McNamara/Fram Discussion on Nonprofit Bylaw Changes

NcNamara
I disagree with you a bit 🙂

Fram
Carter: Thanks for your comments below. I really appreciate your comments, as they force me to rethink and reconsider my viewpoints.

My replies are in bold

McNamara
You and I have been around the nonprofit world for a long time. We’ve seen where lawyers did Board trainings in the ’70s and early ’80s. Everything back then was determined by what was in your bylaws. If you wanted to change how the organization operated, then a change in bylaws was supposed to accomplish that 🙂

Back then, we often confused the map (the bylaws) with the journey (determining how the Board should best operate and then putting that in the bylaws).

I don’t agree that bylaws should be changed as a result of noticing certain symptoms of issues in the organization, as you listed in your article. Instead, discovery and planning should be done to address the causes of those symptoms, and then the bylaws should be changed to address what was found.

Instead, I think the best time to review bylaws is annually and right after strategic planning, for reasons that aren’t in your article. After strategic planning
1. The organization knows what its strategic priorities are, including their number and complexity.
2. The organization knows what priorities there are in how the Board has been operating and wants to operate.

From those results, the bylaws should be updated, e.g., to reflect what committees are needed to address strategic priorities and to reflect any changes in Board operations that are needed to improve Board operations or to position the Board to better oversee new strategic priorities.

Fram
The process outlined above is a good one. But the reality is many of us have observed that strategic planning to many nonprofits is simply developing a SWAT listing. I have even encountered board chairs who reported that they only have had a few fellow directors who can think strategically. (Most of the their directors’ colleagues were middle managers and individual contributors, lawyers, physicians, etc., whose experiences with strategy were limited.)

Times change. My listing is targeted to convince nonprofits that 20-year-old bylaws need to be reviewed and possibly updated to accommodate subtle changes that can advance an organization’s growth. Even a “good” nonprofit, operating under an old system, which encourages micromanagement, can smother the capacity for organizational change. Habit or an accepted culture is never easy to organizationally challenge.

McNamara
I disagree with you a bit, too, that “only three to five board-standing committees are needed.” I’m not a fan of the view that all nonprofits should have the same number or range of committees. That’s a bit like claiming that all families should pack the same things for all of their trips regardless of their culture or their destinations 🙂 The number and types of committees needed, depend on the number and range of strategic priorities to be addressed.

Fram
I agree that one size doesn’t fit all in terms of board standing committees. (Why is there a need for a standing nominations committee when the board only nominates new directors once a year, and occasionally during the interim period?)
At the least, I think nonprofits need three core-standing committees (assessment, planning and resource and executive), plus time-limited task forces for all other board opportunities or challenges. The execution of strategic priorities remains the responsibility of the chief executive, accompanied by a robust annual assessment by the board. “Trust but verify.”

McNamara
Not to be contentious, but I also do not believe that major funders are influenced by the title of the E.D.,President and CEO anymore. I’ve worked with people in schools of philanthropy who chuckle at organizations that change the title of the lead staff person “President” or “CEO” from “E.D.” I know that very large nonprofits, such as universities and hospitals do that, but I don’t see that as a goal for all nonprofits in order for them to improve their chances for donations.

Thoughts?
By Carter McNamara, MBA, PhD

Fram
I respectfully disagree with you on the last point :-). While I don’t think the ED title is inappropriate for smaller nonprofits, I think that many NFPs need to think about the change to president/CEO once they develop a million dollar budget and employ about 10 professionals. The derisive nature of the “chuckle” comment you cited only points out the significant lack of understanding of how the President/CEO title can and has proven to benefit NFP operations.

It solidifies my argument in these ways:

• To me, the comment clearly demonstrates the perception that many outsiders see the ED as a person who needs heavy management direction from the board. (Like a parent-child relationship.) The change to the President /CEO title can be a major step to show that the incumbent has the full confidence of the board.
• It fails to take into account that chief executives’ management experiences and responsibilities may be superior some board volunteers. This, in turn, may limit the capacity for growth when these board volunteers don’t perceive the value of some opportunities.
• In fundraising, in my view, the ED title places the image level of the chief executive below that of part-time volunteer directors and may be viewed as a board “servant’ instead of a partner. This is not desirable in development work where, as the old saying goes, “Principals only talk to Principals.” Except those powers reserved for the board, in the bylaws, a chief executive needs to be in a position to actively seek development opportunities, to sign operational contracts and to seek partnership opportunities as the organization’s top full time operational executive.
• In summary, many of the management and staff people I have encountered in nonprofits figuratively stand ten feet tall for what they accomplish. I feel chief executives and supporting division heads deserve the respectful management titles that are found in similar size commercial organizations.

I invite viewers to add to the discussion – share your opinions and experiences in these governance issues of common concern to many nonprofits.

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4 comments

  1. To just address the Bylaws issue, I have always encouraged the Board to view the Bylaws as a core document, revised only with major changes to the organization. That is especially true now that the Bylaws must be sent in with the 990 if changes have been made. The organizations that I have worked with usually have a separate Strategic Planning document that is adjusted after the annual retreat, reflecting new/changed action items. Then the Plan can be broken down to action points and assigned to Board/staff as appropriate. One of my major goals is always to attract as little attention from the IRS as possible.

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      1. Sounds good to me. Assume you have had legal counsel in drafting the bylaws to make certain they meet state standards.

        From the perspective of a Founding Manager of the 501 C 3 Public Charity, who is actively recruiting for its first Board of Directors members
        http://www.melvinhenry.org/Board-of-Directors.html , I agree with Dr. Fram when he notes of non-profits where “most of the their directors’ colleagues were middle managers and individual contributors, lawyers, physicians, etc., whose experiences with strategy were limited”. Upon retrospect, I didn’t know everything I needed in order to write effective bylaws for our successful Nov. 2012 IRS determination, but I also expect that changes will be made once participation grows.

        As author of all Melvin Henry Center organizational documents (www.melvinhenry.org ), the standing committees as described by Dr. Fram were written in the bylaws in order to maintain the spirit and purpose for creating Melvin Henry Center and sustaining its Public Charity status; eliminating standing committees, for me personally, meant trading in the win/win intent of the public charity for the win loose interactions of traditional businesses.

        The common point of agreement in the conversation appears to be that lawyers are involved in creating the bylaws and that effectiveness of the organization is determined by the bylaws and the working knowledge used for their creation. Perspectives change as the organizations and people grow and create new opportunities for success. I trust upon these we can all agree.

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      2. Sounds good to me. Assume you have had legal counsel to make certain the bylaws meet state standards.

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