The Importance of Good Governance

*Update 1/26/16* – Well it took a while, but they’ve indicted Powell on four felony charges. They’re Class C felonies because more than $100,000 is involved. I’m going to guess that PTP’s governance processes have been tightened significantly.*

News broke today that the former CEO of the Piedmont Triad Partnership is being investigated for financial irregularities stemming from his time at the organization. From the Triad Business Journal:

In a prepared statement released at noon today, the regional economic development group said the following:

“The Piedmont Triad Partnership has provided law enforcement authorities information about financial irregularities involving former CEO David M. Powell. When PTP learned of the irregularities following Mr. Powell’s resignation earlier this year, it immediately began its own assessment of what had happened and what amount of money is at issue. That assessment is ongoing.”…

“We’re taking this issue very seriously,” said Stanhope Kelly, who took over as CEO of PTP from Powell. “We will get to the bottom of this, and ensure it does not happen again. At the same time, the Triad needs jobs, and the Piedmont Triad Partnership’s primary goal is to attract jobs. And we’ll keep working to make good things happen in economic development.”

This caught my eye for a few reasons. First, PTP’s office is literally right across the street from where I work so it hits close to home. Second, I work for a non-profit and am in the equivalent role for my organization that Powell was for his.

Total aside – I was curious what Powell made and what kind of budget PTP had so I pulled up their 1099 from 2013. I’d say they took good care of him, because with salary plus benefits his compensation came to a little over $325k from an organization that had about $1.8 million in revenue that year.

Third, I know who’s on this board and if it ends up that there were financial irregularities with that board overseeing the organization then you can rest assured that it can happen to anyone.

Because no one owns a nonprofit the members of the board play the critical role of representing the interests of the organization as a whole, and by extension the interests of all of the organization’s constituencies. As you can imagine one of every board’s primary functions is to make sure that the organization’s resources, particularly financial, are sufficient enough for the organization to fulfill its mission. With some nonprofits that can be a challenge because the board members may not have the financial or business acumen necessary to truly understand what’s going on. A prime example would be a local food pantry with a board made up of passionate, mission-focused people who may have never seen a balance sheet in their lives.

The board for the PTP is the opposite. It’s comprised of business VIPs, mayors, bank executives and the like. If any board is loaded with people who are sophisticated enough to smell a financial rat this is it, yet they might have had money misappropriated on their watch. Now this story just broke and there could very well be a good explanation for whatever they found, but it’s also a healthy reminder that any organization can fall victim to malfeasance.

In the nonprofit world the topic of governance often gets the groans and eye rolls you usually associate with discussing taxes or budgets at home. We all recognize it’s important, a necessary evil if you will, but we usually dread doing anything about it. That’s too bad because from the perspective of the nonprofit executive and staff it really should be something we embrace. If nothing else it protects us from ourselves; if we make an honest mistake we stand a good chance of our board catching it before we get too far down the road. If we have a staff member that is taking advantage of a weakness in our systems we stand a better chance of catching it if we’re constantly vigilant because our board is demanding it of us. Is it drudgery sometimes? Sure. But in my mind the whole purpose of governance is to acknowledge the inherent weaknesses we all have as humans and to protect our organizations from them.

Now, I’m gonna go do a double check of the books at work to make sure I’m not casting stones while living in a glass house.

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