your story published, and it's popular! (There are still millions of Amercans who enjoy holding the newspaper every day.)
But, our question is about ethics.
While it is incumbent upon the writer of a blog -- in this case, let's consider it to be a non-profit organization that is writing the blog in conjunction with its web site -- to get the information correct and/or to share an opinion about an issue of interest to its readers. This is not necessarily the case among newspaper reporters. Arguably, if the NPO conducts itself in an un-ethical manner, its constituency will respond promptly and 'vote' with its contributions. Such does not seem to be the case among newspaper reporters, their deadlines, and the advertising-driven business plan.
Again, to be fair, newspaper reporters are typicaly handed daily assignments, about topics they generally know absolutely nothing about, and given a deadline for publication. The opposite is true for the blogger: it is not an assignment, the subject matter is almost always something that the blogger is very passionate and/or knowledgeable about, and there is no deadline. Over the years, personal experience has shown that the number of newspaper writers willing to seek information is dwindling rapidly; this is sad and does not bode well for the profession or the industry. One reporter actually told me once upon a time that the readers would not be able to understand the complex story, so the important issues were discarded in favor of a sensational twist. This is sad.
To the extent that 'ethics' in this case relates to accuracy, depth of knowledge, willingness to learn more about the subject, and personal responsibility and accountability (another key issue) for the blog of an NPO, it would be very interesting to hear the argument that would support the ethical superiority of the newspaper writer when it comes to these key factors.
Ostensibly, as the non-profit sector continues to wrestle with increasingly stringent oversight by the IRS and its funders, executive directors and board members will focus on ethics (and governance and accountability) in far more depth. Who will provide such oversight among the news media?
It seems to me that Bloggers need to take great care to write about issues that are of importance to their constituency. Everyone is on 'information overload' and running on and on (while clearly your right) is not likely to provide long-term benefits.
Feedback on this issue will be interesting.
Our organization is dedicated to assisting NPOs with issues of ethics, among other things, so a debate on this issue can also be instructive.
Monday, October 27, 2008
CEGA pointer: Fundraising Focus
A story in USA Today makes clear that times will be tough for non-profits, particularly the big ones who relied heavily on Freddie, Fannie, and Wall Street firms. See the article, "It's a hard time to be a charity" below:
http://www.usatoday.com/money/economy/services/2008-10-26-fundraising-crisis-donations-charities_N.htm
http://www.usatoday.com/money/economy/services/2008-10-26-fundraising-crisis-donations-charities_N.htm
The article makes clear that non-profits, particularly the large ones, are in for tough times. Organizations like Freddie, Fannie, and other Wall Street companies will not be making contributions this year. As all charitable organizations know, many individuals and foundations wait until the end of the calendar year to assess requests and determine contributions.
CEGA was formed to serve. Our mission is to help small to medium non-profit organizations. This may be the most challenging time ever for non-profits to survive and thrive. Take a moment to read the article and ponder the challenges -- and, the opportunities.
We recommend that non-profits use this opportunity to separate themselves from the pack, become poised for excellence, and demonstrate a commitment to Fundraising Focus by working with us on Certification.
No doubt, the non-profit sector is in for some very difficult times as the economic challenges continue to unfold.
We are here to help.
Sunday, October 19, 2008
CEGA Observation: It's the Economy! Great Time for Non-Profits?
The economic events of the last few weeks have certainly captured the attention of most Americans. What effect will the economic recession have on the fundraising and operations of the Non-Profit Sector?
Well, that depends.
At CEGA, we believe that our Mission is more timely than ever: non-profit organizations (NPOs) can derive economic benefit by excelling in areas of Governance, Ethics, and Accountability, particularly in times of economic uncertainty, cutbacks, and increased competition for contributions and grants.
Just this past week, we were made aware of a non-profit that saw an enthusiastic donor's $150,000 pledge become a reluctant $20,000 pledge. It's tough to argue with a donor! The man stated, "the value of my portfolio is dropping by the minute. I'm in my 70s and I just don't feel comfortable right now."
This prompted us to ponder the effect the economy will have on Major Donors and National Foundations. Likely, it will be substantial. Competition will be tougher than ever. But, the missions of so many NPOs are so important to the ongoing success of American that we, at CEGA, still hold to our belief that the Non-Profit Sector is going to be called upon to fix serious problems in ways that neither the Government Sector nor the Private Sector can adequately address.
Will some NPOs fail (i.e. 'go out of business') during these troubled economic times? Absolutely; some will not make it. That's the basis of our capitalistic system. Will some NPOs be 'rescued' like the banks? Perhaps. But, that will depend on the generosity of individual donors and individual circumstances; we would not predict that to be the norm.
So, how is your non-profit organization situated as we continue to move into these times of economic uncertainty? Take a look around you at the issues that are driving the national debate. For example: (a) if CEOs on Wall Street are being hammered for excessive compensation, how does your NPO executive compensation review compare with your peers? (b) if Boards are being criticized for lack of oversight for bank operations, how does your NPO compare? Are your policies up to date? Is your board active and informed? (c) if Accountability and Regulation are at center stage among private sector firms, how does your NPO demonstrate leadership far beyond the norm?
As with all things, the future belongs to the prepared. We urge your organization to take action now to be a leader in what promises to be an exciting new chapter in the greatest country in the world.
Please let us know how we can be of assistance.
Well, that depends.
At CEGA, we believe that our Mission is more timely than ever: non-profit organizations (NPOs) can derive economic benefit by excelling in areas of Governance, Ethics, and Accountability, particularly in times of economic uncertainty, cutbacks, and increased competition for contributions and grants.
Just this past week, we were made aware of a non-profit that saw an enthusiastic donor's $150,000 pledge become a reluctant $20,000 pledge. It's tough to argue with a donor! The man stated, "the value of my portfolio is dropping by the minute. I'm in my 70s and I just don't feel comfortable right now."
This prompted us to ponder the effect the economy will have on Major Donors and National Foundations. Likely, it will be substantial. Competition will be tougher than ever. But, the missions of so many NPOs are so important to the ongoing success of American that we, at CEGA, still hold to our belief that the Non-Profit Sector is going to be called upon to fix serious problems in ways that neither the Government Sector nor the Private Sector can adequately address.
Will some NPOs fail (i.e. 'go out of business') during these troubled economic times? Absolutely; some will not make it. That's the basis of our capitalistic system. Will some NPOs be 'rescued' like the banks? Perhaps. But, that will depend on the generosity of individual donors and individual circumstances; we would not predict that to be the norm.
So, how is your non-profit organization situated as we continue to move into these times of economic uncertainty? Take a look around you at the issues that are driving the national debate. For example: (a) if CEOs on Wall Street are being hammered for excessive compensation, how does your NPO executive compensation review compare with your peers? (b) if Boards are being criticized for lack of oversight for bank operations, how does your NPO compare? Are your policies up to date? Is your board active and informed? (c) if Accountability and Regulation are at center stage among private sector firms, how does your NPO demonstrate leadership far beyond the norm?
As with all things, the future belongs to the prepared. We urge your organization to take action now to be a leader in what promises to be an exciting new chapter in the greatest country in the world.
Please let us know how we can be of assistance.
Sunday, October 5, 2008
Part 3: Income vs. Expenses - Are You Charitable?
In this post, we will continue our discussion about regulatory expectations and your ability to keep your organization in a proactive mode.
Although it may have been a long time ago, your non-profit organization received its IRS determination letter. Requisite in your role as a charitable organization -- serving the community well-being -- your fund-raising (income) must be directed toward your charitable mission (expenses).
The greater the percentage of income directly devoted to the specific mission of the charity is all the better. How do your administrative expenses and overhead compare with the funds directly supporting the activities of your mission? Have you taken a look at those numbers? Do you have a process by which you track those numbers?
As we have predicted, these types of internal reviews are going to be increasingly important as the IRS steps up its reviews of Form 990 filings.
If you need an internal audit process, CEGA can help you.
Excellence in the non-profit sector demands that charitable organizations demonstrate that they are indeed charitable.
Although it may have been a long time ago, your non-profit organization received its IRS determination letter. Requisite in your role as a charitable organization -- serving the community well-being -- your fund-raising (income) must be directed toward your charitable mission (expenses).
The greater the percentage of income directly devoted to the specific mission of the charity is all the better. How do your administrative expenses and overhead compare with the funds directly supporting the activities of your mission? Have you taken a look at those numbers? Do you have a process by which you track those numbers?
As we have predicted, these types of internal reviews are going to be increasingly important as the IRS steps up its reviews of Form 990 filings.
If you need an internal audit process, CEGA can help you.
Excellence in the non-profit sector demands that charitable organizations demonstrate that they are indeed charitable.
CEGA pointer: Documentation
Another "CEGA pointer" before we move on to Part 3 in this series...
I recently received an email from an executive director who had been contacted by the IRS regarding the late filing of its Form 990 and associated penalties. The 990 was indeed filed late, but to make matters even more challenging, the executive director could not find a copy of the 990 that he had mailed. Oops.
This immediately brings to mind the critical importance of keeping good records at your non-profit organization. It is, for sure, part of your Accountability responsibility as a charitable organization. Just a few thoughts:
1. With non-profit executive director (ED) turn-over a fact of life, is your filing system well established and not dependent on any one individual?
2. Do you have back-up copies (hard copy or electronic) of critical documents?
3. Is your legal counsel or your CPA familiar with your records and record-keeping practices?
4. If, as a board member, you were called upon to produce documentation on your non-profit, would you know what documents were required annual filings for your city, state, or federal compliance?
CEGA believes the non-profit world is poised for excellence. Your organization can be a leader. Excellence is an important defining element: take your Documentation responsibility seriously.
I recently received an email from an executive director who had been contacted by the IRS regarding the late filing of its Form 990 and associated penalties. The 990 was indeed filed late, but to make matters even more challenging, the executive director could not find a copy of the 990 that he had mailed. Oops.
This immediately brings to mind the critical importance of keeping good records at your non-profit organization. It is, for sure, part of your Accountability responsibility as a charitable organization. Just a few thoughts:
1. With non-profit executive director (ED) turn-over a fact of life, is your filing system well established and not dependent on any one individual?
2. Do you have back-up copies (hard copy or electronic) of critical documents?
3. Is your legal counsel or your CPA familiar with your records and record-keeping practices?
4. If, as a board member, you were called upon to produce documentation on your non-profit, would you know what documents were required annual filings for your city, state, or federal compliance?
CEGA believes the non-profit world is poised for excellence. Your organization can be a leader. Excellence is an important defining element: take your Documentation responsibility seriously.
Saturday, October 4, 2008
CEGA pointer: Accountablity for Board Members
Before moving on to Part 3 in this discussion series, I would like to take a moment and share a quick thought that I believe is important: Accountability for members of the board of directors of a non-profit organization.
What a challenge! But it must be done. Several questions that should provide food for thought on governance, ethics, and accountability issues for non-profit boards:
1. Do your board members attend the meetings regularly? (Many grantors are beginning to require documentation of board attendance.)
2. Do your by-laws include attendance requirements?
3. Is there a formal process for removing inactive board members? Is your board afraid to use it?
4. Do board members show up at the meeting with their packets still sealed? Or, have they read the material provided to them and are they ready to engage in the discussion?
5. What percentage of your attending board members rarely, if ever, have anything to say or anything to contribute during the meeting?
As a past chair of several non-profit organizations where I have had to make that uncomfortable telephone call to invite a non-participating board member to resign, I certainly understand that it is not a pleasant experience. But, for a number of critical reasons, when it must be done, it must be done! The board has an important job to do. Make board accountability a priority at your non-profit organization and you will, indeed, be on the path to excellence among your peers.
What a challenge! But it must be done. Several questions that should provide food for thought on governance, ethics, and accountability issues for non-profit boards:
1. Do your board members attend the meetings regularly? (Many grantors are beginning to require documentation of board attendance.)
2. Do your by-laws include attendance requirements?
3. Is there a formal process for removing inactive board members? Is your board afraid to use it?
4. Do board members show up at the meeting with their packets still sealed? Or, have they read the material provided to them and are they ready to engage in the discussion?
5. What percentage of your attending board members rarely, if ever, have anything to say or anything to contribute during the meeting?
As a past chair of several non-profit organizations where I have had to make that uncomfortable telephone call to invite a non-participating board member to resign, I certainly understand that it is not a pleasant experience. But, for a number of critical reasons, when it must be done, it must be done! The board has an important job to do. Make board accountability a priority at your non-profit organization and you will, indeed, be on the path to excellence among your peers.
Saturday, September 27, 2008
Part 2 - Noncompliant Activities: How to Make Sure You Stay on the Right Side of the Issue
Issues related to the governance of Non-Profits have intensified -- just as we anticipated 3 years ago.
However, our commitment to you is not focussed on the Past, but focussed on the Future. In this post, we will continue our discussion about regulatory expectations and your ability to keep your organization in a proactive mode.
Specifically, this post follows Part 1, where we examined the issues related to Executive Pay and the long-standing IRS regulations for documentation that supports decisions of the board.
So, what is a 'non-compliant' activity?
Let's start at the beginning...
When any non-profit applies for its tax exemption, the organization is required to specify the activities it plans to conduct and to make the case that their mission qualifies for charitable, tax-exempt status. Upon review, the IRS either grants or denies the application and issues its 'exemption letter'.
If your planned activity falls outside of the specified mission of your non-profit, then the activity may be non-compliant. Non-compliant? With what? Your IRS-approved exemption! How do you know, for sure, if your planned activity is within your compliance parameters? Easy...just ask! Who? The IRS (your regulatory reference)!
Please ponder the following hypothetical example: a local community Food Bank is deciding whether or not to purchase a national fast-food chain restaurant adjacent to its main food bank facility.
It sounds like a great idea when presented to the board for approval:
This is a good example of the challenges of a non-profit board. Let's take this scenario a step further before we try to deal with the dilemma.
This Food Bank was organized 30 years ago and received its IRS approval as a charitable, tax-exempt organization serving the public good. The founding executive director (ED) led the organization for 20 years until he retired.
Following the retirement of the founding ED, the board conducted a search and hired a replacement ED. Unfortunately, their new ED left after just one year, accepting an opportunity at a larger food bank. Since that time, the organization has suffered rapid turnover among four EDs, but the board believes the tide has turned: the current ED is an experienced manager, who was looking for a career change, and is committed to remaining in this position for quite a few years.
The idea for the purchase of a fast-food restaurant took shape during a scheduled fund-raising call between the new 'out-of-the-box' ED and the owner of the fast-food chain. The owner, a former board member of the Food Bank, suggested the purchase as a mechanism for alleviating the ongoing financial challenges of the Food Bank and as part of his estate planning. The deal was a gracious opportunity; the owner would even provide the financing. To answer any questions, the owner offered to attend the board meeting with the ED.
Okay.
An opportunity presents itself: a former board member offers to be unbeliveably philanthropic and an excited ED presents the idea to the board at its regular meeting. You are a board member. You hear the presentation. The opportunity sounds great! What should the board do?
(We could spend quite a bit of time strategizing, but that is beyond the scope of this post.)
Question #1: Yes, you are a board member; however, are you qualified to analyze the deal and make an informed decision? Would you be willing to be that 'lone voice in the wilderness' that dares question the deal? Are you willing to admit your lack of knowledge?
Question #2: Did your ED research the language in your original IRS determination letter as a guide for what your scope of services can be? Did your ED consult with legal and accounting counsel?
Question #3: Are you familiar with 'unrelated business income' - whereby income-producing activities can result in taxable revenues (even for a non-profit)?
Question #4: Do you understand 'noncompliant activity'? Has your ED mentioned that issue in the board presentation?
Per usual, a lot is happening at this (hypothetical) non-profit board meeting. This seemingly good idea of purchasing a fast food restaurant is almost certainly outside the description of the activities of the food bank. The IRS could approve the deal; but, failing to request a definitive ruling would be irresponsible on the part of the board and could literally jeopardize the charitable status of the Food Bank.
A lot to worry about? Nope. Not really. Just remember to ask the right questions. If you do not know the right questions, you are probably on the wrong board.
NEXT: We will talk about the proper balance between contributions spent on charitable needs versus all other expenses of the organization.
However, our commitment to you is not focussed on the Past, but focussed on the Future. In this post, we will continue our discussion about regulatory expectations and your ability to keep your organization in a proactive mode.
Specifically, this post follows Part 1, where we examined the issues related to Executive Pay and the long-standing IRS regulations for documentation that supports decisions of the board.
So, what is a 'non-compliant' activity?
Let's start at the beginning...
When any non-profit applies for its tax exemption, the organization is required to specify the activities it plans to conduct and to make the case that their mission qualifies for charitable, tax-exempt status. Upon review, the IRS either grants or denies the application and issues its 'exemption letter'.
If your planned activity falls outside of the specified mission of your non-profit, then the activity may be non-compliant. Non-compliant? With what? Your IRS-approved exemption! How do you know, for sure, if your planned activity is within your compliance parameters? Easy...just ask! Who? The IRS (your regulatory reference)!
Please ponder the following hypothetical example: a local community Food Bank is deciding whether or not to purchase a national fast-food chain restaurant adjacent to its main food bank facility.
It sounds like a great idea when presented to the board for approval:
- the fast-food restaurant brings in lots of customers who would learn that the food bank is located right next door;
- the profitability of the restaurant could subsidize the operations of the food bank
This is a good example of the challenges of a non-profit board. Let's take this scenario a step further before we try to deal with the dilemma.
This Food Bank was organized 30 years ago and received its IRS approval as a charitable, tax-exempt organization serving the public good. The founding executive director (ED) led the organization for 20 years until he retired.
Following the retirement of the founding ED, the board conducted a search and hired a replacement ED. Unfortunately, their new ED left after just one year, accepting an opportunity at a larger food bank. Since that time, the organization has suffered rapid turnover among four EDs, but the board believes the tide has turned: the current ED is an experienced manager, who was looking for a career change, and is committed to remaining in this position for quite a few years.
The idea for the purchase of a fast-food restaurant took shape during a scheduled fund-raising call between the new 'out-of-the-box' ED and the owner of the fast-food chain. The owner, a former board member of the Food Bank, suggested the purchase as a mechanism for alleviating the ongoing financial challenges of the Food Bank and as part of his estate planning. The deal was a gracious opportunity; the owner would even provide the financing. To answer any questions, the owner offered to attend the board meeting with the ED.
Okay.
An opportunity presents itself: a former board member offers to be unbeliveably philanthropic and an excited ED presents the idea to the board at its regular meeting. You are a board member. You hear the presentation. The opportunity sounds great! What should the board do?
(We could spend quite a bit of time strategizing, but that is beyond the scope of this post.)
Question #1: Yes, you are a board member; however, are you qualified to analyze the deal and make an informed decision? Would you be willing to be that 'lone voice in the wilderness' that dares question the deal? Are you willing to admit your lack of knowledge?
Question #2: Did your ED research the language in your original IRS determination letter as a guide for what your scope of services can be? Did your ED consult with legal and accounting counsel?
Question #3: Are you familiar with 'unrelated business income' - whereby income-producing activities can result in taxable revenues (even for a non-profit)?
Question #4: Do you understand 'noncompliant activity'? Has your ED mentioned that issue in the board presentation?
Per usual, a lot is happening at this (hypothetical) non-profit board meeting. This seemingly good idea of purchasing a fast food restaurant is almost certainly outside the description of the activities of the food bank. The IRS could approve the deal; but, failing to request a definitive ruling would be irresponsible on the part of the board and could literally jeopardize the charitable status of the Food Bank.
A lot to worry about? Nope. Not really. Just remember to ask the right questions. If you do not know the right questions, you are probably on the wrong board.
NEXT: We will talk about the proper balance between contributions spent on charitable needs versus all other expenses of the organization.
Saturday, September 6, 2008
Part 1 - Big Opportunity for Non-Profits: The Issue of Executive Pay
This blog post follows the previous "INTRODUCTION", whereby it is suggested that Non-Profit Organizations can distinguish themselves and gain a competitive fundraising advantage from their peers by proactively complying with the key issues of the Sarbanes-Oxley Act (SOX) to demonstrate organizational excellence.
While SOX does not (yet) apply to the Non-Profit Sector, the IRS has taken an aggressive position (in keeping with recommendations from the U.S. Senate Finance Committee - please see the "Introduction" post below) by enacting changes to its Form 990 (the annual filing by all Non-Profits) regulations.
Readers should remember that the IRS is tasked with (a) 'collecting taxes' from individuals, corporations, and other for-profit entities; but, (b) it is also tasked with 'regulating' the non-profit sector (in keeping with the determination issued by the IRS that the organization serves a charitable purpose and is, therefore, exempt from taxation).
Important point: as a Non-Profit, your regulatory agency is the IRS. (Remember that your grant applications require a copy of your 'IRS Determination Letter'?) And, most states now have non-profit regulatory requirements and annual filings as well.
Enough background.
On to the topic of this blog post: Executive Compensation.
In addition to being the #1 issue identified by Senate Finance, the determination of Executive Compensation for Non-Profits has previously required analysis, comparison, and justification for the pay rates and benefits of top executives (and independent contractors). As with most IRS compliance issues, documentation is advised.
So, can your non-profit organization justify its executive pay with studies, comparisons, and peer-benchmarking? Is that justification on file and ready for inspection?
If your organization does not have proper compensation documentation, it is already at risk, and will be at further risk with the implementation of the revised Form 990 requirements for Fiscal Year 2008 being filed in calendar year 2009.
Is the IRS 'boogey man' out to get your organization? Not at all. Provided you are in compliance. Or, as suggested by our organization (CGEA) you become proactive, document your compliance, or (better still) exceed both current and future compliance regulations. This approach will ensure you have (1) nothing to fear; and, importantly, (2) an opportunity for 'competitive advantage' in fundraising by demonstrating to donors that the Governance, Ethics, and Accountability regulations are of fundamental importance to the operation of your organization.
Remember, the point is to be proactive -- to go the extra mile -- to take seriously and truly demonstrate your understanding of the responsibility that comes with your charitable status as a non-profit.
Is the issue of Executive Compensation a problem? It does not have to be! Actually, it's quite an opportunity; especially for small non-profits, where compliance can be easily achieved if you take the time to do your homework.
Regulatory compliance offers a competitive advantage that is well worth your investment of time and energy. And, this is an opportunity for the Non-Profit Sector to demonstrate leadership in the aftermath of numerous scandals that have led to increased regulation in the for-profit, government, and non-profit sectors.
Please don't miss this opportunity.
NEXT: the challenges of 'non-compliant activities' will be explored...
While SOX does not (yet) apply to the Non-Profit Sector, the IRS has taken an aggressive position (in keeping with recommendations from the U.S. Senate Finance Committee - please see the "Introduction" post below) by enacting changes to its Form 990 (the annual filing by all Non-Profits) regulations.
Readers should remember that the IRS is tasked with (a) 'collecting taxes' from individuals, corporations, and other for-profit entities; but, (b) it is also tasked with 'regulating' the non-profit sector (in keeping with the determination issued by the IRS that the organization serves a charitable purpose and is, therefore, exempt from taxation).
Important point: as a Non-Profit, your regulatory agency is the IRS. (Remember that your grant applications require a copy of your 'IRS Determination Letter'?) And, most states now have non-profit regulatory requirements and annual filings as well.
Enough background.
On to the topic of this blog post: Executive Compensation.
In addition to being the #1 issue identified by Senate Finance, the determination of Executive Compensation for Non-Profits has previously required analysis, comparison, and justification for the pay rates and benefits of top executives (and independent contractors). As with most IRS compliance issues, documentation is advised.
So, can your non-profit organization justify its executive pay with studies, comparisons, and peer-benchmarking? Is that justification on file and ready for inspection?
If your organization does not have proper compensation documentation, it is already at risk, and will be at further risk with the implementation of the revised Form 990 requirements for Fiscal Year 2008 being filed in calendar year 2009.
Is the IRS 'boogey man' out to get your organization? Not at all. Provided you are in compliance. Or, as suggested by our organization (CGEA) you become proactive, document your compliance, or (better still) exceed both current and future compliance regulations. This approach will ensure you have (1) nothing to fear; and, importantly, (2) an opportunity for 'competitive advantage' in fundraising by demonstrating to donors that the Governance, Ethics, and Accountability regulations are of fundamental importance to the operation of your organization.
Remember, the point is to be proactive -- to go the extra mile -- to take seriously and truly demonstrate your understanding of the responsibility that comes with your charitable status as a non-profit.
Is the issue of Executive Compensation a problem? It does not have to be! Actually, it's quite an opportunity; especially for small non-profits, where compliance can be easily achieved if you take the time to do your homework.
Regulatory compliance offers a competitive advantage that is well worth your investment of time and energy. And, this is an opportunity for the Non-Profit Sector to demonstrate leadership in the aftermath of numerous scandals that have led to increased regulation in the for-profit, government, and non-profit sectors.
Please don't miss this opportunity.
NEXT: the challenges of 'non-compliant activities' will be explored...
Tuesday, September 2, 2008
INTRODUCTION - Big Opportunity for Non-Profits: Making the Case for Voluntary Self-Audits for Regulatory Compliance
Increasing scrutiny by the IRS among large non-profit organizations provides smaller non-profits with an opportunity to proactively model successful Governance, Ethics, and Accountability initiatives on a voluntary basis.
This blog post -- an Introduction -- will set the stage for a series of related blog posts in the coming days and weeks.
A bit of background will be helpful:
This blog post -- an Introduction -- will set the stage for a series of related blog posts in the coming days and weeks.
A bit of background will be helpful:
- Concerned about the lack of reporting and transparency among non-profits, the United States Senate Finance Committee began to look at revisions to non-profit reporting and regulation a number of years ago. The IRS Form 990 had not been revised in decades.
- Note that this review is relatively coincident with the enaction of the Sarbanes-Oxley Act on July 30, 2002. Commonly referred to as 'SOX', this legislation followed the corporate scandals involving Enron and others.
- The Finance Staff Discussion Draft was released on June 21, 2004. The Committee heard testimony from a number of non-profits prior to the Draft and again after its release.
- The Committee issued a press released on June 14, 2007 announcing the intention of the IRS to amend its Form 990. The amended Form 990 is scheduled to take effect in 2009 for fiscal years ending in 2008.
- On May 29, 2007, the Committee Chair and its Ranking Member co-signed a letter to the Secretary of the Treasury Department requesting that particular attention be paid to the operational complexities of non-profit hospitals and universities and the critical need of greater reporting and transparency among non-profits.
- That same letter outlined seven specific areas of concern: (1) Executive Pay; (2) Endowments; (3) Related Organizations; (4) Joint Ventures; (5) Governance; (6) Dollars Raised vs. Dollars for Charity; and (7) Hospitals.
The question that must be answered is clear: can the non-profits, particularly the small to medium ones, adopt self-audits and regulatory oversight before (and if) Congress decides to include non-profits in the SOX regulations?
Maybe the better question is: why would the small to medium non-profit NOT be proactive in its attempt to avoid costly regulatory oversight?
Since the enactment of SOX in 2002 for ALL publicly traded companies (large and small), much concern has been expressed by the small for-profit firms about the costs of compliance with SOX while, arguably, the large companies have been able to absorb the additional compliance costs more easily.
I would suggest that this dilemma can and should be avoided by the non-profit sector; excepting, however, that it seems clear that the hospitals and universities are so large and complex that they will not likely be off the radar screen in the near future.
I will continue the discussion on this issue in the days to come. In the meantime, please feel free to participate. Let us know how you feel. The purpose of our Center is to give the Non-Profit Sector a competitive advantage, so your thoughtful feedback is invited.
Tuesday, August 26, 2008
Extraordinary Customer Service
Well, today I have just returned from a one-day visit to my home state of NC and am back in VA. During my discussions with various individuals today, we focused on concerns about the declining economy and the uncertainty that lies before us as a country.
We talked a lot about the 'good old days' and, specifically, whether our country would ever again come to recognize, appreciate, and support 'Extraordinary Customer Service'.
Hmmm...
As I think about that, it seems to me that the Non-Profit Sector is (once again) best positioned to provide solutions for issues affecting our society -- in this case -- extraordinary customer service! Can the Government Sector beat you? Can the Private-Sector beat you? No way!
For it is the MISSION of the non-profit sector that allows it to rise to the fore. Keep your focus. And serve your customers in an extraordinary manner.
How can we help your organization rise to its full potential?
We are only a couple of mouse-clicks away. Please do not hesitate to call on us. And, focus your sights on being Number One in customer service!
We talked a lot about the 'good old days' and, specifically, whether our country would ever again come to recognize, appreciate, and support 'Extraordinary Customer Service'.
Hmmm...
As I think about that, it seems to me that the Non-Profit Sector is (once again) best positioned to provide solutions for issues affecting our society -- in this case -- extraordinary customer service! Can the Government Sector beat you? Can the Private-Sector beat you? No way!
For it is the MISSION of the non-profit sector that allows it to rise to the fore. Keep your focus. And serve your customers in an extraordinary manner.
How can we help your organization rise to its full potential?
We are only a couple of mouse-clicks away. Please do not hesitate to call on us. And, focus your sights on being Number One in customer service!
Monday, August 25, 2008
Accountability: Who Shoulders the Responsibility?
I just had lunch with a friend who was remarking that there is no accountability for elected officials. He was, of course, currently fixated on the presidential elections. Promises get made, plans unfold, then nothing happens, nobody knows why, everybody and anybody else is to blame -- and, then, we start the cycle all over again!
Well, fortunately, our client base is exclusively focused on non-profit organizations. So, how does accountability work for non-profits? Two specific scenarios come to mind:
1. At the Staff level, it is important that the executive director understand Authority, Responsibility, and Accountability and take ownership of all three. Since the staff reports to the executive director and the executive director reports to the board, then accountability to the board for daily operations is always the responsibility of the executive director. As in most organizations of any size, the executive director may/must/could/should delegate to staff members under his/her direction. But, it should be clearly communicated that Authority requires Responsibility and, ultimately, Accountability. Within the government sector and the private sector, many people believe Accountability seems to be in shorter and shorter supply. Let's work toward a level of excellence in the non-profit sector that is worthy of following!
2. At the Board level, Accountability can become very elusive. What volunteer board chair, board member, or committee chair wants to be held 'accountable' (or 'responsible') for results gone awry? Well, certainly nobody wants to shoulder this burden but, should it occur, he or she must. Why? Because it's the right thing to do. After all, the board position was either elected or appointed and the board is accountable to its membership (for example).
Here's the deal: only in very, very rare situations will anything go so astray that it cannot be fixed by a group of well-intentioned folks working together. Accordingly, executive directors and board chairs need to understand their Authority, fulfill their Responsibility, and never hesitate to be held Accountable for anything that goes awry.
It's amazing what a group of humble servants, clearly focused, and committed to a cause greater than themselves, can accomplish when there is no 'blame game' and the level of personal leadership is so deeply instilled that there is no need to to shirk from Accountability.
Want to know more? That's our mission. Please visit www.centergea.com.
Well, fortunately, our client base is exclusively focused on non-profit organizations. So, how does accountability work for non-profits? Two specific scenarios come to mind:
1. At the Staff level, it is important that the executive director understand Authority, Responsibility, and Accountability and take ownership of all three. Since the staff reports to the executive director and the executive director reports to the board, then accountability to the board for daily operations is always the responsibility of the executive director. As in most organizations of any size, the executive director may/must/could/should delegate to staff members under his/her direction. But, it should be clearly communicated that Authority requires Responsibility and, ultimately, Accountability. Within the government sector and the private sector, many people believe Accountability seems to be in shorter and shorter supply. Let's work toward a level of excellence in the non-profit sector that is worthy of following!
2. At the Board level, Accountability can become very elusive. What volunteer board chair, board member, or committee chair wants to be held 'accountable' (or 'responsible') for results gone awry? Well, certainly nobody wants to shoulder this burden but, should it occur, he or she must. Why? Because it's the right thing to do. After all, the board position was either elected or appointed and the board is accountable to its membership (for example).
Here's the deal: only in very, very rare situations will anything go so astray that it cannot be fixed by a group of well-intentioned folks working together. Accordingly, executive directors and board chairs need to understand their Authority, fulfill their Responsibility, and never hesitate to be held Accountable for anything that goes awry.
It's amazing what a group of humble servants, clearly focused, and committed to a cause greater than themselves, can accomplish when there is no 'blame game' and the level of personal leadership is so deeply instilled that there is no need to to shirk from Accountability.
Want to know more? That's our mission. Please visit www.centergea.com.
Tuesday, August 19, 2008
Governance & Fundraising
In these tough economic times, many non-profit organizations face the same challenge: an increasing demand for their services, with decreasing availability of funds. Non-profit organizations are poised to tackle some of the world’s more important challenges, but it will take even more money to help them grow and accomplish their missions. That’s why fundraising, an always important operation, is perhaps more critical now than ever before.
In a recent conversation, it became clear that many non-profits underestimate the importance of board governance in their fundraising operations. The relationship between board governance and fundraising goes two ways: board oversight and participation in fundraising, and acknowledging the strength of a board’s governance practices when seeking funds.
Board members in non-profit organizations have an obligation to get involved in fundraising activities to ensure the financial health and long-term viability of the organization. From making calls and arranging meetings, to setting up events and volunteering, their efforts and participation are vital. At the same time, the board of directors has an obligation to closely monitor and oversee fundraising operations to ensure that the organization is compliant and appropriate in its actions. A committee structure is often a very effective way for certain board members to become very familiar with all fundraising activities, while offering insight and guidance for improved success. The committee members can provide excellent suggestions that help diversify and enhance the development efforts of the organization. This is a responsibility that board members should not and cannot take lightly – it is vital to the long-term viability of the organization.
Additionally, development professionals need to appreciate and recognize good board governance as they seek to raise money. As demand for funds increases while availability of those funds decreases, funders are putting more and more pressure on organizations to demonstrate their competitive advantages. Non-profits should take this opportunity to acknowledge and tout the good governance, ethics, and accountability policies and procedures they have in place. A potential donor would likely be more inclined to fund an organization that can demonstrate strong board governance over an organization that has lax or nonexistent practices.
So, as non-profits go forth to solve some of the world’s most critical challenges, they have an opportunity to maximize the strength of the board of directors through good policies and procedures. Then, they can take advantage of the wealth of resources that the board can bring to the table, and tout the fact that they have a board with the policies and procedures necessary to ensure fiscal health and responsibility. That’s one powerful competitive advantage.
In a recent conversation, it became clear that many non-profits underestimate the importance of board governance in their fundraising operations. The relationship between board governance and fundraising goes two ways: board oversight and participation in fundraising, and acknowledging the strength of a board’s governance practices when seeking funds.
Board members in non-profit organizations have an obligation to get involved in fundraising activities to ensure the financial health and long-term viability of the organization. From making calls and arranging meetings, to setting up events and volunteering, their efforts and participation are vital. At the same time, the board of directors has an obligation to closely monitor and oversee fundraising operations to ensure that the organization is compliant and appropriate in its actions. A committee structure is often a very effective way for certain board members to become very familiar with all fundraising activities, while offering insight and guidance for improved success. The committee members can provide excellent suggestions that help diversify and enhance the development efforts of the organization. This is a responsibility that board members should not and cannot take lightly – it is vital to the long-term viability of the organization.
Additionally, development professionals need to appreciate and recognize good board governance as they seek to raise money. As demand for funds increases while availability of those funds decreases, funders are putting more and more pressure on organizations to demonstrate their competitive advantages. Non-profits should take this opportunity to acknowledge and tout the good governance, ethics, and accountability policies and procedures they have in place. A potential donor would likely be more inclined to fund an organization that can demonstrate strong board governance over an organization that has lax or nonexistent practices.
So, as non-profits go forth to solve some of the world’s most critical challenges, they have an opportunity to maximize the strength of the board of directors through good policies and procedures. Then, they can take advantage of the wealth of resources that the board can bring to the table, and tout the fact that they have a board with the policies and procedures necessary to ensure fiscal health and responsibility. That’s one powerful competitive advantage.
Saturday, August 2, 2008
Absentee Board Members -- Love 'em or Leave 'em?
In keeping with our Center's commitment to the critical issue of Governance, let's make sure we understand how to handle the role of the absentee board member.
In most Non-Profit Organizations, the executive director is the stable and guiding factor. Board members come and they go; board chairs come and they go. In my experience, good board members are hard to find and excellent board members are even more rare.
Any way you want to look at it, the relationship between a board member and an executive director is complex. The two may be friends; the two may not even like one another; the two may find themselves at loggerheads on a lot of issues or very few issues. As with most everything, the relationship is what it is all about.
It would be curious to know with certainty how many Non-Profit Organizations have functioning boards. What is the attendance rating of the board members? Do they assist with fundraising? Are they available to the executive director and other staff members? Do they seem prepared when they arrive at the board meetings?
Rule #1 is straight-forward but very hard for organizations to address: the board member must attend the board meetings. If the board member is not attending, it is impossible for them to be performing their role in a responsible manner.
Now what?
If a board member is not attending meetings, then somebody -- hopefully the board chair -- will demonstrate leadership, call the board member, discuss the issue, and come to a mutually agreeable decision. Asking a board member to resign from a board should not be as difficult as we tend to make it.
Even if board attendance was not a prerequisite for excellent non-profit governance, many Grantors are now requiring a minimum attendance percentage as a prerequisite for funding consideration.
So, don't be afraid to expect the best from your board members and don't hesitate to discuss board member performance.
The future of your organization can only be as good as your board.
In most Non-Profit Organizations, the executive director is the stable and guiding factor. Board members come and they go; board chairs come and they go. In my experience, good board members are hard to find and excellent board members are even more rare.
Any way you want to look at it, the relationship between a board member and an executive director is complex. The two may be friends; the two may not even like one another; the two may find themselves at loggerheads on a lot of issues or very few issues. As with most everything, the relationship is what it is all about.
It would be curious to know with certainty how many Non-Profit Organizations have functioning boards. What is the attendance rating of the board members? Do they assist with fundraising? Are they available to the executive director and other staff members? Do they seem prepared when they arrive at the board meetings?
Rule #1 is straight-forward but very hard for organizations to address: the board member must attend the board meetings. If the board member is not attending, it is impossible for them to be performing their role in a responsible manner.
Now what?
If a board member is not attending meetings, then somebody -- hopefully the board chair -- will demonstrate leadership, call the board member, discuss the issue, and come to a mutually agreeable decision. Asking a board member to resign from a board should not be as difficult as we tend to make it.
Even if board attendance was not a prerequisite for excellent non-profit governance, many Grantors are now requiring a minimum attendance percentage as a prerequisite for funding consideration.
So, don't be afraid to expect the best from your board members and don't hesitate to discuss board member performance.
The future of your organization can only be as good as your board.
Wednesday, July 30, 2008
Who do you believe? Blogs or News Media
We are hearing more and more that readers believe the information contained in Blogs is more reliable than the print news media. (I don't think a direct comparison between the electronic media and Blogs makes much sense, so my comparison is direct: written material vs. written material.) While I find this shift in 'believability' to be somewhat surprising, I must admit that I don't think I personally know anybody that reads the newspaper without a nagging suspicion and a bit of doubt. Even more, I continue to be amazed at the growing number of people I know that do not even bother to read the newspaper.
Well, how does this relate to the subject of ethics?
I recently had the opportunity to speak with a person who serves on a national group that investigates allegations of breach of conduct by the news media. As a professor of journalism, it was clear to me that he wants the profession to uphold the highest standards. When does a misquote become more than a minor issue? How about reporters that leave out details because they don't understand them or don't believe their readers could understand them? Or, editors that cut out segments of a reporter's story and completely lose the intent? And, headline writers that mislead the readers by sensationalizing the story? Worse still, how about reporters who know that their information and their sources are tainted? Do these issues rise to the level of an ethical breach?
While I am very new to blogging (and admit some consternation about putting my thoughts into writing for the world to see), I am extremely fascinated that blogs offer the opportunity to say whatever you want -- in your own words -- without any opportunity for misquotes, editing, media bias, etc. This is what our First Amendment rights are all about. I know of one elected official that has launched a blog for the purpose of making sure his positions on issues are not taken out of context, twisted, turned -- or, even, unreported -- by the news media. This is a very interesting approach! If the media wants his input on an issue, he plans to post their question and his answer.
Perhaps the question remains: what does the print media need to do to regain the public trust and perform consistently in an ethical manner?
Like most complex issues, I believe trust and ethics are directly related to the quality of the individual and his or her commitment to excellence in their professional life. Thirty years ago, I was a corporate media spokesperson at a frighteningly young age. I took the time to get to know the reporters, rely on them for guidance, explain the subject in great detail; similarly, the reporters took the time to understand the issue and double-check facts and figures. Interestingly, I was never misquoted. Never. Not once. I considered these individuals to be seasoned professionals, mentors, and true professionals. No, their reporting was not always to my liking, but the manner in which they performed their job was beyond reproach.
But, that was then and this is now. What has changed? Everything.
I will offer one perspective on the issue of blogs vs. newspapers. A blogger, like me, is taking the time to write about an issue that I want to write about and that I feel passionately about. Question: so, what about the subject of ethics? Answer: I do not have a deadline, I have no editor that is biased, and I even get to write my own headline!
If we were to agree (for the sake of argument) to remove any allegation of intentional breach of ethics by the media, I would say that today's journalist does not have the same commitment to the profession as their predecessors. They seem to be in too big of a hurry, they don't take the time to get all the facts and double-check them, they are not well-versed in what is going on in their community and therefore have no context, institutional knowledge, or historical perspective. They very quickly make a public impression of themselves as either a credible reporter -- or, one that ought to find another line of work...
Poor reporting, just like anything else, becomes a behavior that the public ultimately recognizes -- and then the public reacts accordingly. For example, if the editorial page editor is extremely liberal, the public picks up on that, and filters (and, maybe, even ignores), the columns written by that individual (or his or her editorial team). Likewise, if a news reporter consistently 'gets it wrong' the public will pick up on that as well and tend to discount (or at least question) whatever that reporter writes. Once the public trust is lost, the situation spins further out of control because sources of information to the reporter become less and less willing to waste time with them; and, reporters, not knowing anything about the story they are required to write by their editor (to be fair), continue to turn out a work product (in this case, a 'story') that would be considered inferior by the standards of any other industry.
In the end, just like with any other job or relationship, you can forever lose your ethics in just a brief moment of lapse in judgment. Weirdly, this critical issue does not seem to apply to reporters -- or maybe reporters just think they can say whatever they want to say without consequence or accountability -- but, in reality, they are ultimately personally responsible (although not liable) for conducting themselves in an ethical manner.
As for me, I think the opportunity to say what I want to say about whatever issue is of importance to me tends to indicate blogging is the best source of information available to the thoughtful individual, both today and in the foreseeable future.
Well, how does this relate to the subject of ethics?
I recently had the opportunity to speak with a person who serves on a national group that investigates allegations of breach of conduct by the news media. As a professor of journalism, it was clear to me that he wants the profession to uphold the highest standards. When does a misquote become more than a minor issue? How about reporters that leave out details because they don't understand them or don't believe their readers could understand them? Or, editors that cut out segments of a reporter's story and completely lose the intent? And, headline writers that mislead the readers by sensationalizing the story? Worse still, how about reporters who know that their information and their sources are tainted? Do these issues rise to the level of an ethical breach?
While I am very new to blogging (and admit some consternation about putting my thoughts into writing for the world to see), I am extremely fascinated that blogs offer the opportunity to say whatever you want -- in your own words -- without any opportunity for misquotes, editing, media bias, etc. This is what our First Amendment rights are all about. I know of one elected official that has launched a blog for the purpose of making sure his positions on issues are not taken out of context, twisted, turned -- or, even, unreported -- by the news media. This is a very interesting approach! If the media wants his input on an issue, he plans to post their question and his answer.
Perhaps the question remains: what does the print media need to do to regain the public trust and perform consistently in an ethical manner?
Like most complex issues, I believe trust and ethics are directly related to the quality of the individual and his or her commitment to excellence in their professional life. Thirty years ago, I was a corporate media spokesperson at a frighteningly young age. I took the time to get to know the reporters, rely on them for guidance, explain the subject in great detail; similarly, the reporters took the time to understand the issue and double-check facts and figures. Interestingly, I was never misquoted. Never. Not once. I considered these individuals to be seasoned professionals, mentors, and true professionals. No, their reporting was not always to my liking, but the manner in which they performed their job was beyond reproach.
But, that was then and this is now. What has changed? Everything.
I will offer one perspective on the issue of blogs vs. newspapers. A blogger, like me, is taking the time to write about an issue that I want to write about and that I feel passionately about. Question: so, what about the subject of ethics? Answer: I do not have a deadline, I have no editor that is biased, and I even get to write my own headline!
If we were to agree (for the sake of argument) to remove any allegation of intentional breach of ethics by the media, I would say that today's journalist does not have the same commitment to the profession as their predecessors. They seem to be in too big of a hurry, they don't take the time to get all the facts and double-check them, they are not well-versed in what is going on in their community and therefore have no context, institutional knowledge, or historical perspective. They very quickly make a public impression of themselves as either a credible reporter -- or, one that ought to find another line of work...
Poor reporting, just like anything else, becomes a behavior that the public ultimately recognizes -- and then the public reacts accordingly. For example, if the editorial page editor is extremely liberal, the public picks up on that, and filters (and, maybe, even ignores), the columns written by that individual (or his or her editorial team). Likewise, if a news reporter consistently 'gets it wrong' the public will pick up on that as well and tend to discount (or at least question) whatever that reporter writes. Once the public trust is lost, the situation spins further out of control because sources of information to the reporter become less and less willing to waste time with them; and, reporters, not knowing anything about the story they are required to write by their editor (to be fair), continue to turn out a work product (in this case, a 'story') that would be considered inferior by the standards of any other industry.
In the end, just like with any other job or relationship, you can forever lose your ethics in just a brief moment of lapse in judgment. Weirdly, this critical issue does not seem to apply to reporters -- or maybe reporters just think they can say whatever they want to say without consequence or accountability -- but, in reality, they are ultimately personally responsible (although not liable) for conducting themselves in an ethical manner.
As for me, I think the opportunity to say what I want to say about whatever issue is of importance to me tends to indicate blogging is the best source of information available to the thoughtful individual, both today and in the foreseeable future.
Tuesday, July 29, 2008
Disillusioned Ethics
Friends,
I have come to a new level of concern on the entire issue of ethics. There is no longer any question in my mind that our society is embracing a vision of 'selected ethics' -- which, in my opinion, means that folks justify their own behaviors at the same time as they condemn the behaviors of others -- only, sadly, they apply virtually no standards to themselves and are quick to criticize even the most honest mistakes by others. From my vantage point, this is not what 'ethics' (as a doctrine, a set of principles, a way of life) is intended to be all about. So, I believe quite a few folks are practicing "disillusioned ethics" and we need to start pointing out their flawed thinking, albeit in a nice and productive way.
What is the Benchmark? Local politicians veering off course on silly things like misplaced campaign ads, unkept campain promises, or poor personal decisions that intentionally harm others and benefit themselves? State politicians who are unaccountable for short term decisions that have obvious long-term negative effects? Federal politicians who cannot even bring themselves to discuss (let alone address) SERIOUS issues like Social Security, Health Care, Immigration, or Energy Policy?
The benchmark, I would suggest, does not lie within the Elected Officials; instead, I believe our failings come at the individual level where the ballots that are cast (hanging chads and all!) seem to decrease more and more with every election cycle. Just a little while ago, I learned of an acquaintance with an extremely keen mind and a previously important executive position in my community that has decided to take a long vacation, leave the country, and avoid the entire presidential campaign charade. This is unbelievable.
We have to wonder at what point the public will rise to the occassion and start taking its right to vote and be heard very seriously. Hopefully, prayerfully, it will be much sooner than later.
[Tomorrow's blog will focus on how hard the media has worked to lose our trust -- a truly spectacular achievement! -- and the ever-growing opinon that blogs are dramatically more believable than the media.]
I have come to a new level of concern on the entire issue of ethics. There is no longer any question in my mind that our society is embracing a vision of 'selected ethics' -- which, in my opinion, means that folks justify their own behaviors at the same time as they condemn the behaviors of others -- only, sadly, they apply virtually no standards to themselves and are quick to criticize even the most honest mistakes by others. From my vantage point, this is not what 'ethics' (as a doctrine, a set of principles, a way of life) is intended to be all about. So, I believe quite a few folks are practicing "disillusioned ethics" and we need to start pointing out their flawed thinking, albeit in a nice and productive way.
What is the Benchmark? Local politicians veering off course on silly things like misplaced campaign ads, unkept campain promises, or poor personal decisions that intentionally harm others and benefit themselves? State politicians who are unaccountable for short term decisions that have obvious long-term negative effects? Federal politicians who cannot even bring themselves to discuss (let alone address) SERIOUS issues like Social Security, Health Care, Immigration, or Energy Policy?
The benchmark, I would suggest, does not lie within the Elected Officials; instead, I believe our failings come at the individual level where the ballots that are cast (hanging chads and all!) seem to decrease more and more with every election cycle. Just a little while ago, I learned of an acquaintance with an extremely keen mind and a previously important executive position in my community that has decided to take a long vacation, leave the country, and avoid the entire presidential campaign charade. This is unbelievable.
We have to wonder at what point the public will rise to the occassion and start taking its right to vote and be heard very seriously. Hopefully, prayerfully, it will be much sooner than later.
[Tomorrow's blog will focus on how hard the media has worked to lose our trust -- a truly spectacular achievement! -- and the ever-growing opinon that blogs are dramatically more believable than the media.]
Monday, July 28, 2008
So, You Think You Are an Ethical Person?
As you can imagine, ethical issues are very high on our list of priorities. Today, I spent 4 hours reviewing numerous articles and videos on the subject of ethics. And, if this is a subject you are seriously tracking, you will note the same thing that has crossed my mind: so 'close' (common sense?) and yet so 'far' (how confusing can we make it?). One of the Great Thinkers of our time (still alive) describes 'ethics' as just doing the right thing. More specifically, he believes that every single person on this earth deserves the right to happiness and well-being. Simply put: anything that you do (or don't do) to assist all others in attaining this right to happiness is 'ethical' -- conversely, anything you do (or don't do) to interfere with the right of others to enjoy happiness is 'un-ethical' -- how much more simple does it need to get? While it is enjoyable for some of us to delve into specific cases, one by one, and analyze 'who did what to whom and why' it is really unnecessary. Make today a great day -- be ethical -- "first, do no harm." You, too, will find that the definition is not nearly as important as the action.
[Tomorrow, I will write on the issue of 'Disillusioned Ethics' -- a far too common malady.]
[Tomorrow, I will write on the issue of 'Disillusioned Ethics' -- a far too common malady.]
Tuesday, April 15, 2008
Excerpts from Lee Iacocca
I received an email recently that I believe outlines why we here at CGEA believe the Non-Profit Sector has more potential than any other sector to solve the world’s toughest problems.
“Remember Lee Iacocca, the man who rescued Chrysler Corporation from it's death throes? He has a new book, and here are some excerpts:
...The Biggest "C" is Crisis ! Leaders are made, not born. Leadership is forged in times of crisis. It's easy to sit there with your feet up on the desk and talk theory. Or send someone else's kids off to war when you've never seen a battlefield yourself. It's another thing to lead when your world comes tumbling down.
But when you look around, you've got to ask: Where have all the leaders gone? Where are the curious, creative communicators? Where are the people of character, courage, conviction, omnipotence, and common sense?
Name me one leader who emerged from the crisis of Hurricane Katrina.
Congress has yet to spend a single day evaluating the response to the hurricane, or demanding accountability for the decisions that were made in the crucial hours after the storm. Everyone's hunkering down, fingers crossed, hoping it doesn't happen again. Now, that's just crazy. Storms happen. Deal with it. Make a plan. Figure out what you're going to do the next time.
Name me a government leader who can articulate a plan for paying down the debt, or solving the energy crisis, or managing the health care problem. The silence is deafening.
If I've learned one thing, it's this: ‘You don't get anywhere by standing on the sidelines waiting for somebody else to take action. Whether it's building a better car or building a better future for our children, we all have a role to play.’”
“Remember Lee Iacocca, the man who rescued Chrysler Corporation from it's death throes? He has a new book, and here are some excerpts:
...The Biggest "C" is Crisis ! Leaders are made, not born. Leadership is forged in times of crisis. It's easy to sit there with your feet up on the desk and talk theory. Or send someone else's kids off to war when you've never seen a battlefield yourself. It's another thing to lead when your world comes tumbling down.
But when you look around, you've got to ask: Where have all the leaders gone? Where are the curious, creative communicators? Where are the people of character, courage, conviction, omnipotence, and common sense?
Name me one leader who emerged from the crisis of Hurricane Katrina.
Congress has yet to spend a single day evaluating the response to the hurricane, or demanding accountability for the decisions that were made in the crucial hours after the storm. Everyone's hunkering down, fingers crossed, hoping it doesn't happen again. Now, that's just crazy. Storms happen. Deal with it. Make a plan. Figure out what you're going to do the next time.
Name me a government leader who can articulate a plan for paying down the debt, or solving the energy crisis, or managing the health care problem. The silence is deafening.
If I've learned one thing, it's this: ‘You don't get anywhere by standing on the sidelines waiting for somebody else to take action. Whether it's building a better car or building a better future for our children, we all have a role to play.’”
Friday, March 28, 2008
Competitive Advantage
It seems that non-profit organizations today are facing increased competition while the funding sources are almost shrinking. These two factors make it challenging to meet funding needs, and many executives find themselves spending the lion's share of their time on fundraising instead of other important tasks and operations. We hear this complaint frequently, and we certainly understand how frustrating this situation has become.
Fortunately for non-profits today, our Certification is designed to help. By completing our Certification Course, non-profits demonstrate their commitment to excellence in non-profit governance, ethics, and accountability. Funders, who always like to make sure they're working with professional and well-run organizations, recognize the Certification as an outward display of operational excellence. They understand that, by working with non-profits that have a Certification, they are giving money to a reliable and trustworthy entity.
Think of the Certification as a competitive advantage, in an age where a growing number of groups are seeking funds from sources that seem to be shrinking.
Fortunately for non-profits today, our Certification is designed to help. By completing our Certification Course, non-profits demonstrate their commitment to excellence in non-profit governance, ethics, and accountability. Funders, who always like to make sure they're working with professional and well-run organizations, recognize the Certification as an outward display of operational excellence. They understand that, by working with non-profits that have a Certification, they are giving money to a reliable and trustworthy entity.
Think of the Certification as a competitive advantage, in an age where a growing number of groups are seeking funds from sources that seem to be shrinking.
Monday, March 10, 2008
One Less Things to Worry About...
Almost all non-profit executives and board members will tell you that they don’t have enough time. Between fundraising challenges, managing operations, and keeping up with day-to-day errands, there is rarely time left to pursue other things. Additionally, most non-profits are not aware of or are unsure about their compliance levels with state and federal rules and regulations, and they don’t have the time to do the extensive research to find out. Evaluating compliance often falls by the wayside, which can have serious consequences in the short and long-term.
Fortunately, we’ve developed our Certification Course to solve that problem and more. Our self-paced, online, affordable training provides a comprehensive, concise experience that will ensure you comply with all state and federal rules and regulations. It provides a “one-stop” location for everything you need to excel, so you don’t have to worry about trying to find the time to do exhausting, and often unsuccessful, research. And, by getting a Certification, you are demonstrating your commitment to excellence, which is recognized by funders and stakeholders alike.
Fortunately, we’ve developed our Certification Course to solve that problem and more. Our self-paced, online, affordable training provides a comprehensive, concise experience that will ensure you comply with all state and federal rules and regulations. It provides a “one-stop” location for everything you need to excel, so you don’t have to worry about trying to find the time to do exhausting, and often unsuccessful, research. And, by getting a Certification, you are demonstrating your commitment to excellence, which is recognized by funders and stakeholders alike.
Friday, February 29, 2008
Oops...
An east coast non-profit received a $50,000 strategic planning gift from a corporate donor. A west coast non-profit consulting firm was selected to provide the services. The initial report of the consulting firm was anything but encouraging; they found board members had not provided proper oversight, a former executive director had embezzled funds, policies and procedures were not in writing and/or could not be located, members of the community were not clear of the mission of the organization, and the current executive director was not certified. What was intended to be a good project has now become front page news. Oops!
This organization could have prevented this mess by ensuring they comply with all regulations, and by implementing superior policies within their organization. Our Certification Course allows non-profits to do just that. Do you know if your non-profit is complying with all regulations? Avoid situations like this one by signing up for our Certification Course today, and demonstrate your commitment to excellence!
This organization could have prevented this mess by ensuring they comply with all regulations, and by implementing superior policies within their organization. Our Certification Course allows non-profits to do just that. Do you know if your non-profit is complying with all regulations? Avoid situations like this one by signing up for our Certification Course today, and demonstrate your commitment to excellence!
Tuesday, February 26, 2008
The Non-Profit Sector: Incredible Potential
More and more folks are talking about the incredible potential of the non-profit sector. Non-profits are in a great position to help bring about positive change on any number of issues. That is not particularly true for the public or private sector. The government can be so mired in politics and distrust that little is accomplished. For-profit companies tend to avoid social change issues because they are, in general, less profitable. So, that leaves the non-profit sector in an incredible position to really make powerful, positive social changes.
In addition, the non-profit sector is increasingly appealing from a career perspective. Quality of life is just one powerful benefit, along with the ability to really be proud of the cause toward which the organization is working. Interestingly, the growth of the non-profit sector and the aging of the current population means that literally hundreds of thousands of rewarding job openings can be expected in the near future.
Here at The Center, we understand the incredible potential of the non-profit sector. We're dedicated to helping organizations comply with the increasingly strict government regulations, while achieving and demonstrating excellence in operations. Our Certification allows organizations to tout their accomplishments, making them more appealing to prospective employees and the general public alike.
In addition, the non-profit sector is increasingly appealing from a career perspective. Quality of life is just one powerful benefit, along with the ability to really be proud of the cause toward which the organization is working. Interestingly, the growth of the non-profit sector and the aging of the current population means that literally hundreds of thousands of rewarding job openings can be expected in the near future.
Here at The Center, we understand the incredible potential of the non-profit sector. We're dedicated to helping organizations comply with the increasingly strict government regulations, while achieving and demonstrating excellence in operations. Our Certification allows organizations to tout their accomplishments, making them more appealing to prospective employees and the general public alike.
Tuesday, February 19, 2008
What a Scandal!
If any of you were watching CBS Evening News last night, you probably remember the story about the attorneys who kept Fen Phen settlement money from their clients, formed a non-profit to pay themselves -- and the Judge -- salaries for many years, and even purchased a professional, and well known, race horse. Unbelievable! You can read more about it yourself here: http://www.cbsnews.com/stories/2008/02/18/eveningnews/main3842859.shtml?source=RSSattr=HOME_3842859
This is one of the only examples in recent memory that involves all three sectors -- public, private, and non-profit. And, unfortunately, the non-profit sector was abused terribly so that a few individuals could pay themselves money that was not theirs.
What the news story did not mention was the outcome of the non-profit organization, and the harm it did to the non-profit sector as a whole. Scandals like these lead to increased scrutiny and stricter regulations for all non-profits. Here at The Center, we strongly believe that non-profits have incredible potential to bring about positive, powerful social changes. We work hard to help non-profits that are committed to excellence achieve and demonstrate that commitment, so they can distinguish themselves from scandals like this one and show the public that so many non-profits are focused on important and very respectable causes.
This is one of the only examples in recent memory that involves all three sectors -- public, private, and non-profit. And, unfortunately, the non-profit sector was abused terribly so that a few individuals could pay themselves money that was not theirs.
What the news story did not mention was the outcome of the non-profit organization, and the harm it did to the non-profit sector as a whole. Scandals like these lead to increased scrutiny and stricter regulations for all non-profits. Here at The Center, we strongly believe that non-profits have incredible potential to bring about positive, powerful social changes. We work hard to help non-profits that are committed to excellence achieve and demonstrate that commitment, so they can distinguish themselves from scandals like this one and show the public that so many non-profits are focused on important and very respectable causes.
Friday, February 15, 2008
Compliance...
Business Week published this article a few years ago that is very relevant to the mission of The Center for Governance, Ethics, and Accountability. Essentially, it talks about the increasing scrutiny being placed on the Non-Profit Sector, and the growing number of state governments that have taken, or are taking, action to create and enforce stricter regulations and requirements for non-profit entities. In addition, the Federal Government is taking actions now to move forward with new, stricter requirements for non-profit organizations.
Many non-profit organizations do not even comply with existing regulations and requirements. In fact, many non-profits don't even know there are regulations with which they must comply. The increased scrutiny is making compliance even more critical today, while the stricter regulations make that compliance even more challenging. Our Certification Course is designed to help organizations make sure they comply with existing and forthcoming regulations and requirements. It also allows organizations to demonstrate their commitment to excellence.
If you haven't already, take a few minutes to learn more about our Certification Course. It is affordable and easy to use.
If your organization doesn't comply, there could most certainly be negative consequences; so, save yourself the trouble and make sure you exceed existing and forthcoming regulations by signing up today. You'll be glad you did.
Many non-profit organizations do not even comply with existing regulations and requirements. In fact, many non-profits don't even know there are regulations with which they must comply. The increased scrutiny is making compliance even more critical today, while the stricter regulations make that compliance even more challenging. Our Certification Course is designed to help organizations make sure they comply with existing and forthcoming regulations and requirements. It also allows organizations to demonstrate their commitment to excellence.
If you haven't already, take a few minutes to learn more about our Certification Course. It is affordable and easy to use.
If your organization doesn't comply, there could most certainly be negative consequences; so, save yourself the trouble and make sure you exceed existing and forthcoming regulations by signing up today. You'll be glad you did.
Subscribe to:
Posts (Atom)