NON-PROFIT MEMBERSHIP LISTS NOW REQUIRED IN THE DISTRICT OF COLUMBIA

By Peter Chepucavage

The NEW D.C. Nonprofit Corporation Act of 2010 overhauls the laws regarding the formation and operation of nonprofits organized under D.C. Law. It is the first substantial change to the D.C. Nonprofit Code since 1962.

The new law replaces the old law and applies to nonprofit corporations formed under the 1962 D.C. Nonprofit Code, effective January 1, 2012. It also applies to nonprofits formed under the pre-1962 D.C. law who have not elected to be covered by the 1962 Nonprofit Code (so-called “Old Act Companies”).

Of particular interest are provisions requiring that individual members be provided names and addresses of all members. The new D.C. Nonprofit Corporation Code (the “Nonprofit Code”) requires that the nonprofit maintain accurate membership lists. Section 29.413.01 requires the nonprofit to maintain a “record of its members, in a form that permits preparation of a list of names and addresses of all members, in alphabetical order, by class, showing the number of votes each member is entitled to cast.” A member is entitled to inspect and copy the membership list upon giving the nonprofit five days notice the organization must also give notice of the availability of the list for elections. In each case the organization may suggest alternative means of communicating with members.

 The ramifications of such a requirement are still uncertain as the law went into effect in January but it should have an impact on alternate slates and airing of gripes. The law prohibits commercial use of the list. A summary is found at: http://dcblog.foundationcenter.org/dc-nonprofit-corporation-act-2010/ along with a number of alerts on individual sections.

Because penalties can be imposed Plexus recommends careful consideration as to how to comply with the law. While transparency and open communications are always desirable abuse of such lists is possible. An alternative approach might be for the organization to create a blog where members can communicate with each other and the Board if that is acceptable to the members.

Origami in the Boardroom: Lost Talent

By Neil Bohnert

A selection from Origami in the Boardroom and Other Misadventures in Nonprofit Governance©

I was attending a two-day board meeting, a regular gathering of executives from across the United States.  The primary purpose was to debate and formulate national policy issues.  Toward the end of the first day, as the meeting continued to drift aimlessly, I noticed the man to my left deftly folding his agenda into ever-smaller geometric segments until a three-dimensional form emerged.  Wonderful origami!  He handed me the finished work and whispered, “This is the best thing to come out of this meeting all day.”

My attention was riveted on his work, not because it was distracting and more entertaining than the meeting (although it was on both accounts), but more because it exhibited the great loss of talent so often designed into board meetings.  I’m not speaking of his talent for origami, but his experienced talent for analyzing, debating and deciding important issues.  And that talent was being squandered.   This was a CEO of a sizable organization in a major city whose mind could not be idle and who found the meeting so numbing his only recourse, besides walking out, was to make something constructive with the materials at hand.  It’s not incidental that it was the agenda he used, symbolizing clearly that the printed agenda had no value for him except as raw material for origami. 

The point of this story is there was a great opportunity lost.  The executive had taken time from his business to debate and construct important policy.  The board had assembled its collective wisdom to advance the organization.  Both parties lost in the exchange. 

The second point is that the opportunity was squandered forever.  You may say it was unfortunate that some time was lost, but the reality is that it was an opportunity that was lost forever; one that can never be recaptured.  Every minute spent in a meeting is either an opportunity gained or an opportunity lost.  Foregoing the opportunity is not a postponement.  It is a loss—final.

Why do we permit such loss?  Why do we design such loss into our meetings?  Well, you say, we don’t purposely set out to waste time and talent.  Of course we don’t.  But we do allow meetings to be conducted in ways that are not focused on purpose and outcomes.  Agendas are loosely constructed (except when they’re fashioned into origami).  Discussions are unfocused.  Information is presented in time-consuming and mind-numbing ways. Decisions are often uninformed.  Important issues are underplayed or missed entirely and unimportant issues are overworked.  And the result is a meeting that is ineffective and underproductive.

A common complaint heard from volunteer board members is, “That meeting was a waste of time”.  The speaker may be saying it was a waste of my time; or we could have done all that in half the time; or there must be a better way to do what we need to do.  Whatever the specific meaning, the result is that feeling of loss.  And who has time to waste?  Who wants to feel that their contribution to a worthy mission is wasted?  And how do these people talk about the organization to others?

What, then, is the remedy?

We know people want to contribute.  We also know people have the capacity to do better.  What’s missing?  Probably it’s little more than the knowledge of how and where to begin.

Let’s start with giving up what we’ve “always done.”  Habits learned from our experiences on boards, councils, committees, school organizations, clubs, and myriad social organizations have evolved over 400 years when the first “modern” organizations emerged from feudalism.  Change begins with leaving behind the old habits.

Let’s start with taking on new practices that advance the organization and its mission.  After all, the core mission of the organization cannot be well served if the organization itself is not well served. 

Let’s start with redesigning our meetings to recognize and mobilize the wealth of talent in the boardroom and using it to meet the needs of today’s organization.

What can we learn from this story, a true-life misadventure?  The many forms of origami in the boardroom, or the mental equivalent, disengaging from the meeting, are signals that the group is ready to be re-energized.  The nurturing of a strong, effective governance function requires constant work and assessment. Origami is a marvelous talent, but not one to be displayed in the boardroom.

Let’s get started!

CEOs: Leadership Lessons from Lincoln

By Virgil Carter

The importance of successful and reasoned leadership at executive levels is probably obvious.  What may not be so obvious is the type of leadership needed for success under varying circumstances.  For example, non-profit organizations may face a wide variety of situations, ranging from a downturn in the economic fortunes of the organization to rapid organizational growth in new markets.  Membership and volunteer participation may be up, down or radically changing.  Competitive organizations and markets may threaten the future of many non-profits.  Internal differences of view may create crippling paralysis within the organization.  These and other challenging situations call for many different types and experiences in leadership.  Where can we look for examples of successful leadership in challenging circumstances such as these? 

One historical source, full of examples of triumph over staggering challenges, is the life and achievements of Abraham Lincoln.  So much has been written about Abraham Lincoln that the useful available sources may appear endless.  An excellent and instructive work, however, is Team of Rivals, by historian, author and Pulitzer Prize winner Doris Kearns Goodwin. 

In her book, Goodwin documents the life of Lincoln, his political rivals for the Republican nomination for President in 1860 and how Lincoln ultimately won the Presidency when no one expected him to do so.  Displaying great vision, courage and self-reliance, Lincoln thereafter appointed his political rivals to his cabinet during the turbulent years of the Civil War.  Each of these rivals must have felt their superiority to the inexperienced President, because “they were the strongest men”.  In the end, however, it was Lincoln who became the strongest of them all, and guided the nation through one of its most troubling and challenging times.

What were some of Lincoln’s leadership strengths that changed history?  Goodwin identifies these, among others:

• Visionary yet a practical realist
• Superhuman empathy
• Decisive & steadfast:  possessed the “long view” w/steadfast vision & unswerving commitment to purpose
• Ability to strike compromise & control own emotions
• Never used authority or coercion—motivated by communications & infinite patience
• Fair--inspired others to overcome petty rivalries
• Excellent story teller & communicator
• Honesty & integrity
• Subordination of himself to his work
• Sense of proportion & humor
• Ability to rise above personal slights; ability to get along w/persons of clashing ideologies
• Refrained from turning competitors into enemies

As a non-profit organization CEO (or aspiring one), what can we learn from Lincoln?  If your organization is diverse and opinion-rich, chances are you have “rivals”, of one kind or another.  Fortunately, few of us will ever face the extreme levels of leadership challenge faced by Lincoln.  Considering Lincoln’s leadership strengths and how they were put into practice, however, may enable all of us to become better leaders, forging important bonds with our own “team of rivals”,  and enabling success regardless of the challenge.  Good luck!

Governance--Emerging from a Tribal State

By Steven Worth

Typically organizations spend way too much time, worry and effort parsing how their multiple constituencies will be represented in their various governance and operational bodies.  It is a thankless task where the end result usually is a state of tense political gamesmanship and/or stalemate as one group of constituent interests warily faces off against another.  Some people enjoy such games—most do not; and those in the middle usually are reduced to exasperated cynicism about the whole process. 

Ever since our Eighteenth Century call to arms-- No taxation without representation!--we have been trapped in the mindset that no organization can be truly democratic unless all recognizable constituencies have a seat at the governing table.  But in this new era of Internet-based communities it is becoming increasingly difficult to determine whose team anyone is on.  Do you feel a certain way just because you live in Michigan, or because you work in a certain industry, or perform a certain job or practice a certain profession?--perhaps so, but increasingly not. 

Traditional lines that used to be convenient for determining which “side” people are on are blurring.  Slowly nations and people and communities are emerging from our ancient tribal states—call it “the pursuit of happiness,” a concept made famous by another famous Eighteenth Century document—thanks in no small part to the freedom the Internet has provided us.  In this evolving environment, overarching strategic purpose becomes key—much more so than the traditional identification by geographic location.  It is what draws people and companies to membership organizations and it is what motivates them as donors and engaged members. 

So what does “representation” mean in this new environment?  I suggest that when it comes to board representation the primary criteria are and should be the background and skills set of the people on the board—do they help advance the organization’s strategy and the strategic goals that are part of that strategy?  This is the only question that matters, everything else is or should be subordinate to that. 

For the organizations that have the best governance models, service on their board of directors is considered a privilege, not a right based on what industry segment or geography one comes from.  If the organization’s strategy is achieved then everyone is happy.  Strategy is unquestionably predominant.  Board members are selected primarily on their ability to advance that strategy.  The reasoning goes, “You may not be in my segment of the industry, but if you are helping to achieve the strategy that I deem important then what does it matter where you come from?”  There is a general recognition within these groups that not all people are able to accomplish the work that must be done—so leadership selection should be focused solely on finding those abilities and leadership characteristics that are important for the successful accomplishment of the organization’s strategy.  When the strategy of the whole becomes subordinate to personal or traditional “tribal” interests based on more narrowly defined criteria, then traditional “politics” take over--and that is increasingly unacceptable to the great majority of people who want and expect something better.   

CEOs: How Do You Define Success?

By Virgil Carter

As the chief executive of your non-profit organization it’s often up to you to define, communicate and lead the efforts for success in your organization.  So, how do you and your organization define success?  It’s hard to talk about success when there isn’t common agreement and understanding on what constitutes success.  So let’s investigate how organizational success might be defined.

What does your organization value most?  Is it performance?  How about customer service and member relationships?  Perhaps it’s knowledge-based competencies or credentialing.  Each organization is different when it comes to what matters most, not to mention why it matters at all!  So, to define success, there has to be agreement on what matters most.  For example, an association struggling for financial survival may define success very differently than an association whose growth has been 30% per year for the past five years.

Here are some important success categories, with suggestions how they might be used. 

1. Strategy--Does our association have a sustained record of performance to plan over time (successful strategy is not measured in 12-month cycles or someone’s personal theme for the year)?
2. Voice of the customer—Who are our key members/customers and how do we know if they are satisfied (yes, there may be “less important” members/customers)?
3. Financial—Do we have a record of sustained performance over time meeting budget or ending each year with positive variances (no margin, no mission)?
4. Business operations—What is the record of new program development and existing program retirement over the past 5 years (are you still doing what you did 5-10 years ago)?
5. Learning & growth—What investment do we make on a consistent annual basis for volunteer & staff learning and growth in their association roles (no investment, no dividends)?

When you have figured out what matters most to your association and how you will measure success, it’s time to think about annual communications planning and the year’s key audiences and messages.  Key messages are important for association leaders—volunteers and staff—to focus on, repeat and reinforce.  The messages help everyone to understand and support success.

There are many useful ways to define organizational success.  And to communicate effectively about it.  When there is common understanding about success, your volunteers, staff, customers and business allies will thank you, knowing what to expect and how to help.  How do you define and communicate organizational success?

CEOs: Helping Your Board’s Effectiveness

By Virgil Carter

Effective governance is a necessity for every non-profit organization.  Just how effective is your Board and it’s governance?  Can your organization’s governance be improved?  And made more enjoyable?  As the CEO, how can you help your Board enhance their leadership and communications?

One important place to begin is to recognize what a vital resource time is. Recruiting new board members is challenging because volunteers are concerned about drains on their time. Governing well is critical because a board’s time together is limited. Thus, how you and your board use your time matters.

Boards that are forward-looking and focused on strategy, provide the maximum effective (and enjoyable) leadership when time is limited.  Strategic boards spend the majority of their time identifying broadly important outcomes, setting priorities, and monitoring the way the staff and other volunteers implement major initiatives through annual operations.

Here are five steps for an effective, productive, and rewarding board.

1.      Define success. Establish and practice a shared definition of organizational success. No matter how well an organization may perform in any 12-month period, if it can’t perform effectively year in and year out, it can’t really be called a successful organization. Thus, success has a lot to do with consistency and continuity over time.

2.      Understand your core assets. Every organization has core assets.  Typically they encompass:  1) knowledge, 2) community, and 3) advocacy. Organizations vary, of course, but these are the value-added assets common to many non-profit organizations to help accomplish their mission.  Volunteers and staff leaders must be strategically focused on the development and welfare of these assets which cause members and customers to value their organization.

3.      Think the unthinkable. Ours is a rapidly changing world in which we face unprecedented competition.  To remain both up-to-date and competitive, focus on and prepare for the unthinkable—both opportunities and threats. Effective boards consider the one thing that would most revolutionize their organization and the one thing that would most jeopardize it. Thereafter, boards focus strategically to realize the opportunity and head off the threat.

4.      Set priorities and monitor them. Resources are always finite—there are never enough. So develop strategic priorities and communicate what is truly important. To maintain a strategic perspective, boards must think in terms of strategy:  what is important for the organization to achieve, and leave the operational side of the organization to the full-time staff and volunteers who are in the trenches. The staff and volunteers of the organization’s operational side are the ones to be held responsible for planning, budgeting and executing annual operations. 

5.      Establish a respectful staff partnership. The professional staff of an organization offer important resources—so important that it may be impossible for a board to be truly strategic without them. For example, staff members may have access to knowledge, contacts, and resources that may be unknown to a board. The staff is uniquely positioned to help develop and implement a definition of organizational success that’s built upon consistent performance, year after year.

Effective boards are both enjoyable and productive where it matters most:  achieving the organization’s mission.

CEOs: Employment - Get It In Writing

By Virgil R. Carter

Resources for CEOs and aspiring CEOs may be few and far between.  In this article, and for the next several weeks, we will focus on some key insights for those in the chief executive’s role and those wanting to become a CEO.  We start with perhaps one of the most critical documents:  the CEO employment agreement.  Here are five critically important elements, among others, for a supportive and successful term as a chief executive: 

1. Duties:  Are the roles, duties and authority of the CEO clearly stated?  Is it clear the CEO is singularly responsible for staff, budgets, contracts, and other operational essentials?  Can these duties be changed, and if so, by whom and how?  Are changes (change of duties, change of role or authority, reorganization, merger, acquisition, cessation of operations, etc) considered as termination for good reason?
2. Compensation, benefits & annual review:  What is the base compensation?  What are the types of variable compensation, e.g., bonus, commission, etc.?  Are other types of compensation appropriate, e.g., one-time (moving, relocation, etc.) and/or recurring (car, travel, business club, etc)?  Will compensation be established and maintained as “market rate” and how will market rate be determined annually?  Who participates in the decisions about CEO compensation?  Does the association’s standard benefits package apply to the CEO?  How is CEO annual performance planning and evaluation conducted?  Who leads the annual CEO review process?  Who participates in the process?
3. Term & renewal:  Is there a reasonable initial term of employment?  When and how will the initial term be extended or renewed?  Who participates in the decision?  What if there is no formal action to renew the initial term—does it renew automatically, or is it considered involuntary termination?
4. Termination:  How will unfavorable “termination for cause” be defined?  How will other types of favorable terminations (voluntary, involuntary and for good reason) be identified and defined?  How are the termination definitions linked to compensation, benefits and any special termination pay-outs, e.g., termination in first year of employment, termination after first year, involuntary termination, for good reason, etc.?
5. Restrictions:  Are there personal or professional restrictions on the CEO while employed, and/or upon termination?  For example, can the CEO teach, write, do research or other similar activities, while employed?  Upon termination, can the CEO immediately work for another association in the same geographical area?  Can the CEO immediately approach employees of her/his former organization about career changes?

Thinking carefully about these key parts of your CEO employment agreement, and reaching mutually agreeable resolution with your volunteer leaders will help to establish your credibility as a senior executive.  It will also make your life a lot more enjoyable.  Good luck!