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A Good Board Wants to Hear the Bad News

Jan Portrait 3 (2)

If you run a nonprofit organization, you probably already know this: what your board doesn’t know can cause you big problems.

Recently, a long time Milwaukee nonprofit hit the front pages with the news that its board of directors had suspended operations after discovering serious financial problems. While the details are still unfolding, one thing is strongly implied. The board of directors seems to have been surprised.

Now what I’m going to say doesn’t pertain directly to this most current organization since we don’t yet know all the details. But I’ve been in both positions – nonprofit staff and nonprofit board and I speak from that experience.

Surprises aren’t always bad. Boards love surprises like news of a big grant or receipt of a national award. Those are great surprises.

Financial problems, personnel messes, program issues – those are all surprises that boards don’t love. Surprise is the key word here.

A good board wants to hear the bad news. The problem is that, too often, the staff doesn’t want to tell the board bad news. So they omit negative things from board reports, gloss over problems or take the posture that the issue is too complex for the board to understand. Minimizing problems marginalizes the board. And board members don’t like that. They joined a board of directors to be involved, helpful and smart. Board members want their talents and resources to be used, otherwise, they think: why am I here?

When an organization hums along with routine, boring board meetings where critical issues are rarely discussed in any real depth and then something blows the lid off a problem, say, a very bad audit or inability to make payroll, board members tend to get very upset. They feel duped. They feel like staff purposely kept them in the dark. They lose trust in the staff. And that is a terrible thing for a nonprofit. Distrust between board and staff can sink the entire enterprise.

Trust is built on honesty, communication and solving problems together. Strong, effective boards reflect strong, effective staff’s commitment to sharing the good news and the bad news with no extra varnish. Just the facts. Look around at the most successful organizations. This is what they’re doing: making sure the board of directors is always totally in the know.

How healthy is your board staff relationship? Maybe time to do a little check-up!


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Quick Tip #4: It’s Good to be Nosy

 

YES – IT”S GOOD TO BE NOSY!

Hiring a good consultant can be tricky.  Good credentials, a solid resume, and great recommendations help.  But when dollars for consulting help are so scarce and the stakes so high (as they usually are when an organization decides to get outside expertise), there’s one more question you should be asking prospective consultants.

 WHAT ELSE ARE YOU WORKING ON NOW?

A really good, established consultant will tell you without your asking.  A good consultant will turn down work if it’s unlikely that s/he can devote the attention the project requires.  But some consultants keep adding on, taking project after project, until none of the projects, each one near and dear to the client, gets the time and skill needed to be successful.  For example, unless a consultant is commanding a large grant shop (and the client knows that someone else may be working on their proposal), it’s not a good idea for the same consultant to write two federal proposals at once.   You have no way of knowing unless you ask!

So be nosy.  Ask prospective consultants what else is on their plate. Maybe it’s “too much.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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Another One Falls: What Happened to Esperanza Unida?

 Last week, I talked about the closing of the iconic Hull House in Chicago.  This week, I just have to talk about one of Milwaukee’s own iconic nonprofit organizations, Esperanza Unida.  Yesterday’s Sunday paper carried the news that after forty years, the organization had lost its federal non-profit status. This essential designation, the one that makes foundation and government grants possible and gives donors a tax deduction, was lost because the Esperanza Unida administration did not file a Form 990 with the Internal Revenue Service three years in a row. 

 Esperanza Unida, founded in 1971, started out as a very small, storefront enterprise that focused on workers rights, especially advocacy for Latino workers who had been injured in the workplace.  Ted Uribe, Esperanza’s first director, was a basically a community organizer.  Under his leadership, the group tackled a host of community issues including the distribution of anti-poverty funds by the increasingly powerful Social Development Commission.  When Rich Oulahan became director, the organization took off in new directions, establishing a national reputation for a social entrepreneurship model of job training that started with auto donation/repair/resale and expanded to a day care center, restaurant and other initiatives.  Oulahan attracted federal support to establish the International Building on National Ave., and commissioned Reynaldo Hernandez to create a mural that northbound I-43 drivers still see and appreciate every day. When I drive by, I think about Rich Oulahan’s persistence and advocacy – he died in 2008.

So what went wrong with this nonprofit masterpiece?  Like Hull House, there are probably many possible answers.  From my perch way outside the organization and the neighborhood it serves, I’m wondering where the board of directors was when the 990’s weren’t filed.  I occasionally read the southside papers and see on Facebook references to a lot of political infighting, some of it very bitter and divisive.  I think about the wisdom of having an organization so entirely wrapped up in the identity of its executive director and wonder if the board ever tended to the unpleasant duty of developing a succession plan.  Was there attention paid to building a board that had the professional and technical skills, such as accounting, legal, and fund development expertise, necessary to steer a major nonprofit enterprise? Another thought is what happpened to the organization’s community support?  Esperanza Unida used to be an untouchable nonprofit, so politically well-positioned that its funding was almost never in doubt.  I don’t have answers.  I just ask the questions that I think need to be asked.

The need for an Esperanza Unida continues.  People need skills that will get them family-supporting jobs.  That hasn’t changed.  It’s a sad thing for Milwaukee that this important resource – this community resource – no longer exists as a nonprofit organization.  Those of us involved with nonprofits as staff or consultants or board members need to find the lessons learned from Esperanza Unida’s situation and resolve to keep the valuable nonprofits in our community healthy and strong.


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Postmortem: The Closing of Hull House

Like most people, I was hit with a wave of ‘say it ain’t so’ when I read about Hull House closing last week. The iconic mother of the settlement house concept, the model that Milwaukee organizations like Silver Spring Neighborhood Center and Journey House use in their family and neighborhood development efforts, Hull House was closing due to massive financial problems, one article stating that the organization owed millions of dollars to creditors.

That Hull House collapsed because of the poor economy is the no-brainer and maybe no-brain analysis.  Blaming the economy gives us permission to tsk tsk about how the funding world doesn’t appreciate the iconic, how donors let Jane Addams’ dream disintegrate; the economic downturn and all the excessive belt-tightening are to blame for ending Hull House’s remarkable 123-year run.

All of that may be true.  I don’t know.  All I know about Hull House is what I read in the paper.  But as a long-time observer of nonprofit organizations, I am betting that there is a lot more to the story.  Maybe some of these factors had a role in Hull House’s demise.

  • There may have been a failure to establish and maintain sufficient reserves to help the organization navigate through the economic mess.
  • The board may not have been sufficiently developed, trained, or supported to function as a good steward of Hull House resources.
  • No one may have been able to make hard decisions when they would have saved the agency, e.g. cutting programs/sites/staff.
  • Strategic alliances which might have preserved the Hull House mission and name while providing access to new resources may have been avoided.
  • The organization may have focused exclusively on its service delivery and not been involved in policy-making at the state and federal level that could have influenced program resources.
  • Maybe there was no decent grantwriting shop.
  • Maybe they couldn’t figure out how to diversify their funding (that is, after all, what saved many of us when the stock market tanked).
  • Maybe they assumed the public and the funding world knew all about the good work they were doing so they didn’t need to upgrade the outreach and communication.
  • Maybe they thought it could never happen to them.

 What I’m getting at is this:  The economic downturn reached into every berg in the country.  Strong nonprofits stayed afloat.  Weak ones went under.  And like I said, I don’t know the details of Hull House’s situation.  But I do know this.  Nonprofit organizations can protect themselves – there are life jackets and life boats and survival training aplenty.  Our very own Nonprofit Center of Milwaukee is a good place to start to sharpen your organization’s skills on a lot of fronts. 

The Hull House closing left us with a lesson — If it could happen to Hull House, it could happen to any organization. Be smart.  Take stock.  And protect your organization.


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