Illinois Nonprofit Principles and Best Practices Case Studies Publication

8/14/2019 Illinois Nonprofit Principles and Best Practices Case Studies Publication

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Practical Application of

Illinois Nonprofit Principles & Best Practices:FIVE CASE HISTORIES FROM

NONPROFITS & GRANTMAKERS


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Acknowledgements

Researched and Developed by Donors ForumValerie S. Lies, President and CEORobin Berkson, Senior Vice President for Membership and External Relations

FundingThis project was undertaken with the generous support of the Henrietta Lange BurkFund, administered by Bank of America Merrill Lynch.

Project DirectionCeleste Wroblewski, Vice President, External Relations, Donors Forum

Research and WritingDan Baron, Consultant

Leaders and Organizations ProfiledChristine Edwards, Winston & Strawn, LLP (for Metropolitan Family Services)Bob Glaves, Chicago Bar FoundationSandra Guthman, Polk Bros. FoundationRichard Jones, Metropolitan Family ServicesArt Mollenhauer, Big Brothers Big Sisters of Metropolitan ChicagoCarrie Newton, Camp of Dreams

Suzanne Strassberger, Metropolitan Family Services

EditingMarilou Jones, Director of Communications, Donors Forum

Publication DesignFrances Duberstein, Development and Communications Volunteer, Donors Forum

Copies of this report, as well as a downloadable PDF or an html copy

ofIllinois Nonprofit Principles and Best Practices, are available on DonorsForums website: http://www.donorsforum.org.

Copyright 2009Donors ForumAll rights reservedPrinted in the United States of America


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Table of Contents

Nonprofits

Big Brothers Big Sisters of Metropolitan Chicago, pg. 4Principles booklethelps organizations make right decisions

Camp of Dreams, pg. 9"Principles helped us set benchmarks"

Metropolitan Family Services, pg. 14Booklet offers specific, user-friendly approach to governance

Grantmakers

The Chicago Bar Foundation, pg. 19Principles gave us road map on key issues

Polk Bros. Foundation, pg. 24Principles is a motivating force in push for accountability


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Practical Application of

Illinois Nonprofit Principles and Best Practices

Nonprofit Case Study: Big Brothers Big Sisters ofMetropolitan Chicago

Principles booklethelps organizations make right decisions

The following case study focuses on how Big Brothers Big Sisters of MetropolitanChicago has usedIllinois Nonprofit Principles and Best Practices, which was developed

by Donors Forum as a call for nonprofits and grantmakers to strive for excellence inrealizing their missions, managing resources effectively, and governing well. Thebooklet is part of Donors Forums Preserving the Public Trust Initiative, whichbegan in 2004.

The booklet addresses a variety of key topics faced by nonprofits and grantmakers,including mission and purpose, governance, legal compliance, fiduciaryresponsibility, communication, and disclosure.

Need forPrinciples

In recent years, greater focus on ethics has affected corporate and governmentalsectors, most famously, perhaps, through the Sarbanes-Oxley law that holds publiccompanies accountable. ThePrinciples booklet emerged in the context of growinginterest in ethical standards in the nonprofit sector. One of the most importantresponsibilities of nonprofit organizations is governance. In recent years, the InternalRevenue Service has devoted more attention to governance in the nonprofit sector;one example is the decision to revise the governance section of Form 990, which issubmitted by tax-exempt and nonprofit organizations to provide the InternalRevenue Service with annual financial information. At the same time, morenonprofits are also realizing how closely good governance and overall success are

linked.


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Big Brothers Big Sisters of Metropolitan ChicagoFor more than a century, Big Brothers and Big Sisters organizations have servedyouth through mentoring programs. Through the model, adults develop one-on-onementoring relationships with youth. Early on, Big Brothers and Big Sistersorganizations operated separately. In 1977, Big Brothers of America and Big Sisters

International joined forces and became Big Brothers Big Sisters of America.

StructureIn Chicago, the organizations board includes the executive, program, finance, andboard development committees. Board members are required to contribute aminimum of $10,000 to the organization annually. In addition, Big Brothers BigSisters of Metropolitan Chicago (BBBSMC) features a leadership board of youngprofessionals that provides funds; recruits and develops future mentors, partners,and board members; and works to generate public awareness of the organization.

Since the first Big Brother - Little Brother match was made in Chicago in 1969;more than 12,000 children from metropolitan Chicago have had their lives enrichedby relationships with caring adults through the program. A study conducted byPublic/Private Ventures found that kids involved with Big Brothers Big Sisters were46% less likely to start using drugs, 27% less likely to start using alcohol, and 33%less likely to hit someone than their unmatched counterparts.

Big Brothers Big Sisters of Metropolitan Chicago has received high rankings for itseffectiveness from a range of sources, including Forbes magazine, which ranked theorganization as one of its top charities; Charity Navigator; and the AmericanInstitute of Philanthropy.

The total revenue of the organization (2009 figure) is $1,950,250.

UsingPrinciplesArt Mollenhauer, Executive Director of Big Brothers Big Sisters of MetropolitanChicago, came to the organization after a 24-year career with Baxter Healthcare.Mollenhauer says that when he started at BBBSMC in 2006, the organization faced anumber of key challenges. As BBBSMC ran into economic problems, he says, it

began to struggle with how to maintain services while trying to not compromise andreduce standards.


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Mollenhauer portrays an organization that, he says, had a short-term orientationthat was driven by economic survival and was heavily in debt. We were reallystruggling, and I felt we needed to go back to what is best for communities and kids.I saw many well-intentioned people, but we needed to turn things around. Wefound that the importance of standardization was great.

We used thePrinciples booklet as a guidepost, Mollenhauer adds. We think it is anexcellent tool. If I were governor of Illinois, these are the standards that I wouldimplement, he says. They can help make sure that the public gets a return on itsinvestment in nonprofit organizations.

Mollenhauer sat on a state reform commission for after school programs and saysthere is a 70 percent overlap between thePrinciples book and standards that weresubmitted to the commission. Mollenhauer says this effort was influenced by bestpractices laid out in thePrinciples.

Measuring ImpactMollenhauer says one major concern the organization was trying to understand washow it can measure the impact it makes on people it serves. We refer to ourselves asthe gold standard of youth mentoring we are big on outcomes, measurement, andresearch. But how do we know our work has an impact?

One section of thePrinciples book confirms the importance of answering thatquestion, stating that organizations should Set long (multi-year) and short-

(annual) term objectives evaluating program and organizational effectiveness, andannually evaluate progress toward achieving objectives. It is really critical to havewell-thought-out impact standards defined, regularly analyze your performance, andreport this information to the donors and community partners. This assurestransparency and helps fosters development of a continuous improvement culture.

Self AssessmentWhen dealing with our organizations turnaround, thePrinciples book was a usefultool for what became an assessment, Mollenhauer adds.

The organization, he adds, also does a self assessment with its national office.Because there are a lot of similarities between thePrinciples book and what thenational office asks for, BBBSMC used thePrinciples book as an internal test beforegoing to the national office.


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In an era when measuring outcomes for funders and other key constituencies may bemore critical for nonprofits than ever, Mollenhauer says the book was especiallyuseful. It was timely because of the emphasis on measuring what you do, he says.So many organizations are competing for the same dollars, and its extremely

important to think key issues through.

In the most fundamental way, he says thePrinciples book provided a kind ofoperational audit for the organization. When dealing with our turnaround, welooked at these principles to help us get a handle on what we are doing well and notdoing well. That helped us figure out where we were and, so to speak, put a stakein the ground.

Mollenhauer, however, says that while the organization has focused on its programarea, efforts to move the organization forward were really comprehensive,involving operations, board performance, fund development, and quality controls.We felt that this process had to be comprehensive if we were going to make itsustainable.

Process

The organization used thePrinciples booklet to help develop a self assessment as agood starting point for a strategic plan. In addition, Mollenhauer says, the bookletwas useful on a day-to-day basis, as we tried to meet our goal of a continuous-improvement culture.

Staff and board members were involved in using thePrinciples book and the BigBrothers Big Sisters National Standards for all of these purposes. In addition, BigBrothers Big Sistersconsidered what leading universities had to say about bestpractices in the field. Corporations, paid consultants, and pro bono consultants werealso involved. Meanwhile, oversight groups were set up in several key areas,including program, board and resource development, and financial and riskmanagement.

We tried to use the booklet with a positive attitude, says Mollenhauer. We used itto learn where we can improve. Among all participants, Mollenhauer says the

board drove this process.

The self assessment was completed in six weeks. According to Mollenhauer, it tookthe organization nine months to implement its overallstrategic plan. ThePrinciplesbook, he says, provided useful guidance throughout the development of theorganizations self assessment and strategic plan.


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Sharing a PerspectiveMollenhauer says he would tell other organizations that using thePrinciples book iscomparable to getting an annual physical. At a minimum, this information shouldbe consulted once a year. A great time to do that is when youre going through anykind of strategic planning.

He says that the sector is really in need of better practices, and can really benefitfrom thePrinciples booklet. That can help lead to excellence.

ThePrinciples book, he adds, also reinforces what he believes volunteers and donorsneed to do before they get involved with an organization. Mollenhauer has beenboth a volunteer and donor for Big Brothers. I had been a Big Brother, workingwith a kid, and my wife and I had been donors. So I knew about the organizationfrom the external side. My belief is that before you volunteer time or write asubstantial check, you should be learning about an organization. Look at its financialaudits, operational standards, and programs. I strongly recommend that you conductdue diligence before becoming a board member or volunteer, he says.

Book Could be Used More WidelyNonprofits and grantmakers, he says, will find the book useful. ThePrinciples bookis a great document, Mollenhauer adds. I think it should be more widely utilized,and pushed by more donors. It goes a long way toward helping organizations makethe right decisions.

ConclusionsFor Big Brothers Big Sisters of Metropolitan Chicago, thePrinciples book played animportant role at a pivotal time. The book was used to help the organizationexamine principles and best practices, but also fit well into overall efforts involvingBBBSMCs national office and the state of Illinois.

The organizations executive director frequently referred to importance of measuringoutcomes for the organization always an important subject, but perhaps especiallycrucial during a period of reassessment. ThePrinciples book was a useful tool on thisfront.

Mollenhauer says thatIllinois Nonprofit Principles and Best Practices helped us intangible and real terms. It really fit in with our culture, and with our need to developa really well-thought out process for moving our organization forward and setting ahigh standard for performance the community can be proud of.


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Nonprofit Case Study: Camp of Dreams"Principles helped us set benchmarks"

The following case study focuses on how the Chicago-based nonprofit organizationCamp of Dreams has usedIllinois Nonprofit Principles and Best Practices, which wasdeveloped by Donors Forum as a call for nonprofits and grant makers to strive forexcellence in realizing their missions, managing resources effectively, and governingwell. ThePrinciples booklet is part of Donors Forums Preserving the Public TrustInitiative, which began in 2004.


Need forPrinciplesCarrie Newton, executive director of Camp of Dreams, says that when she started atCamp of Dreams, she found out that members of the organizations board werepassionate people who cared about the program, but many had come to theorganization without the kind of knowledge included inPrinciples. The booklet reallyprovides basic tenets and principles that you need to know in the not-for-profitworld.

In addition, the booklet came out at a time when many nonprofits were exploring

how to improve the way they govern themselves and address key ethical issues. Likecorporations and many government entities, nonprofits were focusing more onaccountability.

Camp of DreamsCamp of Dreams is a nonprofit organization devoted to bringing uplifting,engaging, and free educational programs to young people who would likelyotherwise go without these programs. The organization received its 501(c)(3) statusin 2004, though it operated independently since 2003 as a pilot project of a parentorganization.

Camp of Dreams serves low-income children from underserved communitiesbetween the ages of eight and 18. According to the organization, these students canbenefit enormously from the same types of educational, cultural, and community-building opportunities that are more readily afforded to young people from moreprivileged situations. All of Camp of Dreams programs are free to all of theparticipants, who are called Dreamers.


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The year-round project consists of two complementary components a summercamp and a school-year program:

Summer camp: For three weeks in July, Camp of Dreams runs an overnightcamp at a 650-acre campus in Oregon, Illinois.

Community Days: This component of the program is offered two Saturdaysa month during the school year and includes college preparedness programsfor the high school students.

Both programs feature a wide range of activities that target the academic, health,civic engagement, and other needs of children.

Camp of Dreams works to help students achieve specific outcomes, includingimproved grades, behavior, extra-curricular participation, high school graduation,and enrollment in college. At the same time, the organization strives to successfullyencourage accountability among participants and a supportive community of peopleconnected to Camp of Dreams.

Total revenue for Camp of Dreams (2008 figure) is $346,629. Camp of Dreams hastwo full-time staff members and 30 part-time staff members.

UsingPrinciplesNewton, a corporate lawyer by training, emphasizes that thePrinciples booklet is by

no means a treatise, but it does provide critical information about boardmanagement and not-for-profit leadership that everyone needs to be familiar withbefore entering the field.

When Newton arrived at Camp of Dreams, she says, the booklet was already aresource the organizations board was using as it put together a board manual. Amonth-and-a-half later, the organization held a retreat with a daylong series ofworkshops. Newton adds that board members already respected Donors Forum.Everyone respects the Donors Forum its a given. That lent significant credibilityto what we were trying to do.

It was important for me to formalize processes that were not yet in place like aprocess for bringing in board members or evaluating them, she says. I was prettyadamant about setting those things into place, and I relied on two things:independent consultants and thePrinciples booklet.


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The booklet, Newton adds, contributed to a process that became collaborative, asboard and staff members worked together to define, and meet, specific goals. Sheadds that that was a major departure from her work in the corporate sector.

I was shifting my way of thinking away from for-profit America into a nonprofit

mindset, she says. When I have worked in corporate settings, leadership has oftenoperated from the top down, but thats not always the case in nonprofits.

Setting Benchmarks

Newton says thePrinciples book was especially useful at helping the organization setbenchmarks for a variety of areas, including how to orient board members and createa system for self-evaluation. It also helped set forth requirements and duties ofboard members at the beginning of each year. A lot of these areas were already onthe table, but I wanted to bring a sense of urgency to them.

ThePrinciples book provided a way of showing there is a long history and traditionof how to run not-for-profits ethically and efficiently, she says. The booklet saysthis very simply and directly. When the organization produced a five-year plan, sheadds, it started to think big picture this was no longer a month-to-monthorganization.

Now, one of my goals, she says, is to get us to the point where the board andorganization are not doing things in a haphazard manner that what we do isthought through and intentional.

Key QuestionsNewton pointed to a number of key questions that the organization and its boardhave tried to face questions that thePrinciples booklet helped Camp of Dreamsaddress.

Where do we need to improve?, she asks. What do we need to do to moveforward the organization from a structural standpoint? Fiscally? How can weimprove the training of board members? These are the kind of questions we haveasked, Newton says, and continue to ask.


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Challenges of a Growing OrganizationCamp of Dreams, according to Newton, is in a growth phase leaving the start-upphase of nonprofit life and trying to achieve stability.

There have been times, Newton adds, when she had encountered resistance to ideas

in thePrinciples book. The board doesnt dislike what I propose its just new. Insome cases, I have had to step delicately in some respects, but thats understandable.That is when thePrinciples booklet backs me up. It helps push back any fear andhesitation.

As of result of working with thePrinciples, the board of Camp of Dreamsimplemented a process for evaluating the executive director. In particular, thebooklet reinforced the importance of evaluation and making expectations clear.

In addition, Newton says the booklet helped reaffirm a sense of fiduciary duty forher and the board. Ive been on boards for years, but never really thought aboutfiduciary duty to an organization. Now, she says, she and board members have aclearer sense of how each board member is responsible for the fiscal and structuralhealth of a nonprofit organization.

Its not just about writing a check, Newton says, but also about reviewingfinancials, written materials, and marketing materials. There can be a tendency toleave those things to staff but thats not how I think about it now.

How Others Can Use the BookletWhen asked how other organizations can use thePrinciples booklet, Newton saysthey should read it, digest it, and take it seriously.

For organizations focused on self-evaluation, she adds, the book amounts to achecklist of what a board needs to be doing on an annual basis. Its not going tomake someone an expert on not-for-profit finances, or how to structureprogramming or do fundraising. It provides a guide the book is kind of like thechapter headings of what to do in the not-for-profit world.

ConclusionsCamp of Dreams provides an example of how thePrinciples book can benefit a smalland relatively young nonprofit organization that is trying to meet challenges relatedto organizational growth. The book has also proven useful to the organization as itmakes changes under Newton, a new executive director.


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One critical point Newton makes reflects how board members learn and useinformation about a nonprofits financial responsibilities. While thePrinciples bookprovides clarity and guidance on a range of issues, many related to governance, italso helped the organization navigate through terrain that might not be as familiar toboard members.

Illinois Nonprofit Principles and Best Practices also provided a framework for answeringkey questions (i.e., How can we improve training of board members?) and settingbenchmarks. This booklet, Newton says, is a great entry into understandingpretty much every requirement that a nonprofit needs.


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Nonprofit Case Study: Metropolitan Family ServicesBooklet offers specific, user-friendly approach to governance

The following case study focuses on how Metropolitan Family Services has usedIllinois Nonprofit Principles and Best Practices, which was developed by Donors Forumas a call for nonprofits and grantmakers to strive for excellence in realizing theirmissions, managing resources effectively, and governing well. ThePrinciples bookletis part of Donors Forums Preserving the Public Trust Initiative, which began in2004.

The booklet addresses a variety of key topics faced by nonprofits and grantmakers,including mission and purpose, governance, legal compliance, fiduciaryresponsibility, communication and disclosure.

Need forPrinciplesRichard Jones, Executive Director of Metropolitan Services, pinpoints one reasonwhy thePrinciples book is especially timely. This document came out at a timewhen there is a call for increased transparency for nonprofits, says Jones, who hasmore than 40 years of experience in the nonprofit sector and also serves on DonorsForums Board of Directors. Nonprofits, like corporations and many governmententities, are striving to meet their goals in an era when accountability has becomemore and more important. On the corporate level, perhaps the most famousexample of this trend is the passage of The Sarbanes-Oxley Act of 2002.

Principles reflects a shift in the nonprofit sector characterized by an increased focuson accountability, transparency, and scrutiny of a variety of issues, includingexecutive compensation. Changes are also reflected in attempts by some in thenonprofit sector to emulate best practices that have been carried on in the for-profitsector, like the growth of compensation committees.

Metropolitan Family ServicesMetropolitan Family Services (MFS) is a large social service agency that has servedlow-income and working poor families in the Chicago region for more than 150

years. It first opened its doors before the Civil War. The organization has sevenmajor service centers. With 550 full and part-time staff, MFS serves families fromsouthwest Cook to DuPage counties, as well as Evanston and Skokie. Theorganization serves close to 55,000 families and individuals each year.


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Metropolitan Family Services was the first official charitable organization inChicago; the agency also played a major role in the rehabilitation of the city after theChicago Fire in 1871, when it administered $10 million in aid to families displacedby the fire.

The total revenue of MFS (2007 figure) is $34,607,219.

Programs and services of MFS include child and youth development, counseling,economic stability, employee assistance network, legal aid, parent development,older adult services, and violence prevention and intervention. The organization alsoadvocates for stronger public policies. In recent years, MFS has advocated forlegislative solutions on a number of issues affecting communities and low- andmoderate-income families, including predatory lending, child support, and youthviolence.

Input from communities is also an important component of how MFS operates. Ateach center, community boards include residents and leaders of local businesses andnonprofit organizations whose support helps make families and communities strong.

UsingPrinciplesBy coincidence, Jones says, a member of the organizations Legal Aid Society andthe director of its legal aid program attended a community meeting where there wasa presentation on thePrinciples book. Later, a member of the organizations boardsuggested that MFS more formally explore governance and other issues, and the

organization recruited an attorney for this purpose.

We take pride in being on the cutting edge, and leaders in the field, Jones says.We are a quality service provider with a very strong reputation in the community,and we felt the booklet was very timely. We wanted to really review where we werein relation to the principles.

Jones adds that MFS was especially interested in how thePrinciples book addressesissues related to governance. There was specificity in terms of how governanceprinciples should be evaluated and measured. That appealed to our group.

According to Jones, one area for improvement related to how board committeesoperate. The organization, he notes, did not have clearly written charges for each ofits committees. In addition, MFS had not reviewed its bylaws in a while.


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MFS was able to dedicate Suzanne Strassberger, its Vice President of GovernmentAffairs and Special Initiatives, for the organization to this project. "A big part of thiseffort was setting up lines of responsibility within the organization, Strassbergersays.

The book proved to be a useful and versatile tool that we turned to as theorganization standardized charters for board committees, complied with the new990 form and executed a variety of other changes, according to Strassberger.

"I saw this process -- andPrinciples -- as a way of educating and involved the boardabout its roles," Strassberger says. "A board whose members are comfortable in theirroles is a committed board."

Thorough ReviewJones adds that The book encouraged us to do an extensive review. The more welooked into it, the more we focused on clear relationships, functions, and areas ofauthority. For example, it was not clear to us before this process that our budget isnot something to be approved at the community board level -- but at thepolicy boardlevel.

Role of AttorneyMFS was also able to enlist the pro bono services of an attorney from a leadingChicago law firm -- Christine Edwards from Winston & Strawn, LLP.

"People who join boards are often used to systems, procedures, and controls becausethat's what they've seen in their own work," says Edwards. "They expect to see thesethings in nonprofits."

Edwards adds that one of the issues faced by MFS was that "the organization hadnot kept up with its growth. The various boards of directors did not fit easily into agovernance profile of accountability, standards for reporting, and standards ofaccountability from one board to the next board."

Edwards played an important role in the development of a conflict of interest

statement that reflected the principles. She also contributed expertise toward thedevelopment of a document destruction policy as well as review of the organizationscharter and bylaws and other matters.


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In addition, MFS emphasized the development of a whistle-blower policy, which isalso discussed in the booklet. The organization decided to adopt a 1-800 number tofacilitate this policy, as well as clear procedures that staff or an outside agency shouldfollow.

"Metropolitan Family Services was a very well-run organization throughout thiswhole process, and had attracted some of the most devoted volunteers that I hadever come into contact with," Edwards says. "The booklet was a valuable resourcebecause it looked strategically at how all of the organization's pieces fit together.Most boards will think about issues in isolation; the book looks strategically in termsof overall processes and procedures."

Self AssessmentA self assessment was conducted by the seven board members, who conducted asurvey, pulled together an evaluation, and sent it to other board committees.

Overall, Jones now says he sees a difference in how MFS benefits from the booklet.In previous cases, we would have achieved our goals, but with the help ofPrinciples,we got there in a more orderly manner.Principles informed our review process,which has in turn informed our policies.

MFS ModelAs a large organization, MFS was able to use resources that might not be available tosmaller organizations. For example, Jones cites the contribution of the organizations

large board, a dedicated staff person, and pro bono legal services as having asignificant impact on the process. It turned out that our staff person devotedconsiderable time to this process, he says. That was not anticipated, but wedecided to continue along those lines.

Advice

Jones says he would strongly recommend thePrinciples to other nonprofits. Thebook is manageable and user-friendly -- and it gives you a nice clear path so that youcan avoid all that second-guessing. Its an especially great summary of best practicesfor governance of nonprofits that I believe are the best [standards] available.


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ConclusionsMetropolitan Family Services made a major commitment to strengthening theorganization, andIllinois Nonprofit Principles and Best Practices played an importantrole in that process. It became apparent through MFS' process that it was able todedicate staff to this project -- and pro bono counsel -- in a way that other

organizations may not be able to do. That said, Jones suggests that nonprofits canadapt their own needs and capacities to addressing key issues -- and using the

Principles booklet.

The organization, says Jones, did not view this challenge as a challenge that is metonce -- but as a continuous process in which policies will be reviewed on a regularbasis.

Another key may lie not just in what the organization achieved, but in how itresponded. MFS is a large nonprofit that had not updated many processes for anumber of years. The organization used the booklet to help guide what became avery intensive commitment to looking at how it operates -- and usedPrinciples tohelp guide changes.


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Grantmaker Case Study: The Chicago Bar FoundationPrinciples gave us road map on key issues

The following case study focuses on how the Chicago Bar Foundation has usedIllinois Nonprofit Principles and Best Practices, which was developed by Donors Forumas a call for nonprofits and grantmakers to strive for excellence in realizing theirmissions, managing resources effectively, and governing well. ThePrinciples bookletis part of Donors Forums Preserving the Public Trust Initiative, which began in2004.


Need forPrinciplesIn recent years, greater focus on ethics has affected corporate and governmentalsectors, most famously, perhaps, through the Sarbanes-Oxley law that holds publiccompanies accountable. ThePrinciples book emerged in the context of growinginterest in ethical standards in the nonprofit sector. One of the most importantresponsibilities of nonprofit organizations is governance. In recent years, the InternalRevenue Service has devoted more attention to governance in the nonprofit sector;one example is the IRS decision to revise the governance section of Form 990,which is submitted by tax-exempt and non-profit organizations to provide the

Internal Revenue Service with annual financial information. At the same time, morenonprofits are also realizing how closely good governance and overall success arelinked.

The Chicago Bar FoundationThe Chicago Bar Foundation is part of the Chicago Bar Association, one of theleading metropolitan bar associations in the country. Founded in 1874, theassociation is governed by a 23-member board of managers and has 55 practicecommittees, 23 service committees, and 15 special committees.

The Chicago Bar Association, which is a voluntary association, has over 22,000members. The total revenue of the organization (2007 figure) is $6,186,215. Theorganization provides a wide variety of services to the legal profession, the state ofIllinois, federal courts, and the public. The array of services includes a career andplacement center, various programs that promote diversity in the legal profession, ajudicial evaluation committee, a lawyer referral service, and many other services.


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As the charitable arm of the Chicago Bar Association, the Chicago Bar Foundation(CBF) advances the work of pro bono and legal organizations that provide legal aidto thousands of vulnerable residents in the area.

UsingPrinciples

Bob Glaves, Executive Director of The Chicago Bar Foundation, says that thePrinciples booklet provides meaningful information for an increasingly diverse sector.In the nonprofit sector, there are so many different types of organizations. Toadopt a one size fits all approach to regulating nonprofits can really put difficultrequirements on very small organizations. What this book has done is strike abalance. The principles are really intended to apply to everybody, while the bestpractices provide some flexibility based on the type of organization you have.

For The Chicago Bar Foundation, the principles were used to help the organizationdevelop more efficient ways to address critical issues, from governing theorganization to creating policies that spell out how it should face challenges like theneed for new whistle-blower policies. The principles help keep us on track andprovide us with a framework on these issues, Glaves says. Thats been very helpfuland has allowed us to be a more efficient organization.

As an organization that runs numerous programs, allocates grants, and serves asizable membership base, working with thePrincipleswas not as much about solvinga single specific problem at The Chicago Bar Foundation, but putting into placestronger policies.

Self AssessmentThe Chicago Bar Foundation asked its nominating and governance committees toconduct a self assessment to determine howIllinois Nonprofit Principles and Best

Practices applied to the CBF and where the organization stood in relation tospecific principles. The CBFs associate director and development director played akey role in examining the principles. Now, the organization reviews how it reflectsthe principles once a year.

For example, a key recommendation of the booklet is that The governing body [of

an organization] regularly assesses the organizations mission and the effectiveness ofthe organization and its leadership in assessing it. Before it worked with theprinciples, The Chicago Bar Foundation had not conducted regular governing bodyevaluation in any formal way. Now, it conducts that kind of evaluation throughsurveys that include questions developed by a board committee.


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Glaves says the principles have encouraged CBF to take a look at practices it mightnot otherwise have considered. When you get down to best practices, like whistle-blower policies and document destruction, most nonprofits didnt address theseissues before a few years ago. Now they are required. Whats nice about the

Principles book is that it gives you a kind of map. If you use an assessment tool

annually, its a cue to see if a policy needs to be updated.

The goal, according to Glaves, is to make thePrinciples a living document. Having awhistle-blower policy doesnt mean a lot if people dont know what it is. We try toremind the board and have information about it on our website. We dont want toget into a situation where this policy is necessary. But if it is, we need to make sureyou can find and understand that policy.

Likewise, The Chicago Bar Foundation now has a gift acceptance policy and haseducated staff about what it means.

Another section of the principles recommends that The role, responsibilities,selection and tenure of the governing body are clearly stated in the organizationsgoverning and policy documents and understood by the governing body members.Glaves says that the CBF had something in place to address these points, but werealized it could be better. Paying attention to thePrinciples has helped us improve inthese areas.

Process

While one committee at the CBF reviews policies every year in light of theprinciples, five or six committees, and sometimes the board, are responsible for allmaking sure all points are covered.

Using the principles has helped the CBF address key issues in a more comprehensiveand structured fashion, according to Glaves. The idea is to create with your boardand donors an atmosphere of transparency and accountability, he says.

Need for EducationCBF also offered an educational program for executive directors of nonprofit

organizations. The program focused on governance issues and featured DonorsForum staff who were involved in the creation of thePrinciples booklet.


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To expect people to be well-versed about issues like governance, financial affairs,and disclosure is not realistic, Glaves says. These issues are also not what gotpeople into the nonprofit arena in most cases, we find, people who get involved inthis field who are attracted to a mission. Its so important to educate board and staffabout critical issues.

Creating a FrameworkGlaves says that one of the greatest benefits of the booklet is that it gives us goodguideposts to review issues on an ongoing basis. That has been very helpful, and hasallowed us to be a more efficient organization. The biggest thing that stands out isour processes we have developed more formal ways to address governance andother key issues. When we looked at these issues in more informal ways, we maynot have been as consistent about it.

Also key, he notes, is that the organization is committed to working on issuesaddressed by the book on an ongoing basis.

One sign of how The Chicago Bar Foundation regards the principles is that threeyears ago, the organization made it a condition in grant guidelines that granteesmust agree to subscribe to the booklets principles and strive to adopt best practicesthat are pertinent to them. Grantees, he says, have also consistently providedfeedback that the principles provide a strong framework for how to tackle importantissues.

Glaves says that other organizations usingPrinciples

might want to considerestablishing a committee that is responsible for governance and a process to reviewkey policies. He acknowledged that not all organizations are likely to have thecapacity to establish a separate committee for this purpose, but that they can adapttheir situation to employ the principles in way that fits what they can do.

We have seen a lot of organizations appreciate this book for similar reasons that weappreciate it, Glaves adds. It gives them a road map to addressing these issues.

Conclusions

Perhaps the key phrase Glaves used to describe how The Chicago Bar FoundationusedIllinois Nonprofit Principles and Best Practices as a road map. The bookprovided a point of reference, reminders, and organized information that helpedCBF orient itself as it addressed key issues.


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Glaves also emphasized the importance of paying close attention to critical issues likegovernance over an extended period of time. The idea, he suggests, is that issuesraised in thePrinciples are best addressed in a consistent way over the long haul, notas one-time-only concerns. ThePrinciples book not only provides guidance it servesas a tool that helps engage board and staff members on various issues.

ThePrinciples book has also proved to be a valuable tool for self assessment at theorganization not only in terms of targeting how the CBF meets specific goals, butby encouraging a systematic and consistent review of key aspects of the organization.

Another key phrase also emerged in conversations with Glaves: formal processes.Because ofPrinciples,Glaves says, we are more likely to look at key issues on aregular basis and make them part of our work.


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Grantmaker Case Study: Polk Bros. FoundationPrinciples is a motivating force in push for accountability

The following case study focuses on how the Polk Bros. Foundation has usedIllinoisNonprofit Principles and Best Practices, which was developed by Donors Forum as acall for nonprofits and grantmakers to strive for excellence in realizing theirmissions, managing resources effectively, and governing well. ThePrinciples bookletis part of Donors Forums Preserving the Public Trust Initiative, which began in2004.


Need forPrinciplesSandra Guthman, Chair and CEO of the Polk Bros. Foundation, was on DonorsForums Board of Directors when the original principles were developed. She saysthePrinciples respond to issues that were being discussed in the nonprofit sector atthe time as well as corporate and governmental sectors.

There had been issues in the press for several years about foundation governanceand whether foundations were living up to their fiduciary responsibility, she says.We wanted to demonstrate to the public at large that we were serious about

governance and transparency.

Guthman adds that principles described in the book are always relevant, but in thecurrent economic climate there are more situations where not-for-profits are goingto be turned down for grants or discouraged. Its a tougher environment, so thetransparency and clarity that principles bring to the industry hopefully help relievesome of the stress in the system.

We as funders have a responsibility to grantees, she says. If the rules havechanged, we need to tell them.

Polk Bros. FoundationThe Polk Bros. Foundation is one of Chicagos largest charitable organizations.When the original Polk Bros. furniture, home appliance, and electronic retailerclosed in 1992, assets moved to the foundation, which was founded in 1959. Thenext year, Guthman who is the daughter of Samuel Polk, an original founder ofPolk Bros. became CEO of the Foundation.


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The Foundation works to reduce the impact of poverty and provide area residentswith better access to quality education, preventive health care, and basic humanservices. The primary focus is on programs that impact populations of need particularly public school children and their families in underserved Chicagocommunities, according to Polk Bros. program guides.

The Foundations largest area of funding, social service, includes workforcedevelopment, housing, legal services, community/economic development, and youthand family support.

The Foundation also actively seeks out partners and joins collaborative efforts.While these initiatives and collaborations span a number of issues, many of themfocus on public school education and housing/homelessness issues.

The total operating and administrative expenses of the Foundation (2007 figure) is$1,872,740. Total expenses and disbursements (includes operating andadministrative expenses as well as contributions, gifts, grants paid) is $26,042,287.

The total assets of the Foundation (2007) are $432,331,206.

Using thePrinciplesWe used thePrinciples book a lot internally during our strategic planning process tomake sure we had best practice policies and procedures in place, says Nikki WillStein, executive director of the Foundation. Many people might have originally

talked about standards, principles, and practices because of some crisis. But thisdocument stands on its own it doesnt require a crisis for it to be very useful.

Guthman says thePrinciples book helped the Foundation tighten up and clarify ourgovernance principles. The principles were a motivating force in push fortransparency, clarity, and accountability.

At the same time, she emphasizes the relationship between the Foundation andgrantees when discussing thePrinciples book. One of the things weve done that issubconsciously driven by the principles is develop a mindset that says to grantees

this is not a game of keepaway we will tell you what we are thinking and why weare thinking it.

The Foundation has also tried to make sure all staff members are aware of thebooklet.


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Being SpecificWhile using thePrinciples book, the Foundation addressed key board-related issues,including selection, tenure, and systems for ongoing communication. The bookletwas also useful as the Foundation considered key governance issues like mission, theneed for periodic review of policies, and establishing written criteria for policies.

In addition, thePrinciples book was used to address numerous issues involvingfinance and investment, the board as a whole, nomination of board members, andother concerns. The Foundation also took steps to create an audit committee duringthis process.

The Foundation did not see a need to examine or explore all areas related to theprinciples in an equal way. For example, the areas of legal compliance, fiduciaryresponsibility, and responsible stewardship already seemed to be implemented inaccordance with the principles and so required less attention than other areas.

AssessmentGuthman says that the Polk Bros. Foundation was going through a strategicplanning process as thePrinciples book was published. The book helped us set theagenda for our strategic planning, she says. We talk about assessment all the time assessment is obviously a challenging thing to do. We usedPrinciples to guide selfassessment for governance.

Education

The Polk Bros. Foundation has had little turnover of board members; at themoment, there are seven board members three of whom are Polk family members.

One section of thePrinciples book cites the importance of educating board members.The governing body ensures that its members are competent and knowledgeable,and it seeks diverse points of view and experience as needed to provide credible andeffective oversight of all aspects of the organizations work, according to thebooklet. Principles also cites the importance of developing the skills and experienceof board members -- and ensuring that they have access to sufficient informationand diverse perspectives.

Guthman says the Foundation is doing more to educate board members, and the

Principles book is playing an important role to reaffirm that process. The book isnot a cookbook, but a starting point to remind us that this work needs to be doneon a regular basis, she says. We are laying out an education process for boardmembers.


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That process, she adds, will involve taking board members on occasional site visits.The Foundation has also brought in experts for breakfast briefings for the boardonce or twice a year. What this document does, she says, is remind us thateducating the board is an ongoing responsibility.

Just as Guthman says the Foundation has tailored thePrinciples book to its needs,she believes other organizations can use it for the same purpose. Everyone has adocument they can turn to, a document that will remind them not to forget any oftheir duties, she says. Its the kind of book that grantmakers, and grantees canmake their own based on what they need.

Guthman adds that the booklet has been a factor in the Foundations efforts todocument what it does. Our work is much better documented now, she says. Oneexample: the Foundation made it a point to be more formal about creating anannual conflict of interest statement.

Overall, thePrinciples reinforced the idea that organizations must stay on top of arange of key issues. Its important to note that we have a goal of continuousimprovement, Guthman adds. We really did more to address that during ourstrategic planning process.

Conclusions

One conclusion to draw from how the Polk Bros. Foundation has used thePrinciplesbook is tied to the Foundation's relationship with grantees. Though it is clear that, in

many cases, using the guide is about addressing specific governance issues, thebooklet also reinforced Polk Bros. commitment to maintaining clearcommunications with grantees and those applying for grants.

Education of board members also emerged as a major issue. ThePrinciples bookreaffirmed the importance of education, not as a one-time-only obligation but as aconsistent element of how the foundation operates.

In general, the booklet was used as a reminder and a document that could bereferred to for a myriad of issues, from nominating board members to developing a

system for ongoing communication. For Polk Bros. Foundation,Illinois NonprofitPrinciples and Best Practices was at once a guide -- and a source that encouraged amore formal approach to planning and documenting the Foundation's goals andactivities.

Documents

Illinois Nonprofit Principles and Best Practices Case Studies Publication