Crisis Management

A Nonprofit Board Has A Problem With A Recently Hired CEO – What To Do?

A Nonprofit Board Has A Problem With A Recently Hired CEO – What To Do?
By: Eugene Fram.         

With some possible variations, is the following scenario one that is frequently repeated elsewhere?

• The nonprofit board had engaged, Joe, an experienced ED.  The prior ED had been in place for 25 years, and was evidently unwilling to move to meet changing client needs. For example, the agency only offered counseling services five days a week, 9 am to 5pm, with hours extended to 8 pm on Thursday night. There were no client options for emergency calls during nights or during weekends.


• Joe had been in place for about 6 months making some changes, evidently in an authoritarian manner. The board heard about the staff’s dissatisfaction with Joe’s management style, met with Joe and the staff together and decided to leave Joe in place. It was assumed that he and the staff were capable of healing the rift.
• However, three outside forces then came in to play. First, a trade union heard about the staff’s dissatisfaction and assigned a recruiter to enroll the professional staff as a chapter of the union to bargain for wages, benefits and working conditions. (The union already had a local governmentally supported human services unit as a member chapter.) Second, the agency was a very old one, and a group of community leaders, fearing this problem would cause the demise of the agency formed an unrequested advisory group called, “Friends of ABC.” Third, the United Way gave the agency 6 months to provide evidence that the problems were subsiding, or it was going to substantially reduce, the large portion of the agency’s budget it provided.
• Joe’s management style did not change. He was terminated with a six-month pay package in order to avoid a legal suit.
 A ED/CEO then was fortunately hired, who was well known in the community, was an experienced social worker, and had union negotiating experience.
• The professional staff decided to join the union.
• The new ED/CEO remained at the helm of the agency for 25 year, bringing innovation and change. However, the professional staff remained in a union chapter. Mistrust was hard to breach.

This is a case with which I was involved as a board member. Based on your nonprofit board experiences, to what extent have you noted a similar pattern?

• A nonprofit board misjudges the requirements for filling the chief executive position.
• Organizational discord becomes a problem.
• The board is slow in taking action, by trying to give the new ED time to resolve the problem.
• The board then terminates the chief executive for failing to meet objectives or because there is still substantial organizational discord.
• Groups in the community become involved in the organization’s internal problems.
• The ED/CEO is fired.
• A ED brings change, but there is still a feeling of mistrust that permeates the communications of the agency for decades.  The union continues to be the bargaining spokesperson for the professional staff, long after most staff members involved with the situation have retired  or taken other positions

21st Century Nonprofit Boards Need to be Proactive in Strategy Development

21st Century Nonprofit Boards Need to be Proactive in Strategy Development

By: Eugene Fram       

Most Boards do not excel at strategy planning. In fact, when the subject is included on a meeting agenda, it usually produces a general lack of enthusiasm. A McKinsey study * cited weakness in for-profit boards dealing with the topic. And in my opinion, similar deficits are endemic to nonprofit boards whose response to strategic proposals is often simply– “ to review and approve.”

What causes these vital governing bodies to be passive when the future of the organization is obviously at stake? First, most nonprofit boards meet between 8 and 12 times a year, for what averages to about 1.5 hours monthly. With an agenda crammed with compliance issues and staff reports, there is little time left for board members to dive deeply into a discussion of future transformative efforts on behalf of the organization. When a new strategic plan is developed (that may only occur once every 3-5 years, with a limited perspective), its implementation is not as rigorous as it should be—even in high performing boards.

According to the McKinsey study, only 21% of business board members claim to fully understand the firm’s total strategy. Because of their diverse backgrounds, the percentage of uninitiated nonprofit board members is probably similar or even higher!

Next, the study also reports: “…there is often a mismatch between the time horizons of board members and that of top management.” Since the median tenure for a nonprofit board member is between four and six years, it follows that management‘s experience with the mission environment exceeds the vast majority of board members. Since the outset of the 2009 recession, it becomes critical that a dialogue between board and management brings focus to economic priorities. When the economic environment remains more dynamic, it requires much more discussion.

Questions that board and management need to consider to overcome these issues.

• How well do board members understand the mission dynamics? In terms of nonprofit experience, management has a better understanding of the mission’s environment. As a result, management needs to be proactive in educating board members about the dynamics involved. This can take place at meetings, retreats or engaging outside experts to interact with board members. Where it is possible and appropriate, management should invite board members to join them at local or regional conferences.

• Has there been enough board-management debate before a specific strategy is discussed? “Board members should approach these discussions with an owner’s mind-set and with the goal of helping management to broaden its thinking by considering new, even unexpected, perspectives.” During these debates management should provide information on key external trends affecting the mission. It also needs to review: strengths and weaknesses of staff talent to achieve the mission, the abilities of the nonprofit to differentiate itself and to increase services to its clientele. All of this can keep the organization from perpetuating the status quo—providing small budget increments and keeping current clients satisfied, not seeking growth.

• Have the board and management discussed all strategic options and wrestled them to the ground? Nonprofit board members and their managers may not be used to having high-quality discussion like these. To provide bases for these types of conversations the board must view management as a set of peers with different responsibilities. “Creating a participative, collaborative dynamic while maintaining a healthy tension is critical.”

“Developing strategy has always been complex—and becomes more so with a board’s increased involvement, which introduces new voices and expertise to the debate and puts pressure on management teams and board members alike to find the best answers.”

* http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/tapping-the-strategic-potential-of-boards

Do Nonprofit Boards Proactively Engage Their Stakeholders?

Do Nonprofit Boards Proactively Engage Their Stakeholders?

By: Eugene H. Fram

Nonprofit directors and trustees need to take overview responsibility for engaging all of the organization’s stakeholders.

The first step must involve defining the term“stakeholder” in the broadest action oriented terms. Most boards will quickly agreethat clients and board members are stakeholders, but what about others such as external auditors and significant vendors. For example, if a charity is depending on one vendor for a substantial part of its grocery supplies, that vendor needs to be viewed as a stakeholder—its failure to delivery properly affects the efficiency and effectiveness of the organization.

Following are some guidelines for engaging all types of stakeholders. Don’t marginalize, dismiss or ignore any stakeholder: Nonprofits do this with termed-out board members. * After six active years, a typical tenure, many former board members only received boilerplate materials or development solicitations. The board’s rationale is that they have served welland there is a downside on more frequent communication.This tactic assumes all board members want such a communications approach.

However, for board members who have been very active, it maybe counterproductive from development and future interest viewpoints. The ED and Board Chair need to keep a list of name of this special group and see that they keep in personal touch with the members once or twice a year.

I have observed several cases in which this unintentional marginalized has resulted in losing substantial financial gifts and needed talent. In both cases,the termed-out board members have declined with the excuse that they have been too far away from the activities of the organization. Using members of this group in advisory capacities can avoid such marginalization by forming them in alumni groups or including them insocial occasions and celebrations.

Recognize who may be a true partner: Such a partner can range a vendor that has supplied the organization or a volunteer whose interests have moved to another nonprofit. “ It is generally easier to build consensus,request help and engender trust when those who support you are well-informed, candidly an truthfully.” *

If stakeholders don’t know about the nonprofit’s challenges and needs, even the best-managed nonprofits have their ups and downs. During the latter periods, having stakeholders knowledgeable about the issues can help to dissuade some to avoid protesting job cuts and other receactions. 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 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 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

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

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

By: Eugene Fram                    

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.

    • Respect Management & Staff: The Board needs to accept the CEO as professional manager, not as a person dedicated to a field specialty—police officer, physician, attorney, etc.—with part-time management efforts. * He/s should know how to hire well, interrelate with staff, board and other stakeholders and make certain day-to-day operations are effective and efficient. It is possible, however, to have a mediocre board and an effective management and staff that is devoted to the nonprofit’s mission. Hopefully, a few board members recognize the situation and are able to build a culture of respect for the management and staff, often a difficult task when the board is micromanaging the nonprofit.
    • The Importance of Long-Term Goals: Currently nonprofits tend to plan on a three-year to five-year cycle because the environments in which they operate change so quickly. With nonprofit board members having 4-6 median terms, this suggests many will have one short-term outlooks. But, in my opinion, much longer-term planning needs to be considered, perhaps for as long as ten years. This way current planning can influence longer-term planning. This generative thinking will also provide some benchmarks for the types of abilities and skills that future CEOs will need to possess.
    • Understand Psychological & Non-Monetary Benefits: Flexible benefits are required by nonprofits to compete with business and other nonprofits paying higher wages. For example, in many areas, hospital chains compete with human service agencies for people with social-work abilities. They must also compete with businesses for computer specialists. One way is to offer flexible scheduling to all personnel needing it. Another way is for the board to formally honor staff for successes and make certain that management provides appropriate praise frequently, a requirement for millennial, and possibly generation Z age staffs.
    • Empower the CEO and staff: Boards need to be sure that the CEO is fully empowered to make tactical operating decisions without board interference. On an overview basis, the board needs to request management to ask small staff teams to work on projects that can yield tangible results. This will encourage groups and teams to become more responsible.

Within its overview responsibilities, nonprofit board members can be quite proactive in assisting management and staff when they meet routine operational challenges. The above discussions demonstrate ways this can be accomplished. Nonprofit boards can add to them to meet local challenges.

* Some growing nonprofits unfortunately elect the CEO from the staff and allow him/h to continue to have some staff responsibilities.

What Should Nonprofit Board Members Know?

By Eugene Fram       

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.

 

How Can A Chief Operating Officer (COO) Advance Your Nonprofit Organization?

By: Eugene Fram               

In my decades of involvement with nonprofit boards, I have encountered several instances in which the CEO has failed to engage the services of a COO–when this addition to the staff was clearly needed. In each case and for whatever reasons, this reluctance to act left the nonprofit organizationally starved.

This means that the CEO continues to handle responsibilities that should have been delegated, some of which a predecessor may had assumed during the start-up stage. I once observed a nonprofit CEO with an annual $30 million budget personally organize and implement the annual board retreat, including physically rearranging tables/materials and cleaning the room after the retreat! When top leadership is deflected in situations at this level, client services and the general health of the organization is likely being negatively impacted.

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Are Your Board and Staff Ready For Change?

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Are Your Board and Staff Ready For Change?

By: Eugene Fram               

Ideally, change takes place only when is a critical mass of board and staff want it. A significant portion of leadership must realize that the status quo won’t do. Based on my experiences, this ideal is rarely achieved because:

  • The CEO needs to support the changes being suggested and/or mandated by a majority of the board.   But, if not fully invested in the change, the CEO can accede to board wishes for action but move slowly in their implementations. The usual excuse for slow movement is budget constraint.

Complicating the situation is the fact that most nonprofit boards are hesitant to remove a CEO who has a nice personality but lacks vision, makes modest revisions each year and keeps budgets
in  balance. As volunteers, board members know that removing a “status quo” CEO can cause board and staff conflict. These events require more meeting times and can cause board members
to turn against one another. Volunteers accept board positions to promote positive outcomes, not to become involved with the stresses that accompany conflict.

  • Changing a CEO, board members or the governance model, etc., can easily send negative signals to the staff because they may view it as leading to disruption in their jobs and working environments. Most nonprofit staffs are only one or two organizational levels away from the board and may become concerned that new influential board members can have significant impact.

For example, two professors persuaded their board colleagues that the agency needed a “management by objectives program.”  The staff became so involved in establishing and measuring
objectives that they neglected client services .

Critical actions that boards can take to overcome these barriers.

  • Agreement about what “change” means. Perhaps it is increasing clients served and/or simultaneously having to increase donations to maximize the mission’s service? These changes can be readily measured. However, nonprofits often have revisions that can only be measured approximately in the short-term because of the significant costs involved. These include such items as improving public awareness or community influence. They require use of more qualitative measures over time to assess trends and improve the measures. *

Those responsible for change need to be reminded that words have meaning, and the words used to describe revisions can create negative attitudes from board members and staff. Those with
negative connotations include “profit, efficiency and restructuring.” Positive words include “mission, serving and compassion.”

  • Radical honesty about the hurdles standing in you way. It’s important to be upfront about the “bandwidth” in staff and board resources needed to implement any major modifications. This involves having three or four board members who are experienced with implementing change, willing to assume leadership of the process and have the interpersonal skills necessary to “sell” other board members on the benefits of the new plan. In one situation, where a governance model was changed and the ED’s title revised to President/CEO, a traditional board member was dissatisfied.  He complained about the new title “What do we call the ED now, Presco?”   The implication was that the new title was satisfactory for the head of a business organization but too sophisticated for the operating head of a nonprofit organization.
  • Commitment to do whatever it takes. Driving changed from a nonprofit board position isn’t for the person or team that gives up easily. A realistic plan is to anticipate the bumps in the road along the way. For example, if some board members agreed to a revision with limitations, it’s the responsibility of the CEO and board members to make certain they are consulted as the change progresses, helping them, if they can, to be more comfortable with it. If the change has substantial impact on the staff, the CEO and board members need to be certain that false rumors are handled appropriately when they appear. This also applies to rumors circulating in the community or in an industry, if the nonprofit is an association.

When boards fail to take the types of actions cited above, the impact can affect the nonprofit’s culture for decades. For example, a nonprofit engaged a new executive director with an authoritarian leadership style.  His long-term predecessor developed a relaxed culture, often casually taking staff meeting time to read poetry. The Board concluded major changes were necessary.

As a first step to solve the problem, the board made a mistake by demanding the new ED modifies his authoritative management style. But concurrently, a union organizer heard about the dissatisfaction and persuaded the social workers on the staff to form a union. Results: the problematic ED was finally terminated, and an experienced ED, who had worked previously at the agency, was engaged. But the social work staff is still unionized. Trust between management and the professional staff was never restored.

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

Do Nonprofit Boards Face Cyber Security Risk?
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Do Nonprofit Boards Face Cyber Security Risk?

By: Eugene Fram     

Solarwinds and Target and others may seem far afield from the concerns of nonprofit directors, except for the giants in the area, like AARP. However, think about this hypothetical scenario.

A group of high school students hacked into the computer system of a local nonprofit offering mental health services and gain access to records of clients, perhaps even placing some of the records of other teenagers on the internet.  Considering the recent introductions of new AI tools, the power of immature teenagers and adults to initiate Cyber Security (CS) problems seems unlimited.  

What due care obligations did the board need to forestall the above situation? A move to recruit directors with special expertise in information technology or cyber security would be nonproductive. A nonprofit director has broader responsibilities such as the overview of management, approval of budgets, fostering management and staff growth etc. Similarly, when social media became a prominent issue a few years ago, boards debated the advisability of seeking directors with that specific kind of background. Today, a consultant with management is likely to provide guidance to directors on these issues.

After listening to a group of cyber security experts discuss for-profit challenges in this area, I have the following suggestions on how nonprofit boards might respond to similar types of challenges.

1. Carefully “wall off” all confidential information – Have management be certain that private information such as health records, are encrypted and separated from operating data that may be considered public in a nonprofit environment.
2. Review D&O and other liability policies – Determine whether or not the D&O policy protects directors and managers from CS intrusions. (It likely does not, but I understand that some carriers may offer some protection along with smaller policies.) It is clear that most general liability policies do not protect the organization against CS.
3. Board Encouragement – Devote some meeting time, perhaps 10 minutes, to a discussion of the CS topics so that management and staff are aware of the board’s concerns on the subject and will take action when necessary. Appropriate due care actions like frequent password changes should become routine. Some checklists are available online, suggesting questions directors might pose to raise awareness on the topic and avoid potential CS breaches.
4. Can third party payer help? – Many nonprofits deal with third party payers with sophisticated CS systems and may offer the nonprofit some advice or assistance.
5. Education and training of employers – Many CS crimes have been successful because employees have violated or forget to effectively protect their working accounts and information. Proper education and training can help reduce these types of lapses.
6. Finance & Audit Committees – Recent data indicate that only 20% of nonprofits have a CS vulnerability assessment in place and only about the same proportion have a plan  in place should a CS breach take place . *  Due care responsibilities seem to be missing among a large portion of nonprofits.

If a nonprofit, like the one described, is attacked, not only will records be compromised, but also the reputation of the agency will be destroyed, probably along with the nonprofit organization itself. SolarWinds and Target may be able to survive such an attack, but the typical nonprofit may not.

*https://communityit.com/nonprofit-cybersecurity/

Are Dysfunctional Nonprofit Boards Interesting?
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By: Eugene H. Fram

My blogs have been drawing an unusual number of views related to dysfunctional nonprofit boards.  Is it because:

  • Nonprofit evaluations have become a prime media interest?
  • Compliance regulations have forced a greater number of nonprofits to substantially review their charters?
  • More boards have found board problems arising as a result of reviewing the expanded 990-form section on governance?
  • More audit committees are being given expanded responsibilities?

Can a nonprofit organization focus on its mission vision and values if it has a dysfunctional nonprofit board?  I have seen this accomplished in situations where the CEO is managerially oriented and can live with the board’s problems or foibles.  For example, one nonprofit I encountered had an eleven person board, four of which never attended meetings and several others were sometimes absent for personal reasons.  Meeting minutes clearly showed a focus on operational detail. However a strong CEO was able to focus well, and the organization prospered. On the other hand,the CEO openly complained that she was overworked, needed board member assistance and easily could become financially liable board, missteps.  

In another situation I encountered, the board chair and ED were very strong, but the board governmentally weak. Work and family pressures constrained the time board members could devote to their governance responsibilities. While the organization performed reasonably well, performance problems and board liability issues might arise, if either the chair or ED retired or resigned.

Although not desirable station, a dedicated mission oriented staff can, at a minimum, perform reasonably well when its board may be dysfunctional.  However the following conditions are needed.

  • Management is able to keep the staff focused on mission, vision and values.
  • A legacy staff person(s) becomes a mentor(s) for more recently engaged staff. 
  • The dysfunction is relatively brief and resolved by board member rotation.  If too long, organizational performance will decline.  
  • Board members involved with the dysfunction do not seek to involve staff in their disputes.  

The Enron Debacle–2025 Lessons For Nonprofit Boards?

 

By: Eugene Fram               

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. Quotations from Fastow 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 the 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 a substantial 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. 

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 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.***

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

*https://video.search.yahoo.com/yhs/search?fr=yhs-iba-syn&ei=UTF-8&hsimp=yhs-syn&hspart=iba&param1=u3aa5HpmsM3IXRQhgULSrC7

**https://www.irs.gov/charities-non-profits/charitable-organizations/intermediate-sanctions

***http://bit.ly/13Dsd3v)