Friday, March 6, 2009

"OWNERS" OR "SHAREHOLDERS"

A debate has arisen as to whether the federations are "owners" of UJC or merely "shareholders" and that the difference is substantive. There are those who would argue that the federations, as "only shareholders," are subservient to management as would be shareholders in any public corporation. Those who argue, instead, that the federations are the "owners" of UJC, assert that management is responsible to the owners at all times.

Let's look at the facts and the implications. In a series of acts commencing about two years ago and continuing through today, the UJC management -- the CEO and Chairs -- have acted without, in most instances, consultation with the federations. Some, including some federation CEO's have insisted that as the federations are but shareholders, they are owed only those duties a public corporation would owe those "shareholder" forms of "investors," and no more. Thus, under that argument, "management" may act unilaterally (albeit subject to By-Laws and Governance requirements of the non-profit, one would assume) and no more. Those who make this argument , however, ignore the law at their peril.
For the law is clear: "Nonprofit organizations are institutions that conduct their affairs for the purpose of assisting (federations) or causes rather than garnering profits for themselves. Nonprofit groups have no shareholders;...and receive exemption from various taxes in recognition of their contributions to bettering the general social fabric of the community (served)." (Emphasis added)
Those who would argue that the owners of UJC are "but shareholders" do so as a rationalization of unilateral actions taken in derogation of management's responsibilities/obligations to the owners -- the federations of North America. Of course, management finds consultation and process laborious and time-consuming but, to date, we have seen how wrong-headed decisions (the "Operational Strategy," the Draft Strategic Planning Work Group Recommendations) tend to be made unilaterally and place the UJC at risk of irrelevance. Those who argue that the federations are "nothing more than shareholders," and you know who you are, are sending a message that will guarantee in practice UJC's growing irrelevance to the point of its disappearance.
But, we certainly don't need a debate over "owner" vs. "shareholder." What is needed is a clear commitment by UJC leadership to transparency and relevance. Those can only be achieved through the things in which this leadership has no interest -- process, governance, collaboration and engagement. We need federations to demand these things. We created an organization 10 years ago that would be both "top down" and "bottom up" -- a laboratory where big ideas and best practices would not be dictated but located, created and debated. Unfortunately, under this management all is dictation. UJC has been run as a closed shop (and as I write this I learn of another in a continuing saga of unilateral actions [more on that later]) and the federations have paid the price. A high price indeed.
Now, we have to get it right.
Shabbat shalom.
Rwexler

1 comment:

Joe said...

Just a wild idea - have the so-called "shareowners" stop funding the operations for a year, because of the financial crisis (everyone has to deal with their local problems).
See how long the company holds up...
Jpe