Fund accounting

A Nonprofit Paradox: Weak Leadership Pool, Positive Organizational Outcomes?

A Nonprofit Paradox: Weak Leadership Pool, Positive Organizational Outcomes?

By:  Eugene Fram                   Free Digital Image

It happens: one or both of the two nonprofit engines—governance and/or management — sputters out, yet the organization continues to meet its goals and deliver adequate service to its constituents. Some examples: a child placement agency manages to maintain the quality of its oversight while struggling to deal with an admittedly inept board and CEO. Another example: An ineffective volunteer board at a youth center, meeting quarterly for a couple of hours, allows the CEO to really manage the board and to motivate the staff. The CEO realized she and the agency were in dangerous positions without an innovative board providing standard oversight, although client services were positive.

A staff, dedicated to its own professionalism, can on occasion compensate for a lackluster board and/or senior management team by continuing to provide reasonable value to the nonprofit’s clients. Another example involved the ED, simultaneously a deputy sheriff, and his law enforcement colleagues taking payments to refer wayward youths to ED’s shelter. However, the staff continued to provide valuable services. In the end it’s about leadership and the ability to step up to the plate when dysfunction occurs. In the last case, the staff acted in a professional manner, although the management was entirely corrupt and the board evidently inept.

Klaus Schwab, founder of the World Economic Forum, has some innovative thoughts on that subject. He identifies four key characteristics he believes are critical to strong innovative organizational leaders. * I have listed them below, and the ways I think his ideas can be applied to nonprofit governance. (more…)

Nonprofit Boardroom Elephants and the ‘Nice Guy’ Syndrome: A Complex Problem?

 

Nonprofit Boardroom Elephants and the ‘Nice Guy’ Syndrome: A Complex Problem?

By: Eugene Fram    Free Digital Image

At coffee a friend serving on a nonprofit board reported plans to resign from the board shortly. His complaints centered on the board’s unwillingness to take critical actions necessary to help the organization grow.

In specific, the board failed to take any action to remove a board member who wasn’t attending meetings, but he refused to resign. His three-year term had another 18 months to go, and the board had a bylaws obligation to summarily remove him from the board. However, a majority of board members decided such action would hurt the board member’s feelings. They were unwittingly accepting the “nice-guy” approach in place of taking professional action. (more…)

A Nonprofit Board Must Focus On Its Organization’s Impacts

A Nonprofit Board Must Focus On Its Organization’s Impacts

By: Eugene Fram                Free Digital Image

“One of the key functions of a (nonprofit) board of directors is to oversee (not micromanage) the CEO, ensuring that (stakeholders) are getting the most from their investments.” * State and Federal compliance regulations have been developed to make certain that boards have an obligation to represent stakeholders. These include the community, donors, foundations and clients, but not the staff as some nonprofit boards have come to believe. The failure of nonprofit boards, as reported frequently by local national blog sites, show something is wrong.  Following are some inherent problems that derail boards from focusing on impacts.

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Nonprofit Boardroom Elephants and the ‘Nice Guy’ Syndrome: A Complex Problem?

Nonprofit Boardroom Elephants and the ‘Nice Guy’ Syndrome: A Complex Problem?

By: Eugene Fram    Free Digital Image

At coffee a friend serving on a nonprofit board reported plans to resign from the board shortly. His complaints centered on the board’s unwillingness to take critical actions necessary to help the organization grow.

In specific, the board failed to take any action to remove a board member who wasn’t attending meetings, but he refused to resign. His three-year term had another 18 months to go, and the board had a bylaws obligation to summarily remove him from the board. However, a majority of board members decided such action would hurt the board member’s feelings. They were unwittingly accepting the “nice-guy” approach in place of taking professional action. (more…)

Nonprofit CEOs and Board Directors: How Expert Is Your CFO?

 

Nonprofit CEOs and Board Directors: How Expert Is Your CFO?

By: Eugene Fram        Free Digital Image

When hiring a chief financial officer (CFO), nonprofit organizations often find themselves with a major challenge, since many financial and accounting functions and compliances are identical with those of for-profit organizations. To compete, the nonprofits may need to offer higher salaries than typical for nonprofit organizations. Some may trim the level of expertise required to fill the position.  They hire a person with a bookkeeping background when the organization needs somebody with financial analysis skills.  This is a dangerous move, especially when the organization is growing. It is difficult to terminate a financial person who is satisfactory for a startup, but isn’t able to navigate the challenges of rapid growth.  Also it is a continuing challenge for the Board and CEO, to make certain that the person in the position now has the requisite skills.  A mistake by a person who is not current with financial changes and compliances can make a major error that will harm the organization’s reputation, leading to a board restructuring and/or firing the CEO.

Both the nonprofit CEO and the board need to assess the CFO’s expertise annually by:

*Asking knowledgeable board members if they are receiving financial data and analysis in a format helpful for decision-making.

*Having an executive session with the external auditors yearly to obtain the firm’s assessment of the expertise of all financial personnel with whom they had have contact.

*Keeping track of reports that are submitted late. Something might be radically wrong. (I know of one case where the Board and CEO were only receiving a subsidiary report intermittently. The problem was the data reported involved old accounts that should have been written off months ago. The organization had to hire forensic accountants to determine what needed to be done to resolve the situation. The board terminated the CFO and then the CEO.)

*Making certain all financial personnel take two weeks vacation each year, so that a substitute needs to handle the duties.

*Having the CEO review the CFO’s expertise annually with knowledgeable board members, external accountants or others.  Acknowledging the growth point when the nonprofit needs a CFO with analytical abilities as opposed to bookkeeping ones.  

*Reviewing the causes for a high turnover rate among financial personnel.

*Providing local financial support for the  CFO and others to stay current with accounting and compliance regulations. 

For a current case of a board that evidently failed to adhere to such guidelines see:

http://www.nonprofitquarterly.org/management/23235-existence-of-a-reserve-fund-in-this-nonprofit-threatens-its-future.html

 

 

 

 

 

 

What Makes A Great Nonprofit Board Member?  Some Unique Suggestions!!!
What Makes A Great Nonprofit Board Member?  Some Unique Suggestions!!!

By: Eugene Fram          Free Digital Photo

Viewers may question my taking time to develop this post when a Google search, using the above title, shows about 302 million listings recorded in 0.63 of second! The answer is that I located a board article with a few interesting insights, relating to for-profit boards, that also can be useful to the selection of nonprofit directors. * Following are some of the unusual ideas.

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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               Free Digital Image

“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, he/s can accede to board wishes for action but move slowly in their implementations. The usual excuse for slow movement is budget constraint.

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Must Nonprofits Develop Employee Benefits That Substitute For Annual Raises?

Must Nonprofits Develop Employee Benefits That Substitute For Annual Raises?

By: Eugene Fram                      Free Digital Image

An analysis in the Washington Post reports that a tsunami-style change has been taking place in the manner in which United States employees are being paid—benefits are being offered in place of annual salary increases. (http://wapo.st/1MwoIBZ) Driving the change are the needs of a substantial portion of millennials who appreciate immediate gratifications in terms of bonuses and perks, such as extra time off and tuition reimbursement. Employers like the arrangement because they can immediately reward their best performers without increasing compensation costs. Example: One sales employee spent weeks reviewing dull paperwork, was very diligent in the process and was given three extra days of paid leave. She said, “I think everybody would like to make more, but what I liked about it was the flexibility.”

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Measuring Nonprofits’ Impacts: A Necessary Process for the 21st Century

Measuring Nonprofits’ Impacts: A Necessary Process for the 21st Century

By Eugene Fram      Free Digital Image

 

Unfortunately, outcomes and impact are often unrelated, which is why a program that seems to produce better outcomes may create no impact at all. Worse, sometimes they point in opposite directions, as can happen when a program works with harder-to- service populations resulting in seemingly worse conditions, but (has) higher value-added impact. … Rigorous evaluations can measure impact (to a level of statistical accuracy), but they are usually costly (a non starter for many nonprofit), difficult and slow. * But how do the medium and small size nonprofits measure actual results in the outside world such as enhanced quality of life, elevated artistic sensitivity and community commitment? (more…)

The Outside Advisory Board: Boon or Bother to Nonprofit CEOs?

The Outside Advisory Board: Boon or Bother to Nonprofit CEOs?

By: Eugene Fram.             Free Digital Image

I have established or served on a number of nonprofit outside advisory boards. As a result I strongly recommend their usefulness to nonprofit CEOs. The counsel provided by a group of unaffiliated members of the community or industry will, in my opinion, complement the existing board, helping to deliver services or products to clients with greater effect. The objective of assembling such a body would be to seek advice and expertise regarding a current major project or issue and/or to provide ongoing support and guidance to the CEO. Advisory board members have no legal responsibilities, nor have authority to require the elected board or staff to act on its advice. However, when advice is not followed, the CEO has a professional responsibility to show how the suggestions were seriously considered and to carefully report on what had transpired in making the decision process. Too many useful volunteers become disillusioned with advisory committees when this step is omitted.

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