August 30, 2018; Daily Times
The ousting of the top executive from a small United Way in Wicomico County, Maryland might not seem newsworthy beyond the pages of local newspapers and television affiliates, but for anyone who has made an investment in a nonprofit organization, be it as staff or volunteer, the story likely generates a mixture of strong emotions.
The split in question—between Salisbury-based United Way of Lower Eastern Shore (UWLES) and its long-serving CEO, Kathleen Momme—is filled with reminders about the uniqueness of the nonprofit world. When a CEO departs a nonprofit, there’s no ownership stake, no shares, and with rare exceptions, no golden handshake that stays with them. No matter how long or how important their service, the minute it’s over, it’s over. When investing and becoming attached to a cause through a nonprofit career, something frequently cited as one of the main attractions of the job, the fear of losing that connection is going to result in significant personal and professional hardship. In being dismissed by the UWLES board, Kathleen Momme described this as “painfully heartbreaking.”
Of course, these feelings apply not only to paid staff, but also to volunteers, including the peculiar arrangement that is the nonprofit board of directors: People who typically meet for a couple of hours a month and are fully accountable for a broad range of fiduciary responsibilities, not to mention mission-oriented imperatives (and how they come together with financial planning) to ensure appropriate service to many stakeholders.
The board-CEO relationship has tension built right in, fueling a robust consulting industry in the world of nonprofit governance. The chief executive oversees the daily operations and decisions, but the board, collectively, is the boss, reliant to at least to some degree on the CEO for acquiring facts and evidence about the organization’s performance. This unique CEO-board dichotomy and the importance of a healthy leadership team cannot be underestimated.
With statements now in the public domain—and Momme and the board of directors offering distinctly different versions of events and assignment of blame—there are a myriad of obvious lessons to be learned. First and foremost, given both the CEO and the board obviously care about their United Way, the causes it supports, and some 80,000 individuals in their community impacted or potentially impacted by this split (for example, donors going elsewhere), they should have worked harder to avoid a public spat. The board did attempt (through the legalese of a General Release and Covenant Not to Sue) to manage the possibility of Momme discussing her dismissal in public forums, but clearly this only served to fuel rather than defuse the tensions associated with the relationship wreckage.
The board chose to take the path of a separation agreement, rather than an exit agreement.
The principal motivation to negotiate a separation agreement and release is the desire to reduce the likelihood of a legal claim against the nonprofit, whereas the motivation to negotiate an exit agreement is to reward a founding or long-term executive and ensure a fair and appropriate ending to a long-term employment relationship.
Taking the latter perspective might not have proved successful, but the downside to attempting it seems limited, especially when the upside is eliminating the public displays of anger that got the media talking about the United Way of Lower Eastern Shore in ways that clearly don’t evoke public confidence.
Momme choosing to describe the board’s proposal as a “payoff…in exchange for my silence” is certainly unfortunate if not extreme—it’s a common separation practice—and for her part, she would likely have done better for herself, the UWLES, and her community to take some time to reflect before releasing a public statement.
Momme’s dismissal is clearly related (as ac