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Once upon a time in the land of COVID-19, there was an Executive Director who had to decide whether to apply for funds through the Payroll Protection Program<\/a> (PPP).<\/p>\n Primarily, PPP funding offers small businesses and nonprofits a certain number of weeks of payroll as a loan (that may end up being forgiven by the government). It\u2019s been invaluable in the nonprofit sector and has kept many doors open.<\/p>\n This E.D. has a large budget and no cash flow problems. In fact, the organization has a cash reserve. A gift from a family foundation for a sizable amount seems very promising.<\/p>\n But who knows what to expect? A fall gala projected to generate substantive revenue is in question. Like all nonprofits, there is so much uncertainty.<\/p>\n You may already have decided this org should NOT have applied for PPP funding. But there\u2019s more to this story. And I\u2019ll get into that in just a moment.<\/p>\n First, here\u2019s what I want you to do.<\/p>\n Send this post to your board members as a pre-read for an upcoming board meeting. Ask everyone to be prepared to discuss. What would they do? Why? This will become incredibly instructive for your board about how decisions are getting made.<\/p>\n Alternatively, use this as a centerpiece of a leadership team meeting to dig into the role of the team in decision making.<\/p>\n OK, with that, let\u2019s get into the full story…<\/p>\n <\/p>\n To apply or not to apply? That is the question.<\/p>\n Our Executive Director goes to her Director of Finance and seeks advice from the organization\u2019s pro bono attorney. The three of them do their homework and it\u2019s clear that the organization is eligible for PPP funding.<\/p>\n Next steps. The E.D. sends an email to the executive committee and secures unanimous consent to apply for over $1 million through the funds.<\/p>\n The E.D. announces at her last board meeting that the PPP request has been approved and the funds have been received.<\/p>\n The board reacts with outrage. The majority of board members don\u2019t believe the organization needs the money, is worried about the publicity, and is quite insistent that the E.D. give the money back within a week. The board does not vote but schedules a special board meeting and asks the E.D. to prepare a plan.<\/p>\n The E.D. feels good about the process and is taken aback by the board reaction. After all, she worked hard to earn the board\u2019s trust over the 15 years she has been at the helm. She\u2019s sure she could push back and persuade the board to allow the organization to keep the PPP funding. But is that the right thing to do?<\/p>\n Lastly, she has a terrific communications director and a board member in public relations. She knows that keeping the money could be messaged well to avoid the challenges other organizations have faced.<\/p>\n Before I share their major issues, there are a few \u201cprocess\u201d items to share with you.<\/p>\n So what were some of the big concerns shared by the board?<\/p>\n Ok, maybe you have some questions but this is a blog post and not a deposition. I\u2019ve tried to give you enough to have a terrific conversation.<\/p>\n So, all you nonprofit leaders out there. Let\u2019s discuss…<\/p>\n Please promise me that the conversation did not devolve into what information you needed from me to reach a verdict. If that\u2019s what happened, can you please reboot? I have worked hard to include enough information for you to have a robust discussion.<\/p>\n This post is just \u201cpart 1\u201d of a two-parter. I really want you to think hard and have a great discussion before I weigh in with my thoughts. But part 2 won\u2019t be about me giving you the \u201cright\u201d answer.<\/p>\n In fact, I could easily argue numerous \u2018verdicts\u2019 here. I could convincingly explain to you why the organization should take the PPP funding. I could just as convincingly show you why the money should be returned and why the organization should never have applied in the first place.<\/p>\n Part 2 will be about the lessons in leadership and decision making that this \u2018case\u2019 unearths.<\/p>\n And if this post leads to a discussion that results in an affirmation of how your organization makes decisions, great. If it results in changes on the staff side, the board side, or in how the two work together to make decisions, that\u2019s great too.<\/p>\n OK, ready? Discuss.<\/p>\n And please stay safe.<\/p>\n Part 2 is now available here: The Key to Making Big Decisions<\/a><\/strong><\/em><\/p>\nHERE\u2019S WHAT HAPPENED NEXT<\/h2>\n<\/p>\n
THE BOARD SHARES SOME BIG CONCERNS<\/h2>\n<\/p>\n
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YOUR DISCUSSION QUESTIONS<\/h2>\n<\/p>\n
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JURY, HAVE YOU REACHED A VERDICT?<\/h2>\n<\/p>\n
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FOR WHAT IT\u2019S WORTH…<\/h2>\n<\/p>\n