The Tale of the Chicken and the Egg

By Deborah Davidson, vice president of governance education and research

So many of life’s issues boil down to a chicken and egg problem. In today’s tale, meaning no disrespect, the “chicken” is an organizational vision and the “egg” is hiring a new executive director. The subject organization is a venerated Washington, D.C., institution, the Corcoran Gallery of Art, which is also an art school. Its gorgeous Beaux Arts building, a National Historic Landmark very near the White House, is open to bidders and a new location is being scouted, much to the chagrin of arts lovers, former students, and preservationists. (Shades of the Barnes Collection, which recently was moved to Philadelphia amid gigantic controversy.)

According to The Washington Post, the board is currently tasked with developing a new vision for the organization – a plan that will chart a course for the school and gallery. Meanwhile, it also is tasked with replacing the executive director; the current director is serving on an interim basis and must be replaced by next June.

See the chicken and egg problem? Which comes first, the vision or the new executive director?

The board chair, Harry Hopper, says the board doesn’t want to get too specific in its vision, pending the hiring of a new director: “We were advised that we could not attract the caliber of leadership on the content side that we needed without having a well-thought-out framework, and that’s what we’re working on.”

But he goes on to say, “We don’t claim to have a granular playbook on how a new leader is supposed to execute a vision. We have come up with a framework within which a visionary leader can allow the institution to flourish. Exactly what shape that takes is an organic process that will be led by the new leadership that we bring in.”

It strikes me as an almost impossible task: figure out a framework for the visionary leader to grow the organization…without knowing what the vision is. If I were on that board, I would devote all the resources in my power to doing one of the most, if not the most, critical job of the board: find that new visionary leader NOW, and work out the vision together.

What do you think? Can you build your organization’s vision without an executive director? Can you hire an executive director without a vision in place? What would you do?

 

 

Scout Law

By Deborah Davidson, vice president, governance education and research

“A Scout is trustworthy, loyal, helpful, friendly, courteous, kind, obedient, cheerful, thrifty, brave, clean, and reverent.”

Thus reads the Scout Law, the code that defines the Boy Scouts of America. Note that the first adjective is “trustworthy.” Since this blog is about boards, let’s ask ourselves, what does it mean to be trustworthy, relative to boards?

I believe it means that deliberations won’t be done by secret committees who deliver pronouncements, which are then ratified by a board that had no part in them. It means that policy won’t be determined by pressure.

This week, the board of the Boy Scouts of America announced that it would not reverse its longstanding policy of excluding lesbian, gay, bisexual, or transgender individuals from participating in scouting as Scouts or leaders. But the process leading up to the board decision may not have been the best way to deal with a policy that has been highly controversial, both outside, and by many accounts, inside the organization. According to the official statement, the decision was based on the recommendations of a “special committee of volunteers and professional leaders,” who deliberated the policy for two years. The executive committee of the national board followed the special committee’s advice, and affirmed the policy.

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Board Whispers

by Deborah Davidson, vice president of governance education and research

We don’t usually comment on university board situations, since our sister organization, the Association of Governing Boards, is the expert in university boards. But the evolving situation at the University of Virginia is just too important not to address the lessons to be learned by all boards.

In a nutshell, the board chair, Rector Helen E. Dragas, engineered the ouster of university president Teresa Sullivan by garnering enough votes, in secret, to remove her, and calling the other board members to let them know she already had a majority and they might as well go along with it. According to published reports, there was no meeting, no discussion; no opportunity for debate. And no reason given when the announcement was made: just “Sullivan removed. Unanimous decision.”

Wow.

In a public relations nightmare reminiscent of the recent Susan G. Komen fiasco, the university community has reacted with passion and vehemence against this precipitous ouster of the reportedly very popular president, whose tenure will be, assuming she leaves in August, less than two years. Several large donors have threatened to rescind gifts, and other prestigious universities are apparently preparing offers to scoop up disgruntled rock-star professors.

I’m tempted to compare the whole sad affair to the machinations of junior-high youngsters who whisper to one another they don’t like the new kid in school…shhh…pass it on. Such judgments are never made out loud. But these are adults, and this is the board of a world-class university; just ask the straight-A high school students who weren’t accepted there. Decisions of this magnitude require discussion and debate. The entire board must own the decision. Apparently the underlying reason for the ouster was that some board members felt Sullivan’s methods were too slow; they believed more rapid change was necessary in a difficult financial environment. A debatable point, surely. Summary dismissal, without an opportunity to have that debate, it seems to me, brings the board’s process into serious question.

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What’s In a Name?

By Deborah Davidson, vice president of governance education and research

Shakespeare asked that timeless question, or rather, he had Juliet ask it. Romeo, she tells us, would have been just as wonderful, and handsome, and desirable, if he had another name, like John, or Steve, or Poindexter.  Well, maybe not Poindexter.

Amazing that, 400 years after the Bard penned those words, it still comes up. The age-old question of “what’s in a name” has resurfaced in this blog entry by Phil Buchanan. What to call this sector we live and work in? Many folks, disliking the negative connotations of “non,” have proposed “independent sector”’; “voluntary sector”; “third sector”; and at a recent BoardSource Leadership Forum, an impassioned case was made for “social sector.” Buchanan likes “nonprofit” as a stark antithesis to “profit.”

In this series of blog posts, which I recommend for your edification, Buchanan, the CEO of the Center for Effective Philanthropy, highlights some important issues in the sector (by whatever name); in particular, the heated rhetoric over whether or not the sectors are blurring. (We’re talking about that, too, and look forward to an interesting discussion at this year’s BLF, when Heerad Sabeti, Tim Delaney, and Richard Zeckhauser hold a Town Meeting on the “State of the Sector.”)

So, what is in a name? Does it matter? From a purely practical standpoint, it’s extremely hard to change a word once it’s in the lexicon, but I won’t hide behind that. If we really want to change our name, as a sector, we can do that. But should we? Buchanan’s conclusion was that “’nonprofitness’ matters,” to remind us of our unique focus and duty to reinvest our “profits” back into our organizations.  I’m casting my vote with him. I work for a nonprofit; I believe in the nonprofit sector; I try, every day, to make nonprofit governance a little bit better.  It’s not sexy, it’s not catchy; it’s just a name that fits.

A sector by any other name might smell as sweet, but that name might not remind us, every day, of what we are working for, and what we are not: Not shareholders, not the bottom line, not profit. We’re the nonprofit sector, and that, friends, is a positive thing.

What do you think? Does the name matter?

 

 

Out of Fashion?

by Deborah Davidson, vice president of governance education and research

 

I went to a meeting at the Urban Institute this week called the “Annual IRS Form 990 and State Charity Regulation Meeting.”  Many of the attendees were from state Attorneys General offices who belong to an organization of charity regulators called the National Association of State Charity Officials (NASCO). A pretty serious audience, to say the least.  While sessions like this can sometimes be a bit dry, I am always looking for provocative observations or questions as they relate to nonprofit governance.

This meeting’s provocation came from a discussion on hybrids — those quasi-nonprofits that are actually for-profits, but with a social benefit aim. The most common ones we’ve learned about are the L3C, or Low-Profit Limited Liability Company, and the B Corp, or Benefit Corporation. According to a panelist, the day of the L3C has passed, in favor of the B Corp. Or, as the speaker so elegantly put it, “L3Cs are so 2010.”

While no one is ready to sound the death knell for the L3C, Oregon Assistant Attorney General Elizabeth Grant theorized that the business model of the two entities will continue to favor the B Corp over the L3C for two main reasons: 1) Foundations have never really gotten behind the idea of program-related investments for L3Cs, and that was supposed to be their primary benefit; and 2) the B Corp laws allow the board to take the interests of stakeholders beyond the shareholders into account; shareholders who are unhappy that their profits are not maximized (a common shareholder suit) can only receive injunctive relief, not financial, which gives the board extremely wide latitude.

So, what do you think? Has the B Corp taken over for the L3C as the hybrid of choice? And if so, is the nonprofit sector in trouble, or is this an opportunity, or something in between? Let us know what you’re hearing from your networks.

For more information on hybrids, read this BoardSource topic paper.

The Rest of the Story

By Deborah Davidson, vice president of governance education and research

Most of us at BoardSource, and I suspect many of you, have been fascinated by the ins and outs of the story of the Barnes Foundation. A recount of it is detailed in the film, “The Art of the Steal.” In brief, the Barnes Foundation runs a school for artists, and its late founder, Dr. Albert Barnes, considered the galleries of Monets, Cezannes, Picassos, African art, and even children’s art, to be classrooms.  But over time, the building housing the collection became more and more inadequate, for many reasons. And after years of legal wrangling, board changes, public outcry, and a fair amount of drama, the Foundation’s priceless art collection will be moved from its original “home” in Merion, Pennsylvania, to Philadelphia, where it will be dedicated next month.

I recommend the film for its entertaining look at the world of art, foundations, and governance. However, according to Kimberly Camp, that’s exactly what the film is: entertainment only. Kimberly is the former president of the Barnes Foundation and lived through many of the events that have led to the move, which has been controversial, to say the very least. In fact, the move is the “steal” referred to in the movie’s title.

I recently heard Kimberly speak at American University to a group of arts management grad students, where she told her story of how the film posits conspiracy theories where none exist, and how, contrary to the film’s central premise, it was actually Dr. Barnes’s intention that if the collection could not be housed in Merion, it should be moved to Philadelphia.

We’ve asked Kimberly Camp to tell her story at this year’s BoardSource Leadership Forum. I guarantee it will be fascinating. She’s speaking as part of a storytelling series we’re presenting this year, and you won’t want to miss it. Other storytellers are Greg Landsman, executive director of the Strive Partnership in Cincinnati, who’ll talk about his success with a sweeping, cross-sector educational program; Deirdre Maloney, who’ll relate how she, as executive director, overhauled the board of the Colorado AIDS Project; and Peg Smith, CEO of the American Camp Association, winner of last year’s Prudential Leadership Award. Peg spearheaded a multiyear transformation of the organization where, as she puts it, the board voted itself out of office.

Every organization, every board, has a story. How could it be otherwise? We invite you to share yours with BoardSource.

 

Reversal of Fortune

By Deborah Davidson, vice president of governance research and education

Like you, all of us BoardSource were fascinated as we watched the Susan G. Komen for the Cure controversy play out last week. On Friday, just minutes after my colleague, Rita Santelli, shared her thoughts on the board’s role in communicating in a crisis situation such as the one Komen found itself (see previous post), BoardSource’s  hallways were once again abuzz with chatter —and Twitter – this time focused on Komen’s startling decision to reverse its decision to cut its support of Planned Parenthood.

While we don’t know what went on in Komen’s boardroom, the reversal raises a question that I invite you to weigh in on here: What differentiates a board that makes sound decisions from a board that makes, well, not-so-sound decisions?

From my perspective, three words: Culture of inquiry.

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