|
|
|||||
|
|||||
| Path: Main Street : NewsWeek : Archive : Ethics Q & A Articles : Article |
This is an archive of CharityVillage NewsWeek.
To find a word on the page, use your browser's "find" feature (CTRL-F or CMD-F).
Please note: While we ensure that all links and e-mail addresses are
accurate at their publishing date, the quick-changing nature of the
web means that some links to other web sites and e-mail addresses may
no longer be accurate.
To view other articles in the archive, use our Chronological Index.
Ethics Q & A
May 5, 2008
By Jane Garthson, Garthson Leadership Centre
The dilemma:
Is it ethical to shut down a charity when there is a group of people that would like to form a new board, drawing on new contacts and strategies, to help the organization carry on its work? When should a charity close its doors?Jane's Response:
Ethically, the decision to wind up a nonprofit organization should be made by its "owners" - the community, profession, trade group, etc. that it was formed to serve. If they were to decide that the services were no longer of sufficient value to continue, then a few people should not be able to override that. A nonprofit exists for community benefit and must appeal to a community.
But we rarely agree on who "owns" a nonprofit, other than a co-operative. Legally, as I understand things (and I am not a lawyer), only the voting members can make a decision to wind up. The existing board would call a special members' meeting and put the issue to a vote. But organizations have varied ways of determining who is a voting member. Some count anyone who gives a dollar, while at the other end of the continuum, some restrict membership to members of the board of directors. We sometimes forget when writing bylaws that such votes can hold so much power later on. Often, so few people turn up for a meeting that even a small organizing attempt can easily sway the vote at the members' meeting. A busload of new members might outvote longtime members in many nonprofits.
People rarely want to admit that their organization has become useless. If the original purpose has been served, they may want to redefine the organization and give it a new purpose. Depending on how vague the objects of incorporation are, the change may not even have to come to a members' meeting.
Such change can be quite appropriate. When polio was mostly eradicated, the March of Dimes could have wound up. Instead, it chose a new mission: to improve the health of babies by preventing birth defects, premature birth, and infant mortality. Was it right or wrong to change the existing organization? Well, the problem they chose was very important. The charity saved itself some legal costs and the pain of watching a beloved organization die. When radically changing the mission, take great care that donors to the former mission feel the new one is similar enough, or appropriate enough, that their monies are not being misused.
In most cases, organizations only talk about winding up when resources are drying up and no new ones are being found. Options become limited to wind-up or being acquired by another, more solvent, organization. The latter sometimes happens when the lack of resources is due more to mismanagement or poor fundraising than to lack of a valuable mission. The organizations sometimes choose to speak of a merger instead of an acquisition; it sounds nicer. But unless BOTH organizations wind up and form a new organization together, one has effectively disappeared into the other.
If a charity is truly wound up, the assets must go to a charity doing related work. The reader who asked this question apparently did not attract enough votes to keep the original organization alive, but could form a new charity and seek to have the assets transferred there. Even without those assets, a new organization can always be started.
Sometimes it really is easier to have a new phoenix rise from the ashes than to try to save the dying bird. In my community, I can think of one organization that should die because the members foolishly passed a bylaw a few years ago that required all decisions to be made by 100% consensus. This is an umbrella group for highly competitive interests who are in contentious contract negotiations with each other frequently! Since the bylaw change, they have been able to decide little beyond when and where to meet.
Coming back to the question, the reader should determine the current decision status. Depending on local laws and the organization's bylaws, the decision may not yet be final. Unless the only voting members are the directors on the board, the issue has to come to a members' meeting. There may yet be a chance to save the organization.
The case should be based on what benefits the organization will bring to the community and what the consequences to the community are of a wind-up. History no longer matters, and there is no point finding new resources for unimportant work. If the cause is still important, and the work is valued, some way should be found to save the programs whether or not the organization survives.
***********
Because nonprofit organizations are formed to do good does not mean they are always good in their own practices. Send us your ethical questions dealing with volunteers, staff, clients, donors, funders, sponsors, and more. Please identify yourself and your organization so we know the questions come from within the sector. No identifying information will appear in this column.
To submit a dilemma for a future column, or to comment on a previous one, please contact editor@charityvillage.com. For paid professional advice about an urgent or complex situation, contact Jane directly.
Disclaimer: Advice and recommendations are based on limited information provided and should be used as a guideline only. Neither the author nor CharityVillage.com make any warranty, express or implied, or assume any legal liability for accuracy, completeness, or usefulness of any information provided in whole or in part within this article.
|
|||
