Old board to select new one at troubled United Way.

Departing board members of the United Way of the National Capital Area (UWNCA) will approve their own replacements before relinquishing their posts by January in an uncommon process.

UWNCA officials also plan to have a forensic audit that would review the organization's finances dating to 1997 or further in an ongoing attempt to clean the organization's sullied reputation. UWNCA is seeking proposals from approximately four audit firms, and a definitive answer to alleged financial mismanagement though the investigative audit, said Robert Egger, UWNCA interim executive vice president.

"They're going to go back five years," Egger said. If anything is found, the organization, "will definitely be aggressive in its pursuit of corrective measures."

The board wouldn't object if the audit went further than 1997, although cost is an issue, said Neal Barkus, UWNCA acting board president. The audit would include an investigation dating to former CEO Oral Suer's leadership at UWNCA.

UWNCA's Trustees Assembly approved new bylaws, reducing the board from 47 members to no more than 31, and imposed a limit of two consecutive, three-year terms. Board members are eligible for re-election one year after a completed term.

Although entire boards have resigned before, "it does not happen often," said Lisa LaMontagne, spokeswoman at BoardSource (formerly the National Center for Nonprofit Boards).

Boards resign for various reasons, such as a belief they're not serving the organization's best interests anymore, LaMontagne said.

In similar situations, nonprofit leaders often create an external committee to find new members and then the old board elects replacements, LaMontagne said. The process should be above reproach, transparent, open to the organization's public, and give full disclosure. If those steps are taken, the process is credible, LaMontagne said.

"We see their resigning as an intelligent and ethical approach to the situation," LaMontagne said. "I wouldn't question that at all."

Myrna Peralta, principal at ALTA Consulting Group in Washington, D.C., and a UWNCA board member, was am pointed to chair the nominating committee.

But at that first meeting Oct. 10, the nominating committee made it clear they didn't want a current board member involved in the nominating process and wanted a clean slate of incoming board members, Peralta said. "I was pleased with their willingness to roll up their sleeves and do this," Peralta said. She added the group decided because of public perception and the impact on a successful campaign the process had to be completely transparent.

Chuck Bean, executive director of the Nonprofit Roundtable of Greater Washington and a nominating committee member, said John Derrick Jr. emerged as the nominating committee chair at the first meeting. Derrick is chairman and CEO of Pepco Holdings, an energy holding company headquartered in Washington, D.C.

The newly adopted bylaws, however, require that a director must chair any committee.

Egger downplayed concerns that the board election process could lead to more controversy or suspicion.

"When they are voting for the new board, in effect, they're voting themselves out," which is a "purifying" process, Egger said.

Despite appearances that the board could handpick its successors, Egger said the reality is "no one is going to jerk them (nominating committee) around. I guarantee it."

Egger anticipated that a new board would be installed 30 to 50 days from Oct. 4, when the bylaws were approved. Egger said he thinks the nominating committee will aim for a benchmark of 21, including eight representatives nominated by the regions. Egger invited everyone in the United Way community to forward names, but is distancing himself from the process. The bylaws call for the nominating committee to give recommendations in November with board approval occurring in December. The committee presents a new name if someone isn't approved.

Barkus said the board is urging the committee to provide a list of names before Nov. 1, if possible.

Egger said a key is getting more CEO-level people and nonprofit representation on the board to bolster fiduciary oversight. He added the previous board lacked that CEO-level representation.

"I think you really need people who will have no problem challenging some of the things we might bring to them," Egger said.

Egger acknowledged some board members have been in office only a few months, but pressed for a "clean slate" for symbolic reasons.

Barkus said the board is changing because its size contributed to inefficiency, and community perception of the current board is "part of the problem."

Barkus doesn't share that perception, but "not wanting to debate that...we're perfectly happy to say 'fine let's get a new group in,' and the giving public will be assured to the extent they need to be."

Barkus said the board has been "all over" issues, acted promptly, and accomplished major reforms in a just few months.

The approved bylaws eliminate the 178-member Trustee Assembly; the board will assume those responsibilities, a UWNCA statement said.

Egger said that a thee-month infusion of eight national employees will help UWNCA's delayed fundraising campaign, which launched Oct. 1, but was still in "limbo." The campaign deadline is open-ended; Egger said. The batch of national employees going to UWNCA in October included Deborah Foster, executive vice president with the United Way of America. Foster will serve as UWNCA interim chief operating officer and help internal restructuring and transition.

United Way of America is paying the salaries, saving UWNCA from hiring a high-salaried officer even as it attempts to slash the non-Combined Federal Campaign fundraising budget from $7.6 million to $4.5 million.

Egger said that he is "on the trail" every day talking to perspective donors, some of whom are on the fence about giving. He is also trying to "make peace" with Sen. Chuck Grassley's (R-Iowa) office, which has raised questions about UWNCA's operations.