Resolution for 2017—Focus on Long-Term Nonprofit Sustainability
By: Eugene Fram Free Digital Photo
Nonprofit boards, like their business counter-parts, can become complacent and lose their vitality. This sets the stage for nonprofit disruptions by the social and technical environments that surround them. Following are some crucial priority questions (listed in bold) that have been raised for business boards. * They easily can be modified to drive the thinking of nonprofit directors and help them keep nonprofits sustainable and productive.
- How fresh and varied are the management’s and the board’s sources of new ides? When major changes in the field are on the horizon, management has a primary obligation to provide a flow of actionable new ideas. Nonprofit boards, as part time overseers, have an obligation to develop the “what if” questions necessary to challenge management’s new idea proposals. To maintain the sustainability of nonprofits these actions are necessary to assure stakeholders that the organization is “connecting the dots” from a variety of perspectives. For example, many fields built on routine decisions now handled by managers will be disrupted as machine learning takes over routine tasks—ranging from programming to health care. Every nonprofit board needs to address this question in 2017.
- What nontraditional peers will take precedent in serving a nonprofit’s clients? Emergency rooms in hospitals are currently being displaced by clinics located in drug stores. Ophthalmologists may be displaced by technology that examines eyes and automatically writes corrective eyeglass prescriptions. None of these changes were on the horizon ten years ago. Nonprofit boards need to be alert to every potential avenue for disrupting its client service business model.
- How proactive and agile is the nonprofit in assessing digital risk, including its use of data, analytics and technological platforms? Even medium sized nonprofits face a risk in these areas. Any nonprofit board that has not reviewed the need for insurance cyber security coverage can be seen having a dereliction of duty. Many naïve high school students have the ability to hack the software of the typical medium sized nonprofits, possibly leading to its demise. Unfortunately, I have encountered some board members who mistakenly believed cyber losses are covered by an agency’s general liability policy. In the vast majority of cases, this is contrary to fact.
- How does a nonprofit board balance its human and financial resources for the long-term while always being faced with unmet client needs? With 35% of current nonprofit boards receiving academic grades of “C, D, or F” for their strategic planning efforts, it appears that much more board long-term efforts are needed. But this is difficult to accomplish with 4 to 6 year median board tenure that fosters short-term thinking. In addition, the immediate client needs are usually so substantial that there is a human tendency to shift the resource balance toward current band-aid actions rather than long-term sustainability. For example many nonprofits serving the homeless use resources to provide temporary shelters, instead of joining with others to develop permanent accommodations.
- Does the board have a robust assessment in place, succession-planning efforts to address gaps in expertise and refreshment plans to provide new or different perspectives? Both nonprofit and for-profit boards lack experience and focus on succession planning—the JC Penney board, for example, had to reengage a retired CEO to restore stability after a continuing CEO leadership debacle that lasted about 18 months. Few of the nonprofit boards I have encountered have a succession plan available in the event the CEO is temporarily incapacitated and few have over-viewed the need for assessing promotable internal personnel. Assessments of the CEO and organization are often based on checking the financial boxes rather than analyzing critical issues deeply.
“The velocity of change is increasing. (Sustainable) boards and directors who add value will:
- be comfortable with uncertainty.
- have a tolerance for ambiguity.
- have courage and curiosity.
- be comfortable with not having all the answers straight away.
- understand that their skills will need to be constantly updated.” **