“Was that wrong? Should I not have done that? I’m sorry, I’m gonna have to plead ignorance on this one, because if I had known that sort of thing was frowned upon …” – George (after having sex with the cleaning woman on his desk at work). Negligence is no defense for shoddy governance. Be educated about your legal requirements. Invest in help, if necessary.
“Sometimes the road less traveled is less traveled for a reason.” – Jerry. Consider adopting best practices. Learn from others’ mistakes. Be careful if implementing unique and innovative governance structures; there may be some unexpected and unintended consequences.
“Borrowing money from a friend is like having sex. It just completely changes the relationship.” – George. A financial transaction between the organization and a board member can completely change the relationship. Ensure that any such transaction is approved by the other board members not related to the interested board member pursuant to a conflict of interest policy.
“It’s the financial equivalent of a complete rectal examination.” – Jerry (describing an audit). Prepare your Form 990 with care and professional guidance to help avoid an IRS audit.
“The IRS – they’re like the Mafia. They can take anything they want.” – Jerry. Beware the authority of the IRS. They are getting involved in state laws (governance) because, as they argue, governance is inextricably linked to federal tax compliance. And they have the authority to penalize organizations and board members with excise taxes (e.g., excess benefit transactions, self-dealing, failure to distribute income, excess business holdings, jeopardizing investments, taxable distributions).
“I don’t trust the guy. I think he regifted …” – Jerry. If your organization makes grants to other organizations, ensure that your donors understand and support your grantmaking activities. If you make grants to for-profit organizations (particularly if any of your board members has a financial interest in such for-profits), which is possible if the use of such grants is exclusively for charitable purposes, make sure you confer with legal counsel and do so with full transparency. If you regrant, subject to a (Model C) fiscal sponsorship relationship, make sure you’re doing it right and not serving as a mere conduit.
“Is it possible I’m not attractive as I think I am?” – Elaine. Recognize that your organization may appear much more attractive to you than it may appear to the general public. Consider what steps the board takes or should take in making the organization more attractive. Consider what policies and practices may be hurting the organization’s public image.
“When you control the mail, you control … information!” – Newman. Well, the mail may have lost some of its importance over the years (sorry, Newman). But public perception of your organization’s image is mostly within your control and based not only on your communications but also on how you operate. Control the information by being transparent and ensuring that the information sells the value your organization brings to the public.
“I hate asking for change. They always make a face. It’s like asking them to donate a kidney.” – George. Recognize that it’s not easy for all board members to engage in fundraising. If recruitment of board members has become a high priority, think about what type of fundraising obligations they should have, if any. Remember that governance must be the board’s priority.
“Stick a fork in me … I’m done.” – Kramer. At some point, a board may need to make the difficult decision to dissolve the organization. Under the best of circumstances, this happens because the organization has fulfilled its mission. Under less than ideal circumstances, this happens when the organization has become ineffective or inefficient in furthering its purposes and/or has lost the necessary support to keep it running. A board of an organization operating in the zone of insolvency must pay particular attention to this critical issue.
If you found this fun, read Quotes from Glee and Nonprofit Governance.