Board Recuitment

The Nonprofit Board’s New Role In An Age of Exponential Change

The Nonprofit Board’s New Role In An Age of Exponential Change

By Eugene Fram                 Free Digital Image

Most nonprofit boards are being faced with huge pressures—reduced financial support, challenges in integrating new technologies, recovering from Covid impacts and difficulties in hiring qualified personnel who will consider “nonprofit” wages. To survive long term, board members need to be alert to potential opportunities. These may be far from the comfort zones of current board members, CEOs and staff.

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Raising The Bar For Nonprofit Involvement

 

Raising The Bar For Nonprofit Involvement

By Eugene Fram                            Free Digital Image

It’s no secret that some nonprofit board members cruise through their term of board service with minimal involvement. McKinsey Company, a well-known consulting firm, has suggested five steps that can be used to counteract this passivity in for-profit boards. * With a few tweaks, McKinsey suggestions (in bold) are relevant to the nonprofit board environment where director engagement is often a challenge.

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Once Again: How to Keep Nonprofit Board Members Informed.

Once Again: How to Keep Nonprofit Board Members Informed.

By: Eugene Fram.            Free Digital Image

With high performing nonprofit organizations, board members will rarely be invited by the CEO to participate in operational decisions. As a result, management will always have more information than board members. Yet the board still needs to know that is happening in operations to be able to perform their overview process. The name of the game is for the CEO to communicate the important information and to keep board members informed of significant developments. Still, there’s no need to clutter regular board meetings by reporting endless details about operations.

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Nonprofit Board Members—Are They Aware of Their Independent Director Duties?

Nonprofit Board Members—Are They Aware of Their Independent Director Duties?

By Eugene Fram     Free Digital Image

The vast majority of nonprofit board members serve as independent directors. They are not members of management, have other occupations as their major focus, but have some significant responsibilities to a community, profession, government or professional/trade association. Mary Jo White, Former Chair, U.S. Securities & Exchange Commission, outlined the responsibilities of fund board members who also are independent directors to overview the investment dollars made by 53 million U.S. households. Many of her comments easily apply to nonprofit board members and their responsibilities as Independent directors. Note: The italicized materials following are White’s direct quotations. *

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How Prepared Are Board Members for the Challenges of the Nonprofit Culture?

How Prepared Are Board Members for the Challenges of the Nonprofit Culture?

By: Eugene Fram     Free Digital Image

Given that the typical tenure of a new board member is six years. In addition,a new director’s intention  may beto make his/her unique contribution to the organization’s progress before he/s rotates off the board and is supplanted by another “new” director. With these factors in mind, I estimate that many volunteers enter the boardroom with little understanding of nonprofit culture. Even those who have served previously on business boards may initially spend valuable time in accommodating to the nuances of nonprofit practices and priorities before being poised to make contributions to the “greater good” that nonprofit create. Following are some areas that are endemic to nonprofits:

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Time Compressed Non Profit Board members – Recruit & Retain Them

Time Compressed Non Profit Board members – Recruit & Retain Them!

By: Eugene Fram               Free Digital Image

Every nonprofit board has had the experience of having board positions open and being unable to fill them with highly qualified people. The usual response from qualified candidates is that they are too busy to be accept a board position. However, the real reasons, if speaking privately, are that they perceive the nonprofit decision process to be too slow, board agendas loaded with minutiae, presentations that take up more time than they should, unfocused discussion, etc. (more…)

Common Practices Nonprofit Boards Need To Avoid

 

Common Practices Nonprofit Boards Need To Avoid

Peter Rinn, Breakthrough Solutions Group, * published a list of weak nonprofit board practices. Following are some of the items listed and my estimation of what can be done about them, based on my experiences as a nonprofit board director, board chair and consultant.

• Dumbing down board recruitment – trumpeting the benefits and not stressing the responsibilities of board membership.
Board position offers frequently may be accepted without the candidate doing sufficient due diligence. At the least, the candidate should have a personal meeting with the executive director and board chair. Issues that need to be clarified are meeting schedules, “give/get” policies and time expectations. In addition, the candidate, if seriously interested, should ask for copies of the board meeting minutes for one year, the latest financials, and the latest IRS form 990.. These reports and the data revealed tell a great about the sustainability and impact of the nonprofit.  

• Overlooking the continued absence of board members at board meetings, strategic and planning meetings.
Many bylaws have provisions dropping board members who do not meet meeting attendance criteria established by the bylaws. However, such actions are difficult to execute because of the interpersonal conflicts that can arise. For example, one organization with which I am familiar had a director who did not attend any meetings, but did make a financial contribution to the organization. When his resignation was requested, he refused. Not wanting to create conflict, the board simply kept him on the board roster until his term expired and then sent him a note acknowledging the end of his term. The board chair, not the CEO, has a responsibility to have a personal conversation with the recalcitrant director. He/s needs to offer a “tough love” message in the name of the board.

• Taking a board action without conducting enough due diligence to determine whether the transaction is in the nonprofit’s best interest.
Although each board member should sign conflict of interest statement each year, my impression is that this is rarely done. Board members should understand the potential personal liabilities that might be accrued as a result of violation of the federal Intermediate Sanctions Act (IRS Section 4958) and other statues. For example, under IRS 4958, a board member can have his or her personal taxes increased if involved in giving an excess benefit, such as selling property to the wife of a board member for less than the market rate. Some boards and their members need to be frequently reminded about their “due-care” responsibilities.

• Allowing board members to be re-elected to the board, despite bylaw term limitations.
This often occurs when the board has given little thought to a succession plan, and the only person who seems qualified is currently in place. It also happens when the board has significant problems and nobody on the board wants to take the time to hold a time consuming position. Some boards, however, have a bylaw exception that allows a board chair, if scheduled for rotation, an extra year or two to be chairperson. Succession planning needs to be a yearly routine for top managers and for the board itself.

• Allowing board members to ignore their financial obligations to the nonprofit.
To assess board interest in a nonprofit, foundations and other funders like to know that every board member makes a financial contribution within their means or participates in the organization’s “give/get” program. This topic should be discussed at the outset of recruitment so it can be full understood by all directors.

• Overselling the protection of a Directors’ and Officers’ (D&O) insurance and laws limiting the liability of directors.
The importance of a nonprofit having a D&O policy, even a small one, can’t be overstated. I recently encountered a nonprofit that had operated for seventeen years without a D&O policy, although its annual budget was $500,000, and it was responsible for real estate valued at least $24 million. Each director should be knowledgeable about the potential personal liabilities involved with the board position. Frequently, directors assume that a D&O insurance policy covers too wide a range of situations.

• Allowing ignorance and poor practices to exist keeps leadership in control.
Changing leadership and practice is difficult for both for-profit and nonprofit organizations. However, in the nonprofit environment it is more difficult because poor leadership and practices can continue for a long time period, as long as current revenues meet expenditures. They can even become part of the organization’s culture. In some situations, this state of affairs continues because the board has low expectations of management and staff. It’s critical that the leadership needs to be thoroughly evaluated annually.

There is much that nonprofit boards can do about avoiding common practices that weaken the effectiveness of the board.

* aka The Nonprofit Entrepreneur, Placitas, New Mexico

Once Again! Nonprofit CEO: Board Peer – Not A Powerhouse

Once Again! Nonprofit CEO: Board Peer – Not A Powerhouse

By: Eugene Fram                Free Digital Image

Some nonprofit CEOs make a fetish out of describing their boards and/or board chairs as their “bosses.” Others, for example, can see the description, as a parent-child relationship by funders. The parent, the board, may be strong, but can the child, the CEO, implement a grant or donation? Some CEOs openly like to perpetuate this type of relationship because when bad decisions come to roost, they can use the old refrain: the board made me do it.

My preference is that the board-CEO relationship be a partnership among peers focusing on achieving desired outcomes and impacts for the nonprofit. (I, with others, would make and have made CEOs, who deserve the position, voting members of their boards!)

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Different Strokes For Nonprofit Board Folks

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Different Strokes For Nonprofit Board Folks

By: Eugene Fram     Free Digital Photo

Over decades of service on nonprofit boards, I have interfaced with board colleagues who possess a variety of performance styles and behaviors. Certain of these types seem to be common to all boards. My comments below are based on adaptations of a director classification system suggested by David Frankel, Partner of Founder Collection. *

The Eager Beaver  

This board member (30s to early 40s) has probably been successful as an entrepreneur or is, perhaps, rapidly rising through middle management in a larger organization. He/she wants to “get things done”. His/her impatience with the typically slow nonprofit rate of progress can be channeled and directed by the CEO or Board Chair. Discouraged by lack of action, this director may quietly exit the board on the pretext that work pressures have increase. On the other hand, if properly nurtured, this category can offer substantial leadership contributions.  

The Checked-Out Check Writer 

Serving on a nonprofit board has likely become a family or company tradition for some directors. (Some local nonprofits are now about 100 years old or older.) Regardless of the person’s dedication to the mission, nonprofit board service becomes part of this director’s DNA. Often they develop into respected leaders and can be conduits to modest or substantial donations. In addition, they have access to interpersonal networks that are useful in recruiting other able board members. This cohort should be valued and their contributions, acknowledged.

The Vanilla Director 

This is a director who attends meetings regularly, occasionally makes an interesting comment. He/she is dedicated to the mission of the organization and can make substantial financial or other contributions. One such director I observed, volunteered to assist the staff with a difficult field problem.  According to Frankel, these directors are “less critical and offer encouragement…. ” However, like many other nonprofit board members, across behavioral types, avoid rigorous discussions at board meetings. If substantial conflict appears between factions of the board on a major issue, they may resign instead of taking an unpopular stand.

The Nonprofit Entrepreneur

This is a director who has a substantial understanding of the nonprofit sector. He/s has served on other nonprofit boards and is dedicated to the nonprofit’s mission. He/s has a desire to help move the nonprofit to its next level of service to clients. He/s often brings bold or different perspectives to the board and management. She/h knows that to achieve growth and improve client services, it is necessary to “sell” ideas to other board members, as well as the CEO. It’s important that the nonprofit entrepreneur and CEO are on the same page in terms of the organization’s future and potential to serve clients. If not, the CEO, unfortunately, may view the entrepreneur with his/h “fast track” style as a disrupter.

An overview of nonprofit boards tends to focus on the unique set of skills and work experience they bring to the table (doctors, professors, accountants, full-time homemakers etc.) A closer look at the board suggests another layer of classification i.e. individual styles, motivation and behaviors. Herein is challenge and opportunity to develop meaningful board experiences for each individual who has said “yes” to the call to service.*

https://hackernoon.com/eight-people-youll-meet-on-your-board-of-directors-8963863d4a03  

Do Your Board Members View Their Board Work As Being Meaningful?

 

Do Your Board Members View Their Board Work As Being Meaningful?

By Eugene Fram                  Free Digital Image

For several decades, I have suggested that nonprofit Board Chairs and CEOs have a responsibility to be sure that each board member perceives his/h continuing relationship as being meaningful. Following are some organizational guidelines that can assist Board Chairs and CEOs in this effort.*

  1. Developing or hiring strong executive leadership: Obviously when hiring externally it is necessary to engage a person with a managerial background. But many nonprofit CEOs can be appointed after years of being an individual contributor or leading a small department. These experiences condition them to do too much themselves, rather than to assume a strong management posture. This involves focusing more on strategy, on talent development, interacting more with the board/community and creating a long-term vision.

A strong CEO, if appointed internally, should understand the role changes that take place once appointed. He/s must delegate activities that was once performed was once performed within a comfort zone and seek new challenges. Examples: The new CEO needs to be enthusiastic about becoming a fundraiser.   She/h must become well acquainted with peer CEOs regionally and nationally to stay abreast of the state-of-art in both management and mission areas. He/s needs to become acquainted with cohorts in the business and public management communities. Over time, those involved with the nonprofit internally and externally must perceive the organization is lead by a capable executive.

  1. Creating impact: In the 21st century, funders, board members and other nonprofit leaders are attracted to organizations that create impacts as opposed to outcomes. A nonprofit can have great program outcomes with little long-term impacts on clients. Impact is often hard to measure, but it can be done, only if started with imperfect measures that are improved over time. ** For example, one local human services organization, with which I am acquainted, operates groups of apartments offering social services that allow elderly clients to live independently for years on their own, rather than in an assisted living facility. The impact in this instance is well-defined and an impetus to attracting board members and donors that find the impact meaningful.
  2. Building relationships externally and internally: Board candidates who have broad contact networks are sought by search committees to enhance community or industry relationships or to strengthen the organization’s fund development efforts. Little effort is directed to fostering closer relationships among current board members who often don’t get to know each other personally because of crowded board and committee agendas. Example: I consulted with one board where some board members complained that they might not recognize their board peers when they meet them in outside social situations.

To solve the problem, both the Board Chair & CEO must acknowledge that it exists—in the above example; it took an extensive personal interview board survey to highlight the problem.   Then creative tactics like the following can be employed.

  • One CEO has a weekly one-hour conference call with the board chair to discuss current issues. Other board members are invited to join the calls if they wish. This is an excellent way for new board members to quickly become attuned to the nonprofit.
  • Another CEO, each Sunday, sends a one-page e-mail summary of major events to board members. He reports that his high school English teacher would never approve of his grammar or format, but he knows emails are reviewed. They are reflected in the level of discussions at meetings
  • Low-key self-funded social events for board members and significant others can help board members to become better acquainted and work together.
  • Another classical approach is to allow 10 minutes each meeting to allow board members to briefly report changes in their personal or professional lives.
  • Assuming an organization is successful in developing a cohesive board, what can be done to retain these efforts once they have termed-out? The answer is to ask them to join the organization’s “Alumni Association.”   The process can be found here: (https://onlinelibrary.wiley.com/doi/epdf/10.1002/ltl.20305)
  1. Organizational stability: Unstable nonprofits have common telltale signs—rapid employees or management turnover, excessive bank borrowing, reserve depletion, late report filings, etc. It’s difficult to provide meaningful board experiences under these conditions. However it is not unusual to find board members who will accept responsibility when the nonprofit is unstable, if they are dedicated to its mission. Some may even “enjoy” the turnaround challenge.

While no nonprofit will be perfect, those with the best opportunity to provide meaningful board experiences will have a well formulated strategic plan that allows it to be stable operationally and financially.

*https://grantspace.org/resources/blog/high-impact-volunteer-engagement-six-factors-for-success/

** https://nonprofitquarterly.org/2012/07/24/using-imperfect-metrics-well-tracking-progress-and-driving-change/

** https://nonprofitquarterly.org/2012/07/24/using-imperfect-metrics-well-tracking-progress-and-driving-change/