Last month, I agreed to be part of a group of five Construction Specifications Institute (CSI) members making a formal request for information from our board of directors. The requested information relates to the creation, management, and ownership of CSIs newly revealed for-profit entity The Construction Standard (TCS) and its predecessor company Construction Information Network, LLC (CIN). The specific documents we requested were: accounting records; annual financial statements; minutes of meetings and proceedings; contracts between and among CSI, CIN, TCS, and consulting entities engaged pre-and post-formation; and other relevant corporate documents pertaining to the creation, funding, and transfer of the rights to license CSI intellectual property to partners or outside investors.
Heres a little history for those not following along on this forum and others. CSIs new MasterFormat licensing scheme was made public on the TCS website at the beginning of February. We and other CSI members had questions, so we reached out to CSI board members and management online, by phone, by email, and in face-to-face meetings. Their original responses were confusing, disjointed, contradictory, or non-existent. We kept getting promises of replies in a few days, or next week, or at an undefined future date. Finally, the board chair and chair-elect hosted a town hall broadcast on March 31. The result was unsatisfying and lacked substance more new questions were asked. But we did get a promise to respond as soon as the questions could be compiled into categories. Answers finally appeared on the CSI-Connect Forum late last Friday afternoon, almost three months since this first was brought to light.
Given the background of non-responsiveness from our leadership, we felt membership needed to formally request sufficient documentation to answer several troubling questions. Among them:
How was a fair market value determined for the licensing rights to CSIs intellectual property?
Was creating a for-profit entity the only option considered for managing those rights?
What compensation was received by CSI?
What relationships exist between and among CSI, CIN, and TCS; who are the shareholders, partners, and board members; and how were the for-profit entities capitalized?
What control, if any, does CSI have over the decisions made by the for-profit entities? Who, if anyone, from CSI sits on their boards?
Under the laws governing nonprofits, members are analogous to shareholders in a for-profit corporation. The board is accountable to membership. CSIs own Board of Directors Governing Policies Manual acknowledges that the boards activities shall be open and accessible to reasonable scrutiny by the membership. The boards fiduciary and governance obligations require them to provide members with clear information on matters affecting CSI. That this is beyond dispute was acknowledged by the board chair in his response to our initial inquiry, which we received on April 2.
On April 5 we replied to each board member that while the Boards response had agreed to comply with our request, no actual documentation was included. We asked the board members to reply to us with a plan for compliance, a list of documents they would be releasing to us, and a concrete time frame for doing so. When no response was received, we reminded them again of their obligations ten days later, on April 15. Another ten days has elapsed with no word from our leadership.
My four co-signatories and I agree that the time has come to reveal publicly that we have been making efforts to gain transparency about the boards decisions related to TCS and CIN. They have made major financial transactions with our funds, on our behalf, but without our knowledge. They have not been appropriately responsive to our requests, even though both they and we agree that we have a right to know, and they have an obligation to tell us. This is beyond dispute.