I am a resident of a nonprofit continuing care retirement community (a “CCRC”) and a number of us have asked the Board to add residents as full voting members of the Board. We think they need to improve their transparency and accountability. We are the biggest “investors” in the community. We paid high entrance fees to get here and significant monthly service fees to stay. We have heard rumors and are concerned about the financial viability of the community. Some of the Board have told us the finances are too complicated to worry residents about. More than half of the residents are in “independent living” and some have very strong financial backgrounds. What do you think? —By email.
I have a strong belief that residents of a CCRC have a place on the board of the CCRC in which they live. We have represented a number of CCRCs over the years and most of them had slots for two residents on the board, out of a total of about 20 directors. They made clear that the resident members would have to recuse themselves on any question involving themselves individually, but were encouraged to articulate the residents’ point of view on issues affecting all residents, like fees and fiscal solvency, changes in meal plans, or proposed expansion plans. It was stressed that they had a fiduciary duty to the organization and could not put their personal interests first.
If you believe that diversity on the board helps better decision making, there is no greater constituency to be represented than residents who have made a huge investment to find a stable living situation for their final years. The last thing they need is the uncertainty of a bankruptcy. While not every resident will necessarily understand the finances of the operation, you are absolutely right that the organization, consulting with the Residents’ Association (which might even be given appointing power), could find individuals who have the knowledge and experience to make substantial intellectual contributions to the Board.
My favorite story of board diversity involved a healthcare organization providing services to low-income minority women in the inner city. Its board was all middle-aged white males from the suburbs. Because the directors were volunteers and not employees, a court held many years ago that the uniformity was not illegal. When I mentioned that case in my classes on bylaws, the men usually had little reaction but the women reacted viscerally and vocally. The women’s consensus seemed to be that it may not be illegal, but it sure was stupid.
We have published a number of stories about the value of diversity in adding women to major nonprofit boards. (See e.g., Nonprofit Issues, Vol. XXXIII. No.3, “Why Is It Important to Have Diversity on Boards?) Clearly diversity can bring different issues to light from different perspectives. At a CCRC, which is created specifically for the purpose of serving the residents, it is hard to imagine a more important perspective.
I worked first as a board director and then the Executive Director of a Federally Qualified Health Center. FQHC's are nonprofit health care centers that fall under federal oversight. It is a requirement that the board be comprised of 51% 'consumers of services'. It was on ongoing challenge to recruit such persons for board service, but well worth it to acquire their firsthand insights on the delivery of care.