Basic Board Governance Failures Stand at the Center of the Penn State Debacle

In the days after Penn State released an independent report condemning its leadership for failing to follow up on allegations of sexual abuse by Jerry Sandusky, an assistant football coach, Penn State become the center of discussion and analysis of governance by nonprofits. Everyone seemed to think that the situation offered many lessons for the nonprofit word.

But as with every big scandal, too often the key takeaways from such sensational stories fade quickly, only to resurface again when the next scandal hits the front page. So now that nonprofit leaders are planning for the busy fall season, it’s important to take a moment to look beyond the circumstances unique to such scandals and see the underlying governance problems that are all too common at many nonprofits today.

The main message from the Penn State report is that boards must take seriously their role in overseeing programs and finances. They must also be alert to any concerns that federal and state laws may have been broken or that internal policies haven’t been followed.

Good boards read and ask questions about the materials in front of them; better boards are perceptive to more than this tunnel vision. They ask for what they want or need to confidently propose and vote on actions critical to the organization and its mission. They actively inquire about the “what ifs,” such as looming threats, and not just the “what is.”

They put into motion structures and policies that set the proper tone at the top in directing, overseeing, and protecting the organization. They also recognize when they’re faced with urgent and serious obligations, such as protecting children from harm.

In the case of Penn State’s trustees, reports suggest that they failed to seek the kind of information that would have allowed them to exercise strong oversight.

According to the investigation by the former FBI director Louis Freeh, Penn State officials “did not have regular reporting procedures or committee structures in place to ensure disclosure to the Board of major risks.”

Even when made aware of a grand jury investigation of Mr. Sandusky, they imprudently relied on the false assurances of senior officials and failed to make further inquiries when circumstances demanded that they do so.

They failed where the safety of children and the well-being of the university were at stake. The failing not only calls into question the degree to which the board members neglected their oversight duties but also contributed to more kids being sexually abused on the campus.

Just as critical as asking tough questions is to remember that money does not equal mission, and that a nonprofit’s fundamental values must never be compromised.

At many junctures, an unaware and inattentive board can let its focus drift away from the organization’s mission and values toward the pursuit of dollars and publicity. Penn State, for example, describes itself as “a multicampus public research university that educates students from Pennsylvania, the nation and the world, and improves the well being and health of individuals and communities through integrated programs of teaching, research, and service.”

That’s not the mission that seems to have driven the decisions made by top officials at Penn State, the Freeh reports suggests. Instead, those leaders focused on protecting the prestigious and lucrative Penn State football program, its venerated coach, Joe Paterno, and the university’s reputation.

In allowing other priorities and interests to take the front seat, Penn State officials and trustees not only compromised their loyalty to Penn State and its mission but also left the child victims of Sandusky with no protection from the crimes that had occurred or would occur on the campus.

At the core of the Penn State scandal are failures in basic governance principles, a problem that is pervasive throughout the nonprofit world.

It is unfortunately common to find boards that serve as rubber stamps for a nonprofit organizations’ leaders in much the way some Penn State trustees characterized their role. Boards must create and demand a culture of accountability. It’s time to stop fostering dysfunctional governance structures and practices.

The tragedies that occurred under Penn State’s watch must serve as a lasting and powerful message to nonprofit boards and officers that better governance must be a continuing quest and that failures in oversight can lead to far-reaching and sometimes unthinkable consequences.