October 06, 2008
Scandals Prove Need for Leadership Turnover
An expert on nonprofit governance says nonprofit groups should be more careful about limiting the power of their leaders in wake of the recent embezzlement scandal at the Association of Community Organizations for Reform Now, or Acorn.
In May year, a whistle-blower in the organization forced the disclosure that Dale Rathke, brother of Acorn’s founder and chief executive, Wade Rathke, had embezzled nearly $1-million from Acorn.
Dan Prives, an expert on charity finances, writes on Where Most Needed, that the situation raises significant questions about how much authority should be given to nonprofit leaders.
Mr. Prives writes that Wade Rathke, who founded Acorn in 1970, set up the organization in such a way that other employees and its board of directors could not easily follow its financial structure. That structure helped enable the embezzlement scandal, he says.
Worse, Mr. Prives writes, the organization has lost much of its influence and credibility.
“Executive tenure over a decade is always going to be problematic, especially since board tenure is typically much shorter,” Mr. Prives writes. “Some people would like to call it founder’s syndrome, but the issue isn’t about being a founder as much as it is about being in power long enough to be the only one remaining who really understands how everything works.
“The result is often a crash-and-burn scandal, confirming the adage that absolute power corrupts absolutely. “
Is it possible for long-tenured leaders to maintain successful organizations? Or should there be “term limits” for those who oversee nonprofit groups?
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I’m sympathetic to this issue as I’ve seen many cases where long standing power has shaped boards, oversight, and processes to suit the leader. I’m not so sure about term limits as most organizations are capable of getting around them to keep valued players, and there are many more highly ethical long time leaders than unethical.
It would be interesting to imagine legislating that non-profits undergo some form of a publically shared management audit (not just a 990 scan) that benchmarks board and leader practices, performance, and compensation against the industry and those of like mission. If Boards knew they would periodically need to hold their management habits and decision processes up to scrutiny, we might curtail many of the ugly behaviors and scars on the industry.
— Tim Deuitch Oct 7, 02:26 PM #
Proposing a sort of term limit for executive leaders at nonprofits is overeacting to situations such as ACORN where leaders have abused their position and authority. Of course there are organizations that have had effective, ethical leaders with long tenures. Problems like the situation at ACORN are the result of weak governance and erosion of organizational culture. The standard line is that the board is in charge and accountable but in many, many nonprofits it is the staff leader who really runs the show. Most of them do an OK job. Rather than drive them out, we need to consider whether the accepted board model works. How many more times do we need proof that it doesn’t.
— Kate Barr Oct 10, 11:25 AM #