Crazy Stupid Boards

I recently spoke with an executive director and board president of a theater company looking for some insight to help resolve an issue with a major donor/board member.

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This individual wanted to give the organization a gift specifically to produce a play written by a family member.  This gift would be bigger than any the donor had previously given, but would only be given if the stipulation were met.  While some might view this as a restricted gift and say that nonprofits accept restricted gifts all of the time, the difference is that when a smart and ethical nonprofit accepts a restricted gift, it for something the organization was planning on doing because it fit with its mission.

 I asked the callers if they would be putting on this play if it had come in blind over the transom, and while they hemmed and hawed and said it was a well written piece, they eventually admitted that they would not.   They had answered their own question:  thank you, but no thank you.

No one ever said it was easy to be a board member—or, let me rephrase that, to be a strong, functioning board member.  Well-performing board members and their collective boards have to make tough decisions all of the time, like turning down money that would require a mission stretch.

But it is a very slippery slope to start stretching those boundaries of what we do and don’t do. If not careful we end up being something entirely other than what we say very publicly in our mission statements that we are supposed to be.

I’ve witnessed that first hand twice in the last month.  The first was a mission that says the organization does five miles worth of work, but the board likes only ¼ mile and so it just works on that.  This board quite intentionally simply ignores 75% of its mission promises.  Why?  Because it was much easier to find donors interested in that ¼ than the 100%.

The second organization had the opposite problem, choosing to abandoned what its mission promised and be anything to any funder.  Word is that if a funder wants a program done, and it involves human beings (no animals, ecological or historical preservation), this was the organization to approach.

One of the most salient responsibilities of a board—and one that does not get talked about nearly enough—is to make sure that organization delivers on the promises of the mission.   The particular tasks that we do—fundraising, governance, oversight, etc.—are all done with the ultimate goal of those individual tasks coming together to protect and steward those mission promises.  This is fundamentally and without question a board’s job.  It is not and never should be a donor’s job, or anyone else’s (like a local government with its vested interests).  And it is with this understanding that the actions of the former board of the Patricia and Philip Frost Museum of Science in Miami are so incredibly mindboggling.

What are those actions?  The 40 member board of directors ousted itself and agreed to put in its place a four person board. Those four people are:  Patricia and Phillip Frost (one a board member of the ousted board and another a former board member), a lawyer from a big Miami firm (and prior board member) and a health care entrepreneur.  By doing this, it was announced by a special advisor to Miami’s Mayor, the Museum can get a $45 million grant from the county (that’s on top of the $160 million taxpayers already contributed), as well as a short-term loan for an undisclosed amount from the Frosts.   

There are so many things that are wrong with this situation that it is hard to know where to begin.

1. Biting off more than you can chew. The new Frost Museum of Science had a price tag of $275 million.  $160 million came from taxpayer dollars, a “mere” 58% of the total.  The museum was to raise the rest.  Sadly, it was only able to get $60 million (out of the $115 million remaining) in secured pledges—barely 50% of their share.  Even cutting out $20 million in projects, the Museum board fell way short of its share of the bargain, suggesting a couple of things:  a) either the feasibility study was off, or it was on the mark and the board didn’t heed its findings and/or b) the board didn’t step up to the plate and help raise the needed funds.  From the outside, it clearly bit off way more than it had the ability to deliver, resulting in the current state of affairs
2. Clarity of purpose. A nonprofit is intended to serve a portion of the public good, not the interests of donors or government—local, state or federal.  When a donor buys the naming rights, or makes any donation whatsoever, that’s all they are buying—not a seat on the board, not control of the organization, not even influence.  The same thing holds for a government body:  giving taxpayers’ dollars doesn’t buy control of the recipient organization, unless for some bizarre reason the nonprofit agreed to cede control.  (And if that happened, the nonprofit has more things awry than is good for it, and no one should be giving it dollars of any kind).  How an entire board thought it was the right and best thing to do to remove itself and place four people with clearly vested interests is, quite honestly, beyond belief.  Either too much group thinking/mob behavior going on there and/or a huge failure on the part of every board member to understand the purpose of a nonprofit board.
3. When it comes to nonprofit boards, size does matter, but so do the people and their understanding of their job as board members.  A board larger than 20 to 25 probably mistakenly believes that the larger the board, the more money it will raise.  Clearly, the Frost Museum proves this wrong, though it has much company in that category.  And when I see a board of that size—it was 40 before shrinking to its current size of 4—I know that they have co-mingled the function of a friends board (a euphemism for people who are supposed to write the big check and bring in their friends to do the same) with a governing board.  What generally happens in these cases is you get little of both functions.  It is not the size of the board that counts, but each individual board member’s a) understanding of her/his full array of board responsibilities and b) his/her willingness and ability to execute those responsibilities.  And when a board puts couples on the board (the co-chairs of the ousted board at the Museum were husband and wife), or has a “family seat” on the board, such that one half replaces the other when a term is up (as the Frosts did), that nonprofit board starts to look like the board of a family-owned business.  Board service is about work, not about advancing or protecting people’s social standing in a community, and the sooner every nonprofit gets this—particularly those nonprofits that are deemed to have “status” in the community—the stronger the whole nonprofit sector will be.  It does matter what you are putting on the board more so than whom.
4. Extremes are never good. There is a happy—and, more important, extremely beneficial—medium that the Frost Museum ignored.  Going from 40 to 4 is simply absurd; the fact that the four all have vested interests makes the absurdity dangerous.  Years ago, Grantmakers for Effective Organizations came out with the recommendation that its members’ boards should have at least 7 board members.  According to BoardSource, the average size board in the US last year was 15, with a range of 12-19.  Four is simply too small by anyone’s standards.
5. Letting the tail (donors) wag the dog. The Jewish philosopher Maimonides defined eight levels of charitable giving, starting at the bottom with Level Eight—giving a gift unwillingly—all the way to Level One, making a gift to make someone self-sufficient, with different degrees of giving in between.  But the lesson on charitable giving that most take from Maimonides is that an anonymous gift is “a commandment fulfilled for its own sake.”

With the self-glorification sought by having one’s name “up in lights,” we have left Maimonides so far behind, and along with that the idea that the donation is the prize, not control of the organization.