Buidling personal relationships

What Nonprofits Can Do To Maintain Liquidity

What Nonprofits Can Do To Maintain Liquidity

By: Eugene Fram    Free Digital Image

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.

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The Devil’s Advocate on a Nonprofit Board: Asset or Liability

The Devil’s Advocate on a Nonprofit Board: Asset or Liability?

By: Eugene Fram              Free Digital Image

An unwritten rule for nonprofit board membership is that it is best to “go along to get along.” But sometimes a nonprofit director’s “no” vote to an action that has had inadequate discussion can allow him/h to avoid tax penalties that have been levied on other board members for lack of due care.

Stanford University research results indicate that groups with a lone minority dissenter outperform other groups where all members agree. In addition, these groups…”are more successful than (groups) in which all members disagree and fall prey to escalated emotional, difficult-to resolve (group) brawls “ *

The key to success, according to these data, is to,” … have a devil’s advocate (DA) on the nonprofit board. … This is a person or a small board minority that “has the sensitivity to see the differences, perceives them as conflict, and then communicates about the differences in non-confrontational ways.” **

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How Nonprofit Boards Can Support Management & Staff and Refrain From Micromanaging!

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.

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How Nonprofit Boards Can Support Management & Staff and Refrain From Micromanaging!

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.

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The Search For a New Nonprofit CEO Needs To Be Realistic

 

The Search For a New Nonprofit CEO Needs To Be Realistic

By Eugene Fram      Free Digital Image

Boardmember.com in its October 11, 2012 issue carries an op-ed item by Nathan Bennett and Stephen Miles titled, “Is your Board About to Pick the Wrong CEO.” Although targeted to for-profit boards, all of the five items listed in the article can be applied to nonprofit boards. 

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Once Again: How Should Nonprofits Conduct Board Evaluations?

 

Once Again: How Should Nonprofits Conduct Board Evaluations?

By: Eugene Fram    Free Digital Image

 Data from BoardSource show that only about 58% of boards have had “formal, written self-assessment of board performance at some point. Only 40% of all boards have done an assessment in the past two Years,” a recommended practice. With the rapid turnover of directors that nonprofit boards traditionally experience, this seems inexcusable. As a “veteran” nonprofit director, following is what I think can be done to improve the situation.

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WHAT NONPROFIT & TRUSTEE BOARD MEMBERS HAVE A RIGHT TO KNOW.

By Eugene Fram        Free Digital Image

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

 

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.

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Nonprofits Can Build a Stronger Brand With Internal Marketing

 

Nonprofits Can Build a Stronger Brand With Internal Marketing

By: Eugene Fram     Free Digital Image

Nonprofit branding is an important topic to nonprofit board members and managers with nonprofits wanting to differentiate their services, images and reputations. Some organizations are spending substantial dollars to assess and build their brands.

Most nonprofits with which I have had contact are not aware whether not all their employees and perhaps some board members are brand loyal to their nonprofit organization. Many independent contributors (accountants, counselors, social workers, trade association executives, etc.), who work for nonprofits, see their loyalties as being related to their professions not their employing organizations.

 I co-authored several articles to explore the issue of employee brand loyalty with commercial firms. * I would like to review some of those finding to show that nonprofit management also constantly needs to assess whether or not employees and board members are receiving positive brand messages related to the organization’s mission, vision and values. This should be the outcome of an internal marketing effort. The impact for internal marketing should be to enlist every employee and board member to become a brand champion for the nonprofit.

Reasons for Rejection

“The results of (our study) indicate the two most prevalent perceptions relating to low employee … behavior were (a) a lack of pride in the product and (B) a sense that the product is unaffordable. “ … This suggests that managers need to determine the level of product pride in mission, vision and values when the term commercial term, “products,” is translated to nonprofits.” They must motivate employees to take pride by celebrating professional awards and reviewing honest client satisfaction data and case studies, especially those that show how the organization has contributed to individuals and society.

In terms of affordability, the internal marketing effort needs to show how clients have benefited long term. This is typical of university internal marketing that focuses on successful graduates who have made societal contributions. This program is especially important where the university is not nationally known but has some special educational benefit to offer.

Quality & Features

“Internal marketing campaigns (often) may rely too much on appeals to employee loyalty or self-interest, thereby missing the opportunity to convert the more skeptical persons on the payroll. …These findings imply that employers need to, where possible,continually educate employees (and board members) on the comparative advantages of their brands involving outcomes of mission, vision and values.” Comparisons of impacts of the local organization with those of others nationally can be helpful. For example, professional organizations often publish data that make interesting comparisons.

Values, Reliability and Prestige.

“One way to deal (with the prestige) issue is to inform employees and board members how the (nonprofit’s) standards compared to the (professional field) standards.” This can be done in two ways. One is to add the annual IRS 990 report to the organization’s website. Another approach is to issue a press release when the organization is re-accredited by an outside organization. At this time, when transparency is becoming increasingly important, management even might want to present a detailed debriefing on important reports to the board and employees as a way to discuss and challenges and strengths.

Changing Perceptions

“Management needs to survey employees and board members to fully understanding their perceptions of the organization’s mission, vision and values. Even having a few misconceptions circulating can be harmful to the brand.” For example one nonprofit recreational facility determined that several members of their board and their families were using a competitor’s facilities. In several instances, there was little they could do about it, but it is important to understand the reason and to try to reduce the negative impact on its brand image. On the other hand, substantial positive changes might occur with the proper internal marketing.

Summary

“One responsibility of management might be to develop venues for employees and (board members) to become more comfortable in communicating their positive attitudes to friends and relatives. There’s also significant potential for brand-loyal employees (and board members) to act as brand champions After all, high enthusiasm within the ranks of employees and directors brings impressive dividends.”

• *Eugene H. Fram & Michael S. McCarthy (2004), “What’s Not to Like? If employees aren’t buying your brand, it important to find why,” Marketing Management, July-August, pp. 36-40.
• *Fram & McCarthy (2003), “From Employee to Brand Champion,” Marketing Management, January-February, pp. 25-29

 

The Succession Dilemma: Why Do Nonprofit Boards Fail to Plan Ahead?

The Succession Dilemma: Why Do Nonprofit Boards Fail to Plan Ahead?

By: Eugene Fram              Free Digital Image

There are many types of crises common to an organization. But one event seems to trigger a large proportion of the ensuing trauma. It frequently happens when a CEO or another top manager retires, resigns or leaves for other reasons.   The flow of leadership is about to be disrupted and there is no viable replacement for the departing executive.

This transitional panic happens in both for-profit and nonprofit organizations. The National Association of Corporate Directors (NACD)  reported that 50 % of public company directors concede that CEO succession planning needs to be improved. * In the nonprofit environment, only 27% actually have succession plans to replace a suddenly departing executive. ** This demonstrates the low priority nonprofits place on over-viewing talent succession to prepare for unexpected vacancies.

Here are some insights (in italics) from the NACD report that are applicable to nonprofit succession planning, be it management talent overview or implementing the replacement process.

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