The Nonprofit CEO–How Much Board-CEO Trust Is Involved?
By; Eugene Fram Free Digital Image
The title, CEO for the operating head of a nonprofit, clearly signals to the public who has the final authority in all operating matters and can speak for the organization.* .
The CEO designation calls for an unwritten trusting contact with the board based on mutual respect, drawing from the symbolism that he or she is the manager of the operating link between board and staff. It is a partnership culture. However, a solid partnership does not allow the board to vacate its fiduciary and overview obligations. The board has moral and legal obligations to “trust but verify” and to conduct a rigorous annual evaluation of outcomes and impacts CEO has generated for the organization.
While the trust the board has in its chief operating officer can’t be described in exact quantitative terms, viewing it through the lens of a set of CEO and/or Board behaviors can give an idea that a significant level of trust is involved in the relationship.
Following are some of the behaviors that signify a trusting partnership is in place:
HOW CAN NONPROFITS ACCOMMODATE TO EXTERNAL INFLUENCES? SOME FIELD OBSERVATIONS
How Can Nonprofits Accommodate To External Influences? Some Field Observations
By Eugene Fram Free Digital Image
Ruth McCambridge, former editor of Nonprofit Quarterly, pointed out “Our organizational management, (board) styles and structures are affected by the four external influences.” See paraphrased bolded items below. (http://bit.ly/1HSwrZY)
Following are some specific field observations I have encountered that, over several decades, support her model relating to external influences.
The nonprofit’s mission field: McCambridge points out that arts organizations have dual have leadership models—artistic and business. However, unless specified which has final authority, the system can lead to continual conflict between the two; the artistic leader wanting the most authentic productions and the business leader concerned with budget realities. The final authority is often determined by which leader has the CEO title.
Human services boards and staffs often operate at a much higher emotional level than other types of nonprofits. Examples: Some of these board members consider themselves “families,” frequently fail to make the hard choices when board members are ineffective directors. Even the least productive board chair can be venerated. Staff members similarly can be emotionally bonded, failing to realistically acknowledge the strengths and weaknesses of others.
On the other hand, board members of trade or professional associations often look to the staff as “servants” who should closely follow board directions. Example: One association CEO I encountered creativity developed a million dollar reserve for the group. Yet he was only allowed to spend up to $5K of a multimillion-dollar budget without formal board approval.
The nonprofit’s regulatory environment: It can be argued that nonprofit organizations are much more regulated than their for-profit counterparts. In addition to traditional state and Federal corporation laws, all nonprofits must abide by the Federal Intermediate Sanctions Act that prohibits them from providing excess benefits to anybody in a position to influence actions—internally a management or staff person and externally a vendor, donor or volunteer, etc. Charitable and public benefit nonprofits must annually file an IRS Form 990 that has, in addition to financial data, 38 questions related to corporate governance. Health care nonprofits face a multitude of regulations related to staff certification and relationships with patients. Example: A psychiatrist employed by a counseling agency resigned and took patient records with him. The employing organization had to sue for return of the records because the agency, not the psychiatrist, was responsible for confidentiality.
The nonprofit’s communities’/industries’ spoken belief systems: Having worked with nonprofits on both US coasts, I have generally observed that CEOs on the east coast are given much more managerial latitude once a nonprofit startup moves beyond its early stages. Example: I have consulted with two west coast nonprofits both well beyond the startup stage—one with a budget of $6 million and he other with a budget of $10 million. A community model that required significant number of board interventions covered both. If they were on the east coast, both would likely have had CEOs with the title “President /CEO” with much more operating flexibility than the CEOs I observed on the west coast.
The nonprofit’s communities’/industries’ cultural norms and dynamics: Peter Drucker, the noted management expert, is said to have remarked, “Culture eats strategy for breakfast every morning.” He meant that strategy needs to be in line with culture to succeed. Nonprofit boards frequently align with this comment. Example: If a nonprofit board is a conservative one and content with a “mind the store CEO culture,” one or two board members can’t do much to drive change, until the CEO retires or leaves.
Suggestion for action
With the assistance of an independent moderator, many boards could benefit from an in-depth discussion of these four issues every couple of years. It may open discussion on some internal issues that need corrective action.
Once Again: How to Keep a Nonprofit Board Informed.
By: Eugene Fram Free Digital Image
With high performing nonprofit boards, board members will rarely be invited by the CEO to participate in operational decisions. As a result, management will always have more information than the board. Yet the board still needs to know that is happening in operations to be able to overview them. The name of the game is for the CEO to communicate the important information and to keep board members informed of significant developments. Still, there’s no need to clutter regular board meetings by reporting endless details about operations.
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 Giveand 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.
What Role Should Nonprofit Board Members Play in Overviewing Management /Staff Talent? By: Eugene Fram Free Digital Image
Nonprofit boards rarely develop an in-depth strategy for assessing its organization’s human capital. Some will keep informal tabs on the CEO’s direct reports to prepare for the possibility of his/her sudden departure or is incapacitated. Others –smaller organizations with fewer than 20 employees—need only a basic plan for such an occurrence.
Need for Strategy: In my view, maintaining a viable talent strategy to assess staff and management personnel is a board responsibility, albeit one that is often ignored. The latter stems from the constant turnover of nonprofit board members whose median term of service is 4-6 years—hardly a lifetime commitment. Like for-profit board members whose focus is on quarterly earning results, their nonprofit counterparts are likely more interested in resolving current problems than in building sufficient bench strength for the organization’s long-term sustainability.
The Nonprofit Board’s New Role In An Age of Exponential Change
By Eugene Fram Free Digital Image
Most nonprofit boards are being faced with huge pressures—reduced financial support, challenges in integrating new technologies, and difficulties in hiring qualified personnel at what are considered “nonprofit” compensations. To survive long term, board members need to be alert to potential opportunities. These may be far from the comfort zones of current board members, CEOs and staff.
How Can Nonprofits Accommodate To External Influences? Some Field Observations
By Eugene Fram Free Digital Image
Ruth McCambridge, former editor of Nonprofit Quarterly, points out “Our organizational management, (board) styles and structures are affected by the four external influences.” See paraphrased bolded items below. (http://bit.ly/1HSwrZY) Following are some specific field observations I have encountered that, over several decades, support her model relating to external influences.
The nonprofit’s mission field: McCambridge points out that arts organizations have dual have leadership models—artistic and business. However, unless specified which has final authority, the system can lead to continual conflict between the two; the artistic leader wanting the most authentic productions and the business leader concerned with budget realities. The final authority is often determined by which leader has the CEO title.
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…)
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…)
Identify Nonprofit Staff Groups To Help Drive Organizational Change.
By Eugene Fram Free Digital Image
Nonprofit executive directors Board Members tend to think of the staff professionals as individual contributors. These individuals are persons who mainly work on their own and but increasingly also have to contribute as team players – for instance, counselors, health care professionals, curators and university faculty. However, many executive directors fail to recognize that these individual contributors can be grouped according to identifiable types, with differing work-value outlooks. Each group needs to be motivated differently to drive change in today’s fast moving social, political and technological environments. Nonprofit board members can use these groupings in their responsibilities for overseeing promotable staff members.
Nonprofit Management 