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Need some advice...

SW MI Planner

Cyburbian
Messages
3,194
Points
26
Sorry in advance for the length of this.... I am on the board of directors for a regional social services non-profit agency. I have been on the board for about a year and a half, and totally think its a worthwhile effort. However, I become more and more convinced that something corrupt is going on. Maybe not corrupt per se, but a lot of things that I am not comfortable with.

*In the past year and a half, we have been served with 4-6 lawsuits for discrimination and/or sexual harrassment. The board finds out through the rumor mill about these suits - not through the CEO. When asked about them, he blows it off like they are no big deal.
*We have a budget of 15 million, and have about 600,000 in our general fund. This year was the first year we have had an agency wide budget. In April, the finance committee finally got the reports it had been requesting, and noticed that two departments were significantly overbudget. The CEO and dept heads made up some excuse and said it wasn't really over budget and basically ignored the committee. The rest of the board blew it off. Last month, they came forth and said 'yah, your right, we are over budget by $300,000 - let's use our general fund'. Board instead decided to take out some equity loans to cover the deficit rather than use the general fund. (I wasn't in favor of using general fund, but not in favor of the loans either). SO then, this month we get the packet, and lo and behold, they aren't $300,000 over budget, they are $500,000 over budget. I have no idea how they are proposing to handle that.
*The CEO has been there two years, and a few boardmembers highly encouraged doing an evaluation after the first year. It still hasn't been done. It had gotten started, then the chair *lost* all of the materials and said we would have to start over. That was a few months ago, and nothing is being done.
*There have been numerous complaints about things not being handled correctly. One of the dept heads owns a rental, and used agency funds to do a rental rehab - the "qualified" renter happened to be her daughter. And, the daughter was living in there without any occupancy permit nor proof that she qualified. So when the dept head was called on it, her daughter moved out. Ok, so this might not really be illegal, but in my opinion, it surely wasn't ethical. An internal *investigation* into it revealed nothing amiss.
*If you bring things up at meetings, the CEO basically tells you that you need to call him first to talk about the issues. I understand not purposely blindsiding the CEO and staff, but if you call beforehand, they totally give you the run around and get their stories straight for the meetings. Also, staff is not allowed to speak to the boardmembers (it's in the employment policy).
*CEO claims we are exempt from Open Meetings Act and has tried to fight following conditions of it. We made him bring in a letter from our attorney and guess what - she said to follow it. He still argues that we shouldn't have to.

There are a lot of other things that just don't add up. Maybe these things are par for the course, but I am seriously consider quitting. The board as a whole is extremely apathetic and they don't take any action. They seem to trust the CEO (I think he is a weasle). There are a few board members who question these things, but basically we are outvoted. I am sure the CEO does not like me at all because I actually speak up and question things when needed. On the other hand, I am a sucker for these types of things. I have this sick need/desire to make things better.

I am sure it's normal for there to be issues, but this much? Anyone have any similar experience, or advice?
 

tim

Member
Messages
7
Points
0
I can't offer much advice from on high, but served a brief time as a footsoldier in an NFP museum. I think it's par for the course to have a nutjob running the show and a board that can't decide what to have for lunch, much less how to spend half a million bucks. All the good people quit.
Same story from a friend of mine who is an office manager at a big legal NFP. We decided that NFP organizations are where the crazies come to roost because a "real" business would weed them out pronto.
 

biscuit

Cyburbian
Messages
3,904
Points
25
I really couldn't give you any advise but I can agree with tim about the nature of people at NFP's. My first job in PA was with an economic development NFP that was nothing more than an old politicians club. The board always had closed meetings and the CEO was constantly going to meeting with developers without the staff planner (Me), making almost all of the deals seem suspect, shadey and often bad.

I currently work in a position where I'm managing and working with at least 45 different NFP's, and while many are professional, more than a few are run by complete morons and crazies. It amazes me everyday what some of these people think they can get away with.
 
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NHPlanner

A shadow of my former self
Staff member
Moderator
Messages
9,927
Points
40
I'd be figuring out how to discreetly step down....I know I wouldn't want any association with it if something bad is discovered. I don't envy your position!
 

Zoning Goddess

Cyburbian
Messages
13,852
Points
39
A few ideas:

Does the agency receive any federal funding? If so, there should be some legitimate auditing done and you should be able to see the results. If not, try to get some of your other board members to work with you in demanding an outside audit.

Insist that the board chair appoint an evaluation committee, and that you be on it. Take it out of his/her hands.

Don't even bother letting the CEO know what you will bring up in meetings. Blindside him and then make him sweat.

Resign and leak it all to the press. With that kind of budget, they should be intensely interested in looking into it.
 

ecofem

Cyburbian
Messages
206
Points
9
wow.

I work for a NFP, and I don't think I'm a crazy... but maybe... who knows?

Seriously, though... if it the NFP is a 501(c)(3), which it probably is, it sounds as though somebody should tip off the IRS and have it audited.

Also, if you hold a fiduciary position, as a member of the Board of Directors, I would be very concerned about personal liability issues (and other board members should be, too). Not to make you paranoid... but I would try to insulate yourself as much as possible... (ie. Quit the Board ASAP)... and maybe consult outside counsel.
 

michaelskis

Cyburbian
Messages
19,971
Points
49
For the most part, having come from a place that I was certain that was run by a corrupt administration, I would say if you feel like there is something wrong, then, there is a good chance that something is wrong. Past that, it is more or less a personal choice of what you are willing to do about it. I agree that many NFP are just a good old boy’s (or girls) club and a political “frosting” for many people, but you need to ask your self, if what you are doing benefits those that it is intended to.

Personally, I did not want to be associated with the corrupt environment that I came from, and I knew that there was nothing that I could do to change it, mainly because out side forces with LOTS of money, would have diminished any chance of correcting the problem.

Have you spoken with any of the other members of board about this? Maybe if enough of them feel the same way that you do, or maybe if they can give you insight into something that you may have been miss judging, then something good can come from this situation.

Let me know how it works out!
 

Mastiff

Gunfighter
Messages
7,181
Points
30
First... I'd read up a little:

http://www.michiganlegislature.org/mileg.asp?page=getObject&objName=mcl-162-1982-1&highlight=

Next, realize that you, as a board, are this man's boss. I'd call the attorney and question the harrassment suits. If he used the Corporations attorney, I doubt client confidentiality applies.

Next, ask for a copy of the last audit. You have a right to it, and SHOULD get the yearly audit as a matter of course. If the CEO won't do it, go directly to the firm who did it.

Without knowing what the NFP does, it's hard to know where to send you. If it has anything to do with the state, such as a housing authority, call the State Auditor.

Next, review the contract of the CEO. It may have some nice little things in it... like the requirement of a yearly review. Again, you should be ENTITLED to these records.

Don't let anyone bully you.
 

Chet

Cyburbian Emeritus
Messages
10,624
Points
34
Mastiff and the Godess are both dead on in thier statements. Good luck!
 

Otis

Cyburbian
Messages
5,169
Points
29
Just to throw a little scariness int this: check the by-laws and articles of incorporation to see if the board of directors is indemnified for any losses that happen on their watch. If you are, good. If not, think about that. There is the potential for you to be personally liable. You now know about the problems and have an obligation to see if they really are serious, and if so, to fix them.

In any event, start making waves. These all are serious problems that need to be addressed. By all means go to the attorney for the organization. And the auditor. Get detailed answers. Don't be deterred by the CEO's assurances. It sounds like he is a poor manager at best, and an @$$-grabbing thief at worst.

And document everything you do. It could get you off the hhok should that be necessary.
 

Chet

Cyburbian Emeritus
Messages
10,624
Points
34
The more I thought about this, the more I am concerned for you.

Miliwaukee's Social Development Commission collapsed a few years ago under a strikingly similar scandal. The Board was not immune, and it was ugly.

Better to be the whistle blower than the scape goat. You're too young to have a major catasrophe pinned on you. ;)
 

Cardinal

Cyburbian
Messages
10,080
Points
34
I served on a board with similar problems. The director of the organization was not corrupt, but was not a person with good financial skills. The first clue came when checks started to bounce at the bank. The director had 1) failed to understand that revenues needed to match expenditures, and when we were not taking in the projected funds we should cut back on spending, 2) mistaken a $300 spending authority to mean they could buy anything without board approval as long as it was less than $300, and 3) to further complicate things, had a desire to take over control of other organizations. The director hid things by not providing financial reports, ignoring bills, etc. It all leaked out later. I found that many of the other board members questioned things that we saw, but none of us spoke to each other about it. I also served ona board that fought the idea that it was subject to open meeting law. When they kept fighting I left. They eventually lost all county funding over the issue, and the organization folded. It was stupid. Open meetings are no burden.

You have received some good advice already, so I won't add much more, but...

- If you are being sued, you should know about it. The board should be meeting with the attorney in closed session to discuss the cases and make decisions on how to proceed. These art full board decisions, not simply for the chair, and especially not for the CEO to make.

- How can departments spend more than authorized in the annual budget, without board approval? Most organizations are set up so that any significant expenditure needs board approval, even if the item is in the annual budget. This sounds like malfeasance. Get an audit performed by a third party. You need to find out what is going on.

- I have only been evaluated three times in seven years. That sort of thing often falls through the cracks in small organizations. Still, it sounds like you have some issues to deal with and the evaluation process can help.

- Federal and state funds such as CDBG explicitly forbid anyone who is an employee or board member of the organization from being a beneficiary. Even where such a requirement is in place, it is usually considered unethical to use the funds in this manner. I would ask for a copy of the written investigation report and ask an attorney to review it.

- As for the CEO asking for information before the meeting, tell him that as his employer you have the right to ask questions at any time. Then, as long as he wants advanced notice, use the public meeting to make him sweat. You might make a request like "I would like you to provide an explanation of why the board has not been informed that a sixth sexual harassment lawsuit has been filed against the organization and what you are doing to address what appears to be a pervasive problem within the organization, and then I would like an executive session discussion with the attorney who will be advising us."

You have a number of "last resorts." Personally, I would make a list of demands - an audit including an investigation of any potential misuse of funds, an evaluation of the CEO, full board discussions with the attorneys handling the lawsuits, etc. - and threaten to leave very publicly if these things don't happen. If you can find a couple allies on the board, that is better. Are the people on the board who don't want to deal with the issues going to want to see headlines that three or four board members simultaneously resigned over concerns of poor management and potential fraud? Probably not.

(Sorry this got long, but I've been there.)
 

Rumpy Tunanator

Cyburbian
Messages
4,473
Points
25
SW MI Planner said:
Ok, so this might not really be illegal, but in my opinion, it surely wasn't ethical.
*CEO claims we are exempt from Open Meetings Act and has tried to fight following conditions of it.

There are a lot of other things that just don't add up.
I am sure it's normal for there to be issues, but this much? Anyone have any similar experience, or advice?
-Wow, this sounds like a real bad situation. I hate to say it but you might want to blow the whistle in on this or risk being caught up in the controversy. Either that or pack your bags and try to find another job. You don't want your name tied in with that mess.
-Another thing I wouldn't buy is that your CEO says your exempt from open meeting laws. Any time your dealing with the public (reguardless of whether its in the private or public sector), if it affects the public, they better know about it.
-I'd say abort mission and good luck to you!
 

Zoning Goddess

Cyburbian
Messages
13,852
Points
39
Chet said:
The more I thought about this, the more I am concerned for you.

Miliwaukee's Social Development Commission collapsed a few years ago under a strikingly similar scandal. The Board was not immune, and it was ugly.

Better to be the whistle blower than the scape goat. You're too young to have a major catasrophe pinned on you. ;)
One final note: our housing authority was recently run by two rotten to the core administrators. They were finally taken over (in a hostile move) by Mel Martinez and the feds. The two board members who kept pushing for answers, questioning the audits, etc., came out in the press as clean as a whistle, while the ones who acquiesced with the director were vilified.

If nothing else, get it on the record that you have problems with what's happening.
 

Chet

Cyburbian Emeritus
Messages
10,624
Points
34
Zoning Goddess said:
If nothing else, get it on the record that you have problems with what's happening.
I agree 100%, even if it means you have to strap on a pair and be really confrontational.



















wow. thats my second strap on reference in 2 days!
 

Wulf9

Member
Messages
923
Points
22
Make sure the organization has liability insurance for board members, so they are held harmless in case the organization makes mistakes. This is pretty standard, but there are still many nonprofits that don't protect their board members.
 

SW MI Planner

Cyburbian
Messages
3,194
Points
26
Thanks everyone..... yah, we do have board liability insurance. I am going to talk to a couple people today to figure out what to do. I just don't want to waste my time anymore especially when the other boardmembers don't give a crap.
 

SW MI Planner

Cyburbian
Messages
3,194
Points
26
Update

Update on this situation - I was kicked off the board. Yes, I am being serious.

A boardmember called last week (he's chair of the nominating committee) called last week and said that 'they' (whomever that would be since it wasn't the nominating committee) had a meeting, and since I was representing the Mayor, and he lost in the election, I can't be on the board any longer. He compared it to county commissioners when they get unseated. But, in my opinion, unlike County Commissioners, regardless of who is Mayor I am still representing the City of Coldwater. Their reasoning makes absolutely no sense to me. I started my own term in 6/02 - if I was continuing the Mayor's term, wouldn't that have continued, and not started a new one?

He said that it was in our bylaws and 'tried to see if there was anyway that I could stay on the board'. First, let me say I have no problem with him, even though I think this is BS. I checked our bylaws and maybe I don't fit the technical term of public official, as I am not elected or appointed, but I could have very easily been 'appointed' by the new Mayor. I am certain that 'they' (there's that word again) were looking for a reason to release me from my duties. And, I'm really not trying to sound paranoid, but there's no other way to look at it.

I know that I probably come across negative a lot, but I am not going to apologize for asking a lot of questions. I have a lot of distrust for what goes on around that place, and they have consistently shown me that I should be concerned. Even if there was the chance I could stay on, I'm not sure that I would want to - there are a lot of things going on in that place that I do not want any part of. On the other hand, I would stick around just to be a pain in their arses.

I work with a member of the nominating committee, and there was never a meeting or anything, so I am kind of interested to know who all was apart of this decision.
 

Cardinal

Cyburbian
Messages
10,080
Points
34
You sould feel lucky to get off the board. Here, the "city representative" is usually someone who is put forward by the city council or an appropriate board. If it has anything to do with "business" it is usually me. I don't have much choice, and either does the board I get appointed to.

Be sure to document your concerns, though, and pass them on to the person that replaces you.
 
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