Tag Archives: governance

The Importance of Good Governance

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*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.

Standing on Principle

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Winston-Salem city councilman Dan Besse is taking a bit of a political hit for his stance on an issue before the council. From Yes! Weekly's editorial about the matter:

The Winston-Salem city councilman took a stand last week against a proposed resolution by the city to oppose the Supreme Court’s 2010 Citizens United decision, which equated money with free speech and enabled corporations and unions to make unlimited financial contributions to the political process…

But the time is being spent regardless of Besse’s opposition, largely at the behest of his political allies and constituents…

Surely there would be no harm to Dan Besse’s political future by backing down on his stance and throwing in with the opposition groups. It’s an election year, after all, and though Besse’s Southwest Ward seat seems safe, he will surely face a Republican opponent in the General Election.

The editors then provide two quotes from Besse that I think should be printed and hung on the walls in the chambers of every city/town/county council in the land:

“I strongly believe that as a good-government issue, that local governments should focus on the good things we can do — services and infrastructure that we are responsible for — instead of serving as an adjunct public debating society on issues over which we have no jurisdiction,” he said.

and

“If you can’t act on what you believe is the right thing to do, then you shouldn’t be in office,” he said.

Councilman Besse also pointed out that he is an activist on many issues like assault weapons bans, the Affordable Care Act and environmental quality, but he is active in other more appropriate venues. His point – that being a member of city council doesn't preclude him from advocating for any issue on his own time, but when he's wearing his councilmember hat he should be focused on the city's business – is spot on. 

Having Their Cake and Eating It Too

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According to an article in today's Winston-Salem Journal the Triad affiliate of Susan G. Komen for the Cure is experiencing a deep decline in its fundraising after the Planned Parenthood controversy the national organization created last year. That's not terribly surprising, but a quote from the president of the Triad affiliate is a bit befuddling:

Natasha Gore, president of the Triad affiliate, acknowledged the challenges that the local group faces, stressing that most of the money raised here stays in the region. She also expressed frustration that some would-be donors do not differentiate between the local affiliate and the national organization.

"A lot of the time, people think we are one and the same," Gore said. "If they're boycotting us because of something happening with the national organization, it does not really fit with what's going on."

The quote is befuddling because it's amazingly naive, if not downright disingenuous. Of course people are going to confuse the organizations because in the grand scheme of things they are the same organization. Sure the local affiliate has it's own board, staff, volunteers, grants, etc. but it has affiliated itself with the national organization, which means it benefits or suffers from the national organization's activities. The Triad affiliate certainly benefited from the national organization's advertising and branding activities and I don't recall hearing any concerns about brand confusion from the local affiliate before the controversy.

So the donors aren't confused, rather they're saying loudly and clearly that they've lost faith in the organization and it is up to organization on both the national and local level to win back that faith. If the local affiliate thinks the brand is too damaged to repair then they might want to consider:

  • Disassociation from the national organization
  • A name change (would likely be required by the national group anyway)
  • A clear articulation of the local group's principles/standards and how they're different from the national group's
  • An ad/branding campaign to introduce the "new" organization to the Triad, and to highlight all of the organizations that benefit from its grants

In the end an affiliation is like a marriage: you're stuck with it in good times and bad, and if the bad gets horrific then your only choice might be a divorce.