“Bond—James Bond!”
Those words from the movie Dr. No introduced me to spies. (Dr. No also introduced Ursula Andress, but that’s another blog.) A summer visit to Washington, D.C.’s International Spy Museum provided a fascinating look at spies and their history, tools, and techniques. Their “Ground Truth Theater” discussed the 21st century challenge for spies to provide decision makers with unvarnished and objective facts.
The geospatial intelligence exhibit displayed satellite and high-tech intelligence gathering techniques then unavailable to James Bond and “Q”. But data gathered from spy satellites must be reconciled with what literally and simultaneously occurs at ground level to be credible. This factual and objective confirmation and reconciliation of multiple perspectives describes the concept of “ground truth”.
Wikipedia suggests the military’s slang definition migrated into current scientific usage. Military slang defines ground truth “to describe the reality of a tactical situation as opposed to what intelligence reports and mission plans assert the reality to be.” A foot soldier’s view differs markedly from a general’s. Both are needed!
Spies seek to secure early, objective, and actionable data for decision makers without direct access and far removed in time and place from a spy’s sources. Decision makers use this information to confirm, deny, test, and modify underlying assumption(s); learn; and, hopefully, make better informed decisions.
As deliberative bodies juries and boards require ground truth to work. Jurors decide based on relevant facts and conflicting interpretations about their significance. Successful trial lawyers learn to anchor their case on unquestioned and irrefutable objective facts. When facts are accepted as true, a jury evaluates the litigants’ conflicting interpretations for legal significance and meaning. When rendering their verdict, a jury establishes the case’s ground truth.
Boards of directors must determine their organization’s ground truth. They lack in-depth knowledge derived from daily operations compounded by the quality and timeliness of board information and members’ preparation for and substantive engagement at meetings. Designed with packed agendas, sole reliance on staff, and social functions members may be distracted by their personal concerns. Board members don’t run their own business or personal lives based on a few meetings lasting several hours a year. Yet this is how boards govern.
Ground truth should guide board decisions. With access to timely and unfiltered data members first form their assumptions based on ground truth as they understand it. But members must then test them openly and explicitly through a healthy board’s hallmark of give and take discussions.
Boards have implicit and explicit expectations. When ground truth conflicts with expectations, the gap between expected and actual results, whether positive or negative, should facilitate the nonprofit’s examining it underlying assumptions and theories of change. Failing to engage in this analysis or take timely action may have adverse effects.
Conflict often arises when challenging assumptions (“sacred cows”). A board’s social nature may seek to limit, if not eliminate, conflict engendered when members assert fundamental differences. Boards may ignore or, worse, affirmatively shut down or eliminate dissenting members, thereby creating a perilous “group think” phenomenon! Dissenting views often should be heeded, but particularly when based on ground truth.
Fostering a board culture designed to test assumptions establishes healthy dialog when board members’ differing views emerge. This is why boards meet. Through critical analysis and discussion, their decisions should seek to reflect ground truth. Otherwise, their ability to confront reality and implement change diminishes. As the saying goes, “denial” is not just a river in Egypt.
What if the Raleigh, North Carolina YWCA timely addressed multiple years of operating in the red instead of closing abruptly without notice and then filing for bankruptcy? What if Penn State University and the Second Mile boards addressed their painful ground truth earlier?
They are today’s headlines. Their legacy serves as a warning beacon for boards to seek ground truth no matter how painful and act accordingly.
Boards built on ground truth will persevere, survive, and ultimately thrive more readily than those built on the gossamer of opinion, feelings, and influence untested and unchallenged by ground truth.
How willing is your board to seek “ground truth”?
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Public Funds Bring Increased North Carolina Nonprofit Transparency
Effective October 1, 2012, North Carolina nonprofit corporations receiving more than five thousand dollars ($5,000.00) of public funding within a fiscal year from any local, state, or Federal government shall disclose their latest annual financial statements upon written demand from any member of the public. Public funds include grants, loans, and the value of in-kind donations from these government entities.
The information to be disclosed include:
Corporations may comply by:
(a) posting the report on their website along with copy of the most recent IRS Form 990, 990 EZ, or 990N;
(b) having materials posted on a third party website (e.g. Guidestar) which does not charge a fee to access the website if the North Carolina corporation provides a link on its public website to this third party website.
Corporations excepted from this filing include those required to file reports with the North Carolina Medical Care Commission, Local Government Commission of the Department of State Treasurer, and private colleges as defined by North Carolina law and required to report to the State.
A problem with a third party website compliance is these websites may not list the most current 990 form on the website. Many in the public still do not know about or regularly use these public third party websites. Further, advanced analysis or historical date may require a paid subscription.
The IRS requires a tax exempt entity upon request to make available to the public its current and preceding two IRS Form 990 for examination. A nonprofit complies when the 990 are posted on its public website.
Missing from this legislation is the requirement that nonprofits post their financial reports on the public websites when they don’t receive public funding. Nor are there any substantive consequences if a nonprofit does not comply in a timely manner or at all to a written request. Both issues can easily be remedied by amending the statute.
Increased transparency can also be improved if private funding entities (e.g. foundations or large donors) require a nonprofit to post this information on their website as a condition to receive their funding.
Nonprofit boards of directors and their senior management engaging in best practices will create and maintain a current “Governance Page” on their public website. This page will include current and historical financial information, as well as other relevant information about their nonprofit’s operations to enable the public make better informed decisions about them.
Transparency for nonprofit organizations is no longer optional.
If nonprofits aren’t transparent, donors, investors, the public, and government funding entities may be well justified in their concerns and skepticism about the nonprofit’s operation and how their funds are managed by a nonprofit’s board of directors and senior management.
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