Get or Give Obligations

How Often Do Nonprofit Board Members Need to Question Strategic Norms?

How Often Do Nonprofit Board Members Need to Question Strategic Norms?

By Eugene Fram               

A new nonprofit board member has a lot to learn. Considering that his/h term of service will be relatively short (typically six years), he/s must quickly learn the “ropes” to participate in a meaningful way. In this process, colleagues and leadership will acquaint him/h with prevailing board systems and culture—often ignoring the depth of expertise she/h can employ. Example: An expert in financial strategies may be asked to assist the CFO with accounting details, far below the person’s skill level. Oftentimes the new board member also is greeted with a mantra that says, “We’ve always done it this way.” As the board member moves in his path from novice to retiree, during a short tenure, there is little opportunity to suggest innovations that differ from the accepted fundamentals and to successfully advocate for change.

Following are four nonprofit areas that call for strategic scrutiny and, if recognized by several other current board members as constraints on the future of the nonprofit, the process may allow individual directors to seek positive change:

Can Mission Creep be Good?? Dedication to the organization’s mission should be the board and staff’s primary focus. Often this focus can limit a conservative board’s vision if long-term risk may be involved. But nonprofits have an obligation to keep current in addressing emerging needs and may veto a client venture that has reasonable potential. This hard and fast adherence to mission parameters can be used as an avoidance mechanism to maintain the status quo. How do directors determine the initiative’s positive/negative impact on the organization? Boards need to wrestle with tough questions such as the following: As baby boomers retire, there will be an increased need for elderly housing. Should those nonprofits whose mission is to operate homes for children feel morally obliged to extend both their mission and operational expertise to develop separate or operationally related homes for the low-income elderly?

Nonprofit boards, in my opinion, try hard to acculturate new board members to the mission, as the current group of board members views it. The disadvantage is that expansion or even modification of the program implementation becomes difficult or even unacceptable. A field case: A moribund human services agency offered counseling services on weekdays from 9 to 5 and on Thursdays 9-8pm. The nonprofit had no provision for emergency services. For decades board members had been acculturated to the rigid service schedule and were resistant to change. Finally, a group of new board members, recognizing the urgency of the clients’ requirements was able, with support of new a CEO, to develop a cost-effective way to increase service to a 24/7 model.

The Ethos of Overhead vs. Development: When the need for a new staff-type management person arises, it is often hotly contested. Nonprofit organizations have usually operated on the ethos that about 80% of budgets need to be expended for direct client services. This ignores the fact that an increase in overhead costs, if carefully planned, can yield substantial increases to program budgets. One CEO who was adept at fundraising refused to engage a COO, citing increased overhead as the reason. After four years of board prodding, he relented and made the appointment. The result was positive on two counts—he was able to expand his fundraising prowess and internal operations improved significantly.

Board Culture: Many boards have a tendency to be a rubber stamp for management. This can be a significant danger with nonprofit boards whose culture encourages directors to “go along to get along.” Board members, as volunteers, often view the political and friendship costs of rigorous debate as being too high. Others surmise that management has more information in the field and are uncomfortable in challenging its expertise. This malaise in the nonprofit sector can have disastrous results, evidenced in the frequent reports of fraud due to board laxity. Occasionally, a board may even refuse to fire the perpetrator and the state attorney general must intervene.

There is nothing tactically sacred about the monthly two-hour board meeting and yet limited discussion and crowded agendas can inhibit any type of rigorous discussion at them. Board members who would like to suggest new ideas or question accepted norms are usually frustrated and discouraged from doing so. Although obsolete, the meeting format is rarely challenged. There are, however, alternative options. Board meetings, in my opinion, should be scheduled for longer periods such as 1½ – 2 days–or bimonthly meetings of 3-4 hours. Instead of merely current updates, the format, if carefully structured, could then accommodate substantive policy/strategy issues and allow board members to be heard.

Alternative Data Measurement Systems: Nonprofits often fail to develop  impact data that one could deem reliable. In my view, too many nonprofits fail to appreciate the benefits of rigorous performance basis measurement. This failure is caused by the substantial cost of developing some qualitative impact counts, e.g. impact of advocacy efforts. Nonprofits, however, can glean whatever value they can through imperfect metrics, gathering information and data that may be anecdotal, subjective, interpretive, qualitative or developed through small size samples. Over time, imperfect metrics can be continually improved and become useful in tracking progress and driving change. (http://bit.ly/OvF4ri)

Challenging the Nonprofit’s cultural DNA is daunting. Ties to traditional modes of governance are hard to sever. But with sensitivity and persistence, a board member can help move the organization forward, if at least several other directors also understand the need to question strategic norms.

Pressure Test Your Nonprofit’s Fund Development Efforts

Pressure Test Your Nonprofit’s Fund Development Efforts

Pressure Test Your Nonprofit’s Fund Development Efforts

By: Eugene Fram

It’s no secret that nonprofits do not excel in the craft of fundraising. A 2015 study reported that 65% ofCEOs gave their boards academic grades of “C” or below for efficacy on this front. Yet most will agree that without the continuous influx of financial support, the mission to which the board members have committed themselves will fail

I clearly remember examples of this deficit from my own board experience—one in which I served on the fund development committee for a small nonprofit which met monthly for about a year. A sincere and hardworking board chair headed it, but the meetings took place without the presence of the CEO.   Many ideas with merit were exchanged such as developing a reserve fund, “get or give” board requirements etc.There was a lot of talk but no implementation, and after a year of pure discussion, a new president, who convened a new committee, disbanded the group.

A review of the pressure points in key fundraising activities would have taken the group from talk to action and further implementation. Here are activities and their variations that I consider most critical to nonprofit development processes:

Board-CEO Partnership—Some Elements For Success

 To be successful in fundraising, both the board and CEO must be active partners. Board memberscannot fundraise alone as in the above example.

 Board members will never have the required depth of organizational knowledge to demonstrate nonprofit outcomes and impacts. Also the CEO and/or development director, if there is one, will be needed to build proposals for grants or awards. In addition, the CEO should have access to foundations in the mission field, so that appropriate responses can be initiated

. Although this is not always the case, the CEO needs to have the ability to interact with senior business and foundation executives. Where the CEO lacks these capabilities, the board has an obligation to offer the services of a management coach to help him/h to acquire such skills. Expenses involved can yield substantial returns!

 Hypothetically, the board must be continually seeking donors who will be interested in the nonprofit’s mission, quickly involving the CEO when an opportunity is identified. Similarly, the CEO has an obligation to agree with the board about what funding proposals should be pursued from foundations and individuals.

 While the board is one partner in the development effort, not all board members should berequired to be active in fundraising. At a minimum, all should be asked to report donor opportunities that they encounder.

 For nonprofits that have a diverse board, some training on how to seek and address opportunities will be necessary. These topics can range from knowing that their employers have a matching gift policy to recognizing something they see in a newspaper/magazine that might be reviewed as a funding opportunity.

 Three or four board members, willing and able to drive the effort, should shoulder major funding activity. Many of the others will be unable or unwilling to become involved, except to provide lead information. (A recent study shows although 90% of nonprofit directors believe fundraising is an important obligation, only 45% of organizations require board member to minimially fundraise.) *

 The board members focusing on development need to be able to be persistent and constantly on the lookout for new sources.   As one fundraiser said to me, “ I’ll keep after the opportunity until the donor tells me to “go away!”  He was directly responsible for a $1 million donation to his university for organizational support. As part of the partnership, the board and CEO will have to determine how much time and resources need to be given to fund development. This can become a difficult discussion because many CEOs will want to direct more of the budget to targeted mission projects. In some cases where an unusual opportunity arises, the CEO may have to expend substantial amounts of his/h personal time to be successful. He/she may also have to redirect staff time and resources to the project.*

Nonprofit fundraising is a team effort. In cases where the CEO does not actively involve some board members in the process, make certain the board is not being micromanaged by the CEO.

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

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

By: Eugene Fram    

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

• Mission is Impact: Whereas the central mission of corporate boards is to make money for shareholders, nonprofit organizations, with their multitude of diverse missions, are commonly invested in impact. Most nonprofit board members, managers and staff are committed to helping the nonprofit organization fulfill its unique mission. I have seen staff and managers, often with highly marketable skills, remain with nonprofits despite financial pressure to move on. Dedication to the organization’s raison d’etre is a strong motivator that keeps good people working towards its accomplishment. Both types of organizations can report financial results quarterly, but nonprofits struggle to measure such long-term mission outcomes as  ” … enhanced quality of life, elevated artistic sensitivity, community commitment and successful advocacy… .” The elusive nonprofit challenge becomes how to measure impact in order to assess mission fulfillment. (http://bit.ly/OvF4ri)

• A Slower Pace: The pace of the decision process is decidedly slower in nonprofits than in the corporate board. This can occur for a number of possible reasons. It could be that the NFP’s charter may purposely set up requirements that preclude hasty and possibly unwise decisions—by mandating a period of deliberation before an action is formally voted upon. It may possibly be that the organization recognizes that it has insufficient staff for fast implementation. And there have been a number of cases when a nonprofit board has had to defer action because a succession of meetings has not produced a voting quorum!

• Get or Give Obligations: Nonprofit board members are said to stand “10 feet tall” in response to their commitment and service to the organization. The value of their time, energy and expertise is immeasurable. Another important aspect of good board management is ensuring the availability of adequate funds. To this end, many nonprofits ask board members to help generate and/or make annual donations themselves within the parameters of their resources. Commonly, directors are urged to make a “stretch” gift– and there are times when they are even requested to make their largest donation to that organization or seek donations or services from others. Some board members resist this type of pressure. But even with a development staff taking proactive development responsibility, it is still the board’s responsibility to pursue funds by every appropriate means.

• Board Chair, CEO and Staff Relationships: This triumvirate of positions makes up the lifeline of any nonprofit organization. Both Board Chair and CEO have their own designated spheres of influence that sometimes succumb to a board culture that is resistant to change. The staff has its own set of issues related to the nonprofit’s “flat” structure.  Here are some cultural breakdowns in internal relationships that can be disruptive to the organization.

The NFP Board Chair is probably more important than in an FP organization. The rank and file board members often defer to the current chair on proposed actions– generally to avoid conflict, which might impact donations or hobble potential networking efforts. This hesitancy to challenge the leadership cannot only impede progress but is apt to give the board a “rubber stamp” image..

The CEO will be the keystone to implementing a high-performance culture in a nonprofit organization. Boards are frequently resistant to consider replacing a CEO as long as he/s is producing at  a “C” or “B” level.  “If it’s not broken, why fix it?” is the view, albeit a short-term response. Understandably, the frequently shifting body of board members finds that maintaining the status quo is less disruptive. It is not, however, always in the best interest of the organization and its potential to grow and serve clients. 

The Staff, unlike in the FP hierarchy, is structurally often only one or two levels below the board, thus well attuned to the frequent rotations of board personnel. A continual shifting body of of board members makes staff members vulnerable to changing priorities, which can significantly impact their work. Nonprofits should offer many opportunities for staff and board to communicate appropriately—to interact in informal settings and on board-staff committees. But creeping board micromanagement needs to be avoided as a danger for nonprofits. 

Summary: Once acclimated to the unique challenges of the nonprofit culture, serving on the board can provide an exceptionally rewarding experience. Board members will have a chance to work with others who are dedicated to the work of serving people with significant personal needs, improving the positive contributions of professional and trade associations and bringing value and enrichment to their communities.

 

What attributes does a nonprofit board member need to be a Change Agent?

By Eugene Fram

Be well acquainted with mission arena of the organization — This can range from current or previous employment in the arena or being a board member of an allied organization. The change agent must be able to “walk the talk.” Example: Ask the CEO of a counseling organization whether or not the treatment modalities used by the staff are current.

Must have a proactive style — Uninterrupted attendance at most board and committee meetings; asks questions that his/her board colleagues recognize as being perceptive ones; be well respected by peers internally and externally; responds well to the “give or get” policy of the organization and has a professionally cordial relationship with the CEO.

Needs to be patient and flexible — The frequent rotation of board personnel may mean that a process of convincing new board members that the change is in the best interest of the nonprofit’s clients. Be ready to change when outside circumstances require a modification of the shape of the effort.

Has excellent people skills — He/she will need to understand the various reactions to the change(s) being driven. These can range from board colleagues to management personnel, staff and even external stakeholders like funders.

Will “stay on message” in comments related to the change — Will be required to present arguments in a concise and understandable manner. Will be seen as a strong, but not overbearing, champion for the change.

The time issue — Most nonprofit board members are volunteers with full-time occupations and family responsibilities that must take time precedents. Becoming a nonprofit board change agent often requires these additional time commitments:

• Chairing a major board committee for a substantial time period.
• Possibly taking personal responsibility for research/ background efforts.
• Specialized training efforts may be required for other board members.
• A continual process of updating colleagues and seeking allies to whom some of the work can be delegated.
• Constantly being alert to legacy minded people who may impede forward moment toward the change goal.

Not every nonprofit board change agent will have all the qualifications cited above and all the time necessary to devote to marketing the change. But from those who have succeeded, others need to know what is potentially involved.

* https://www.linkedin.com/pulse/champions-change-agents-advocates-dr-jack-jacoby/

Are Nonprofit Boards Capable Evaluating Themselves?

Are Nonprofit Boards Capable of Evaluating Themselves?

By: Eugene Fram       

A 2025 survey of business boards by PWC (Accounting/Consulting Firm) yielded the following results;

  • More than half (55%%) of board members think someone on their board should be replaced.
  • Most board members (78%) do not believe their boards’ asssessment process provides a complete picture of overall board performance.
  • A majority (51%) say their boards are insufficiently invested in the investment process.
  • About half (45%) seek addiktional education or training on key topics.*

Given that many of these business boards have the financial power to employ legal counsel or consultants to conduct a rigorous impartial evaluation, what can a nonprofit board, with limited financial resources, do to make sure that the board and its members are being fairly evaluated to drive change?

Ask The Tough Questions:  No matter what process is used in the evaluation, the board has to address some difficult common questions.  These include:

  • To what extent are board members overly compliant with the wishes of the board chair or CEO? Having been a veteran nonprofit board member or a consultant with dozens of others, I find there is a tendency for nonprofit board members to “go along to get along.” As a result, the board tends to be compliant with the wishes of the board chair, the CEO or an influential director. Rigorous/civil dissent is not part of meeting discussions.
  • Leadership selection discussions are rarely a priority. Often, through lack of interest or the organization’s formal culture, the board has little contact with staff members below the senior management level and little interest in assessing where future management strength can be developed.
  • I have yet to encounter a nonprofit board that is willing to discuss its effectiveness in terms of overall strengths or weaknesses. Critical tough questions are: Are all members contributing at a minimum “get or give” level?  Especially between meetings, how can board’s internal communications be improved? To what extent does the board become involved in micromanagement or perpetuate it long after the board has outgrown the startup stage?   For example, I observed one mature board make a decision about the timing of fundraising events and then spend the next hour brainstorming the types of events that might be developed—clearly a management responsibility to investigate.
  • The strategic strength of the board. Nonprofit board member backgrounds should be aligned with the emerging needs of the nonprofit.  Examples, if fund development is going to be a priority, a person with event planning experiences should be recruited. If the reserve fund return is not being maximized, a person with a financial background, not a CPA, is required.
  • The ineffective nonprofit director. It is the most vexing problem that boards face. This person’s behavior can range from one who monopolizes discussions to the person who attends meetings but never makes any financial or other types of contributions. Some boards claim that they can approach the problem by asking each director to assess the effectiveness of his/h colleagues, but in decades of nonprofit governance experiences, I have never encountered a board that has had this process in place.

Review Current Practices:  If the board has never been self-evaluated, to do a proper self evaluation, these steps are important:

  • Develop a questionnaire to be completed by all board members.  It should be carefully crafted to determine how the board as a group and each individual board member contributes to enhancing the organization’s mission.
  • The committee assigned to the project should seek the assistance of someone with professional evaluation competence to guide the work.  Hopefully he/s will accept the assignment on a pro bono basis. This also can be an interesting project for a small group of graduate students, guided by a knowledgeable professor.  Because of the confidential nature of the material, no more than three students should be involved.
  • Develop the processes for dissemination, confidentiality, collation of materials and organization of survey information. Again, engage a professional to assist with these efforts.

Traditionally, nonprofits use a simple questionnaire to evaluate the organization and the CEO. Their development processes vary widely, and their usefulness often can be questioned when not all board members take the time to thoughtfully respond to the survey or when it is developed by committee. However, board self-evaluation needs to be completed with professional assistance, and the results reported with diplomatic care to drive positive board change.

*https://www.pwc.com/us/en/services/governance-insights-center/library/assets/pwc-2025-annual-corporate-directors-survey.pdf

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

 

 

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

By: Eugene Fram     Free Digital Image

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

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Common Practices Nonprofit Boards Need To Avoid

 

Common Practices Nonprofit Boards Need To Avoid

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

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

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

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

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

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

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

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

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

* aka The Nonprofit Entrepreneur, Placitas, New Mexico

Should All Board Members Be Required to be Involved With Fundraising?

 

Should All Board Members Be Required to be Involved With Fundraising?  Updated Version

By Eugene Fram        Free Digital Image

Based on my experiences, I suggest those who have done it before or are willing, with some coaching, to try it.  However, board members also need to maximize their colleagues’ contacts.  That may involve teaming someone who does not usually get involved in fundraising with an experienced hand, if the inexperienced person knows a potential donor.

The CEO will also need to be an assertive leader when it comes to fundraising, but all board members will need to play an active or supportive role.  Neither board members nor CEOs can abdicate their fundraising roles.

Everyone on a nonprofit board should make an annual contribution.  This is accomplished by a Give and Get Policy.* Certainly, the amount depends on each director’s personal situation, but even a token amount is significant or useful contributions in other ways are in line with the policy.  When developing 21st century funding grant proposals for foundations or corporations, funders want to know whether or not all members of the board have a personal interest.

*https://www.amyeisenstein.com/set-give-get-policy-for-your-board/

 

Should Nonprofit Boards Be A Boot Camp for Corporate Executives?

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Should Nonprofit Boards Be A Boot Camp for Corporate Executives?

By: Eugene Fram.       Free Digital Image

Alice Korngold, President of Korngold Consulting, suggests, “Nonprofit board service is the ultimate leadership opportunity, giving business executives the personal and professional skills they need… .“ * She suggests that the following abilities can be developed from such experiences. But will the neophyte board member become attuned to some inappropriate nonprofit practices, such as micromanagement,  and promote them on subsequent nonprofit board assignments?  Following are some of the different experiences the business executive might encounter on a nonprofit board.

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Are Nonprofit Boards Capable of Evaluating Themselves?

Are Nonprofit Boards Capable of Evaluating Themselves?

By: Eugene Fram       Free Digital Image

A study of business boards by Stanford University yielded the following results:

  • Only one-third (36%) of board members surveyed believe their company does a very good job of accurately assessing the performance of individual directors.
  • Almost half (46%) believe their boards tolerate dissent.
  • Nearly three quarters of directors (74%) agree that board directors allow personal or past experiences to dominate their perspective.
  • And, perhaps most significant, the typical director believes that at least one fellow director should be removed from the board because the individual is not effective. *

Given that many of these business boards have the financial power to employ legal counsel or consultants to conduct a rigorous impartial evaluation, what can a nonprofit board, with limited financial resources, do to make sure that the board and its members are being fairly evaluated to drive change?

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