Governance malpractice

When I was in Orlando in December attending the Board Source Governance Forum, the Orlando Sentinel featured an exclusive front page story entitled Blood-bank shake-up.

The article began by saying, “With a state Senate investigation of its practices heating up, Metro Orlando’s largest blood center said Friday that it will no longer do business with its board members, who now will be subject to term limits. The sweeping changes at Florida’s Blood Centers affect millions of dollars in contracts. They also will result in the resignation of longtime Chairman Leighton Yates and a quarter or more of the 40-person board of the nonprofit organization“.

It is quite ironic that while national nonprofit leaders were gathering in Orlando for a two day conference to talk about best practices in nonprofit governance,  the Florida Blood Center was being investigated for poor governance practices.  A probe by the Florida State Senate identified a number of governance practices which were in conflict with best practices promoted by Board Source, and  Independent Sector, and the Nonprofit panel.

Several governance practices identified in the article that seem to be at the heart of the scandal include :

• The setting of executive compensation for the CEO and senior leaders.
• Contracts with board members.
• Tenure of some board members including the  board chair.

Boards of directors must serve in the public interest. When nonprofit organizations such as the Florida Blood Centers are the subject of news paper exclusives and probes by public officials, all nonprofit organizations are devalued and become subject to suspicion. Our role as governance leaders and partners require us to follow our fiduciary duties — the duty of care, loyalty and obedience.