Only rarely do we see boards of foundations and other mission-based entities proactively demanding answers when managers and executives do questionable things. And that’s why what took place in recent months at the Cook County Health Foundation is so refreshing. It should serve as an example to directors at all levels, whether at for-profit corporations or nonprofits.
As the Chicago Tribune has reported, directors of the foundation hired a Chicago law firm to probe an initiative by Cook County Health Foundation Executive Director Sylvia Zaldivar to substantially broaden the foundation’s mission to administering programs of its own rather than only raising money on behalf of the Cook County Health system, as the foundation has mainly done since 2011. That long-standing mission, by the way, is important given that Cook County Health is tasked with providing care to all county residents regardless of their ability to pay.
That firm, Riley Safer Holmes & Cancila, then produced a memo for the board that raised questions about conflicts of interest in the foundation’s hiring of a separate law firm, based in Atlanta, to help negotiate an agreement with Cook County Health to pursue the expansion. Riley Safer Holmes & Cancila also flagged the foundation staffers’ hiring of the law offices of Marc J. Lane, a local firm, saying there was inadequate documentation of what Marc J. Lane was doing in any effort to expand the foundation’s scope.
The board’s intervention led the foundation to give up on the initiative, but the fallout continues. Illinois Attorney General Kwame Raoul’s office has asked for documents going back four years, as well as more information about what Riley Safer uncovered. In so doing, the AG’s office cited “allegations involving serious governance issues.” Zaldivar, after initially asserting that Riley Safer’s memo contained unspecified “inaccuracies,” no longer is commenting on the matter.
Many board members clearly remain unsettled. Bill Quinlan, an attorney who was among the directors who pushed for the hiring of Riley Safer, told the Tribune he was concerned about how quickly the project was moving. “We were taking on, conceptually, all this responsibility when we didn’t seem to have infrastructure in place and we hadn’t discussed it,” he said.
Several directors, he added, “are very concerned. They’re giving their reputations, their name, their efforts, and in many cases, their money, and they want to make sure it’s used in the best method, no one can claim we’re using money improperly.”
Exactly. That is how everyone who takes on the critical role of overseeing an institution’s management by sitting on a board should think and behave. In addition to the welfare and health of that organization, what is at stake when things go off the rails is the reputation of each board member. When directors take a hands-off approach or look the other way because they don’t want to make waves or due to personal relationships, they often unwittingly put their hard-won reputations at risk.
This is a board that has done precisely the opposite. By acting as engaged caretakers for the institution, these directors only have burnished their reputations. Board Chairman Joseph Flanagan, who is CEO of Evanston-based business-to-business sales outsourcer Acquirent and a veteran of Chicago’s business scene, told the Tribune in April that the foundation’s directors “take corporate governance matters very seriously. … We have never lost sight of the people we serve, and we never will.”
The continued investigation of the foundation may or may not turn up more serious issues than what’s surfaced so far. Regardless, this board has set an exemplary standard. Effective corporate governance works just like it has here — asking questions before it’s too late, refusing to accept vague assurances, acting with decisiveness when actions don’t pass the smell test.
Thanks to the board’s due diligence, donors to the Cook County Health Foundation should feel much more confident their contributions are doing what they’re supposed to be doing.
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