7.30.2014

Don't Let the Founder Make the Nonprofit Flounder: Practice Good Governance

Based on the controversy over anti-trafficking nonprofit founder, Somaly Mam, Jeannie Rose Barksdale, has a great article on what nonprofits should do to avoid similar problems by relying on and practicing good governance.
Newsweek’s recent cover story discrediting a bright light in the anti-human trafficking movement is a prime example of how good governance can help an organization avoid the vortex of damage control.  As a long-time anti-trafficking advocate and volunteer, I was saddened to read about the alleged deceit and mismanagement of Somaly Mam Foundation by its founder Somaly Mam.  Mam has long been celebrated for shedding light on the issue of human trafficking and protecting those at risk. According to Newsweek, much of what she told to donors, fans, and the media was largely fabricated.
Mam’s ability to raise large amounts of money and create awareness of the terrible tragedy of human trafficking is legendary. But according to Newsweek Mam wielded an excess of power. The article recounts how former employees describe Mam as “unstoppable.” Though they were aware of Mam’s questionable practices, they were too intimated to come forward. 
The consequence of the exposé of Somaly Man is that other anti-trafficking organizations have been left scrambling to remind the public that trafficking is still a major global issue that must be addressed. The incident also raises significant organizational issues, including those of fundraising ethics and the ills created by “founder’s syndrome”. In reflecting on this, we are reminded of the necessity for establishing a solid foundation of good governance. Who held Mam accountable? Where was the vehicle for employees to vocalize their concerns?
So what are her recommendations for good board governance?
Some governance policies are required under state law. New York non-profits are required to incorporate governance and accountability measures under the New York Non-Profit Revitalization Act (“NPRA”), which went into effect recently (see Perlman & Perlman Revitalization-Act-Client-Alert). 
Yet the law isn’t a substitute for good practice. What policies does your organization have in place? Layers of accountability are necessary to protect your organization from any individual’s bad decisions.  Below is a reminder of basic good governance practices that will ensure your organization’s health and help you avoid the untenable position of having to implement damage control. 
  • Checks and Balances – Unlimited or excess power should not be vested in an individual The board of directors must contain independent directors who will hold the management accountable. Spending authority should be limited. These practices should be embedded in the organizational by-laws.
  • Conflicts of Interest – Adopting and abiding by a conflict of interest policy helps your organization make decisions in its best interest – not in the interest of staff, directors, or other individuals.
  • Whistleblower Policy – If an employee in your organization suspects a leader of wrong-doing, they need a means to share their suspicions. A whistleblower policy provides a mechanism for people to speak up without fear of retaliation.

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