Second Mile Saga a Big Wake-Up Call to Nonprofit Boards
Posted in Nonprofit Organizations on December 13, 2011
Second Mile, the youth charity founded in 1977 by former Penn State assistant football coach Jerry Sandusky, is struggling for its very existence and will likely serve as a classic “worst nightmare” scenario for anyone involved in the nonprofit community for years to come. To settle the first lawsuit filed against it, the organization agreed not to shut down or shift its assets to another entity without court permission. The charity is also reportedly laying off employees in the face of a sharp drop in donations, and representatives of well-known advisory board members are resigning and demanding that their names be removed from the Second Mile web site.
Is the organization’s board of directors at risk for being held personally liable? We shall see. It is important to note that the primary role of a nonprofit board is to oversee the organization’s activities and affairs, not micromanage every detail. Such oversight generally requires review of timely and accurate information, reasonable attention from board members, and loyalty to the organization, but it does not require board members to play the role of private investigators as part of their board service to search out misconduct or illegal activity unless specific warning signs of trouble are apparent. This tragedy underscores the importance of taking nonprofit volunteer service seriously, doing your due diligence before agreeing to serve (e.g., confirming the organization has directors and officers insurance coverage in place), and exercising reasonable efforts to fulfill your fiduciary duties as an officer or director.
Nonprofit converts to “B” corporation for access to capital
Posted in Nonprofit Organizations on August 31, 2011
According to a recent report by Forbes, CouchSurfing.org has decided to convert to a "B" or "Benefit" Corporation in order to receive $7.6 million in funding from Benchmark Capital and the Omidyar Network. The now former nonprofit organization connects world travelers with locals across the globe with a user base of roughly three million people in 80,000+ cities. Virginia recently became one of the first handful of states to pass "B" corporation legislation, thereby creating a new form of business entity that is established to pursue a socially beneficial purpose. You can learn more about "B" corporations and the social entrepreneurship phenomenon at an upcoming conference organized by Richmond Unite. Richard Branson will be the featured speaker. Visit www.richmondunite.org for details and to register (also be sure to vote for the Richmond Tennis Association while you're surfing that site).