Nonprofit Boards Must Wake Up

Last updated on May 13th, 2019 at 02:35 pm

In the past several years, there have been numerous examples of mismanagement, fraud and theft in the local nonprofit sector, including service organizations, government agencies, churches, agencies, etc.

The alleged scandals at the Milwaukee Public Museum and the Second Harvest Food Bank of Wisconsin quickly come to mind.

What has happened? Is it new? Is it worse now?

The private sector, i.e., the Wall Street financial district, has also experienced similar events. The New York Stock Exchange has implemented a set of ethical, financial standards that must be adhered to for a company to maintain it’s listing on the exchange. The Better Business Bureau (BBB) nationally has adopted a set of similar standards for nonprofit organizations.

So what?

In a free economy and democracy, public trust, accountability and oversight by a board of directors is mandatory. The nonprofit sector of our economy processes billions of dollars each year through charitable giving, grants, bequests and fund drives.

The arts, community agencies, churches, service organizations, health care institutions, education, etc., all depend on public and private giving for both capital and operating funds.

With the problem defined and the magnitude of the dollars involved, people who serve on a nonprofit board of directors, trustees, deacons, etc. have a responsibility to:

1. Oversee the fiscal operation, i.e. the financials, "the books."

2. Oversee ethical, legal and moral standards of conduct.

3. Be at meetings (both regular and committee) to be kept informed and to ask questions (The call letters for WMAQ, the Chicago radio station, stand for "We Must Ask Questions!").

4. Provide direction and appraisal of paid executive management, personnel and organization results, i.e. performance metrics.

5. Provide complete and honest annual reports (printed and

distributed) to the donors, customers and community.

The five board responsibilities are not to be taken lightly, or else a person should not agree to serve as a director of an organization.Public trust and long-term success of an organization go hand in hand.

Nonprofits should be run like good, ethical businesses, so that the community and the people are served well and the donors know their charitable dollars are used for the good of the community.

Remember WMAQ! Milwaukee’s economy depends on it.

Ted Hutton is the retired former director of government and community affairs at Rockwell Automation Inc. in Milwaukee. He has served on more than 20 boards of directors in the community.

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