During this past year Jewish communal and Israeli nonprofit organizations experienced some trying times. Unfortunately there were several extremely negative examples of how nonprofit agencies should not function. In a number of cases the problems revolved around the position of the CEO and behavior that was either inappropriate or illegal or both. These cases raised many of these or similar questions:
- How did this happen to our organization?
- What were we doing or not doing?
- What were we doing wrong?
- How could it have been prevented?
What should we do now to regain the confidence of the community and to reestablish our credibility as a communal organization?
Among the most striking problems that confronted some nonprofits were CEOs having extramarital affairs with their staff members, CEOs who involved the agencies and themselves in financial improprieties, and board chairs who used their political influence for the benefit of the agency. In the last example the theme was often “the ends justify the means.” The real question is why and how does a nonprofit organization find itself in the position of having to respond to such aberrant situations.
This is the time of year when we take a step back and examine, on an individual basis, how we have led our lives in the past year. Let me suggest that we also use this time to examine how we and our agencies have functioned in the past twelve months.
The “Ten Days of Repentance” provides the perfect opportunity to review organizational policies and practices. Engaging in this process can help prevent the aberrant situations just described.
Often these situations arise because of an accountability void that exists between the board of directors and the CEO, and between the chair of the board and the board. Complete trust is an invaluable asset in the relationship between the board and these leaders. However, there are limits to the informal relationship, and that is why organizational checks and balances exist. In ongoing relations extending over many years, however, these checks and balances are unfortunately not put into action.
In most nonprofits when the CEO is hired, there is a written agreement between the board and the executive based on a job description that usually covers all of his or her responsibilities. It will often include a description of what is expected in his or her work with the board. Frequently it will set down expectations for the CEO’s working relationship with the officers and executive committee and to some extent with the standing committees. The same applies to the description and expectations that exist between the board chair and the board.
Although most board orientations cover board responsibilities, it is less often the case that the board has a written code of ethics that guides the executive and the members of the board. By the time someone has reached a high-level professional or volunteer position it is assumed that the person adheres to the highest level of ethical behavior. Of course the emphasis is on “assumed.”
Sticky situations arise when gray areas exist between the lines of job descriptions, whether they be for professionals or volunteers in leadership positions. It is best when policies and practices are in place that not only provide a guide for appropriate behaviors but also institutionalize a system of checks and balances that are implemented on a regular basis. It means that the board has to take responsibility for developing a system for assuring accountability for both professionals and volunteer leaders.
For example, often CEOs have the authority to sign checks with just their signature, and at times a cursory review of expenses is conducted by a volunteer leader or chair of the finance committee. This may not be sufficient to guarantee appropriate accountability, and there should be clear guidelines for the CEO, the board chair, and/or the chair of the finance committee. There should be a monthly review of expenses and a justification of each budget line and what it covered. Sudden increases in salaries or benefits, for example, should raise a red flag.
The board’s finance committee is the vehicle to be used to assure proper oversight of the nonprofit’s financial obligations. Whether it is the board chair or the CEO who requests or authorizes a payment, it is essential for proper oversight to be in place.
The same can be true of accounting for donations. It is always wonderful to receive generous contributions; however, the nonprofit organization has an obligation to ensure that the funds received are from legitimate and legal sources. When a committee oversees income as well as expenses, it can strengthen the credibility of the organization in the community.
The organization’s staff and board also have to uphold the highest ethical standards in terms of their behavior. An agency has the responsibility to articulate clearly the standards it wants to uphold in the relationships that exist among staff members and between members of the staff and their members or clients, as well as with members of the wider community.
This is the best time of year for Jewish nonprofit organizations to review their standards, guidelines, and practices as they apply to both fiscal areas and conduct of the staff and board. Let me suggest that you spend some time at board and staff meetings during the days between Rosh Hashanah and Yom Kippur to review agency policies and practices to ensure they represent the highest Jewish and human values. This would go a long way in not only building confidence among the staff and board but also in making a statement to the larger community that these values underline everything you do.
Stephen G. Donshik, D.S.W., is a lecturer at Hebrew University’s International Nonprofit Management and Leadership Program. Stephen was Director of the Israel office of the Council of Jewish Federations (CJF), 1986-94, and Director of the Israel office of UJA Federation of New York, 1994-2008.