Ethics & Governance

We’re supposed to be a nation of laws. Statutes, regulations, and governance conventions codify the continuum of Americans’ ethical beliefs and guide our decisions as we work together to maintain civility.

When things fall apart, it’s usually due to arrogant abuse of power or the naive “gee-whiz, we’re all honest” mindset – which is uncomfortably close to willful ignorance. The former is exemplified in the Virginia corruption scandal involving the ex-Governor and his acquisitive wife. The latter is sadly evident in our own current legislature. Recent efforts to reform or establish clearer ethical guidelines for executive and legislative positions have earned a legislative yawn.

The Secretary of State, Public Assets and Ethan Allen Institutes, and Vermont news organizations of record are working to shed light on campaign financing, ethical conflicts, and under-the-desk dealings. This represents a vital, but still backdoor, effort to solve a problem the legislature could solve preemptively by setting and adhering to accepted ethical standards.

Similar issues affect the state’s large non-profit sector. My experience with non-profits reminds me repeatedly how thin the veneer of understanding among non-profit boards is around ethics, governance conventions and board responsibility.

The recent dust-up at Vermont Public Television is one example, and there are others. They surface in the news after the damage is done, but the damage from bad governance can be extensive. Public trust is compromised, organizations become polarized, and the way back is a long one.

From my experience, these are the five worst mistakes a board can make: first, not to do thorough annual or bi-annual performance reviews of their executive director that include feedback from staff and the constituency they serve.

Second, too many executive directors hand pick their board members. This compromises board independence. Boards should be self-perpetuating with a nominating and governance committee that proposes new trustees and monitors candidate strength, terms, and board diversity. Often executive directors surround themselves with well-meaning friends they believe will make their job easier. This works only until the organization founders and there’s no clear leadership.

Third, the trustees don’t always fully understand their responsibilities and liabilities. Boards are ultimately responsible for effective delivery on mission as well as for the financial, ethical, and legal integrity of the organization.  It is the board, not the executive director, who will bear the weight of organizational failure and will be liable for recourse.

Fourth, boards often don’t understand management boundaries implicit in their trusteeship role. They’re not there to run or manage the organization. They’re task is to hire, review, compensate and hold the executive director accountable for good management and leadership. A trustee’s proper role is to review, question, amend and ultimately approve the annual plan.

Finally, many board chairs misunderstand or ignore the role of executive sessions, especially if their organization is subject to the open-meeting law – as seems to have been the case with VPT.

There’s too much at stake to ignore bad governance. It’s time to do it by the book.

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