From The Board of Directors
We are writing to report on the findings of the community process that was undertaken this summer by The Nonprofit Center task force. As you may recall, the Board convened a group of community stakeholders who had an interest in preserving the mission of this valuable community resource. This group was charged with exploring the needs of the nonprofit sector, assessing the viability of delivering those services and making a recommendation to the Board on how to proceed. We thank all who participated in our stakeholder meetings and/or filled out the survey. Your time and your thoughtful and honest feedback are appreciated.
From June through September the task force met four times, convened three gatherings of stakeholders and conducted a community-wide survey of the nonprofit sector. They also researched other organizations with missions similar to that of The Nonprofit Center that are successfully operating in other communities. The task force concluded that the greatest area of need was among smaller organizations, and this conclusion was supported by conversations with regional funders. For smaller nonprofits, the most valued and most-needed services are:
- Education and Training to support managers, staff, board chairs, and board members.
- Convening and Connecting individuals and organizations with similar interests, for example, executive director roundtables, grant writers, or organizations that could potentially partner on grants or projects.
- Offering Referrals to high quality service providers and experts who have been screened.
- Back Office Services such as financial, legal, human resource and IT services.
The need for these services appears to exist in Kitsap and Thurston counties as well as Pierce County. The task force recommended two possible courses of action to the board:
- Rebuild and rebrand the organization, focusing on the four areas of high-need identified above. This option would require the infusion of significant start-up capital and the recruitment of highly dynamic and visionary management and board leadership.
- Responsibly close The Nonprofit Center to allow the mission to be carried on by other interested parties in the community. This option would require the board to be conscientious about ensuring the well-being of current clients and protecting any assets of the organization so that they can be handed off to another organization serving the needs of the nonprofit sector.
After careful and deliberate consideration the board has decided that the course of action that will best advance the mission of serving the nonprofit sector and the communities we serve is to formally dissolve The Nonprofit Center. We will be taking steps over the next few weeks to do so responsibly and ask for your support and understanding throughout this process. The Nonprofit Center has added significant value to the Puget Sound nonprofit community and this is of course a direct result of the dedicated, committed and passionate past and current staff, volunteers, and community members who have so generously donated their time, sweat and tears for this vital mission over the years. The board wishes to thank everyone who has been involved with The Nonprofit Center.
For those agencies currently being served by Center staff for your financial services, Alan Strand and Christine Garst will continue to provide nonprofit bookkeeping services. Their professional and knowledgeable services will continue to be an asset for the nonprofit sector and we thank them for their contributions. Alan can be contacted at www.notforprofitaccounting.net and alan@notforprofitaccounting.net. Christine can be contacted at cbgarst@gmail.com.
Despite the challenges facing all of us and The Nonprofit Center these past few months, we are heartened by the task force process. It brought to light the significant level of community engagement and energy for the continuation of nonprofit capacity building services to exist in the south Sound. It is the sincere hope of the board and the task force that this positive energy will result in other organizations and individuals stepping up to rebuild, recreate and find solutions for improving the capacity of the nonprofit sector to make our communities better places to live, work and play.
We are confident that leadership will emerge from those who expressed a desire to continue this mission into the future and we encourage you to be an active participant in whatever should develop. Thank you for your continued support during this time and for sharing your thoughts, opinions and expertise.
The nonprofit sector has a proud past in this region and makes a significant impact in all of our lives. We are confident in the resiliency, passion and determination that exist in our South Puget Sound nonprofit sector.
Sincerely,
Dave Petrich, Board President
Joe Lawless Board Vice-President and Task Force Chair
The unexpected closure of a nonprofit organization often provides a message for anyone who serves on a nonprofit board. The board is responsible. The board always has ultimate responsibility for a nonprofit organization. Yes, the director is the operational leader, but the board is where the buck stops.
Every nonprofit board member must act knowledgeably for his or her organization so the same fate does not befall it. How do you do this? It isn’t easy, but it is essential. You ask questions, require full information, and verify results. If you don’t know how to read a financial statement, learn how. If you don’t know what something means, find out. If there isn’t enough money, raise it.
If no one on your board has legal or financial or marketing or management experience, expand your board. If you don’t know anything about planning or other relevant topics, make sure you and all your board members admit that lack of knowledge and get someone to teach you.
While the day to day operations of most nonprofits are handled by professional staff, the credibility and sustainability of every nonprofit is in the hands of the board. This responsibility is best met when the board and the Executive Director or CEO are a strong team of equals, each committed to fulfillment of the agency’s mission.
When that team doesn’t work – when one or the other partner doesn’t do their job with honesty and commitment, the ones who suffer are those who are served by the agency. The disservice is done to the community as a whole.
What should you do if you think your board is headed in this wrong direction? Bring everyone together to formulate a strategy. Find resources in the community. Talk to your funders. Whatever you do, don’t ignore the problems. They will not go away.
Serving on a nonprofit board is, in my opinion, one of the most important things you can do for your community. It can also be one of the most challenging. I do not want to scare people off with these words because every nonprofit organization needs committed volunteers to lead them into the future. On the other hand, I hope to help board members understand the substance of their role so they can do a better job.
Many people want to learn more about what it means to be on a nonprofit board. Below is a short quiz that may help. It is based directly on the “Ten Basic Responsibilities of Nonprofit Boards” developed by BoardSource.
We call this the “Healthy Board Checklist” and here are some of the indicators. Ask yourself if these are true statements for your board.
- All board members regularly prepare for, attend and participate in meetings.
- The mission is clearly defined, and board members can state it without looking it up.
- The board regularly spends time learning about trends in the field of service.
- The board exercises diligent financial oversight.
- The board is involved with policies and issues rather than day-to-day management (except with grassroots organizations).
- Each member of the board makes a personal financial contribution each year.
- All board members are actively involved in raising money for the agency.
- Board members set aside personal considerations for the common good and act ethically.
- Working relationships among board members and with staff are harmonious.
If 7 to 9 of these statements are true for your board, give yourselves a gold star. Would you like to become mentors for members of other boards? If so, give us a call at The Nonprofit Center.
If 5 or 6 of these statements accurately describe your board, you’re ok. You need to do a little work, but you’re on the right track.
If only 1 to 4 statements are true for your board, it’s time to take a hard look at setting some development goals for your board. Involving everyone on the board in some training and planning would be a very good first step.
Two events happened this week which point up critical issues for new and young nonprofits.
The first was a call from a woman who wanted to turn her business into a nonprofit. The work she does has a significant human service focus, so it made sense, especially since she wanted to seek grants to fund a building expansion.
When I pointed out to her that she would need to form a board of directors, she hesitated. I went on to clarify that, in a nonprofit organization, it is the board of directors that has the ultimate and legal responsibility for policy, management and financial oversight. That’s all she needed to hear. She was not at all interested in having others determine how the business would be run. It is a good thing that we had this conversation, because the proprietary nature of her approach simply would not work in the nonprofit sector.
There’s an agency in another part of the state that might be doing better if the founders had had this same conversation a few years ago. Their programs are very successful but there is a great deal of tension between the Executive Director (who founded the agency) and the board of directors. They, rightly so, are working to fulfill their responsibilities, but unfortunately the director views their work as undermining his control.
Even more unfortunately, this happens often in the nonprofit world. The alternative is for board and staff to share the vision and the commitment to make the agency a success. Both have their roles, and both are absolutely essential. Together they are the team that can make the vision reality.
The other event is that the board chair of a small, grassroots organization called The Nonprofit Center to ask some questions about how they should be operating. She had recently attended one of our board training sessions as a guest and had realized that her group was facing some big challenges.
Started several years ago, the group organizes social activities for people with disabilities. These events are run on a shoestring and the cost to attend is extremely low. The board members – there are ten – do all the work, and they happily make sure the events continue. They do this because they know how very important this social activity is for the people who attend.
Here is a nonprofit providing a much-needed service and doing so with the passion of real caring for the people they serve. That’s the ultimate best practice – it is this passion that fuels everything else a nonprofit does.
But the passion isn’t enough. All nonprofits are given a public trust. In exchange for certain exemptions (paying no taxes, for example) each nonprofit has a responsibility to assure that it is worthy of that trust by operating ethically, legally and effectively.
At the very least, nonprofits must have organizing documents and approvals. In this state that means incorporating as a nonprofit through the Secretary of State’s office, registering with the Charitable Solicitations Department of the Secretary of State’s office, registering (if required) with the local city or county office, and obtaining tax-exempt determination from the IRS, either independently or under the umbrella of another exempt organization.
These are the most basic best practices, yet there are many groups which consider themselves to be nonprofits who have not completed even these elementary steps. There are more. Financial records must be responsibly maintained and required reports submitted in a timely way. Each member of the board must fulfill their responsibilities of informed oversight and guidance while acting in an ethical way.
The organization mentioned above has taken the first steps, but where do they – and others like –them go from here? Should they raise lots of money to hire staff and become a more formal organization? Or continue as they are? Those answers will only come over time. But the answers will be the right ones if they look at the standards for nonprofits and work to meet them. Then everyone benefits –people served, donors, and all of us.
For just shy of eight years, I wrote a column for The News Tribune on nonprofit topics. Many of the columns focused on governance, so we’ll be reprinting selected ones from time to time.
Much of the time on this website you find comments about nonprofit boards. That’s because the board has ultimate responsibility for the health and future of the organization. All too often board members don’t take that responsibility seriously, or they bend it to serve their personal interests.
Now is not the time to let that happen. Now, more than ever, it is absolutely essential that board members remember their primary duty – the Duty of Care. This is a legal concept and it means that a nonprofit board member must take care to do their job well.
When a board member is fulfilling their Duty of Care, they are preparing for meetings, they are attending meetings and they are actively participating in the discussions of the issues before them. Furthermore, they are not afraid to say “no,” and, even more important, they are not afraid to say “I don’t have enough information.”
A passion for the mission is absolutely essential to leading a nonprofit organization. But that passion must be balanced with an objective analysis of the decisions to be made. Here’s an example – a hypothetical one, so don’t try to guess who it is.
The ABC agency provides an essential service to the community meeting people’s basic needs. Everyone on the board and the staff care deeply about they people they serve, so they often overlook warning signs of financial trouble. The Director comes to them and says, “The downturn in the economy has more people coming to us every day. We have to open a new center, and I think I can get the money from several places.”
Because everyone on the board wants to make sure their clients get the help they need, the plan is approved with little discussion of the financial ramifications. A year later, the agency has to close its doors because it can’t pay its bills or meet its payroll.
Yes, this is a hypothetical example, but it happens over and over again. So, my request of all you board members is to keep your passion alive while you balance it with some hardheaded thinking. After all, you can’t help anyone if you’re no longer around.
