Wednesday, August 4, 2010

Two things critical to the vitality of the nonprofit sector

Last weekend I spoke to members of the Education Industry Association (EIA) at their annual conference in Chicago. The majority of EIA members are for-profit companies. Many of these for-profit companies wanted to start nonprofit arms in order to access additional funding only available to nonprofits. This brought up a lot of interesting conflict of interest issues that we discussed during my two conference sessions.

In one of the sessions I presented a workshop titled: Partnering or Forming a Nonprofit and shared about different types of social enterprises including (B Corporations, L3Cs, and nonprofit organizations). I also presented my signature workshop: Starting a Nonprofit Organization.

I enjoyed presenting to this enthusiastic group of tutoring companies, education software companies and charter schools. It was also interesting to hear their comments and perceptions about the nonprofit organizations that they partner with. For example, they were frustrated that the nonprofits they work with have a scarcity mentality. They were also surprised by the legal and financial risks involved with being a nonprofit board member or starting their own nonprofit organization. Hearing these comments reminded me of two things that I think are critical to the vitality of our nonprofit sector:

1) We (nonprofit organizations) need to continue to educate the general public (including for-profit companies) about what a nonprofit organization is and how it operates differently than a for-profit company.

2) We must educate our board members about the legal and financial duties as well as risks of being a board member of a nonprofit organization. (Most importantly the Duty of Care and the Duty of Loyalty) Eide Bailly sums up these board duties nicely.

These pieces of education are especially pertinent after today's article in Blue Avacado about the demise of the Vanguard Foundation. The Vanguard foundation would have benefited from some key legal and financial trainings for its board members.

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