Clearly the purpose of a nonprofit board is to serve the constituency that establishes it-be it community, industry, governmental unit and the like. That said, the “how” to best deliver those services is often not so clear.
The fuzziness of boundaries and lack of defined authority call for an active nonprofit system of checks and balances. For a variety of reasons this can be difficult for nonprofits to achieve. (more…)
It doesn’t take a pandemic to make a nonprofit question its capacity to survive. Events such as a loss of major funding, a damaged reputation, huge unpredicted expenses could swiftly reduce the lifeblood of the organization, plunging the nonprofit into deep concern for its long-term survival.
Any nonprofit CEO has the data to predict how long the organization can stay afloat without income. This, however, would be only one rough measure of the nonprofit’s liquidity. Board members need to take the discussion further. They need to realistically appraise total liquidly from fixed/variable expenses and income venues as they relate to mission accomplishment.
How Nonprofit Boards Can Support Management & Staff and Refrain From Micromanaging!
By: Eugene Fram Free Digital Image
The dilemma is common to nonprofit organizations. As start-ups, everyone aspires to do everything. Passion for the mission and determination to “get it right” imbue board members with the desire to do it all. But once the organization starts to mature, board roles shift to focus more broadly on policy and strategy issues. With the advent of qualified personnel to handle operations, there are many overview activities, sans micromanaging, available to board members. Following are some ways that boards can assist and demonstrate support for operations, CEOs and staffs without interfering.
How Nonprofit Boards Can Support Management & Staff and Refrain From Micromanaging!
By: Eugene Fram Free Digital Image
The dilemma is common to nonprofit organizations. As start-ups, everyone aspires to do everything. Passion for the mission and determination to “get it right” imbue board members with the desire to do it all. But once the organization starts to mature, board roles shift to focus more broadly on policy and strategy issues. With the advent of qualified personnel to handle operations, there are many overview activities, sans micromanaging, available to board members. Following are some ways that boards can assist and demonstrate support for operations, CEOs and staffs without interfering.
A blog developed by an internationally known board expert* raises some pertinent governance questions mainly targeted to 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 the questions 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 with an authoritarian management style, but the board felt it needed to give him a chance to modify his style. Board members didn’t know that the staff professionals had been meeting with a union organizer for nine months. A labor election resulted, with the professional staff 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 accounts receivable financial report. The board and CEO accepted his excuses, but the data, when submitted, had a significant negative impact on the financials. Both the CEO and CFO lost their positions. Should the board have also accepted some responsibility for the crisis?
Do you understand the (mission) and add value? The board members 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 nonprofit 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 board members. Whatever you compensate, management will do.” Be certain the organization is compensating for outcomes and,more importantly, today impacts. Too often compensation is given for completing processes that are not tied to client impacts
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 Points. 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 join with management in meeting 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 from the above blog.
Falling in Love With the Mission & Other Sage Advice for First Time Nonprofit Board Members
By: Eugene Fram Free Digital Image
Sam Smith recently entered early retirement and wants to become a director on the board of a nonprofit organization. His motive is to give back to the community where he has prospered. As a first time board member, he can look to some advice from pros in the area, from an article by Stanford’s Center Social Innovation (CSI). http://stanford.io/1qefmx1
Following are my reactions to some of the article’s suggestions, hopefully adding important field information. My comments are based on having served on 12 nonprofit boards over several decades and my experiences as a consultant to at least a dozen additional nonprofit boards.
Once Again! Should Nonprofit Chief Executives Should Have Title: President/CEO?
By Eugene Fram Free Digital Image
This post, over several years, has developed a record of continued viewing or comment interest. Rarely a day passes in which the data doesn’t include several views. Perhaps the controversial nature of topic causes the longevity of interest?
When nonprofit organizations reach a budget level of over $1 million and have about 10 full-time staff members it is time to offer the chief operating officer the title of PRESIDENT/CEO. In addition, the title of the senior board volunteer should become CHAIRPERSON OF THE BOARD, and the title of EXECUTIVE DIRECTOR needs to be eliminated. Experience has shown that with a reasonably talented PRESIDENT/CEO at the helm, he/she can provide the following benefits:
Must Nonprofits Develop Employee Benefits That Substitute For Annual Raises?
By: Eugene Fram Free Digital Image
An analysis in the Washington Post reports that a tsunami-style change has been taking place in the manner in which United States employees are being paid—benefits are being offered in place of annual salary increases. (http://wapo.st/1MwoIBZ) Driving the change are the needs of a substantial portion of millennials who appreciate immediate gratifications in terms of bonuses and perks, such as extra time off and tuition reimbursement. Employers like the arrangement because they can immediately reward their best performers without increasing compensation costs. Example: One sales employee spent weeks reviewing dull paperwork, was very diligent in the process and was given three extra days of paid leave. She said, “I think everybody would like to make more, but what I liked about it was the flexibility.”
Do Today’s Business Leaders Make Effective Nonprofit Directors?
By: Eugene H. Fram Free Digital Image
The names of the new board nominees have been announced. They include several outstanding recruits from the business community. Will these new formidable board members perform well in the nonprofit environment? William G. Bowen, a veteran director in both the for-profit and nonprofit environments, raised the following questions about such beginnings in a 1994 article:* Is it true that well-regarded representatives of the business world are often surprisingly ineffective as members of nonprofit boards? Do they seem to have checked their analytical skills and their “toughness” at the door? If this is true in some considerable number of cases, what is the explanation?
Although this is not a good idea for nonprofit organizations, it is not an unusual occurrence, especially among start-ups. A director in a start-up nonprofit will need to assume some staff responsibilities as a volunteer. But he/s will need to organizationally report to the CEO. In the event the position ceases to be a volunteer one, i.e.,the person wearing the two hats is compensated for the staff work. he/s should resign the board position. With two hats, a director would be in conflict-of-interest on important matters like salaries. Although some state statutes specifically forbids a director to hold multiple roles, enforcement of the statues is haphazard, especially among smaller nonprofits that are short of people to carry out staff functions.
Nonprofit Management 