The Telltale Signs of Trouble

MY MENTAL LIST OF CULTURAL ORGANIZATIONS ABOUT TO GO UNDER was significantly lengthened this week.  Just yesterday a neighbor told me that a small environmental/ natural history research organization she works with was about to fold.  She was told that the board was casting around for a place to transfer the organization's collections of books, maps, photos and videos (although no one knows exactly where that will be despite the fact that they may have to shut their doors in a couple of weeks).  
The day before that, a colleague called to say she was retiring from her organization and that there's a movement afoot to dissolve it (not her doing).  A third organization has burned through its endowment fund to the point where some board members think it's time to close the whole place down.  
That's all in just the last week.

I've been hearing for a long time that the pace of consolidations and dissolutions in the nonprofit sector would speed up as the recession deepened.  Apart from symphony orchestras and the occasional museum, I wasn't seeing a great deal of evidence of that in the cultural corner of the sector until this summer.  But now I'm wondering if we're starting to reach a tipping point.  The money that's typically in a cultural's pipeline (from government, foundation and corporate grants, usually) tends to keep it lagging behind the rest of the economy.  Maybe now the time has run out.

The fact is, the recession may be blamed for the demise of some of these organizations, but it isn't the sole reason and it's usually not the primary one.  Unless an organization is relatively new and still a bit shaky, many of these organizations got into a fragile state well before the recession can be blamed for putting the final nail in the coffin.  Organizational deterioration can go on for years before it becomes palpable and impossible to avoid. 

But there are dozens of telltale signs (easier seen in hindsight, of course) -- OK, here's the first (baker's) dozen:

• failing to understand the purpose and role of the organization
• cutting back on the staff that produce mission-driven programming, and as a result
• cutting back on programming
• deferring maintenance on buildings and equipment (that's one of the first telltale signs in my book)
• failing to file required reports (to the IRS, to state regulators, funders, etc.)
• failing to follow the Bylaws by ignoring term limits of board members, by-passing membership meetings, sliding by elections, not constituting stated committees, etc.
• slacking off on producing timely financial reports
• failing repeatedly to reach a quorum for a board meeting or 
• reducing the number of board meetings for fear of not reaching a quorum or because the work has no forward momentum
• giving inordinate power to an executive committee thus marginalizing the decision-making of the full board
• sporadically communicating with supporters (or not communicating at all)
• regularly spending more than is earned
• borrowing from invested funds with the promise that those funds will be paid back

What telltale signs of trouble would you add to this list? 


Image:  Here comes trouble t shirt &...from birdarts via flickr