Recently, the CNBC "American Greed" TV series launched with a memorable episode that wounded and embarrassed nonprofits (Harvard, Penn State, and dozens of evangelical ministries) a decade ago. "The Con Man" was John Bennett. CNBC reported, "Some said he was a visionary and a godsend. His New Era Philanthropy foundation doled out $100 million nationwide. Was it too good to be true?"
Yes. Could it have been avoided? Maybe. Will it happen again? It's not likely if you follow the well-researched and documented counsel in Ron Mattock's new book. "The Zone of Insolvency," writes Mattocks, "is a period of corporate financial distress, sandwiched between solvency and total insolvency."
Mattocks puts a spotlight on the alarming number--up to 450,000--of nonprofits that are operating under financial distress, the Zone of Insolvency, and how the courts have expanded board member legal responsibilities and liabilities in these cases. It's fascinating and scary reading. He gives key lessons from the success and failure stories of 10 organizations, including: United Way of America, New Era Philanthropy, Baptist Foundation of Arizona, American Red Cross, and others. The book is organized into four parts: perspective, naming the disease, symptoms and the cure.
You'll get hooked reading the first 10 chapters (10 nonprofits in trouble) and you'll be comforted with his practical suggestions for executives and board members. He includes sample board policies for avoiding or escaping the Zone of Insolvency--and every chapter concludes with "Five Great Questions for Your Next Board Meeting."
The author says every board must ask itself, "Do we exercise a healthy dose of skepticism in carrying out our fiduciary responsibilities?" And how about this one: "If we decided today to close this organization, would we complete the close-down with net assets remaining, or net liability?"
This important book expands on the themes in my Board Bucket and Budget Bucket, two of the 20 buckets in my book, Mastering The Management Buckets: 20 Critical Competencies for Leading Your Business or Non-profit. Caution! Some board members may get cold feet and resign from your board after reading The Zone of Insolvency. That's not necessarily a bad thing.
The book is logically laid out and well indexed. The author sets the scene by briefly taking the reader through case studies of ten non-profit organizations who dealt with challenges to the solvency of the enterprise. He identifies the responsibilities of each organization's board of directors and how each either fell short or rose to the occasion.
Each chapter is presented in a bite size format, coming quickly to the main teaching point and facilitating a quick return to any portion for further thought and future reference. A check list is provided at the close of the chapter to drive home the key points and enable their customization and/or application to your particular area of responsibility.
After a thorough portrayal of the various pitfalls a non-profit can and frequently does face, the final section presents various cure scenarios covering the analysis and assessment of a non-profit structure. These include a discussion of courses of action that will, first, prevent/avoid failure (insolvency); second, enable the honest assessment of the situation to recognize that failure (bankruptcy) is possible or even probable and third, in the worst case, guide the dissolution of the organization with no further or minimal damage to its distributed assets.
This is a very valuable work that can serve as an excellent textbook and discussion guide in both academic and business seminar environments and as a desk-side reference for all who serve in any oversight capacity for a non-profit enterprise.
This is an excellent book on what the tip offs are for a non-profit that is looking like it might go belly up. After working for several non-profits as a board member, I wish I had had this in hand before some of the board meetings, as I would have had a much better way of relating what I saw to those who were so mission-oriented that they refused to see what they should have seen in the business end of a non-profit.
The book takes you through several non-profit horror stories and bad dream situations to give you a feel for how bad it can get, and what they board members may have to face. It details several bad deals, scandals, and non-profits working through difficulties to give you a flavor of what can happen. While I would have liked it to be a bit more definitive about what certain things were about, and when things will have to be dealt with, it is certainly a revelation about how mismanaged non-profits can be, and what it may take to right the ship. It also deals with the event that all 'true believer's' dread, when to close the curtain.
While a bit short on details at some junctures, it nevertheless details the hazards, and what good board members need to be aware of to prevent themselves and their organizations from falling into the Zone of Insolvency, which can become a personal liability issue as well.
What sucks is AMAZON sending me notices every 6 hours to do another review of this book!
Product Details :
Hardcover: 240 pages
Publisher: Wiley; 1 edition (April 11, 2008)
Language: English
ISBN-10: 0470245816
ISBN-13: 978-0470245811
Product Dimensions: 6.3 x 0.9 x 9.2 inches
More Details about The Zone of Insolvency: How Nonprofits Avoid Hidden Liabilities & Build Financial Strength, 1st edition
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