Greg Mortenson’s lessons for non-profit boards
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Last year 60 Minutes and Jon Krakauer investigated Greg Mortenson, the executive director of the Central Asia Institute (CAI) and author of the best-selling, and, it seems, largely fabricated, Three Cups of Tea. They discovered that he had violated the trust of the people who donated money to the CAI and of those he was claiming to help. This past week Montana’s attorney general said Mortenson must repay $1 million to the CAI. He is allowed to remain with the charity, but can no longer serve as a board member, nor is he allowed to hold a position of financial responsibility.
This case offers some lessons about the role and responsibilities of boards of non-profits that are too important to ignore.
A good board can be hugely beneficial to the stability, growth and effectiveness of a non-profit. On the other hand, a bad or self-indulgent board can be a time-consuming distraction or a drag on scarce resources. In the worst cases, it can allow the abuse of funds and trust on a large scale, as seen with the CAI.
Non-profits come in all shapes and sizes. Some are small niche organizations that come from the passion of one or two people and have limited resources. Others are large, complex organizations with significant donations and operating costs that rival many global corporations. No matter the size or scope, the principles behind the board’s responsibilities are the same: Donors give money to an organization in the belief that their money will be used for a specific cause. The organization and the cause are at stake, and the ethical imperative behind the organization goes beyond the bottom line.
Non-profits require deliberate care and attention in building a strong, capable board, one that will ensure that the mission of the organization is honored in word and deed, and that the donated funds are used in responsible and careful ways. These boards have multiple “grounding and stargazing” responsibilities, from governance and oversight to fundraising and strategic planning. These responsibilities are made greater in challenging economic times.
Board seats of non-profits should be filled not simply by those who give the most money or even those who have the greatest passion for the organization or regard for the person running it. To do so discounts the seriousness of the role of a non-executive board member or trustee. A board should be carefully curated to ensure that the skills and abilities around the table will safeguard the health and well-being of the organization and its mission.
Who needs to be around the table and what skills should they have?
Governance
The board is about governance. It is about ensuring that the organization remains healthy, adheres to the mission and uses funds responsibly. Not every person who donates money, even sizable amounts, should automatically be given a seat at the board table. It is possible to honor donors and to value their input in places other than the governing board, including a separate advisory board.
Financial acumen
The board must have people who are financially astute and who understand the finances of the organization. Their role will include oversight functions, such as serving on the audit committee, as well as financial and strategic planning. The combination of financial oversight and planning is critical to a non-profit’s long-term strength.
Independence
Commonly overlooked is the value of genuinely independent board members. As with corporate boards, it is useful to have people who are neither donors nor beneficiaries and who bring true independence to the discussion and the oversight role of the board. One good choice for this role is an accountant who can serve as chair of the audit committee and in other oversight capacities.
Fundraising
Fundraising is a critical part of a non-profit’s existence. Having board members who take this role seriously is vital. However, a board member’s role is about more than fundraising, since the primary role of the board is governance and ensuring that raised funds are used as intended. Separate bodies can be created to ensure that there are enough people doing the necessary fundraising.
Relevant skills and abilities
A good board has members who have skills, abilities and knowledge relevant to the organization. This means that if the organization is building schools in Afghanistan, it needs board members who understand building, education and the country. These same board members can help bolster the skills and abilities within the organization. That often happens through mentoring and skills matching, where a board member is coupled with a full-time staff member to ensure that the organization has access to valuable, and sometimes costly, expertise, ranging from marketing to human resources.
Increasingly, public-sector responsibilities are being taken on by charities, especially as governments around the world are forced to cut back on services that they have provided in the past. As such, non-profits are touching the lives of more people every day. In the end, serving on a non-profit board is not about loyalty to the founder, personal agendas about the direction of the organization or the prestige that comes with sitting on the board. It is about ensuring that these non-profits are strong, capable organizations with integrity that honor those they are intended to help and those who have entrusted the money to fulfill their mission. Serving on these boards is about ensuring that organizations are sustainable and can help those in need for many years to come.
PHOTO: Greg Mortenson poses with Sitara “Star” schoolchildren in Wakhan, northeastern Afghanistan in this undated photograph released to Reuters, March 11, 2009. REUTERS/Central Asia Institute/Handout
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Why not comment on the Bill Gates Foundation, which has only three family members on the board, Bill & Melinda Gates, and Bill Gates Sr. One look at their recent IRS 990 annual filings is revealing, although regulatory agencies, and watch dog organizations do nothing about organizations that give away so much.
Daniel Borochoff, who directs the charity watchdog group, American Institute of Philanthropy (AIP) and a media critic of Mortenson’s Central Asia Institute, receives a salary of CEO is $ 153,357, out of a total $483,257 in revenue for 2010. That makes his salary a whopping 31.7 % of the AIP total income for one year. The industry ‘accepted’ CEO salary should be no more than standard is 5-8% maximum of total revenue.
AIP is only registered in about three dozen states, even though it solicits in all 50 states. IT is illegal to solicit in a state if the nonprofit is not registered there.
Last year, the IRS revoked registration or shut down approximately 314,000 nonprofits, out of about 1.5 million nonprofits in the U.S.
I’ve been watching closely the news on Mortenson since 60 minutes and am also very involved in another organization that starts schools in Pakistan.
My belief is that the most important thing for humanitarian organizations to have is a thoughtful long range vision of how their work will play out over time. Most humanitarian organizations focus closely on a specific goal without stepping back to see its effect in the entirety of the situation. I believe this is because of the relationship of the organization to funds and the perceptions of the donors. In all of my reading about Mortenson I never saw the question asked whether his schools taught what would benefit communities at the “end of the road”, as he put it. This is far away from global commerce and where subsistence takes every effort. Building schools alone is not nearly enough. The important question is about what is being taught and how,yet it is the simple notion that brings in the dollars and drives most nonprofits. Distant boards in another country then pay people far away to accomplish their donor’s wishes. In my organization we have turned this literally upside down and assist our school communities to direct their schools to meet their needs. We here help them to earn the expenses and make good decisions and achieve far more lasting benefit with a penny than others can with dollars. I would like to see more boards take this approach.
Ms Marcus,”largely fabricated” you say.I know Mortenson has admitted that some events did not happen exactly as he described, but your choice of phrase implies that over half of his book is a pack of lies.
What parts of the book have you personally researched have found to be “largely fabricated”?
As a teacher who used Three Cups of Tea in a reading group, I felt tremendously betrayed to learn that substantive parts of the book were fabricated. It’s not that certain events didn’t happen “exactly as he described”, but that they happened much, much differently and w/out the drama. (I’m thinking, specifically, of how Mortenson “discovered” Korphe.) Once I’ve been deceived by a person, I begin questioning everything else and so I question events in both of his books that I’ve read. Furthermore, I also now question Greg Mortenson’s motivation, no longer seeing it as the phenomenal altruistic endeavor I once saw it to be. Unfortunately, it seems possibly much more selfish and ego driven.
But the commentary is on non-profit boards, not Greg Mortenson. It’s well-written and, from my experience, has great insight and advice. Unfortunately, the non-profits I’ve been associated w/haven’t had the strength to pull together healthy boards like the one described. These are certainly levels to aspire to.