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Conflicts of Interest

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“Looking at the agenda, does anyone see that they may have a potential conflict of interest?”

As president of a nonprofit board of directors, I routinely ask that question at the beginning of each board meeting. Rarely does anyone speak up, and we go on about our business. We also have a conflict of interest policy and each board member must sign an annual acknowledgement that they have received and read a copy. When it comes to conflict of interest, our board is on top of things, right?

Not necessarily. At a recent meeting of leaders of some of our Spokes member organizations, the topic of conflict of interest came up. These leaders were concerned that their board members did not have a very sound understanding of what constitutes a conflict of interest. That prompted me to do a little research and guess what? I learned that my own concept of conflict of interest, while not wrong, was far too narrow.

Duality of Interests

First of all, the concept of conflict of interest relates to more than direct financial gain. Let’s imagine a board needs to hire a general contractor for some job. Let’s also imagine that one of the board members happens to be a general contractor. We probably all would say that board member should recuse him or herself from the discussion and decision on what contractor to hire for the job. On the other hand, what about a board member who also serves on the board of another nonprofit in the same community. Is that a problem? Could be!

Two considerations can help us to a broader, more complete understanding of conflict of interest. First, we need to think in terms of ethics rather than legality. An action can be strictly legal yet not necessarily the right or good thing to do. Second, we need to remember that among the three “duties” that board members owe to their organization is the Duty of Loyalty—essentially, that they will put the organization’s welfare first.

As the National Council of Nonprofits puts it, “Conflicts can be nuanced and have more to do with a “duality of interests” than a financial conflict.”

What now?

Based on my new understanding, I want to go back and re-read our conflict of interest policy. Are we following it? Does it reflect this broader concept? Does it say anything about how we will manage conflicts of interest that do come up? What should we consider adding or changing? My hunch is there will be work to do.

Want to educate yourself and/or your board on this topic? Here are some excellent resources to share.

Conflicts of Interest | National Council of Nonprofits

Charity Conflicts of Interest: A Guide – Non Profit News …

Nonprofit Conflict of Interest: A 3-Dimensional View – Blue …

Risk Assessment for Nonprofits

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Last week, we covered the types of insurance your nonprofit should consider. But how exactly do you choose what types of policies you will need for your organization? Doing a careful risk assessment is a good starting place.

What is a risk assessment? Ready.gov provides a simple definition: “A risk assessment is a process to identify potential hazards and analyze what could happen if a hazard occurs.”

A risk assessment contains multiple stages of identifying and prioritizing risk. Nonprofit leaders are responsible for recognizing vulnerabilities and monitoring any risk that could affect their organization.

There are many ways to accomplish a risk assessment based on the size of your organization. For smaller nonprofits, the best way to save money is for internal leadership teams—such as volunteers, boards, or staff—to conduct the assessment. Larger organizations might hire a risk professional or even employ one in-house.

BoardEffect provides a simple risk assessment template that any small nonprofit could use as a practical guide. Essential steps include:

  • Identify risks in categories such as governance, external, financial, or operational.
  • Analyze risks and score each for likelihood and impact.
  • Prioritize and determine how much risk your organization is willing to accept.
  • Determine which risks are acceptable and decide what you will need to take action on.
  • Ensure that risk controls are in place.
  • Monitor and review identified risks and update controls as needed.

Once your organization has recognized and prioritized risks you’ll have a much simpler experience selecting the types and amounts of insurance appropriate for your organization.

Additional resources:

4 Steps to Volunteer Appreciation and Assistance During a Crisis

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In times of crisis, high volumes of volunteers are needed more than ever. However, due to the uncertain nature of the current pandemic, nonprofits must provide more unique and thoughtful support for volunteers. 

Since the beginning of the pandemic, the demand for volunteers has experienced an interesting shift. According to an article published by NonProfit Pro, Volunteerism in Today’s World, volunteers are in a higher demand than ever to provide COVID-19 relief. 

However, volunteer organizations such as Sterling Volunteers have seen a balance of a decrease in volunteer availability and an increase in new volunteers offering to help. 

Despite the major changes in volunteerism during this time, volunteers remain some of the most vital and valuable organs of any nonprofit. 

Spokes has covered Tools to Engage Volunteers while Sheltering at Home, with ideas including virtual training and virtual engagement activities, but how does this effort extend as we approach the “new normal”? 

We dove a little deeper to give you four ways to assist your organization’s volunteers and ensure that they feel appreciated and fulfilled during a crisis situation, however long that may be. 

1. Acknowledge the importance of your volunteers.

In a time of stress, it is vital to express gratitude to your organization’s volunteers. Know what you ask of them and keep your expectations realistic. Updates will have to be made and keeping your volunteers at a high priority will help your organization to run as smoothly as possible. 

2. Develop a plan.

Creating structure in a time of crisis is crucial to keeping your volunteers involved and up to date on new opportunities and changes implemented in your organization. 

  • Create new protocols and procedures where necessary. Make adjustments to ensure safety, for example implementing social distancing guidelines and hand washing stations for in-person sites. 
  • Plan for shortages and surges of volunteers. This may mean virtual training for new volunteers and remote opportunities for volunteers staying at home. 

3. Keep your volunteers safe and comfortable

Be wise and thoughtful about what you are requesting of your volunteers. 

  • Acknowledge that everyone is different regarding what they are comfortable doing. 
  • Ensure that their safety is your priority and if they don’t feel comfortable with in-person opportunities they are still valued at your organization. 
  • Welcome your new volunteers with virtual training, workshops, gatherings, and a safe working environment. Making a good impression is important as these volunteers may stay with your organization after the crisis. 

4. Embrace new opportunities

Sustaining meaningful contact with volunteers is crucial to solid and supportive relationships. This could mean virtual, remote or in-person engagement with guidelines. 

  • Offer both remote and in-person tasks if possible. According to a VolunteerMatch study, 44% of respondents showed an interest to help virtually and 50% wanted to help in-person but needed ideas. Depending on your organization, suggestions include no contact deliveries, video calls with clients, donation collections or virtual companionship. 
  • Offer meaningful support with remote volunteers. This could mean brainstorming new ways to help, implementing new policies for remote working or virtually checking in. 

For a nonprofit, striving for normalcy in a crisis can be challenging. Ensuring that your volunteers feel supported and appreciated is a huge step in keeping your organization functioning as healthily as possible.

Rethinking Your Nonprofit’s Future in the Face of Covid-19

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The Covid-19 pandemic has rocked the nonprofit sector and nonprofit leaders throughout the United States are now grappling with one or more of the following questions:

  • Can we redesign our annual fundraising event to meet our budgeted revenue goals?
  • If we can only host 25%-50% of our clients in our programs, can we reduce our operating expenses proportionately to avoid incurring too much debt or creating an imbalance in our administrative:program expense ratio?
  • Will our donors and business sponsors need to reduce their philanthropic giving? And, if so, for how long?
  • If many folks are paying significantly less income and sales taxes, will federal, state and county budgets, and, specifically, our government contracts and grants, be significantly reduced?
  • Do we have the right people able to lead our redesign efforts?
  • Will our community consider our mission and programs relevant to the post-Covid world?

All the answers to these questions will require significant operational changes. For some nonprofits, those changes may be so insurmountable that they may choose to cease their operations altogether. If you are leading one of these nonprofits, we want to offer you some ideas for your board to discuss before you choose to dissolve your organization.

Going Out of Business is the Goal

It’s strange to hear, but, really, the goal of every nonprofit is to resolve a societal issue or fill a need so well that there is no need for that nonprofit to continue to operate. Unfortunately, most of the problems that nonprofits address are complex and cannot be solved within a single lifetime. However, no nonprofit should continue to exist simply because it does exist. Every nonprofit leader has an ethical obligation to continually examine the relevancy of the organization’s mission and evaluate its impact. The crisis of Covid-19 is forcing all types of organizations to rethink why they exist and work the way they do. Competition and comparison among similar organizations has become much more pronounced. Nonprofits are no exception and there is no reason to be ashamed of having these types of conversations at the board table. Arguably, when a nonprofit’s effectiveness or relevance is waning, choosing not to compete for limited resources is one of the most socially responsible decisions a board can make.

Be Strategic

Whether your goal is to stay in business or dissolve, you will need a strategic plan to guide you. Continuing organizations will most likely need a plan to help them restructure or redesign operations in response to this strange new landscape. Goals and objectives that once felt relevant and achievable at the start of the year may no longer be so. It may not be possible to start a new capital campaign or hire staff to launch a program when facing a shortfall in operating revenues. Likewise, demand for a new program may increase and make it necessary to let go of other programs due to limited resources.

Organizations that are choosing to dissolve will need strategic plans – even if they’re short term – to direct how to responsibly care for employees and clients and redirect assets.

Whatever is changing for your organization, you need a clearly defined plan that is understood and implemented by all members of your team. There are several variations to the strategic planning process, however, every successful plan will include the following components at a minimum:

  1. Vision
  2. Mission
  3. Values
  4. SWOT Analysis
  5. Goals
  6. Objectives
  7. Action Plan
  8. Budget

Trying to lead your organization through the next several months without a strategic plan is like starting a cross-country roadtrip without a map.

Watch for a future blog article with more strategic planning guidance and tips.

Find a Partner

Most nonprofit leaders are well-versed in the art of collaboration with other entities including schools, government agencies, donors or fellow nonprofits. But, have you taken a moment to identify what new collaboration opportunities may exist post Covid-19? What nonprofits have specific donor or client information you need? What information do you have that might be helpful to other nonprofits? Are there products or equipment that can be jointly purchased and shared? What about room or performance space rentals? Can furloughed staff with unique skills and training be shared with another organization? Can programs working with the same audience or on relevant issues be delivered in shared spaces? How can economies of scale be created to deliver more services with less resources?

Consider Merger Variations

Sometimes the best option for creating more operational efficiency is through a form of merger including joint ventures, parent-subsidiary structures or a full-scale merger. Maybe your nonprofit no longer needs to operate as a stand-alone agency? Maybe your organization has a signature program that is aligned with another nonprofit that could “adopt” it? The key to any merger variation is to identify a partner who shares the same organizational values and strategic vision as your organization. Humility is also necessary. There can only be one board and one Executive Director/CEO. Some folks will need to step down from their leadership roles when two organizations choose to operate as one entity. For these reasons, organizations that are about to experience a leadership turnover are better positioned to pursue a merger option.

Spokes will explore the nuances of merger variations in upcoming blog postings.

Try “Hibernating”

When a partnership or merger is not possible because of your nonprofit’s remote location or very unique mission-focus, but it’s too challenging to continue operating efficiently and effectively while implementing social distancing guidelines, it might be time to consider “hibernating.” Nonprofits must legally conduct one board meeting per fiscal year, submit their annual 990 tax filing and ensure that there is an appointed President, Treasurer and Secretary (with no President simultaneously serving as Treasurer). And, that’s it. All else is negotiable. If your stakeholders understand and support your need to temporarily reduce staff and programming until a future date when the organization can expand and rebuild, then try hibernating instead of formally dissolving your nonprofit. Continue board meetings and stakeholder communications and keep your incorporation status in good standing until you’re ready to ramp up again.

Nothing is Forever

Remember, you can change your organization now – and change it again, later.

Make the best decisions you can with the information you have at this moment and take one strategic step at a time. If you gain more information and realize a different decision is needed, you always have the privilege to re-launch old programs, end joint ventures, reorganize or start a new nonprofit! Always act in the best interest of your clients and communities and you will never make a poor decision.

Nonprofit Leadership During Crisis

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A crisis can tell you a lot about your organization. If your nonprofit is functioning at healthy levels, you are able to build upon these strong foundations to weather storms and continue to further the mission. On the other hand, a crisis can often bring up fundamental issues within an organization that need to be dealt with. Here are some areas to take a closer look into to ensure that your organization is set up to withstand and come out of a crisis situation thriving.

It is a Team Effort 

When determining the health of an organization, one needs to look no further than the leadership of the Executive Director or CEO and the Board of Directors. These individuals should be cultivating a productive culture centered around the nonprofit’s core values and mission. Each individual must have a clear understanding of the mission and display commitment through making unique contributions to its success. 

When crises emerge, these individuals must remember why they are here. Their actions always need to take into account the good of the whole. It is vital to be able to do the right thing even when it is hard. When there is this kind of leadership at the top of the organization, the rest of the staff and volunteers will organically follow their example.

Focused and organized

As a board member or Executive Director/CEO, if you are committed to this type of leadership, you will be able to carry out your mission in a focused and organized way. This will allow you to be able to move through any potential fear surrounding a crisis, see challenges as opportunities, be creative and collaborative and continue serving your mission.

Executive Director/CEO relationship with the Board of Directors:

It is essential as an Executive Director to be able to facilitate discussions that are organized and clear to ensure that a nonprofit is always moving toward mission based action. Everyone must be rowing in the same direction. Miscommunications and disagreements must be handled swiftly and moved past in a safe space where the leaders can work collaboratively. Here are some key focuses for an Executive Director when fostering this relationship with the board of directors. 

  1. Accountability. As the Executive Director, you must be clear about your own commitments and accomplishments and how they further the mission. This will give you the ability to follow up on board commitments and accountability. 
  2. Communication. You are the one who is in the day to day operations and will be able to have a clear insight into what is happening within the organization. It is important to understand the best way to communicate with each board member to keep them informed and on the same track and avoid miscommunications.
  3. Appreciation. Board members are volunteers who make efforts to support the mission and you. Showing appreciation goes a long way to build these relationships and continue to move productively forward together. 
  4. Outreach Efforts. Effective communication about your organization’s impact needs to reach your community to garner continuous support. Know your board and understand how each person can individually support these efforts. 

The Board President

As a Board President, or Chair, you must be one of the most dedicated individuals to the mission of a nonprofit. You must be able to provide clarity if the leadership team ever veers off mission and hold them accountable to doing what they have committed to doing. Here are some focuses that will lead to effectiveness as a Board President.

  1. Culture. You need to be able to partner with the Executive Director to always guide the leadership team with the core values and mission. Part of your role is to hold each individual on the team accountable to operate with these in mind. 
  2. Responsibility. You have a huge impact on the health of your board. It is important to understand the different capacities and capabilities of the board and how they can best serve the organization. Don’t let board members waste energy on efforts that don’t make sense. When issues arise, ask the right questions in order to be able to deal with the issues and move on. Board members should be able to depend on your consistency, honesty, communication and organization.
  3. Productivity. Make sure that efforts are always moving forward and that the team is being proactive and adjusting efforts when it makes sense. If something seems to be stuck, deal with it as quickly as possible so it won’t get in the way of the nonprofit’s momentum. 
  4. Strategic.  We cannot stress enough how important it is that efforts are always supporting the mission. You need to continually be able to take a step back and see how each effort fits into the big picture of accomplishing and growing the mission.

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