imperfect metrics

Can A Nonprofit Find Strategic Ways to Grow in Unsettled Times?

Can A Nonprofit Find Strategic Ways to Grow in Unsettled Times?

By: Eugene Fram                               

Nonprofits have always had to struggle to meet their client needs, even when economic conditions and social turmoil were much less constraining than today, and they have dim prospects for the immediate future.  How can mid-level nonprofits uncover growth opportunities in the present environment?

Plan Strategically: Any nonprofit board needs a core of directors and managers who are capable of identifying potential new strategic directions. The CEO must be highly conversant with changes in the mission field. He/s then needs a core of board members to assist in realistically reviewing his/h long-term insights for growth, as well as board insights developed from generative discussions. The CEO, supported by several board members, can then be the keystone for board discussions about implementing change. Should the CEO not have the requisite forward-looking knowledge, the only alternative is to try to replace the CEO, a difficult change even under the best of circumstances.

Capacity Investment: As expected, nonprofits invest their assets in maintaining and improving programs. It seems that client needs will always be there to operate and expand existing programs. But success in nonprofits and elsewhere also involves beginning to solve tomorrow’s problem today. Example: The challenges for serving the aging cohort of baby boomers is clearly showing demographic impact. Those in the field or allied fields serving this cohort need to be concerned with finding new modalities to assist the baby boomers in an efficient, effective and humane manner. Where funding is a barrier to participate in such an effort, foundations and governmental agencies need to be aggressively tapped to fund with small-scale projects, if the foundation can partner with the nonprofit. (See: https://www.snpo.org/publications/sendpdf.php?id=2024)

Impact & Evaluation: Midsized nonprofits should have the capacity to conduct a few small-scale studies every few years, if growth and development are cultural values for the organizations. Resources might come from within the nonprofit and/or from outside sources. Once a small-scale study provides evidence of impact; the nonprofit can find outside interest for more small-scale improvement, additional evaluation and possibly some outside support.Obviously, a small new project won’t be able to have an extensive evaluation component. However, if imperfect metrics are used in the process, the impact findings can be useful in seeking an interest from other sources. (These are metrics that are anecdotal, subjective, interpretive or qualitative. For more details see:http://bit.ly/OvF4ri)

Importance of the Board & Management: Growth opportunities will be initiated in nonprofits, only if the board constantly asks for them, especially in the current environment.  The board, overtly or indirectly, has to ask management about innovations that are taking place or can take place within the organization. Annual questions to management such as “What do you want to do innovatively or creatively this coming year?” are mandated. When it appears an innovation can be scaled a little or an innovative person has potential to be creative, the nonprofit board has to support this learning culture for testing

Onboarding the New Nonprofit CEO: Who’s In Charge?

Onboarding the New Nonprofit CEO: Who’s In Charge?

By: Eugene Fram

When the chair of the search committee announces that a new CEO has been selected, there is visible relief in the boardroom. After the stress of a waning—or even absent executive at the helm, directors tend to relax, engaging in a series of social events that provide a pleasant if superficial acquaintance with the new executive.

What actually lies ahead is much more serious and vital to the future of the organization. Call it orientation, acculturation or transitioning; it is the board’s responsibility to see that the CEO is grounded in every aspect of the organization. And that requires a plan that is carefully structured and may take a year to complete. Major responsibility for the plan and its implementation rests with the board chair and one or more senior board members. While there are may formats to achieve this goal, the best, in my opinion, is what has been described as a customized format.

Under a customized format the nonprofit board tailors a program that helps the new executive develop a solid base in the organization and an understanding of its unique climate and culture.
Biweekly meetings should be scheduled. However, both sides should be wary if the time required does not decrease considerably as the year progresses. The CEO will then operate more independently, perhaps even making modest mistakes from which he/s can easily recover. Those handling the orientation must take care to delegate responsibility incrementally, based on the CEO’s background and experiences. Every custom designed orientation program should include nine steps. Some must be taken in sequence, while other steps can proceed concurrently.

  1. Developing immediate and long-term goals: After several months on the job, ask the CEO to solidify his immediate goals and determine whether or not a new strategic plan needs to be considered.
    2. Reviewing fiscal and personnel resources: The CFO and chair of the audit committee should be responsible for this orientation, assuming the CEO has an adequate financial background. If not, the CEO and the board chair need to find a way(s) to fast track the person’s development in this area. When the CEO has had a chance to assess the staff talent bank, he and the board chair should compare notes to determine if their assessments are on the same page.
    3. Examining current policies and procedures: As soon as possible, the board chair and CEO need to have a discussion about the division between board responsibility for policy and strategies and the CEO’s responsibilities for operating issues and tactics.
    4. Developing staff relationships: Depending on the size of the staff, the board might sponsor one or more informal meetings between the CEO and Staff.
    5. Fostering board relationships: The board chair needs to make certain that the CEO has personal one-to-one meetings with all board members as practical, depending on the composition of the board.
    6. Cultivating community or industry relationships: The amount of time necessary for this step will depend on the person’s background.
    7. Understanding the clientele, membership and other stakeholders: This function should evolve over the first year, supported by the board chair.
    8. Discussing the new executive’s career expectations: If this has not been determined during the hiring process, it should be discussed frankly towards the end of the first year.
    9. Establishing a succession plan should the executive be temporarily incapacitated: After the CEO becomes comfortably acquainted with the staff, the board chair and CEO need to make this decision. If they decide that there is no one on staff to fill the temporary gap, the board must decide how to seek outside assistance, e.g., a consultant, a board member, a recently retired CEO, etc.

On boarding a new CEO clearly has not been a priority for a portion of nonprofits. “Nearly half (46 Percent of the 214 CEOs responding to a 2014 Bridgespan Group survey reported getting little of no help from their boards when first taking on the (CEO) position.”* The cost of this gap to nonprofit organizations must be substantial.

* http://www.bridgespan.org/publications-and-tools/nonprofit-boards/resources-for-board-members/nonprofit-boards-role-in-onboarding-a-new-ceo.aspx#.VzzcYWbLMz4

Sources: Eugene Fram with Vicki Brown, Policy vs. Paper Clips, Third Edition, 2011 http://bit.ly/yfRZpz
Eugene Fram & Robert Pearse, The High-Performance Nonprofit, Milwaukee, Wisc, Families International, 1992.

Is Your Nonprofit Forward-Focused or a Prisoner of the Past?

By: Eugene Fram            Free Digital Image

Governance arguably suffers most … when boards spend too much time looking in the rear view mirror and not enough scanning the road ahead. *

It has been my experience that nonprofits rarely address the possibilities and perils of “…the road ahead.” An endless stream of current and pressing issues can cause both Board and CEO to take a myopic view of their nonprofit responsibilities — either totally ignoring strategic issues or procrastinating a discussion of the subject. The results can be damaging to the organization. Here are some “prompts” that might guide nonprofit board members and CEOs as they attempt to provide leadership in this important but neglected area:

Balanced Agendas — Include and highlight strategic issues on every board meeting agenda (not just when a committee report is presented) until they are resolved with action plans, policy development or thoroughly discussed and removed. This constant emphasis on planning can go a long way towards achieving concrete actions on topics of future concern. A discussion of immediate issues juxtaposed with ongoing strategic concerns will provide a balanced meeting format that may possibly discourage board member’s attempts to micromanage, a very common tendency in nonprofit boards!

Short Term Focus — In a BoardSource report,  “…only 33 percent of nonprofits report that their board members are actively involved in advocating for their missions, and many organizations aren’t advocating at all.”** To inspire and challenge board leaders to actively serve as ambassadors.  The explanation for weak performance in this area is often attributed to the fact that the directors’ terms of service on the board are usually three to six years during which time people’s interest in the long-term future of the organization may be compromised. Some boards may be disproportionately represented by “millennials” whose participation comes with heavy time constraints. Problems of this type can be mitigated by seeking board members who are partially or fully retired. They are likely to be better equipped to focus on the important governance functions and the fundamentals in which the nonprofit operates. Boards need to look to look further out than anyone else in the organization… There are times when CEOs (those operationally concerned with strategy) are the last ones to see (environmental) changes coming.

Board Recruiting — Nonprofit recruiting can be a hit-or-miss process, often producing candidates who are readily available and familiar to the current board. Rarely will the committee seek out people who have strong track records as strategists and/or competent visionaries. This is a real challenge, but a forward focused board should make every effort to identify potential directors who have these types of experience and skills. The topic of recruitment is a challenging one and the process should have continual annual evaluation.

Can Nonprofit Boards Work Smarter Not Harder?
As noted earlier, nonprofit board people are often limited in the amount of time they can devote to board participation. Given these constraints, the board chair and CEO can choose from a range of options that will help orient directors to better understand the external landscape in which the organization operates. These initiatives can include visits to comparable facilities, opportunities to attend field related conferences or inviting experts in the same or similar organizations to interact with board members. The purpose is to infuse each member of the board with an informed view of the organization’s long-term future and prepare them to take the appropriate action. The CEO and board chair must address this question with a viable plan: What actually helps… (to develop) a board environment that encourages participation and allows board members to derive meaning, inspiration and satisfaction from their (board) work?

Talent: The Key to Nonprofit Success — A nonprofit board has one hiring decision to make: the engagement of the CEO. But it also has a significant responsibility to overview long-term talent development in the staff and management. The board of a family service agency needs to assure that its counselors are up to date on current modalities of counseling. A recreational organization must be operating in the context of accepted fitness practices. Annual talent reviews need to be scheduled with CEOs and the appropriate staff. In addition, individual board members, with the concurrence of the CEO, may want to have occasional professional contact with key people below the senior management.

Make strategy part of the board’s DNA — (Many nonprofit) … CEOs present their strategic vision once a year, the directors discuss and tweak it at a single board meeting (or a short retreat), and the plan is then adopted. The board’s input is minimal and there’s not enough in-depth information to underpin proper consideration of the alternatives.

An educated nonprofit board will have the depth of understanding to be alert to the future needs and problems of its organization. Typically there is usually an unanticipated “fork” in the road ahead. Status quo, “minding the store,” participation by rote are all too easy mindsets that will only hobble the progress of an organization. Board chairs and CEOs are key actors in turning an existing board environment into one that is focused on moving forward.

*Christian Casa and Christian Caspar (2014) “Building a forward-looking board,” McKinsey Quarterly, February. Note: Quotations from this article are presented in italics.

**https://boardsource.org/research-critical-issues/

 

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

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 as this, client services and the general health of the organization is likely being negatively impacted.

From a board perspective, the dynamics involved with the COO issue are best explained through field case examples:

CASE A: 

Peter Gilbert was CEO of a national association, with a budget of about $13 million. The association supported about 250 human services nonprofits throughout the United States. It also had a subsidiary for-nonprofit firm that generated cash flow for the nonprofit. Income was generated from members’’ dues, foundation grants, individual donations, plus income from the for-profit firm, publications and conferences. 

After about two years, Peter was doing an outstanding job with fund development and visiting individual members, but the internal organization was being deprived of leadership since he was traveling about 50% of his working time.

The board began to suggest that Peter needed a COO to assist him to improve internal operations. However, he said the budget was too tight to allow for the salary of COO.  

Comments & History: After about four years of discussions, Peter and the board decided to allocate salary dollars from the subsidiary for-profit to fund the salary of a COO. He and the new COO worked well together for many years. The organization has successfully merged several times since then and continues to prosper. 

CASE B: 

Steve Gilbert is a 10-year veteran CEO heading a community human service nonprofit with a budget of about $3million. He is well regarded in the community, and his nonprofit is considered well run, although it is the smallest of similar types of agencies in the region. He has 4.5 full time people directly reporting to him, and a total staff of 40 professional and other types of support staff. Since the organization is a relatively “flat” one, some board members want Steve to add a COO. For example, he recently had to make a decision on whether to buy a new or rebuilt carburetor for a van? Steve recognizes the need for a COO, and at one time even allocated budget for one, but without taking action on the budget allocation.  

Comments: The board in this case needs to make a determination as to whether or not Steve is managing the organization for long-term stability. In other words, does the nonprofit have the capacity to serve more clients with the addition of a COO? Considering Steve’s long tenure of acceptable service, is it appropriate for the board to be proactive in motivating Steve to appoint a COO? With his willingness to step in to the “weeds “ and work harder when agency gaps develop, it seems he is perpetuating a form of crisis management.

He may not realize that the nonprofit may not be functioning appropriately. This may include delegating too much of the fund raising effort to others and neglecting potential donors who want to interact with the CEO. He may fear that a millennial COO will encourage too many disruptions with the status quo.

Since the appointment of a COO is clearly Steve’s responsibility, there is little the board can do except to offer, “advice and consent.”

CASE C:

Jennifer Gilbert is a newly appointed CEO of a faith based nonprofit with an annual budget about $12 million. The organization has had some significant deficits over the last three years, causing her predecessor to resign.  Although she had been a volunteer board member of the organization, this is her first management position with a nonprofit. Her previous experiences included a series of middle management positions in business and entrepreneurial organizations. One of her first actions as CEO was to eliminate the COO position.

Comments: Obviously Jennifer needs to trim costs, but she/or others must assume the responsibilities now carried by the COO. Since she had been on the board of the organization, perhaps she felt she knew enough about the internal dynamics to eliminate the COO position without starving the nonprofit? On the other hand she may be leading the nonprofit to long-term difficulty once the current financial crisis has abated.

Summary

Nonprofit CEOs may knowingly or unwittingly reject the idea of adding a new “chief” to the management team. Some are victims of the “founder’s syndrome” and enjoy the high level of control that defines their current leadership. Others are concerned about the financial implications the addition of a new staff salary might have on a typically tight budget. Risk is carefully considered in the nonprofit environment. The board needs to exert its overview responsibilities and become advocates for the change when deemed necessary. Otherwise, client services will be impeded and the organization will become locked in its status quo position.

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

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

By: Eugene Fram             

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

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

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

The process …for succession planning should begin with determining the… organization’s future strategy.

This type of generative strategic thinking is difficult to accomplish in the nonprofit environment for several reasons. Currently, the planning cycle for most nonprofit boards that I have encountered is from three to five years. The median tenure for nonprofit board members is from four to six years. This means that most board members will only be actively involved with one planning cycle. My observation is that it not a motivating environment for longer terms nonprofit planning.   It tends to focus planning on known details instead of the more ambiguous “what if” questions.

At a minimum each cycle should have some considerations of the talents and skills that will be needed by senior managers to robustly complete the plan and to remain current for the next change.   Such a listing allows senior managers to plan for personal growth and for board governance committees to better understand the new skills and talents required for board members.

Examples:   A CEO may recognize that she/h needs further background in the applications of Artificial Intelligence to nonprofits.   In turn, the board has as an obligation to help the CEO to achieve this goal, even if the CEO might leave after taking advantage of this educational opportunity.

From the board’s perspective, the governance committee may decide that the board does not have a sufficient number of board members interested in fundraising to mount a capital campaign. The plan should how greater attention is needed to recruit candidates with comfort in fundraising.

Trying to achieve agreement on projection can cause disruptive discussions among board members. Legacy-focused board members may try to sidetrack projections especially when the organization has been reasonably successful under a popular leader. But the airing of the issues can be helpful, even if they become emotionally charged.

…Boards of directors are increasingly accepting culture as a hard issue, as opposed to a soft issue. that is measurable and has a direct impact on the organization’s performance.

In both the for-profit and nonprofit environments, the CEO must drive the organization’s culture through example and operational policy. In turn, the board must trust and verify that the CEO is managing in a morally sound and ethical manner.   Where questions arise related to the CEO, on these two issues, the board must start an investigation, often with the assistance of an outside party.

To maintain a healthy culture and the process of succession planning, nonprofit boards need to:

  • Have a healthy review of the nonprofit’s culture included in each planning cycle.
  • Be certain that the CEO has a strong cadre of managers capable of growing in their current positions and able to advance if the opportunity arises.
  • Become reasonably well acquainted with the strengths and limitations of key members in the cadre group.
  • Allow three or more years to plan a CEO transition.
  • Have a written plan in place in the even that the CEO becomes temporarily or permanently incapacitated.

Nonprofit planning cycles, like those in the for-profit world, rarely relate succession considerations to the planning efforts because the boards can have a constant churn of memberships. This tends to produce a short-term atmosphere not conducive to succession planning. Every planning cycle should include a review of culture as well as the growth and grooming of high potential staff.

*https://www.nacdonline.org/Resources/Article.cfm?ItemNumber=53191

** https://boardsource.org/fundamental-topics-of-nonprofit-board-service/executive-transition/

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.

Nonprofit Boards And Internal Working Environments—No Pieces of Cake!

People who work in the business community sometimes view nonprofit organizations as “cushy” places to work. The truth is that today’s nonprofits have challenges that are very different from those of the corporate world–and typically struggle to accommodate parameters such as restricted finances, increasing wage costs that must aligned with ever expanding client needs. In addition, board members must be concerned about personal liabilities under special legislations such as completing the IRS Form 990 and The Intermediate Sanctions Act. * Not easy!

A article in the Wall Street Journal discusses the hypothetical release from “grind” pressures a business executive might experience when moving employment to a nonprofit. ** Following are some of the specific advantages cited by the article (in bold) followed, by some of my real world observations over four decades as board member and/or consultant.

“People, etc.

The importance of the mission to a nonprofit cannot be contested. It’s what attracts committed personnel to the field and motivates them to grow the organization. The problem is that this concept can lead to a low risk culture that impedes the CEO and senior managers from seizing client service opportunities, elevating the fundraising culture and developing innovative business plans that can demonstrate impacts. 21st century standards require nonprofit CEOs to be strong and aggressive entrepreneurs. But conservative boards often inhibit that behavior in the nonprofit sector

“For nonprofits, it is more difficult to measure success.”

No question about this statement when it comes to measuring objectives that are anecdotal, subjective, interpretative or qualitative, such advocacy for the homeless. ** Also the metrics can only rely on small sample data or those that are derived from situational data. On the positive side, both nonprofits and for-profits are beginning to utilize types of data often referred to as “non-financial metrics.” These are lean experiment style metrics *** that can be modified, long as as learning takes place.

“Generally speaking, nonprofits are much more process-oriented….”

Nonprofit boards often employ a process culture because they are responsible for public funds or charitable dollars. This often leads to a board micromanagement approach long after the nonprofit has exited its startup phase. Also it causes many nonprofits to limit their potential for maximizing client service.

“There are also multiple stakeholders (clients, donors, volunteers, the general public) whose viewpoints have to be considered.  

Both business and nonprofit organization have multiple cohorts with which they must be concerned in the 21st century. But the nonprofit has to tread the very fine line between various constituencies.   A board member angering a major donor can lead to the organization’s bankruptcy!

“Collaboration decision making replaces speed in this world.”

Nonprofit managers have to devote significant time to garner a high level of collaboration, some times at the expense of more important projects. Many nonprofits operate on a “consensus” format. But without board members having a financial investments in the organization, and the rotating director tenure system (4 to 6 year median), votes can be based on a personal need to “go along to get along.”  What should take place is rigorous and civil discussion, respectful of dissenting votes.

* International Journal of Not-for-Profit Law / vol. 18, no. 1, February 2016

**Ted Beck (2016) “Think You Want to Work For a Nonprofit?” The Wall Street Journal, September 12th, p. R10

** For a comprehensive explanation, see: http://onstartups.com/tabid/3339/bid/96738/Measuring-What-Matters-How-To-Pick-A-Good-Metric.aspx 

Can Using Imperfect Data Assist Nonprofits in Defining Impacts?

By Eugene Fram

Nonprofit boards need to expand their evaluations of nonprofit managers and their organizations adding more behavioral impacts * to their evaluations.

For example, a nonprofit might count the number of volunteers that have been trained. But boards must go to the next level in the 21st century.
In the case of volunteers, they must seek to understand the impacts on those trained. They need, for instance, to understand how well these volunteers are assisting clients and how they are representing the nonprofit to the clients. The training is a process, but it determines their relationships with clients and yields impact data.

Qualitative data must be developed to the next level, and the average nonprofit CEO will argue that he/she doesn’t have the staff or expertise to develop impact data. Engaging an outside organization to complete a simple project can cost thousands of dollars.

Yet funders are asking for these types of data because they know in the nonprofit environment that good program outcomes do not necessarily mean that the organization is creating impacts related to its mission. As one analyst reported: ** Clear measure of performance and impact will be required by donors (in the coming years). Over and over donors are looking for performance metrics. They want proof that you are doing a good job with their money. …. They want efficiency and effectiveness. Some nonprofits are:
• Talking about their accomplishments in meaningful and measurable ways.
• Demonstrating clear results for the people and causes they serve.
• Turning their annual reports into “impact reports.”

Are Nonprofits In a “No Win” Situation?

They are not in such a situation if they are willing to use imperfect metrics to track progress and drive change. Most funders will accept such measurement if the organization shows it is trying to develop impact data and learning from their experiences over time. With the data, nonprofits can assess impacts on such honorable but vague goals such as “enhance quality of life,” “elevate artistic sensitivity,” or “community commitment.”

The following five-step process can be utilized: ***

• Agree on relevant outcomes: The board and management should agree that the metrics reflect organizational impacts, not activities or efforts. Impacts should focus on a desired change in the nonprofit’s universe rather than a set of process activities.
• Agree on approaches to evaluation: Many way to measure—personal interview, mail questionnaires, sampling client records, comparisons with other agencies, comparing imperfect data with similar types of national data.
• Agree on specific indicators: Develop behavioral outcomes desired. Example: Mentions in the local newspapers can be used as an indication of public presence.
• Agree on judgment rules: Board and management need to agree at the outset upon the impact metrics the organization would like to achieve for each specific indicator that contributes to the desired mission related objective.
• Compare measurement outcome with judgment rule: Assess impacts and then compare results to mission related objectives to determine contributions to strategic objectives.

Who implements the process?

Few nonprofits will have the person-power or budget to implement the process, but there are other ways to accomplish it to develop impact results.

• Seek a local university class that will assist under the close direction of a professor or a knowledgeable volunteer professional.
• Engage a recently retired professional volunteer, provide him/her with an organizational title (e.g., Director of Measurement Projects) and seek funds from local foundation to cover costs.
• Ask a local service organization, like Rotary, to fund the project, as a demonstration for X number of years. A business organization might also agree to such funding.
• Seek a doctoral or masters student who might conduct the project in exchange for the ability to publish an article about it. Submit a funding grant to cover costs.

Without some ways of measuring their impact on clients, nonprofits can easily degenerate into monitoring staff activities, mistaking outcomes for impacts. That danger is much greater than the danger of using imperfect metrics. Efforts involving process can easily be measured, but an imperfect metric can be improved with experience over time to reveal impact.

* See– http://amzn.to/1OUV8J9  

**http://boardassist.org/blog/top-10-fundraising-trends-and-predictions-for-2016/

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

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

Reversing Traditional Nonprofit Board Barriers

Reversing Traditional Nonprofit Board Barriers

By: Eugene Fram         

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 directors, 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 43- 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 three 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.