Tuesday, July 9, 2013

Riveting Response to my Mr. X Post...

It would be helpful, but not necessary, if you reference the post of June 13 entitled:  "Mr. X's Dilemma -Stay or Go on a Nonprofit Board." You can access it on the Archives side of the Blog section (on the left).

I have received some great responses/suggestions from that post, about a new board member who was criticized by the board chair for asking a (good) question about board governance. Below is the most interesting. Read it - as it is a revealing and even disturbing piece of personal testimony by a reader from the "front lines." Note: by director is meant board member.

Please allow me to share ( anonymously) the story of a business person who recently sold his firm for over $10 million and who gave away 30% of that amount. These are not, I admit, Bloomberg numbers, but neither are they penurious - 30 donations of $100,000 would make a positive difference for a lot of nonprofits. But giving away this amount of money has not been a happy experience for me. Your blog post really hit a nerve, and if you think it is helpful, you are welcome to share it with your readers.

Twice in the past couple of months I've seen boards of venerable institutions alienate directors who might have been helpful to the long-term future - indeed survival- of those institutions. But before those directors could offer their wisdom and strategic insights based on decades of professional experience in the corporate and nonprofit worlds, it became clear to these directors that is was their bank account rather than their endeavors at serious governance, that was the subject of interest to the nonprofit organizations they had sought to help. In the short term this strategy might work. When operating deficits are mounting and many nonprofits have not recovered from the financial crisis of the past five years the quick buck has its appeal.

But the Sugar Daddy theory of nonprofit governance only delays the inevitable. Without accountability and standards, the hallmarks of effective governance in any organization and the essence of Geoff's blog post, the donors preferred by entrenched boards and nonprofit management will delay, but not avoid, the day of reckoning. Sadly, those donors who opened the door for consideration as board members, will find their advice is less valued when that advice is no longer accompanied by out-sized donations.

Here's a tip for nonprofit organizations who recruit people who have had a financial windfall, such as selling a business or cashing out of property and partnerships that were built over a career. When we "suddenly" - that is after 30 or 40 years of labor- become wealthy, we were happy to share that bounty with nonprofit organizations. Opportunities for board memberships soon follow. But while the financial windfall lasted only a few years, the judgment and insight that might have been of value to nonprofit organizations could have continued for a lifetime. Unfortunately it is very clear  that once these windfalls have ended - for me and for the nonprofits  to which I have been so generous - the invitations to board service have also come to a close. This is precisely the reason that many entrepreneurs choose to create their own foundations rather than become involved in those that already exist,. Our energies are perhaps best exerted. even in our 6th or 7th decade and later, in starting new enterprises rather than contributing to those that have as their primary interest recruiting people who are engaged primarily in sustaining the mistakes of the past,

Well, Dr. Geoff, that was certainly therapeutic for me. I hope it will serve some of your readers. If nonprofits need board members and leaders who are capable of building organizations and sustaining them through difficult times, then they might start by valuing those board members for their acumen rather than their back account.  

Many thanks to my necessarily anonymous reader for this candid and articulate testimony. I hope it will be of use. Feel free, as always, to pass it on.