Reply to Watching my CEO run our non-profit into the ground

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[quote=Anonymous]This makes me sad to write. Many nonprofit Boards do not have financial acumen or a deep legal understanding of their fiduciary responsibilities of "care, loyalty and obedience." This means they tend to defer to their hired help. This ignorance tends to be less true when Boards come from business, as at many trade associations. This ignorance is a widespread problem with most charities, educational nonprofits, etc. Compounding ignorance, many Boards are conflict averse. Even if the Board members "see" financial problems, they may not actually feel they are important enough to override their fear of conflict. It sounds ridiculous, to be sure: what did they think their fiduciary responsibilities would entail? Boards like this (that are ignorant and/or conflict avoidant) are highly unlikely to act unless 1) there is a fear they will be personally liable and 2) there is horrifically embarrassing media/publicity event to pierce their paralysis.

The duties of care, loyalty and obedience mean that members of boards are personally liable if they were not being diligent or had a conflict of interest: showing up to Board meetings, reading minutes, rubberstamping financials that clearly evidence (for instance) grotesque losses or overpayments, personally benefitting from information gleaned a member of a board.

Media coverage that stains a nonprofit's reputation is very damaging and usually horrifying to Boards.

If you feel either of these situations is likely, your group may take action and be "rescued." However, sad to say, the majority of cases these situations are not likely and you would be wise to locate a new, better run nonprofit.[/quote]

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