boards / CEO / corporate governance / non-profit

GLEN: Good governance protects your most important asset, your reputation

Evidence of poor financial monitoring, managerial hegemony and overall failures of governance have brought “an abrupt and inglorious end to the story of an organisation which was instrumental in driving arguably the biggest social, legal and cultural change this generation has seen” (Linehan 2017).

In 1988 homosexuality between consenting adults was a criminal offence and that year the various gay groups founded the Gay and Lesbian Equality Network (GLEN) which was instrumental in bringing about changes in laws and social attitudes to homosexuality in Ireland, culminating in the passing of the marriage equality referendum in 2016 (Ó Caollaí & Hilliard 2016).

GLENs subsequent fall resulted from reports to the board by the new CEO, and subsequent investigations, that uncovered misuse of resources by the previous CEO (without the board’s knowledge) and use of credit cards by staff for personal use (Cullen 2017 May 18).  However, the two investigations also “did not find any evidence of misappropriation of State or donor funds or any fraudulent activity taking place” (Cullen 2017 May 18).   But by then the damage was done. Donors and funders had withdrawn support, the new CEO had stepped down, staff had left, public trust was diminished, financial reserves were minimal and as a result the board announced GLEN was to cease operations (Cullen 2017 May 18; Cullen& Gartland 2017).

Companies are worth more than the sum of their parts, the sum of their physical and financial assets.  A key asset is the brand, the company’s and their products and services. For example, consider Coca-Cola, one of the biggest brands in the world, and clearly Coca-Cola, the company, is worth more than the total of their plants and sugared water (Chapman 2016).  If this is the case for companies with physical assets, than organisations and companies where the brand is their primary asset must place their brand reputation at the forefront of all strategy and risk management.   Non-profits are thus especially vulnerable when their brand is damaged.  A key purpose of governance is to provide assurances to funders (whether shareholders, banks, investors, or donors) that their funds will be used appropriately.  Thus when funds are employed inappropriately that assurance fails, company brand and reputation is damaged, and funders will flee.

Good governance is not an option, not something that can be postponed, but a way of working to be built into the DNA of the organisation.  The rapid fall of GLEN is a cautionary tale for any non-profit or organisation that fails to prioritise good governance.

References

Chapman, B (2016, Oct 5). The top 100 brands in the world have been revealed. The Independent. Retrieved May 30 2017 from    http://www.independent.co.uk

Cullen, P. & Gartland, F. (2017, May 25)   Gay rights charity Glen to be formally investigated. The Irish Times. Retrieved May 30 2017 from http//irishtimes.com

Cullen, P. (2017, May 18)   Gay charity to close following review: Board to wind up affairs after allegations of financial mismanagement last month. The Irish Times. Retrieved May 30 2017 from http//irishtimes.com

Cullen, P. (2017, April 12)   Former co-chair of Glen quits board over [euro]11,500 ‘supports’ for Seanad run. The Irish Times. Retrieved May 30 2017 from http//irishtimes.com

Linehan, H. (2017, May 20). Inglorious end cannot obscure Glen’s legacy: Gay rights group drove change and brought equality issues to the fore.  The Irish Times. Retrieved May 30 2017 from http//irishtimes.com

Ó Caollaí,  É. & Hilliard, M (2016, May 23). Ireland becomes first country to approve same-sex marriage by popular vote.  The Irish Times. Retrieved May 30 2017 from http//irishtimes.com

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