Board Recuitment

What Can A Nonprofit Chair Do To Fix A Dysfunctional Board?

What Can A Nonprofit Chair Do To Fix A Dysfunctional Board?

By: Eugene Fram             Free Digital Image

There are times when the governing body of any organization may appear to be “broken.” The directors, whether for profit or nonprofit, may be polarized—progress is stunted – apathy and confusion replace purpose and efficiency.
A listing of ways to resuscitate dysfunctional business firms prompted me to expand on actions for nonprofits in similar condition. When a nonprofit is in trouble, any chair, who is aware of his/ her leadership responsibilities, should aspire to be the “fixer “of the fractured board. But there is just so much he/s can do. Some failures have deep endemic roots such as outdated structure, personality conflicts etc. The following actions are within the chair’s capability, and they can be useful in repairing board disruption. (more…)

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The Art of the “Ask”: Six tactics frequently ignored by nonprofit fund developers & CEOs

The Art of the “Ask”: Six tactics frequently ignored by nonprofit fund developers & CEOs

By: Eugene Fram       Free digital image

Most nonprofit board members and managers have acquired a measured of savvy when it comes to raising funds for their organizations. They have learned that building trust with current and prospective donors is the key to maintaining meaningful support. Here are some overlooked tactics to further strengthen relationships. *

  1. Show the donors “what’s in it for them:” Some development officers still lead by focusing on what is of interest to them—the construction of a new building, providing funds for the nonprofit’s strategic development plan, etc.   But they often lack certain perspectives.

(more…)

Attention Nonprofits: If You Want to Avoid “The Squeeze,” Here’s the One Strategy That Can Help

With a competitive landscape in which spiraling demands are offset by a financing squeeze, nonprofits organizations have entered an era where only the strongest and best run will flourish, Prof. Eugene Fram, an author, consultant and nonprofit expert said in an interview. But that “strength” is easily attained, with a simple-to-implement game plan that strategically integrates the nonprofit’s board and executive staff.

“It’s a threatening squall – one I often refer to as ‘The Squeeze’,” said Prof. Fram, author of Going For Impact,” a guide to nonprofit dominance. “Just think about what’s happening. On one hand, because of slashed government budgets, there’s a growing demand for nonprofits to solve community challenges and societal ills. On the other hand, there’s the escalating challenge that nonprofits face because of a funding squeeze. Declining tax receipts are crimping many government budgets. The merger wave has slashed the number of companies that were traditionally big sources of giving. Even the recent tax cuts are squeezing funding. The competition for those fewer dollars is brutal. And that’s just on the funding side. There are also new challenges that nonprofits must address – challenges ranging from cybersecurity to sexual harassment. The bottom line is that nonprofit boards – and their directors or trustees – must be more vigilant, more informed and more proactive than ever. The good news is that the nonprofits that embrace this will be the organizations that emerge as healthy, even dominant. And the strategy isn’t that tough to enact.”

Dr. Fram recently sat down with veteran journalist William Patalon III – ironically, one of his former MBA students – to talk about the “State of the Nonprofit Sector,” and to explore what philanthropic organizations can do to “beat the squeeze.”

Here’s an edited transcript of their talk. (more…)

Top Factors For Improving Nonprofit Board Members’ Board Experiences

Top Factors For Improving Nonprofit Board Members’ Board Experiences

By: Eugene Fram

Spencer Stuart, an international placement firm,  asked 500 directors who serve on for-profit boards to name the top factors that would reasonably improve their board experience. Their answers also resonate in the nonprofit arena. (more…)

Establishing Effective Nonprofit Board Committees – What to Do.

Establishing Effective Nonprofit Board Committees – What to Do.

By Eugene Fram                      Free Digital Image

Following are ways that many nonprofit boards have established effective board committees using my governance model as described in the third edition of Policy vs. Paper Clips.

https://goo.gl/j4EK5P

• In the planning effort, focus board personnel and financial resources only on those topics that are germane to the organization at a particular time. For example, financial planning, long-range planning or short-range planning. However the board needs to be open to generative planning if new opportunities present themselves or are developed via board leadership. (more…)

Dysfunction in the Nonprofit Sector—Reality or Myth?

 

Dysfunction in the Nonprofit Sector—Reality or Myth?

By: Eugene Fram         Free Digital Image

Judging from the vast literature on dysfunctional nonprofit boards and organizations (my own posts included!) one might conclude that the majority of nonprofits are struggling, incompetent and/or in crisis. I argue that this is not the case. Decades of experience lead me to believe that nonprofits have the same functional variables as profit making organizations—dysfunctional at times like Target or GM; efficient like Apple or Amazon. Everybody doesn’t get it right all the time.

Perceptions become reality to those who are quick to embrace popular labels such as the overused term, “dysfunctional.” Obviously, in the case of nonprofits, such perceptions are harmful. Once evaluated in this way the stigma persists and can seriously reduce the level of support that is so critical to the work of these organizations. (more…)

The Enron Debacle, 17 years Ago—2018 Lessons for Nonprofit Boards?

The Enron Debacle, 17 years Ago—2018 Lessons for Nonprofit Boards?

By: Eugene Fram                Free Digital Image

In 2001 Enron Energy collapsed due to financial manipulations and a moribund board. It was the seventh-largest company in the United States. Andrew Fastow, the former CFO and architect of the manipulations served more than five years in prison for securities fraud. He offered the following comments to business board members that, in my opinion, are currently relevant to nonprofit boards. (http://bit.ly/1JFGQ6T) Quotations from the article are italicized.

One explanation of his downfall was he didn’t stop to ask whether the decisions he was making were ethical (moral).

Nonprofits directors and managers can find themselves in similar situations. One obvious parallel is when a conflict of interest occurs.  In smaller and medium sized communities, it is wise to seek competitive bids, especially when th purchase may be awarded to a current or former board member or volunteer.

Board members and managers themselves can be at personal financial peril, via the Intermediate Sanctions Act, if they wittingly or unwittingly provide an excess salary benefit to an employee or an excess benefit to a volunteer or donor. Examples: The board allows an above market salary to offer to the CEO. Also the board allows a parcel of property to be sold to a volunteer or donor at below market values.  See: https://www.irs.gov/charities-non-profits/charitable-organizations/intermediate-sanctions

One subtle area of decision-making morality centers on whether a board’s decision is immoral by commission or omission. Examples: In its normal course of client duties, the board allows managers to travel by first class air travel. Obviously, resources that are needed by clients are being wasted and morally indefensible. On the other hand the moral issue can come in to play, if the nonprofit is husbanding resources well beyond what is needed for an emergency reserve. The organization, in a sense, is not being all it can be in terms of client services or in seeking additional resources. Overly conservative financial planning, not unusual in nonprofit environments, can result in this latter subtle omission “moral” dilemma. Overtly, universities with billions of dollars on their balance sheets have been highlighted as having the issue, but I have occasionally noted smaller nonprofits in the same category.

He (Fastow) said he ultimately rationalized that he was following the rules, even if he was operating in the grey zones (area).

There can be grey zones for nonprofits. Example: IRS rules require that the nonprofit board be involved in the development of the annual Form 990 report. But what does this involvement mean—a brisk overview when the report is finished, a serious discussion of the answers to the 38 questions related to corporate governance, a record in the board minutes covering questions raised and changes suggested, etc.? A nonprofit boards needs to make a determination on which course is appropriate.

Boards implementing government-sponsored contracts can get into grey areas. Example: Some contracts require the nonprofits to follow government guidelines for travel expenses. I wonder how many nonprofit audit committees are aware of their responsibilities to make certain these guidelines are followed?

According to Fastow, a for-profit director can ask the wrong question—“Is this allowed?” A nonprofit director can make the same mistake. Instead, in my opinion, the better question for a nonprofit should be “Will this decision help the organization to prosper long after my director’s term limit?”

As Fastow did, human service boards can invite trouble if they falsely rationalize an action as being taken for client welfare, and then conclude they are following the rules.

Mr. Fastow said one way to start changing an entrenched culture is to have either a director on the board, or a hired adviser to the board, whose role is to question and challenge decisions.

Nonprofit directors are often recruited from friends, family members and business colleagues, etc. This process creates an entrenched board.

When elected to the board, a process begins to acculturate the new person to the status quo of the board, instead making best use of the person’s talents. Example: An accountant with financial planning experience will be asked to work with the CFO on routine accounting issues, far below her/h professional level. One answer is to accept Fastow’s suggestion and to appoint a modified lead director or adviser to a nonprofit board. (For details: see: http://bit.ly/13Dsd3v)

An old Chinese proverb states, “A wise man learns by his own experiences, the wiser man learns from the experiences of others. Nonprofit can learn a something from Andrew Fastow’s post conviction recollections to hopefully help avoid signifcnat debacles.