Survey results (yawn): 2/3 of Executive Directors plan to leave. The shocker? 1/3 plan to stay!

On Monday, the results of the newest study on nonprofit leadership were released by CompassPoint Nonprofit Services and the Meyer Foundation.  They’d surveyed 3,000+ executive directors on issues ranging from career paths to boards and the impact of the recession on their organizations. The results of the survey were very similar to other types of studies that have been done recently, essentially stating:

• Boards are not performing their duties as they should be (in this case, almost half had not reviewed the Executive Director’s performance within the past year).
• The recession is having a large negative impact from the recession (again, no surprises).  
• Nonprofit organizations have dwindling operating reserves, if any. 
• Few organizations are providing executive coaching, though respondents feel it is  “a very effective professional development” tool.   

I’m not quite sure why organizations keep funding this type of research.  Perhaps to continue to validate the findings of the previous one, two, three studies? 

What surprises me, thinking about the depths of the economy, the lack of support from Boards, and the stress of the executive position, is that 1/3 of nonprofit leaders want to stay in their roles.  Bless their dedication and strength!  

So - let's say we get it now.  Let's say we see that nonprofit leadership is stressed and in serious trouble.  What do we do?   I suggest that’s what we need a study to figure out – let's get some answers.

I have one suggestion.  How about starting with better executive compensation?  I’m not talking about millions here – I do believe in staying within a reasonable range.  But I object to the extremely low pay they usually get.  It limits the market of who can afford to take these positions. 

Let’s actually treat these leaders - their positions - as if their organizations, staff, and all the thousands (millions?) of people they serve depend on them.  (Not to mention the animals, the planet, the arts, and other worthy causes…)  I suggest we stop worrying about what it might “look like” and think more about paying them what they actually deserve for their work.  Let's think about the value of the role to society.  How's that for a project. 

As I said, it's a suggestion… your thoughts? 

De-listed as a Nonprofit by the IRS? No great loss...

It’s official – 275,000 organizations have been listed by the Internal Revenue Service as no longer tax-exempt because they did not file the required documents.  You can search on this list, thanks to the Chronicle of Philanthropy link.

I took a look at my hometown just to get a sense of the injustice.  To be honest, I can’t say I’m too appalled.  Of the 50 entities listed, the majority appear to have been set up in someone’s apartment or house for a cause they felt was worthy and then left relatively dormant over time. 

Don’t get me wrong - I have nothing against worthy causes set up by individuals.  I did so myself years ago.  However, if they aren’t going to be ongoing – if they aren’t aware enough to “keep up” with regulations like this – my feeling is they can’t be too concerned with their nonprofit status, so why should I be?

It appears that the larger, more “ongoing” concerns are NOT listed and still ok with the IRS.  So I'm not worried losing programs for children getting daycare or homeless shelters or food pantries. 

How can I be so callous and make such a blanket, value-laden statement?  Here are some of the names I came across:

• Blue Knights Motorcycle Club
• Boon Family Foundation Inc.
• Independent Order of Odd Fellows
• John & Mildred Wright Foundation
• Quidditch Foundation, Inc.  

Now, I have nothing against motorcycle clubs, fans of Harry Potter, odd fellows who associate with one another, or family foundations.  I just think that if you set up one of these entities you have a responsibility to either keep it up or let it go.  The IRS has stated that they haven’t kept these up so - so now they have to re-do their efforts or let it go (with regard to their nonprofit status). 

Believe me, I’ve ranted about issues with the IRS changes previously – I have no love for their changes to the 990 (which I think have done nothing at all with regard to changing behavior).  However, in this case, I don’t think they’ve done much harm at all, except maybe to wake some sleepy people up.

What do you think?  

What did new IRS 990 Forms get us? Board Compensation at Health Insurers?

I’m visiting the same topic from last week because one of my colleagues – someone who asks great questions in the nonprofit arena – asked the same question I’ve been asking.  Why is it that one would put the phrases “board compensation” and “nonprofit” in the same sentence?

Well, they are on the new 990s. 

But they were on the old 990s, too! 

Has the changed form changed practices?

No. 

Not at health insurers. 

But apparently the state of Massachusetts is asking some good questions – and trying to legislate that board members of nonprofits should not be compensated for their “volunteer” work, as they are at most of the 22,000 nonprofits in the state.

Two large health insurers, Harvard Pilgrim Health Care and Tufts Health Plan have refused, stating it “is the industry norm and they must do this to attract directors, and that their members ‘committed significant time and effort to their board duties’.”  

I applaud what Massachusetts is trying to do.  Basically, health insurers are either in or out – they are nonprofits or they’re not. Nonprofit boards are volunteers.  For-profit boards can be compensated.  Which is a health insurer?  I want to know! 

And did the "new" 990s find all this?
No, they didn’t. 

The citizens of Massachusetts started this in 2009.  

I still don’t see how the 990s have made any difference at all, except taking a lot more time to fill out…

Thoughts?

What did new IRS 990 forms get us? Two Cups of Tea?

I’ve been wondering if all the changes the IRS put forth into the 990 forms actually made a difference.  A couple of years ago the IRS changed the 990s in reaction to the scandals and misappropriation of funds that had gone on at various nonprofits.  The changes were designed to make such acts less likely to occur. 

So has it worked?

Well, what were the changes?  Without going into details, they broadly covered a few categories, such as:    

a) a new section on governance, with the idea that good governance would equal good operations.

b) more detailed reporting for the compensation of officers and others affiliated with the organization. To make sure all forms of compensation were being reported.

c) expanded reporting regarding program services and exempted activities, as well as payments made to contractors in excess of $100K.

In all, they sound virtuous.  So how did we get Greg Mortensen’s scandal with “Three Cups of Tea” and the Central Asia Institute?   Did the 990 catch him?

I went back and looked.  The most recent 990 they post is from 2008 (unfortunately) but it’s revealing:

a)      There were only 4 board members.  Wow.  One of them was Greg himself.  Doesn’t look good, does it?

b)      Greg makes $180K in total compensation - a nice living - and not out of line. The head of our local United Way makes a lot more than he does.

c)      Expanded reporting doesn’t really say much…

But Part III says it all.  And Part III is no different than it used to be.  The “Statement of Program Service Accomplishments” clearly indicates that 41% of revenues are spent overseas on programs and 47% are spent on “domestic outreach and education, lectures & guest appearances in the U.S.”  So while Greg may earn a modest sum, the nonprofit is supporting the sales of his book, his lecturing, and the promotion of his book and cause in the U.S.

Since 91% of his funding, per the institute’s website, comes from individual donors, I bet they’d find this interesting. 

Not to take away from Greg – it appears that his organization is helping to educate 13,630 young students – boys and girls - in Pakistan and 28,475 students in Afghanistan.  He is certainly to be commended for this.  The list of schools is impressive.   

I’m  just thinking his funders might like to see the pie chart divided a little differently – with 47% (or more) of funds going to programs overseas – and even less than 40% going to promote the cause in the U.S.

So what has the new 990 done?  Not much that I can see.   It was the people within the organization, as well as some outsiders who were watching the reporting, who blew the whistle on Mr. Mortensen.  I don’t think the change in reporting did it…the old forms would have told this story just as well as the new ones do.

I’d like to see if the 990s are really ending corruption.  I doubt it.  It’s just being reformatted – for the astute to go and find.  Let me know if you see a difference somewhere that I’m missing.