December 18, 2017; EdSurge
Against a black background, the nonprofit New Media Consortium published its own obituary in an emailed announcement that surprised and shocked its clients, partners, and employees: “Because of apparent errors and omissions by its former Controller and Chief Financial Officer, the organization finds itself insolvent. Consequently, NMC must cease operations immediately.”
After 24 years connecting technology and educational organizations, a surprised NMC board found itself with no options but to enter Chapter 7 bankruptcy proceedings, close its doors, and become another case of a nonprofit Board appearing blindsided by the reality of their struggling organization.
The organization was formed in 1993 to focus “on the future and the implications of emerging technology for schools, museums, universities, and society” with support from Apple Computer, Adobe Systems, Macromedia, and Sony. It became a respected hub for creative thinking about how emerging technologies could become a more integral part of the educational process. According to EdSurge, NMC “has hundreds of college and university members. It organized conferences and events, and published reports in its goal of encouraging ‘exploration and use of new media and technologies for learning and creative expression.’” Since 2003, NMC’s annual Horizon Report identified “important developments, technologies, challenges and trends” that stimulated specific development projects undertaken by NMC and its partners. The report had a wide and international following, with its last edition being downloaded 500,000 times. On the surface, this operational picture was matched by a healthy balance sheet. The last 990 tax return it filed showed it ended the 2015 fiscal year with a small surplus and its revenues topped $1.7 million.
The strength of the community of interest that NMC had fostered can be seen in the immediate efforts underway to figure out how important projects and materials can be saved. The online conversation has already begun to look at the potential of forming a new nonprofit to take on these responsibilities, seeking ways to ensure NMC staff quickly find new jobs and funding mechanisms. Bryan Alexander, a consultant to NMC, captured the spirit of this dialogue in a blog post, saying the best way “to honor the legacy of the New Media Consortium [is] to build upon the smoldering ruins something new, creative and amazing.”
The board’s statement provides little insight into what problems forced them to lock the doors and shut the lights. Board chair Gardner Campbell’s comment, as reported by EdSurge, was, “This came to light very recently and was shocking for all of us. We’re all devastated by this turn of events and wish it could be otherwise.” While it’s liquidating the organization’s assets, Campbell also committed the board to figuring out exactly what went wrong and, perhaps, why they were so unaware of the serious trouble.
The sudden demise of NMC should raise important questions around many nonprofit board tables. Larry Johnson, who had served as NMC’s CEO until last year, observed that “it’s very, very rare for a not-for-profit organization to cease operations so suddenly—it’s catastrophic. It speaks to, ‘How could that happen? Who’s minding the store?’” Were there no signs of trouble that could have been seen? Were there no questions that needed to be asked of the CEO and CFO that went unasked? What about the organization’s auditor—what did they miss? Were there risky decisions that the board made that they did not fully monitor? What more could they have done?
While there is no way to reverse the clock for NMC, other nonprofits can use it as a stimulus to ensure they are operating with all the transparency that is needed and that both staff and board leadership have the information they need and are asking all the needed questions.—Martin Levine