Consistency

Reversing Traditional Nonprofit Board Barriers

 

 

Reversing Traditional Nonprofit Board Barriers

By: Eugene Fram          Free Digital Photo

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 that service is often not so clear. An executive committee, for example, can overstep its authority by assuming powers beyond its scope of responsibility. I encountered this in one executive committee when the group developed a strategic plan in an interim period where there was no permanent ED. The board then refused to share it with the incoming executive. In another instance, an executive committee took it upon itself to appoint members of the audit committee—including outsiders who were unknown to the majority on the board.

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 is difficult for nonprofits to achieve:

  • A typical nonprofit board member is often recruited from a pool of friends, relatives and colleagues, and will serve, on a median average, for four to six years.   This makes it difficult to achieve rigorous debate at meetings (why risk conflicts with board colleagues?). Directors also are not as eager to thoughtfully plan for change beyond the limits of their terms. Besides discussing day-to-day issues, the board needs to make sure that immediate gains do not hamper long-term sustainability.
  • The culture of micromanagement is frequently a remnant from the early startup years when board members may have performed operational duties. In some boards it becomes embedded in the culture and continues to pervade the governmental environment, allowing the board and executive committee to involve themselves in areas that should be delegated to management.
  • The executive team is a broad partnership of peers –board members, those appointed to the executive committee and the CEO. The executive committee is legally responsible to act for the board between meetings–the board must ratify its decisions. But unchecked, the executive committee can assume dictatorial powers whose conclusions must be rubber-stamped by the board.

Mitigating Oversight Barriers: There is often little individual board members can do to change the course when the DNA has become embedded in the organization. The tradition of micromanagement, for example, is hard to reverse, especially when the culture is continually supported by a succession of like-minded board chairs and CEOs. No single board member can move these barriers given the brevity of the board terms. But there are a few initiatives that three or four board members, working in tandem, can take to move the organization into a high-performance category.

  • Meetings: At the top of every meeting agenda there needs to be listed at least one policy or strategy topic. When the board discussion begins to wander, the chair should remind the group that they are encroaching on an area that is management’s responsibility. One board I observed wasted an hour’s time because the chair had failed to intercept the conversation in this manner. Another board agreed to change its timing of a major development event, then spent valuable meeting time suggesting formats for the new event—clearly a management responsibility to develop.
  • “New Age” Board Members: While millennial directors may be causing consternation in some legacy-bound nonprofit and business organizations, certain changes in nonprofits are noteworthy. Those board members in the 40- and- under age bracket need some targeted nurturing. I encountered a new young person who energized the board with her eagerness to try to innovative development approaches. She was subsequently appointed to the executive committee, deepening her view of the organization and primed her for board chair leadership.

Board members who understand the robust responsibilities of a 21st century board need to accept responsibilities for mentoring these new age board people, despite their addictions to electronic devices.

  • Experienced Board Members: Board members who have served on other high-performance boards have the advantage of being familiar with modern governance processes and are comfortable in supporting change. They are needed to help boards, executive committees and CEOs to move beyond the comfortable bounds of the past. They will be difficult to recruit, but they are required ingredients for successful boards.
  • NEW Projects: Boards and the CEO must be bold and try new approaches to meet client needs. For example instead of going through a complete planning process for a new program the board must ask management to complete a series of small experiments to test the program. When a series of results are positive, the nonprofit can work on a plan to implement the program.

Conclusion: Individual board members working alone will probably become frustrated in trying to contend with the overview barriers discussed. But working with three or four colleagues, over time, on a tandem basis, they can make inroads on the barriers. Meetings can become more focused on policies/strategies, new age board members can become more quickly productive, experienced board members can become role models and new programs and other projects can be more quickly imitated via the use of small scale experiments.

How Do Nonprofit Boards Keep Stakeholders Engaged?

 

 

How Do Nonprofit Boards Keep Stakeholders Engaged?

By: Eugene Fram                       Free Digital Photo

First, exactly who are the “stakeholders” in the nonprofit environment? Most board members would readily define the term as clients, staff, donors and board members. But what about other participants such as external auditors and significant vendors? Surely a nonprofit that depends on a vendor to supply food items can be hobbled if the food is not delivered properly. And, last but not least, the backbone of the organization — the volunteers! Many cogs in the wheel make the nonprofit world go around and need consistent and careful attention. Following are some guidelines for engaging all types of stakeholders:

  • Don’t marginalize, dismiss, or ignore a stakeholder: Unfortunately, for example, termed-out board members * are often dismissed in more than one sense of the word. After serving the typical tenure of four to six years, the retired board members may only receive boilerplate materials or fund solicitations. Any residual interest or enthusiasm for the nonprofit is not encouraged unless the retiree initiates a desire to remain connected. The assumption is that the past board members are content with the disconnect.

For those board members who have been active participants during their term, this tactic may actually be counterproductive from many points of view—talent, expertise and development possibilities. I have observed several cases in which this unintended marginalization has resulted in losing substantial financial support and needed talent. In each case,  the retirees have declined to help, using the excuse that they have been too far away from the activities of the organization. Boards must be creative in finding ways of reigniting the former directors’ commitment to the organization’s mission. This can be accomplished in a variety of ways—in an advisory capacity, forming “alumni” groups and/or by including them in social events and other occasions.

  • Recognize who may be a true partner: Such a partner can range from a vendor that has supplied the organization or a volunteer whose interests have moved to another nonprofit to a legacy board member who has developed new insights.  “It is generally easier to build consensus, request help and engender trust when those who support you are well-informed, candidly and truthfully.” **
  • Stakeholders must know about the nonprofit’s challenges and needs: Even the best-managed nonprofits have their ups and downs. During the latter periods, educating stakeholders about the issues can help to dissuade some to avoid posting job cuts and other actions.
  • Self–perpetuating boards can became insular and lose touch with other stakeholders: “These boards tend to retreat into a silo-or bunker-mentality that only serves to intensify bad habits and practices, as well as preclude consideration of other perspectives.” ** At difficult times, the board can tend to lose trust in the ED even when the problem is beyond the EDs control. If the board is at fault, it may look for a scapegoat on which to hang the root cause of the problem, often people in senior management.

* http://www.huffingtonpost.com/eugene-fram/how-does-your-nonprofit-r_b_5393736.html

** https://www.linkedin.com/pulse/what-sweet-briar-reminded-us-alumni-engagement-mark-w-jones

Board Members:  Are Your Managers & Staffs Effectively Engaging Business Donors?

Board Members:  Are Your Managers & Staffs Effectively Engaging Business Donors?

By: Eugene Fram          Free Digital Image

Fund development should be a partnership between board members and CEOs/Development Officers, if the latter is available. However, I have noted that board members don’t take sufficient responsibility to make certain that CEOs and Development directors are well prepared when they approach potential business donors. This, in my view, is the first step in building a relationship fundraising approach. Many involved with NFP fundraising or management have spent their entire careers in the nonprofit environment, resulting in a gap in communicating with those in the business environment.*  Some may even privately believe that those in business contribute less significantly to society.  While little can be done about the latter, here is what I think can be done to fill or reduce the unfortunate gap in cultures often found between for-profits and nonprofits, especially when it relates to fund development.

Homework: Development officers, executive directors and others meeting potential business donor have an obligation to know a great deal about the potential donor’s firm. The worst opening for those seeking a business donation or grant is, “Tell me about what XXX produces.” It appears the solicitor has no interest in the environment in which the firm operates. In the Internet age, there is no excuse for such lapses. A Google or LinkedIn search is also critical in preparing to understand each of the persons who might be involved in initial contacts.

With this information, a conversation can be appropriately opened with “How’s business been recently?” It can be followed by a discussion of the donor’s industry trends and challenges, establishing a level of comfort for the donor.

What can your nonprofit do for the donor? Sophisticated development officers have ways of asking this important question. Some examples: (1) In the case of a university, this may range from suggesting capable entry-level employees for the firm to answering personal questions such as guidance on seek a relative’s admission to a selective university. (2) In the case of a nonprofit whose mission to assist qualified persons to find locate new employment, its work can be related to the firm when the firm has significant layoffs.

A Business Posture: A development officer or executive director needs to convey they have grounding in the business world and its basics, especially to be able to quickly show that their nonprofit is well managed. A recent study of Silicon Valley donors and nonprofit leaders cited a  empathy gap between the two.  Generally speaking, nonprofit leaders and new philanthropists don’t move in the same social circles. For the latter, community is increasingly defined not by physical place but by socioeconomic class: a particular psychographic and a set of shared experiences that only wealth can buy.*

The objective is to develop a continuing conversation with the donor related to his/h business interests and outlook. This offers a connection to show that the nonprofit fulfills a human service, professional or social need. These may include:

  • Explaining the scope of the “executive director” title directly or indirectly if the operating CEO does have the well-known title “president/CEO.” The ED title puzzles many in the business environment, since the top operational person in a business firm most often is the “president/CEO.” ** 
  • Showing the nonprofit has a viable mission that is being carefully shepherded and the organization doesn’t engage in mission creep. 
  • Clarifying that an achievable business plan is available.
  • Having a well managed internal structure that can achieve impacts for clients. (Like the results of the Zuckerberg gift to Newark schools, many business people are aware that process goals can be achieved without having client impacts.)

Unfortunately nonprofit organizations can have a reputation among members of the business community as being less effective and efficient than for-profit ones. These people may not have encountered many local nonprofit leaders, as I have, with significant management savvy. Consequently, nonprofit representatives first  need to be sure they begin their relationships with donors by showing interest in their business, industry, or firm. This then offers the opportunity to demonstrate that the nonprofit’s mission is managerially strong and looks to impacts, not processes, as measures of success.

*https://www.linkedin.com/pulse/key-trends-silicon-valley-philanthropy-tatiana-fedorova/

**https://non-profit-management-dr-fram.com/2010/05/31/non-profit-governance-executive-title-ceo-versus-executive-director/

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?  A small group of  CEOs may 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, when allowed by state laws, voting members of their boards!)

There are many precedents for a nonprofit CEO to become a peer board member, some without voting rights, some with full voting rights. One nonprofit group is university presidents, where shared governance with faculty bodies can be the norm. For example, when General Eisenhower became president of Columbia University, he referred to the faculty in an initial presentation as “Columbia employees.” Later a senior faculty member informed him “With all due respect, the faculty is the university.”

Another nonprofit group is hospitals where the CEO may also be or has been the chief medical officer. The level of medical expertise needed to lead requires that a peer relationship be developed. Also if the hospital CEO is a management person, he and the chief medical officer must have a peer relationship, which extends to the board.

Hallmarks of a Peer Relationship
• The CEO values the board trust assigned him/her, and carefully guards against the board receiving surprise announcements.
• The board avoids any attempts to micromanage, a natural tendency for many nonprofit boards.
• When a board member works on a specific operating project, it is clearly understood that he/s is accountable to the CEO for results.
• The CEO has board authority to borrow money for short term emergency needs.
• The CEO understands need for executive sessions without his/her presence.
• The CEO understands the need for a robust assessment processes to allow the board to meet its overview duties.
• Both board and CEO are alert to potential conflicts of interest which may occurs.
• Both value civil discussion when disagreements occur.
• The board realizes that nobody does his/her job perfectly, and  does not strongly react to occasional CEO modest misjudgments.

Summary
Elevating a nonprofit CEO to a status of board peer does not automatically make the CEO a powerhouse. The board legally can terminate the CEO at will. However, in my opinion, having the CEO as a board member can generate  following benefits.

The peer relationship help will:

• Help the organization to build a desirable public brand, since the related responsibility is more broadly understood when compared to the ED title.
• Allow a capable person, with daily experience, to interface with the media.
• Define a role for the CEO to lead in fundraising.
• Allow the organization to hire better qualified personnel.
• Allow the organization to present a strong management environment to funders. After all, top people in organizations readily communicate with people in similar positions.

How Can Nonprofit Boards Overcome the Inertia of Certain Board Members?

 

How Can Nonprofit Boards Overcome the Inertia of Certain Board Members?

BY: Eugene Fram        Free Digital Image

Making major changes in nonprofit  mission, board structure, management or other significant matters is difficult. The typical nonprofit board will be divided into several groups on the issue: 1) members who want change, 2) members opposed to change, some strongly opposed and 3) what I call “process board members,” persons uncomfortable with major decisions who always want more data or information before voting.

The first and third groups (members who want change and process directors) will be very willing to appoint a committee to review the alternatives, but it’s up to the board chair to satisfy process members who create obstacles.

Process members like to sit back and examine issues, often, in my opinion, sincerely feeling that their questions allow them to be on the cusp of showing some insights that others have failed to notice. They always ask, “Have we consulted everybody?” Or say, “Let’s make sure we have considered everything.” Often they are members who call for postponement of the vote, even after a lengthy discussion.

Process members  are well-intentioned, sincere individuals. However, the board has to be careful that these members don’t allow the board to continually examine one angle after another until they lose sight of the board’s main job. They can keep action in limbo indefinitely! It is up to the board chair to makes certain that this does not happen. But board chairs want to develop an inclusive board where all who want to voice their views can be heard.

A certain level of board process is necessary to operate efficiently. But when it gets out of hand, it can have a serious negative effect. Boards often lose some of their best volunteers, who get frustrated and quietly resign. Their usual reason for resigning is “the pressure of job obligations.” To me, that’s a covert message that the board is getting mired in minutiae, usually initiated by process members.

One friend recently from a board, using the “job obligations” excuse. The real reason was that the executive director, a process oriented person, used board-meeting time inappropriately, including asking the full board to review detailed public relations powerpoint presentations.

In another situation, I watched a board make a strategic decision involving the combining of two programs. Even after a thorough discussion of the decision, the board insisted on discussing the tactical decisions needed to implement the change, all of which were the responsibility of management. The board was unable or unwilling to shed an imbedded process culture that the status quo nonprofit had used for over 50 years.

Six Approaches to Innovation for Nonprofit Boards

 

 Six Approaches to Innovation for Nonprofit Boards

By Eugene Fram                     Free Digital Image

The Bridgespan Group, supported by The Rockefeller Foundation, completed an exciting research study. The results identified “six elements common to nonprofits (in bold/italicized) with a high capacity to innovate” * Following are my suggestions on how to implement these elements.

  1.  Catalytic Leadership that empowers staff to solve problems that matter. 
    This involves the board to lead with committed and generative leadership. ** Board members must be ready to ask tough questions. They must require management to respond to the classic question, “Who would miss the nonprofit if it were to disappear?” Board members should be able to suggest new ideas drawn from business and the public sector that can be adapted, assessed and tested by management and staff

  2. A curious culture, where staff looks beyond their day-to day obligation, question assumptions, and constructively challenge each other’s thinking as well as the status quo.
    This, in my view is difficult to achieve, but boards should attempt to take every advantage to develop it. Boards that question the status quo are hard to find in all fields. They should, at the least, involve the staff in strategic planning efforts and pay close attention to its development. Staffs then are in an excellent position to challenge the status quo. One staff person in a human services agency, for example, challenged the status quo by observing the nonprofit did not have a “safety net” mission, but in reality had a “sustainability” mission. The agency was not only helping clients on a day-to-day basis but also was trying to assist them to achieve sustainable lifestyles.
  1. Diverse teams with different backgrounds, experiences, attitudes and capabilities—the feed-stock for growing an organization’s capacity to generate breakthrough ideas.
    As the Bridgespan Group has noted, it is necessary to have board members, “who are diverse across their dimensions: demographics, cognitive and intellectual abilities and styles with professional skills and experiences. In my opinion, nonprofits have been successful in recruiting board members in all of these categories except two—cognitive and intellectual abilities. I have encountered nonprofit boards without a single director with strategic planning or visionary abilities. Board members’ full time occupations often do not require them to have these abilities. As a result, strategic planning was just a SWAT (strengths, weakness and threats) review without any real analytical depth. To rectify the situation, nonprofits need to add these abilities to their recruitment grids. Unfortunately, this makes the recruiting effort more difficult since the abilities don’t appear on many resumes. Candidates must be assessed from an in-depth interview process.
  1. Porous boundaries widen the scope for innovations, by allowing fresh ideas to percolate up from staff at any level—as well as constituents and other outside voices—and seep through silos.
    Because many nonprofits have small travel budgets, they may operate in “bubbles, ” consisting of themselves and similar neighboring organizations. In addition, they can acculturate board members to the “bubble” traditions and environments.   For example, they may ask a new board member, with strong financial abilities to help the CFO with accounting issues, instead of asking her/h to develop a strategic financial plan for the organization. Perhaps as national webinars become more available to nonprofit managements and their staffs, these information flows will help to change the innovation roadblocks. Then they can, “generate new ideas systematically, test ideas using articulated criteria, metrics methodologies and prioritize and scale the highest potential ideas.”
  1. Idea Pathways that provide structure and processes for identifying, testing and transforming promising concepts into needle-moving solutions.
    For example, the process of Lean Management can allow testing of new ideas quickly. Instead of waiting for a new strategic plan to establish a pathway for   something new, a nonprofit can test it with a series of small-scale efforts to determine its viability. The idea can be dropped if positive results are not developed after a couple of tests.   If after successive tests with viable information results, the idea can be moved quickly to an implementation stage when the nonprofit has the necessary resources.

  2. The ready resources—funding, time, training and tools—vital to supporting innovation work.
    To fully take advantage of most of these six innovation guidelines, fundraising is critical. But each board and staff cannot do it alone. It must be a partnership between the board members and the CEO that recognizes fundraising for innovation is a necessary part of the nonprofit’s resourcing efforts.

*https://ssir.org/articles/entry/is_your_nonprofit_built_for_sustained_innovation

**https://www.bcg.com/publications/2022/all-about-generative-leadership-and-its-benefits

Does Your Nonprofit Have A Process For Implementing Strategy?

 

Does Your Nonprofit Have A Process For Implementing Strategy?

By: Eugene Fram           Free Digital Image  

My observation is that intense interest in nonprofit organizational strategy only takes place  very three or five years when the strategic plan needs to be reviewed.  The cause, as I see it, is that substantial numbers of nonprofit board members and senior managers lack substantial strategic  backgrounds and interests to enable them to give the plan implementation attention. Most boards I have encountered are fortunate to have one or two  board members with broad based strategic experiences. With nonprofit board members rotating every four to six years, it’s likely that any board member will only participate in one strategic plan change experience.  Also some nonprofit CEOs and senior managers can be directly appointed from staff positions, lacking knowledge of strategy development.    

Based on a survey of commercial organizations by McKinsey, it appears that these boards and their managements have similar strategic challenges as nonprofits. * 

Following (in bold) are McKinsey’s three suggestions for implementing strategy development and my suggestions for adapting them to nonprofit organizations (more…)

Anticipating Tomorrow’s Nonprofit Crises Today

 

Anticipating Tomorrow’s Nonprofit Crises Today

By: Eugene Fram            Free Digital Image

In the decades in which I have been a nonprofit/business board member or consultant, I fortunately have only been in the mire of a crisis situation twice.   In both cases, the board was totally unprepared to take appropriate actions to minimize the turmoil that followed.

Following some guidelines that nonprofit boards can use to plan to respond effectively to crises in the 21st century: *

(more…)

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.

Following is a list of “selling points” to potential board candidates, providing a board can deliver on them!

• We are careful to make wise use of your valuable time.
• Board meetings will begin and end of time, a quorum will be present at the beginning of the meeting.
• Board meeting material will be sent a week ahead of time.
• The agenda also will be sent out a week ahead of time.
• If you miss a meeting, the minutes or videos will be available within a week afterwards.
• If are going to be traveling, we have the facility for directors to attend virtually.

• Divisional staff reports will each have a time limit and be well prepared in advance, so the agenda can be completed as scheduled. The CEO works with each presenter ahead of time to assure well developed presentations.
• The board chair has the responsibility to quickly refocus discussions if they get off track into the weeds.
•  Visual presentations will be limited to 10 important visuals.
• Policy and strategic topics will be the major foci of the meetings, not operating minutiae. We view our responsibility to overview, not micromanage.
• Board committee work will be aligned with the candidate’s interests and backgrounds. Committee chairs will understand board members’ time constraints.
• The board chair and/or CEO will meet with each board members individually once a year to make sure the board members perceives the board experiences are in line with the above guidelines and to seek suggestions for board improvement.

Should Mature Nonprofits Allow Board Micromanagement?

 

Should Mature Nonprofits Allow Board Micromanagement?

Commonly accepted View of  Nonprofit Micromanagement: Board members spend more time with the details of the operations instead of planning the organization’s short-term and long-term growth strategies. 

The Need for a Micromanaging Board
Board micromanagement is an appropriate approach when a nonprofit is in a start-up stage. Financial and human resources are modest, and the volunteer board members must assume some responsibilities normally executed by compensated staff. The chief executive often has managerial responsibilities as well as a list of clients to service. It is not unusual to promote a person who is only familiar with direct service to become the first chief executive of the organization. In turn , this neophyte manager has to depend on board members for managerial counsel and direction. A culture of board dependency is created out of necessity.

Problems Arise
The micromanaging board is a worthy model for smaller nonprofits that stay at a start-up level for a long time. Some nonprofits retain this governance model, with its dependency relationships, long after it is needed. Example: One nonprofit I encountered required its department heads to first discuss major issues with designated board members before reviewing them with the chief executive, e.g., the program manager follows instructions of the board program committee chair.

Major Organizational Impacts Of Continuing Micromanagement
• Management and staffs wait for board signals or instructions before taking action. One CEO reported: “I give the board options and let them choose the course of action.” Implication: I don’t want the responsibility for the action chosen. “The board told me to implement it.”
• It’s more difficult to hire talented managers with these types of organizations. Most, from CEO down, are “C” players. They fear “A” and “B” players and then hire more “C” players like themselves. More qualified personnel may reject offers.
• Management & staff just don’t have the “right stuff” to be creative. They don’t properly question authority. Boards are shown great deference.
• Impacts and outcomes at best are minimal, but this is not readily recognized by the community or sponsoring organization. As long as income meets expenses each year, the board does not note any long-term red flags.

Changing the Culture — The Important Issue
Governance and management changes do not occur easily when an organization has maintained a micromanagement culture well beyond the start-up period. Following are some ways that I have seen changes take place.
• Several forward-looking members of the board, including the chair, develop a plan to seek change. Opinion leaders or well-respected veterans must be included.
• Over time, often a year or more, a change plan is developed and then formally adopted by the board. This usually involves giving the chief executive full responsibility for operations, along with a robust annual assessment of the CEO and operations.
• During the process, all stakeholders must be informed about the proposed changes, and the reasons for change. Naysayers will quietly spread internal and external rumors about it. Actual Example: “We will be losing our family culture and our great interpersonal relationships.”
• The CEO must be in favor of the changes to be instituted. If not, the board needs to wait until the CEO retires or leaves. Of course, the board can terminate the CEO, but this will certainly lead to conflict with the staff and the stakeholder constituency he/s has developed.
• When a new CEO is engaged, make certain the person has a desire and some experience to manage and the interpersonal skills to relate to the staff at its current state.
• Some members of the board will become “displaced directors,” persons cemented to the older order. Look for them to resign quietly and/or take potshots at the new governance-management arrangement. Actual Example: In one organization, when the traditional ED title for the chief executive was abandoned and the title President /CEO instituted, a board member derisively questioned, “Do we call him ‘Presco’ ?”

Summary
The tendency of nonprofit boards to micromanage organizational operations is still prevalent. In fact, it appears to be part of the nonprofit’s DNA! With the huge problems confronting nonprofits, it’s high time for a 21st century culture change!