New Hampshire Bill Requires Board Training for Nonprofits

January 27, 2012; New Hampshire Business Review | Some legislators in New Hampshire think that the leaders of nonprofits need a little unsolicited help. The New Hampshire Senate passed a bill requiring at least one member of each nonprofit board to go through training sessions emphasizing fiscal management and ethics. 

Nonprofits decried the legislation as contrary to the “live free or die,” anti-regulatory spirit of the Granite State, an ethos that crosses party lines. The bill was sponsored by Republicans but got Democratic support. The idea, however, came from the state’s Health and Human Services commissioner, who said it was necessary because “boards need to be trained to understand what their fiduciary duty is.”

The initial version of the legislation was pretty strict, requiring nonprofits that received a total of $250,000 in funding from government (at any level) to send all board members as well as the CEO and CFO for training every four years, or else risk getting cut off from public funding for two years. In the amended bill that passed, the state Senate requires only one board member to go through training, albeit every other year. At the moment, penalties for noncompliance are unspecified.

Democratic State Sen. Sylvia Larsen voted for the bill in committee but then denounced it on the New Hampshire Senate floor. Larsen explained that one reason for her about-face on the bill was her fear that the training requirement would have a chilling effect on people who might want to serve on nonprofit boards. But that’s not a persuasive argument, as most nonprofits, at least the larger ones, provide some sort of training for their board members, and most nonprofit management support organizations promote and market this kind of training.

But there are other compelling reasons to oppose such legislation, such as the burden on small nonprofits that don’t have the resources to pay for third-party training programs. Is the state going to finance a variety of multi-service organizations to deliver the mandated training? Is it going to help build the capacity of the trainers so that they can meet the demand?

But the real issue is equity. Why is it that nonprofits have to get this kind of training, but the owners, investors, and governing boards of businesses aren’t treated the same? After all, many of these businesses are functioning as vendors of goods and services to government, or as developers of real estate with government funding, or as recipients of various government tax incentives for economic development. What makes the for-profit sector so automatically more responsible about fiduciary and ethical matters than nonprofits?

Truth be told, there’s not a whit of evidence that nonprofit CEOs and board members are any less attentive to their organizations’ finances and programs than those in the for-profit sector. The New Hampshire legislation is one more indication that, against all logic, too many legislators have gone back into the skein of viewing nonprofits as less capable, less responsible, and less trustworthy than for-profit businesses. This inequitable treatment of nonprofits warrants the serious attention of national and regional nonprofit leadership organizations, else the pernicious message of the New Hampshire legislation will fester and spread. –Rick Cohen