What Nonprofit & Trustee Directors Have a Right to Know

What Nonprofit & Trustee Directors Have a Right to Know.

By Eugene Fram

A recent blog was published, “raising some (directors’) questions that go beyond the rules…” (See below) Developed by an international for-profit & nonprofit board expert, they are primarily targeted toward for-profit boards. Following are my suggestions how these questions could apply to nonprofit and trustee boards. In addition, field examples show what happened when they had to be raised in crises situations.

Does bad news rise in your organization?
“You may be the last to know.” For example, the board of a human services organization knew that the professional staff was not happy with a new ED, but the board needed to give him a chance to solve the problem. Directors didn’t know that the staff had been meeting with a union organizer for nine months.
An labor election resulted, with the professionals agreeing to work under a trade union contract.

Do your CEO & CFO have integrity?
“If the CEO or CFO holds back, funnel information, manages agendas, is defensive or plays…. cards too close to the, vest, this is a warming sign.” For example, a CFO was delinquent in submitting a supplementary financial report.” The board and CEO accepted his excuses, but the data, when submitted, had a significant negative impact on the financials.

Do you understand the (mission) and add value?
The board directors need to seriously answer this question:
If this organization were to disappear tomorrow, who would care?

Do you know how fraud can occur in your (nonprofit)?
Common wisdom prevails that there is little for-profit or nonprofit boards can do avoid fraud. To review nonprofit boards actions that can be taken, especially for medium and small size boards, see; Eugene Fram & Bruce Oliver (2010) “Want to Avoid Fraud? Look to your Board,” Nonprofit World, September/October, pp.18-19.

Do you compensate the right behaviors?
“You are at the helm as directors. Whatever you compensate, management will do.”
Be certain the organization is compensating for outcomes and impacts, not for completing processes.

Do you get disconfirming information?
Management is only one source of information. With the agreement of management, visit privately with people below the management level. Set a Google Alert for the name of the organization to see what others on the Internet are saying about your nonprofit’s relationships.

Do you get exposures to key (operational areas) and assurance functions?
“Bring key people into the boardroom, without Power Point slides. See how they think on their feet. It is good for succession planning and is an excellent source of information.”

Do you get good advice and stay current?
“Bring tailored education into the board room and stay on top of emerging developments. “ This is especially important for the nonprofit directors or trustees who serves on a board that is out of their area of expertise. For example, bankers might serve on a hospital boards.

Do you meet with (stakeholders) – apart from management?
Board members need to visit with key funders occasionally to determine if their expectations are fully met and what the board might do to foster a continuing relationship. This lets funders know that the board is involved over-viewing the organization’s outcomes and impacts.

Richard Leblanc, “The Board’s Right to Know and Red Flags To Avoid When You Don’t.” http://www.boardexpert.com/blog, September 14, 2012
Note: Bold & quoted items are in the above blog.

My blog site: http://bit.ly/yfRZpz

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