The executive professional leadership of a nonprofit organization – whether the CEO (chief executive officer), associate executives, assistant executives, or other members of the executive staff – must always keep in mind that they are representatives of the organization and that whatever they do reflects on the reputation and standing of the nonprofit in the community. Of course, executives want to be treated respectfully and receive what is due to them, but they must always be mindful of how their actions will be perceived by the community.
I would like to share two examples with you. Recently a nonprofit organization that is well known in Israel embarked on a multi-million dollar capital campaign to fund the purchase and renovation of a building to make it appropriate for delivering services to its developmentally disabled clients. The agency, which has a national scope, is supported by voluntary contributions as well as government funds from several ministries.
The agency wound up gutting the second and third floors of the building to be used both for its central offices and for two of its centers that provided services five days a week to clients. After consulting with architects who were specialists in designing these kind of facilities, the second floor was dedicated to client use, and the third floor to administrative offices for the director, the accounting staff, and the secretaries. The rooms and bathrooms for the clients were designed to accommodate wheelchairs and other special needs. The space was planned to handle an anticipated growth in the client population once word reached potential clients about the new state-of-the-art facilities and sophisticated services provided to the regular attendees of the day center programs.
As it turned out there was very little involvement of the board of directors in overseeing the architectural design of the building and the use of the capital campaign funds. Instead, the renovation was overseen by a small committee composed of the agency director, representatives of the government, and representatives of some of the funding organizations.
Despite this lack of board involvement, there was a great deal of excitement as the renovation progressed, and there was overwhelming support from national and international funding bodies because of the creative ideas the organization was proposing. Unfortunately, once the building was completed, this positive momentum was lost when it became clear that more thought had been given to the executive offices than to the service areas. It seemed as if nothing was spared when designing and outfitting the executive offices: They were very large and had large windows and high-quality furniture.
However, the floor that was planned for the use of the program participants was quite a different story. The rooms did not appear large enough to accommodate all of the participants: there was barely room enough for the attendees to sit around tables. Some of the amenities were less than functional. The restrooms attached to the group activities room were not functional for people who were physically disabled, and their doors were not large enough to allow wheelchair entry.
New elevators were installed in the building to transport clients to the programs on the second floor, but they were not designed to deal with the heavy traffic the agency experienced at the beginning and end of the day. There was often a tie-up at the entrance, and much time was wasted as people waited for the dysfunctional elevator to take them up to the program rooms at the beginning of the day and bring them downstairs to the vans at the end of the day. As donors and board members entered the new building they became quite aware of the inappropriate planning and undue emphasis placed on the offices rather than the programming facilities.
It is obvious that the agency should have been more modest about its executive offices and put more thought into the spaces used for serving its clients. However, sometimes nonprofit executives become seduced by their own desires and self-esteem and lose sight of what is the essence of the agency’s work. In this particular case the CEO had spent so many years working in an inappropriate office space that he was committed to improving his own work conditions, to the detriment of serving the needs of the client population.
In the second case, a CEO of an institution of higher learning had to replace his company car and failed to understand that vehicles today can be status symbols that give the wrong impression and project the wrong image to the donors and to the community. For many years the CEO had received a car as part of his compensation package; it was a modest, medium-priced car, and the expenditure was never questioned. When it was time to replace the car, the agency was offered a secondhand luxury car at a very reasonable price. The CEO thought it was a great deal and purchased the car for his use.
All of sudden all eyes were following the CEO as he drove around in a Mercedes. Word spread throughout the institution that the executive had purchased a high-priced luxury car for his use; lower level staff who were earning modest salaries were quite upset and insulted by this use of the school’s budget. After the annual meeting many of the board members who were donors wanted to know whose Mercedes it was in the director’s spot in the parking lot. People began to talk and word spread throughout the institution’s community of teachers, students, donors and others about the luxury car the CEO had purchased. No one asked how much it cost or what was the reason it was purchased; the Mercedes was just seen as an unnecessary expenditure that reflected badly on the institution and on the school.
More thought to public perception should have been given before the car was purchased. Even if the purchase of a new, medium-priced car would have cost more, no heads would have turned and there would not have been any gossip or suspicions about the misuse of funds. It was clear the wrong decision had been made when the school purchased this car.
These are just two examples of how a lack of modesty can have an adverse impact on an organization’s image and standing the community. Of course, the discussion can be expanded to executive salaries and benefits and when does a six- or seven-figure salary exceed the acceptable standards for a nonprofit organization. These inappropriate decisions are less likely to happen when there is a system of checks and balances set up by the board and also when the board acts in a fiduciary manner (meaning exercising proper governance) and not simply as a rubber stamp of the CEO or board chair. It is very important that the volunteer leaders are cautious about making decisions that appear extravagant and focused on personal interest and less on the agency’s image in the community. It is much easier to deal with these issues within the organization than having to defend the organization to the community once it appears there has been a lack of modesty in the use of the agency’s resources.
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.