Serving as a Warning to Others; Lessons in Governance

“It could be that the purpose of your life is only to serve as a warning to others.” It’s a terrible role to play, but one that others should bother to learn from, and it’s the theme of a recent post by Lisa Chiu on the Chronicles of Philanthropy with a focus on what we can learn from the the Second Mile charity whose founder, Jerry Sandusky, is now infamous. It is worth taking a look at what the charity could have done differently that might have a different result now that it is considering shutting its doors.

The article points out a few of the primary weaknesses at the charity and they all relate to governance. The article quotes Deborah Davidson, a vice president at BoardSource as noting that  Second Mile suffers from “founder’s syndrome“, which she defines as when the person who created the charity wields inordinate influence to the point that the board may be unwilling to question the individual. In the case of Second Mile, its by-laws lists Mr. Sandusky as an officer, cementing his authority and term for life.

In keeping with the mentality of not questioning authority, Second Mile had no whistle-blower policyin place. The article quotes Matthew Downey, program director at the Johnson Center for Philanthropy, as noting “even if the policy never gets used, it sets a culture in the organization that you can speak up and your job won’t come into jeopardy.”

The third problem in governance that Ms. Chiu notes Second Mile as having is too many board members. That may be counter to initial intuition but it makes sense that too many members results in an environment susceptible to “group-think” and a general sense of lack of responsibility because surely someone else will take care of it.

Having an under-performing, or worse, a scandal producing person entrenched high up in an organization undermines the organization’s mission and can lead to serious operational problems. Governance of any charity should include conversations about how to ensure that the mission comes first and can continue to serve its purpose above and beyond any personalities that get attached to it.

For additional detail, quotes and insights from those interviewed, see the post here.

Seminar: Lean, Mean, and Green – Going Paperless in the New Economy

Still thinking about going paperless? What are you waiting for?

In today’s economy, best-in-class contractors are investing in “Paperless Technologies” to automate AP and other workflow processes. At the same time, they are realizing the benefits of a more efficient workplace with instant access to critical information, rather than manually retrieving and compiling essential documents.�
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eRisk Consulting and Paperless Environments are a winning team of industry experts and products committed to helping contractors understand what it means to “go paperless.”  They help you leverage technologies to provide the greatest opportunity for sustainability and growth in the future.      �
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Please join us at Aronson LLC on Thursday, Dec. 7, 2011 for a free breakfast seminar.  At this event,hosted by Mike Carbino of eRisk Consulting & Paperless Environments, attendees will learn more about how they too can be “lean, mean and green!”

CLICK HERE TO REGISTER!

Webinar: Cyber Security Threats to Nonprofits

Nonprofits and associations are more dependent on technology than ever before. The increased use and reliance upon technology, however, has also significantly increased the vulnerability to cyber security threats—any of which can result in significant out-of-pocket expenses and, more importantly, affect an organization’s most prized possession – its reputation.

Join Aronson LLC on December 13th from 9am – 10am for a complimentary webinar, where our special guest, security expert Ric Valentino of RCM&D, will focus on the following objectives:

• Breach and Network Security Risk Management
  - Who causes data breaches and how they occur
  - Probable exposure after a breach
  - Preparedness risk management
  - Response risk management
  - Response best practices
• Contractual Risk Transfer
• Insurance and Risk Transfer
  - Gaps in traditional coverage
  - Types of risks that can be transferred
  - Coverage available in the market

This webinar, moderated by Rob Eby, CPA, of Aronson’s Nonprofit and Association Industry Group, will provide helpful information for executives looking to protect their organization’s reputation and mission.  RSVP today to reserve your spot!

Ric Valentino
Ric joined RCM&D in August 2004 and serves as Practice Leader, where he has worked with nonprofits over the entire course of his career.  Ric is also a former United States Marine, having served a majority of his five-year career at American embassies and consulates in Jerusalem, Israel, Nicosia, Cyprus, and Geneva, Switzerland. He holds a Bachelor of Business Administration from St. John’s University’s School of Insurance and Risk Management in New York City (1989) and an MBA from The Johns Hopkins University (1999).

Karen Randazzo
Vice President and Senior Client Executive
Karen brings nearly 20 years of industry experience to her role as Vice President with RCM&D.

Prior to joining RCM&D in 2006, Karen spent five years as a senior underwriter with a national insurance company followed by 13 years as a senior broker with Johnson & Higgins and later Marsh.

While at J&H, Karen became the broker for numerous education institutions, including Loyola College, The College of Notre Dame, Mount Saint Mary’s, and Goucher College. Karen’s experience in the education industry provides her with an advanced knowledge of insurance coverages and program design.

Ms. Randazzo earned her BA in English and American Studies from Dickinson College.  She is a seminar leader and presenter for insurance related topics, and is currently pursuing her CPCU

CLICK HERE TO REGISTER

TODAY: Give to the Max Day: Nov 9th

TODAY: With federal spending cuts and the economy in a pinch, Razoo.com has gone grassroots and organized a one-day fundraising event, Give to the Max, for the Greater Washington area. The goal is to raise awareness and get tens of thousands of individuals to support the nonprofit or cause of their choice with the hope of raising over $3 million within 24 hrs on November 9th.

Hundreds of regional nonprofits will compete for cash awards and matching grants offered throughout the day so that every donation made helps the organization’s chance to win even more money. Register your organization here: http://give2max.razoo.com/p/get-registered

Help spread the word and do some fundraising for your favorite participating nonprofit on November 9th! Go to Give to the Max or call 866-437-1952 to learn more.

Executive Compensation – Why It’s an Issue and What to Do About It

GuideStar, home of all of the public copies of Form 990s filed, has issued its 11th edition of the GuideStar Nonprofit Compensation Report, a large-scale analysis of nonprofit executive compensation based upon IRS data. The report compares 14 job categories and follows trends based on observations of over 87,000 Form 990s filed in 2009. It is available for sale at their website.

GuideStar also has a free document available titled “What You Need To Know about Nonprofit Executive Compensation” that does a good job of detailing what is allowed, what isn’t, and why it’s important. Noting that the nonprofit industry is ripe with examples of scandals involving excess compensation, the document helps explain why organizations need to be careful and how to make sure compensation is actually reasonable.

AICPA Discusses Fair Value

The AICPA has issued a new whitepaper called Measurement of Fair Value for Certain Transactions of Not-for-Profit Entities which runs through detail scenarios where Accounting Standards Update No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (effective for nonpublic entities in 2012) might apply. The whitepaper is currently only available to AICPA members and is chock full of topics you can throw out there if you want to bring the conversation to a screeching standstill at your next cocktail party.

Massachusetts Gets Radical and Helps Nonprofit Employees

The National Council of Nonprofits issued an email alert on advocacy matters that reports that Massachusetts Governor Duval Patrick signed a budget bill on October 27 that includes a $10 million salary reserve earmarked for nonprofit human service providers. As Forbes reports, this reserve will help some of the lowest paid direct-care providers that haven’t received any cost of living adjustments over the past three years.  

And Massachusetts isn’t stopping there. On October 26, the state House voted 143 to 7 in favor of a bill that would allow nonprofit employees to participate in the state’s retirement savings plan. The National Council of Nonprofits points to the state’s own study showing that more than half of the nonprofits with budgets of $250,000 or less do not (and I suspect can’t) offer their employees any retirement benefits.

Coming on the heels of the survey results about current dissatisfaction of employees in the nonprofit sector and the high cost of low employee satisfaction, Massachusetts may be making a powerful and progressive step forward.