DIRECTORS’ DUTIES NOW

FPLG COVID-19 RESPONSE

DIRECTORS’ DUTIES NOW

[UPDATE: November 12, 2020]

Board decisions made in recent months in hopes of resuming at least some regular operations have been dashed by the dramatic worsening of the pandemic. On the other hand, the prospect of a vaccine broadly available by mid-2021 may mean an end in sight to any retrenchment moves taken over the winter.

This will likely be a demoralizing and stressful time for nonprofit boards, particularly for those seeing greater demand for services but less revenue. However, for purposes of “scenario planning,” the contours of the next quarter or two are now more sharply in focus – with light at the end of the tunnel.

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[UPDATE: September 24, 2020]

Most of us had hoped that, by Labor Day, we would be returning to at least some semblance of normalcy. Clearly, we are not. (And many philanthropy thought leaders now urge that we should not want to return to a “normal” that rested on flimsy and flawed structures and institutions that led to deep inequalities and unfairness.)

The nonprofit sector includes a broad range of organizational challenges and decisions. Some groups, including those with “essential workers,” have largely stayed open from the earliest days of the pandemic; they have had to deal with complex issues of safety for their staff and the public as well as surges in demand for services. Other organizations moved to remote staff work and to modified or deeply curtailed operations and programs. They now face shifting and contradictory government and health directives about when and how to reopen. Sadly, a sizable number of our ranks are facing dismal prospects for long-term survival.

The role of the board of directors – along with executive leadership and staff – is now more critical than ever.

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[UPDATE: June 24, 2020]

Three months into the COVID-19 pandemic, the board’s duties continue to be critical, despite the competing and important demands on their time and attention by their own business and personal responsibilities. Each director must continue to commit to heightened and continuous participation in strategy and operational planning sessions, particularly now as many states and local governments authorize phased reopening permissions.

The realities of this pandemic crisis have gone against our natural desires to get back to “normal.” Amid the waves of reopenings around the nation are new moves by officials and health advisors to consider or implement retrenchments because of the unrelenting spread of the disease in various hot spots. This creates an element of existential chaos and uncertainty that no one in our society – including nonprofit executives and board members – has previously known or experienced.

There are important decisions to be made about the near or long-term viability of individual programs and activities as well as the sustainability of the organization itself. The matter of succession planning should move front and center in light of the real possibility that the organization may lose one or more key people.

The revision or drafting of new formal, written, policies that ordinarily might be handled at the staff level may now rise to the level of board attention. Specific topics are covered in other sections including “Health and Safety,” “Employment Law,” and “Remote Operations.”

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[March 31, 2020]

The board of directors of a nonprofit organization has the ultimate power, authority, and responsibility for it. The board may delegate management of the activities to others including the chief executive officer, “provided that the activities and affairs of the corporation shall be managed and all corporate powers board’s duties continue to be critical now that it’s clear that this crisis shall be exercised under the ultimate direction of the board.”

More than ever, in a time of crisis, the board chair and the CEO must work together.

The board acts as a collective body, but the individual members have fiduciary duties to the organization.

Contact FPLG (619) 780.3839

Boards find themselves facing a host of challenges as they work to fulfill their fiduciary roles in the pandemic….But the challenges of the pandemic may provide opportunities to evolve governance in ways beneficial for the long run.….

— Dr. Cathy A. Trower et al. (10/27/20)

Governance is not about organization; it’s an essential function in addressing a particular issue or need in our community…. For so long, individual organizations have been the default unit to address problems, and we assumed that it would always be this way. But now, more than ever, single organizations do not appropriately match the scale required for the most critical and substantive community issues and problems. It has become increasingly necessary to develop alliances and coalitions—extraorganizational entities ….

— David O. Renz (7/15/20)

Nonprofits occupy a key role in the response to disasters. …Safeguarding the knowledge, skills, relationships, passion, and creativity of its human resources is an essential component for every organization. In the nonprofit sector, the contribution of the board and staff are even more critical. Many nonprofits operate with a small group of leaders, often playing multiple roles. The unexpected loss of any member of organizational leadership presents a challenge for nonprofits, and the potential loss of several key leaders in a disaster situation can produce a major crisis for many nonprofits.

— The Standards for Excellence Institute (6/20)

The most important thing you can do as a board member is to show up. It may not be in person due to social distancing, but make sure the leadership at the organization knows you have their back and you’re there with them in the fight.

Laurie Zumdahl, Cause Strategy Partners (3/30/20)

REFERENCES & RESOURCES

GO TO – CRISIS COMMUNICATIONS

Remote-Work Costs: Must Nonprofit Reimburse?

[June 5, 2020] Among the many adjustments that employers - including nonprofits - have had to make during the COVID-19 pandemic is the abrupt switch to remote work for some or all of their employees. That includes making sure that everyone in the workforce has needed hardware, software, and internet and phone connectivity.  California is among the jurisdictions that initiated early and mandatory stay-at-home orders for a large portion of the population and economy. There [...]

Filing Deadlines Extended for Nonprofit Organizations

[April 24, 2020] By the third week of March 2020, governments at all levels had begun to respond to the many questions and issues raised by the COVID-19 emergency, including - most notably - the curtailment or suspension of operations and activities by individuals and entities on account of new stay-at-home orders  and recommendations.  The necessary federal emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Act was made in mid-March. The [...]

UPDATE: The CARES Act and Nonprofits

[March 27, 2020] The third prong of the Congressional response to the COVID-19 pandemic - the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (S. 747) - is now before the House of Representatives, having passed the Senate on Wednesday. The House is expected to approve it today with overwhelming support; voting is expected to begin shortly.  It could be signed at the White House and in effect before the end of this weekend. [...]

Some Good News: Funders are Stepping Up

Ten days ago, we posted Funders Must Step Up - Right Now! (March 16, 2020).   That same morning, influential blogger Vu Le had posted Funders, this is the rainy day you have been saving up for. Mr. Le has long been a vocal critic of many foundations’ viewing the five percent payout figure in the tax code as a ceiling instead of what it is: a floor.  During that week, as most of us were [...]

Nonprofit Board Meetings in an Emergency

The devastating pandemic has brought sudden and profound challenges for all of us.  In What Nonprofit Board Members Should Be Doing Right Now to Address the COVID-19 Situation, (March 16, 2020), the experts from BoardSource write:  “As the world responds to the threats of COVID-19, many nonprofits and their boards are wrestling with difficult questions and decisions.”  A rewrite of that sentence may be in order; every nonprofit and its board is flying blind in [...]

The Charitable Sector: COVID-19 Relief and Economic Stimulus Package

America's charities request $60 billion infusion of support to help the most vulnerable March 18, 2020 The COVID-19 (Coronavirus) pandemic facing the country is having a profound impact on the economy and has greatly expanded the need for charitable organizations to provide additional services in an unprecedented manner. At the same time, the economic downturn will undoubtedly result in a contraction in contributions and other sources of revenue which are the lifeblood of many charitable [...]

Coronavirus and Nonprofits: Challenges & Resources

What a difference a week makes. Last week, the news media focused on the minutiae of the primary-election horse race. This week, Americans have been forced to confront the coronavirus (COVID-19) pandemic. For the nonprofit sector, the emergency becomes a double-barreled crisis: we are both victims and saviors. This is not an unfamiliar conundrum; there are frequent natural disasters that devastate one area or another. This nation’s charitable organizations - and, in particular, the social [...]

Funders Must Step Up – Right Now!

“Funders,” writes nonprofit blogger Vu Le, “this is the rainy day you have been saving up for.”  Recently, we wrote about Mr. Le’s earlier plea for America’s foundations to step up their payouts beyond the “five percent rule” in the federal tax code. In an article last summer, he characterized it as a moral imperative: The ethical argument for foundations to increase their annual payout rate beyond 5% (August 4, 2019). This morning, it’s a [...]

Small Business Association Disaster Loan Guidance and Resources

The U.S. Small Business Administration (SBA) has an existing program, the Economic Injury Disaster Loan program, that extends disaster relief loans to small businesses, including nonprofits, to help alleviate economic injury caused by disasters.  On Thursday, March 12, 2020, the SBA announced that the program will be available to claims arising from COVID-19.  The SBA will work with state officials to offer loans of up to $2 million.  “These loans may be used to pay [...]

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