Memo to self: (nonprofit) boards don't like negative surprises, even when you the exec picked them (the members).  Yup, that's my take-away from Stan O'Neal's experience with Merrill Lynch.

The other lesson, no matter how much you have made a positive difference, a big error will end up with you fired.

Communications can make a difference but probably not if you lose half of the profits (in the case of a for-profit.

Today's Washington Post stories Goodwill Store's effort to go upscale with its clothing and with that in mind the use of social network sites, on-line auctions and blogs to reach a different target audience. 

When I began to read my first thought was "mission drift" -- you know, Good will is about raising some bucks for its work but in that, also being a service to those who can't really afford mall clothing.  And that was where the story was going but the last paragraph caught my attention most and reinforced for me that Goodwill was holding onto its mission while adding audiences to its stock.

The last paragraph told of Goodwill's fashion maven and her encounter with a woman seeking jeans that "fit".  The woman was using a clothing voucher and hadn't had a new pair of clothes in a while.  Goodwill met her need.

A nonprofit board in Hartford, CT closed the doors of the agency this week.  The group has been around a relatively short while (at least 10 years) and came to the conclusion, according to the Hartford Courant, that money to support its work -- engaging the public in the work of democracy -- had "dried up." 

I am always saddened when I hear that the reason for a nonprofit's closure is the inability to raise money.  I always believe there are much better reasons like: we accomplished our mission; we joined another organization to be more effective or efficient; our market changed.

And I suppose in some way, this group's market did move -- their donor market anyway.  But has the board closed the organization because it just couldn't get it together to recruit the right folks to govern and also come up with a more effective fund raising strategy? 

Of course I wasn't at the board meetings which I am sure weren't easy.  But I can't help wonder because I am really confident that the mission hasn't been accomplished.

According to the NY Times,  "the director of a Catholic charity stole about $700,000 in donations and thrift shop proceeds to finance her gambling habit, pouring much of the stolen money into lottery tickets, prosecutors said......Auditors discovered the theft this summer."

Applause for the auditors.  I hope they are helping the organization's board institute new policies that will lesson the possibility of this happening in the future.  On the other hand, one might wonder why such policies weren't already in place.  And, where was the board finance committee?

A recent Network for Good win against United Way of the Bay Area for its loss of money back in 2000 is a good lesson for nonprofit boards.

Summarizing simply, United Way created a separate entity to process donations.  A variety of circumstances created a huge loss and the beneficiaries of the donor funds did not get paid and the UW created entity went under.

As described in the Chronicle of Philanthropy, the Judge found that "rather than acting as separate corporate entities, United Way of the Bay Area and PipeVine were “alter egos.” In the decision, the judge wrote that many factors in the case supported that conclusion, including the commingling of assets, the sharing the same officers and legal and accounting services, and the diversion of employees and assets from one entity to the other at critical times during PipeVine’s operation."

Basically, the United Way failed to demonstrate an arms-length relationship and lost the legal protection otherwise available.  Besides the win for Network (nice going!), the judge's findings are important for nonprofits that have developed subsidiaries and want to be "protected" from the action of those subsidiaries.

The good news, I suppose, is that the public is taking notice about how philanthropy, both grantmakers and nonprofits, are in the processes of modifying their approaches to saving the world.  The Social Enterprise Alliance, just shy of some 9 years old, heralded a new age of this reality when it convened a small number of folks who indeed were being specific about their approach and labeling it social entrepreneurship.  These champions came out to say that outcomes and bottom line were equally important and on top of that, some of what nonprofit folks do actually have market demand.

Venture philanthropy developed, in my abbreviated historical perspective, around the same time with donors also interested in outcomes and bottom lines as well as taking on a role in managing, service delivery and raising money (as the exchange for giving).

Meanwhile, and relatively new to this sphere, and the bad and good news is President Clinton.Check out Jonathan Rauch's October 2007 The Atlantic magazine article titled "This is Not Charity". 

The article focuses on Mr. Clinton and Ira Magaziner's "novel" approach to reinventing philanthropy.

And yes, these two have raised bundles of money and are using their (Mr. Clinton's) good name to keep a ball rolling to attack, using business models, a number of global challenges.

Old news, I am afraid so.  Real bottom line, the already famous get all the credit for what the "laborers in the field" have dutifully been pursuing.  Good for the world: let's hope so.  But let's not forget those laborers.

The Independent Sector this week, at its annual conference has released "Principles for Good Governance and Ethical Practice A guide for Charities and Foundations."

The Principles come out of an 18 month process and offers 33 principles organized under 4 headings: legal compliance and public disclosure, effective governance, strong financial oversight and responsible fundraising.

Since Enron, lots of guidance has been forthcoming on the recommended behavior for nonprofit boards.  The ABA has a particularly nice one around Sarbanes-Oxley.  The IS' guide might be helpful too.  But, will boards pour through these 33 principles contained in 25 pages - thus taking governance and ethics to a different level of operational heights?

I just can't imagine it for all but I suppose I could for the IS members.  Given this who's-who of nonprofits and funders, maybe that's enough of a readership.

According to October 2007 Governing (The $3 Trillion Challenge), "no one knows much about how public pension funds are governed or who's governing them". 

One take-away: public pension boards face many of the challenges nonprofit boards regularly face.  Commonalities include:

a. members have good intentions but have limited knowledge or background to make good decisions

b. composition requirements (often specified for public pension boards) may not match organizational needs and member responsibilities/capacities

c. education and training to do the job often does not meet the level of need

d. roles and responsibilities may extend beyond what is reasonably possible given the capacity of folks around the table and demands.

Today's thoughts are really directed to the die-hard nonprofit managers, board chairs and board members who on occasion sit down and think twice, maybe more, about the essence of governance. 

I have just finished Vic Murray's review ( Nonprofit Management & Leadership, vol. 18) of John Carver's latest iteration of his book: Boards That Make a Difference.  Reading reviews is always a mixed experience for me.  The bias of the reviewer helps shape my experience as does my own bias about both the reviewer, the topic and the author.  This however is a smart and entertaining review that is worth mention.

Meanwhile, I must say that Professor Murray also affirms some feelings and thoughts I have about Mr. Carver.  I have never been fond of John Carver's work.  In my experience, it's really challenging to apply "policy governance" to the work of most nonprofit boards.  This does not mean to say I don't think that Mr. Carver doesn't have something to offer that can help nonprofit boards think about how to be boards.  I just don't think that Carver's model has the universal, one mold fits all application Mr. Carver thinks he has figured out.

Anyway, Professor Murray does a great, and entertaining I might ad, job of effectively tearing apart Mr. Carver's latest version.  Professor Murray strives, it appeared to me, to be objective throughout.  For each position, he then turns to quotes to illustrate his point.  But filtered throughout are clear opinions that I believe go beyond objective.

But you know what? I think it's OK.  So few have the nerve to say it like it should be said -- and the bottom line, Carver isn't evolving and I thank Professor Murray for saving us all the time to confirm this.

The "jury" is out while the investigation process proceeds but kudos to the Oral Roberts University Board for taking accusations about their college president seriously and hiring an outside investigator before taking action.  This is good and responsible governance that focuses on looking out for the best interest of the school first.

And sorta kudos to the president, Richard Roberts (yup, son of Oral) for taking a leave of absence while the investigation is conducted.  I say "sorta" because I can't really tell if Mr. Roberts is really taking the higher ground or getting out while the going is good.  Either way, taking a leave, whether requested by the board or not is a responsible step for a college president with this many accusations. 

A nonprofit board loses a lot of trust of its Exec/CEO in this type of situation.  Trust is a critical ingredient for making the Board/Exec relationship effective.  Mr. Roberts may do best by considering not coming back now and letting the board move forward for the School's quicker recovery from the possible loss of faith by constituents and donors when this type of event occurs.