Dig Deep Before Joining a Board

I did not ask to look at all of the financials. I just took their word that they were okay. 

Pub Drawing 12

The organization was a passion project for its founders. They were in a period of their lives where they were asking: do they stop doing the work or do they ramp it up? At the same time, the organization received a large grant from a big foundation that was interested in building their capacity. The organization decided they would accept the grant, build a team, and use this generous gift to develop a strategy to double down on the work that they had been doing. They hired a passionate Executive Director. It was his first ED position, though he was not new to the field.

About four years after this big grant was received, I was asked to join the board. I had multiple frank conversations with the Executive Director whom I had known and categorized as a friend as well as a colleague in the field. I had some concerns, but he responded in ways that made me feel okay. I joined a board retreat to see how the board worked together. The board was made up of committed people who cared about the work but who also had a lot of personal relationships with each other and with the ED. For example, the ED and the Board Treasurer were personal friends. I liked them but wanted to know how professional they were. I knew the organization. I believed in the work they were doing. I felt I could offer value. So, I joined the board.

Poor Reporting and Complicated Relationships Led to Lax Oversight

We discovered financials problems. The big grant had lapsed because of lack of reporting. The organization was the fiscal agent for three other organizations and they were not managing the finances to ensure that the resources were restricted in different accounts. The resources were co-mingled. We did not know this before because the financials were not presented to the board in a clear way and there were not strong mechanisms in place. The Board Treasurer did not have the skillset and experience needed to guide the Executive Director. He also had a conflict based on their personal relationship.

Some of the decisions made by the Treasurer and the ED made the staff finance person uncomfortable. She did not feel she could report back to the board. I also think there was a gender issue at play. This staff person had been working there for a long time. She was a woman and I think was being pressured by the Board Treasurer and the ED who were both men.

We Had to Close Down Which Was Difficult and Time-Consuming

When everything came out, we, as a board, had a deep, thoughtful process about who was responsible and what systems should be in place to make decisions grounded by our ethics, integrity, and our responsibility. It was a lot of work. Intense work. It became clear that we had to close the organization, layoff the staff (the ED had already given notice), and look at merger scenarios. I was a new board member but board members who had been there for years felt a real loss and disappointment both personally and professionally.

So here is what happened: In addition to the primary mission, the organization had other programs. We were able to find an organization to take over one of them and others were reaching the natural end to their funding. For the primary work, a potential merger surfaced. The challenge was the original C3 was established in a state where it is really hard to close or merge a charitable organization. We hired a lawyer. The organization that wanted to receive our assets hired a lawyer. We applied for dissolution through merger to the Secretary of State. The organization no longer had an office or staff, it lived on through content and materials on its web site. It was primarily two women, volunteers, who ended up doing all the cleanup. It was emotionally and physically exhausting. There was a lot of work. About 15 months after we applied for dissolution and almost two years after letting the staff go, we still had not heard back. It took so long that ultimately — and on the advice of counsel – we all resigned from the board.

Lessons Learned: Dig Deep Before You Join

Do you have the correct ED? My biggest take-aways are: When deciding to get involved on a board, take caution when there is a new individual leading the effort. It is great to hire young talent who can help innovate, but is that what an organization needs? This ED did not know how to manage finances and comply with grants.

Have you looked deeply at financial and legal systems? Make sure you do a thorough analysis of the most critical systems that a board is responsible for: the fiscal and legal side as well as the programming. Don’t just rely on the stories. I did not ask to look at all of the financials. I just took their word that they were all okay. Ask what the reporting to the board looks like. Really dig in deep – especially if there is a fiscal sponsorship in play. I don’t think other board members understood the responsibility of being a fiscal agent. And meet the staff accounting person. This person should have a relationship with the Board Chair as well as with the Board Treasurer.

Do board members have the right skills? Look at who else is on the board. People who care about impacting community want to find like minded people and a mission that they care about. But accepting a board role means to be fiscally accountable for the organization. You need board members with skills and experience, particularly on the finance side. The people on this board were not asking the right questions. Particularly about the financial practices in place so the responsibility was shared with everyone.

Do board members have conflicts? I would also be concerned about a group of individuals who have really strong personal connections in a professional setting. The Treasurer was a friend of the ED so was not holding him accountable. To me that was one of my biggest concerns when I talked to the ED. I asked what his plan was for bringing on other individuals who were not friends. Instead he invited me in – someone who was a colleague and a friend. I did not listen to my gut. My gut said, “Don’t do this. Just support them as an advisor.” I should have listened to my gut.


  1. Craig Stewart

    Thanks Janet. Excellent case study and good advice about digging deep to do your due dliigence!

  2. Carol Ryan

    Thanks Janet. Thanks for sharing your learning.

  3. […] my last post, I shared a story about a board member who did not look closely enough at financials and joined the […]

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