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Case Studies from Effective Leadership for Nonprofit Organizations
Thomas Wolf writes: “This is the second blog post drawn from my recently published book, Effective Leadership for Nonprofit Organizations: How Executive Directors and Boards Work Together. In it I provide two case histories that illuminate the delicate balance between executive directors and boards. Neither can be effective without the other. The board has full legal authority and has the power to fire the executive director. The executive director’s power is more subtle but can be just as strong in its own way. What the two examples show is that you need the executive director and board working together or you can run into major problems.”
Bertha started a tremendously successful youth-serving nonprofit organization in the northeast that was considered a national model. She was a pioneer. Her program was innovative. Her ideas were ahead of their time. Bertha was the first of her peers to receive funding from a new federal agency. She was in demand as a public speaker. She gave workshops across the nation. Her board, made up of many friends and associates, were her biggest boosters. “Whatever Bertha wants, Bertha gets,” they used to joke.
With time, the organization expanded. Its staff increased, as did the number of its direct service program people, most of whom were independent contractors with no benefits and low pay. Given the success of the venture, they complained about poor compensation, long working hours, and lack of respect from the top. Bertha was off being famous, they said, and did not pay attention to them. When she heard about their complaints, she shrugged them off. “If they don’t want to work for us,” she said, “there are plenty of others who do.”
Over time, the initial board moved on and newer, younger people took their places. Some Bertha knew and others she did not. She didn’t pay much attention. After all, the board had always deferred to her. But the carte blanche she had always enjoyed was beginning to dissipate. Some board members did not like her cavalier attitude.
Things came to a head when the independent contractors threatened a work action. Was it a coincidence that that happened to be the day the Internal Revenue Service made formal inquiries about their status as independent contractors (apparently one of the workers had lodged a complaint)? Several trustees, including two attorneys, grew very concerned. They asked Bertha to come to an emergency meeting to discuss the problem.
And that is when Bertha made her fatal mistake. She wrote a letter to the president of the board telling him that she was far too busy to come to such a meeting, and she would take care of the problem herself. The board should not meddle.
One week later, Bertha was out of a job. Her reaction to her firing was characteristic but displayed a great deal of ignorance. “You can’t fire me,” she said. “This is my organization.” But despite her protestations, she had no recourse. The board, exercising its legal and fiduciary oversight function, operated completely within its mandate. They indeed had ultimate control.
The fact that a board has ultimate legal power in a disagreement with an executive director is indisputable as is the fact that the board has the power to fire an executive director (within the constraints established by a contract or a personnel manual, if either exist). But the victory can be a pyrrhic one and of little value if a treasured and unique executive director decides to walk away, taking along the program, constituents, and even funders.
Stanley had established a similar type of organization to Bertha’s. Stanley was African-American, educated at elite schools, and had a sterling career ahead of him when he decided he wanted to work with young black kids who had not had the same opportunities he’d had. Working in partnership with a local church and using its nonprofit, tax-exempt status to raise money, Stanley’s after-school education enrichment program was an instant success. His kids saw their grades and test scores improve dramatically. Parents flocked to the program. So did funders. Press coverage was uniformly positive. Everyone seemed happy.
But the church that hosted the program began to see it as a tremendous opportunity to pursue its own agenda. The board had a vision for how the program could be expanded—which in turn would bring in more money, some of which could fund the operating needs of the church. The trustees spoke to Stanley about their plans and the fact that they were planning to bring in someone to help with the expansion. Stanley, not at his most diplomatic, was outraged and let people know it. So were his funders to whom he leaked the news. There was now a standoff, but the church’s board stood firm, and in time the situation became untenable. Stanley decided the only course was to leave and set up a new nonprofit. While he realized he would leave behind some unspent funds at the church and give up some donated administrative support, he felt the loss was worth it. He took all his students, families, and funders with him—every last one. The church was left with a program that it could no longer afford to run and a lot of embarrassment.
–© Thomas Wolf. from Effective Leadership for Nonprofit Organizations: How Executive Directors and Boards Work Together, Allworth Press, 2013. For single copies, go to amazon.com. For information on discounts on multiple copy orders, email or call Ingrid@Wolfbrown.com (617-494-9300).