Wednesday, March 4, 2009

In the Name of Governance, Board Members and Founders of One of the Largest Antipoverty Charities Battle it Out in Court

The Chronicle of Philanthropy reports on yet another Court Battle at a nationally ranked charity, Feed the Children.  Just Yesterday, we posted a story about another nationally known relief charity, The Angel Food Network, that is also struggling under the weight of turf wars/lawsuits between its founders and board members. At the heart of both of these stories, there is a closely-held, family run charity.  The founders are deeply connected to the charities through founding the charity, legacy and passion.  That the IRS requires diverse boards of a reasonable size and is starting to emphasize good governance is possibly threatening to the founders of a closely-held family charity.  And yes, Feed the Children is the charity you often see advertised on late night TV or the equivalent.  The founder, Larry Jones, is known for his emotional appeals on behalf of impoverished children in the United States and abroad.

If you listen to both sides, both sides sound reasonable. The founders in this case, Feed the Children, argue that the Charity's mission is being hampered by the unnecessary imposition of cumbersome committees that aren't working or fast enough, and the board members argue that the founders are taking liberties (i.e., making decisions without board input, and even at times, against board advice). Governance and transparency continue to be important topics for nonprofits, and increasingly so in these recessionary times. Below is an excerpt of the story. If you would like to read the full story, please click here.

A bitter court battle over the control of Feed the Children, one of the nation’s biggest antipoverty charities, reveals an organization in turmoil and a power struggle that pits the group’s founder, Larry Jones, against his daughter, a top official who was fired in December, according to documents filed in the case.

. . .

Feed the Children, a charity in Oklahoma City, provides food, clothing, medicine, books and other supplies and services to needy children and families in the United States and overseas. It ranks No. 7 on the most recent Philanthropy 400, The Chronicle’s list of the charities that raise the most each year from private sources. Feed the Children reported raising more than $932-million in cash, products, and other donations in 2007.

Board Members Go to Court

Controversy at the 30-year-old Christian relief organization became public when five members of the Board of Directors who were fired in December went to court to claim that they had been improperly replaced. The five, who have been at least temporarily reinstated by a court, said they had been removed just before a board meeting at which several members planned to discuss placing Mr. Jones on sabbatical.

. . .

A countersuit filed on behalf of the five new members, all of whom are Christian ministers, said that “documents gleaned from corporate computers reveal” that the fired board members “were, in fact, recruited into an attempted and unjustified clandestine mutiny by one or more salaried employees who hoped to oust Mr. Jones from the organization that he founded.”

. . .

Court papers show that in December, the revised board fired Mr. Jones’s daughter, Larri Sue Jones, vice president and general counsel. Also removed were the chief financial officer, Christy Tharp; chief operating officer, Travis Arnold; and an internal auditor, George Stevens, who also was a non-voting board member.

The reasons for the dismissals, according to court papers filed in the countersuit, included alleged failure by these employees to dutifully implement, as had been repeatedly directed, substantially any of the suggestions of the auditors that related to subjects other than placing restraints upon the powers and authority of Larry Jones.

. . .

Much Sorrow

Minutes of a meeting of the revised board make clear that Mr. Jones had felt hamstrung by committees that board members had formed earlier in 2008 to handle the organizations business. The board had created an executive finance committee and an executive hiring committee and had plans for an executive human-resources committee and a temporary committee to review the charity’s organizational structure.

Dr. Jones with much sorrow explained he did not understand why over the last six months the ministry had not been focused on feeding children, said the minutes, which were taken by Mr. Jones’s wife, Frances Jones, the charity’s co-founder who now serves as executive vice president and secretary. All Dr. Jones and Frances could do was beg for help and attend committee meetings as their hands had been tied from doing anything or moving forward to provide assistance to needy children,the minutes said.

To read another account of this story in a local paper in Oklahoma City, please click here.

AMT

http://lawprofessors.typepad.com/nonprofit/2009/03/in-the-name-of.html

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