Nonprofit board barriers

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.

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.

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.

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 

Do Nonprofit Boards Neglect Oversight of Internal Leadership Development?

Do Nonprofit Boards Neglect Oversight of Internal Leadership Development?

By: Eugene Fram

Although the nonprofit CEO is charged with nurturing the development of his/h staff, the board is responsible for over-viewing the process. Research evidence shows both board and management are neglecting their duties in regard to this responsibility. Only 30% of nonprofit CEO positions are filled internally, a rate that is about half the rate of for-profit organizations. *

The same research shows that,“Hiring the more (internal personnel) can improve performance at the two-year mark by 30%.” These data are even more troubling when roughly related to those of large corporations that concluded that 40% of those hired from outside the organizations are replaced within 18 months. **

Why Are Nonprofit Boards Not Paying Enough Attention?

  • Board Turnover: The most common board structure is two consecutive 3-year terms. Board chairs most commonly serve two consecutive 1-year terms. This in itself can easily create a “short term” board culture.Board members and chairs know they have relatively short tenures and may want to take actions that show more immediate results. Leadership development can be the antithesis of such actions. It takes time andnurturing.
  • The Board-CEO Relationship: Nonprofit boards, as conservators of the organizations assets, are often hesitant to remove an incumbent CEO, sometimes, even when the person has been involved with nefarious activities. Consequently, many nonprofit CEOs are what I call “mind-the-store” types. They have small growth percentages each year, have their financial processes in order, but fail to have enough competent subordinates who are capable of promotion. As a result, those board members who want to establish a culture for leadership growth have to wait for the incumbent CEO to leave or retire. Most board members, as volunteers, fear the interpersonal conflict and added time commitment that follows a board initiated CEO termination. As a result, all plans for change, such as leadership development, can’t thrive without the active support of the CEO
  • The CEO’s Comfort Zone: Few, if any nonprofit CEOs I have encountered take pride in reporting that some of their direct or indirect subordinates have left for substantial success elsewhere. Many currently who have risen in the organization from a line position have had to acquire newer management skills. Consequently, less qualified incumbent CEOs may view more able but less experienced subordinates as a career threat, and they have little interest in promoting leadership development. Moving Leadership Development Into a Nonprofit Culture

Moving Leadership Development Into a Nonprofit Culture

A board member who serves for six years my have some opportunities to introduce leadership development into a nonprofit organization’s culture:

• When Interviewing A CEO Candidate: Ask about leadership development in prior jobs. Ask the candidate about his/h most outstanding direct report and the most problematic one. Look for answers relating to pride in developing subordinates and for engaging able younger managers throughout the organization. Also ask references about these issues.

• A New Strategic Plan: Have the board agree with the CEO that leadership development is critical at all levels and establish some modest mutual objectives when beginning the process of introducing a new strategic plan.

• When The Lack of a Process Affects the Nonprofit’s Impacts: Establish leadership development as a major CEO objective to be accomplished within a reasonable time frame. Seek a new CEO, if the person fails to perform.

Younger people often seek careers in nonprofit organizations because they want to contribute to the lives ofothers or to the social welfare of the greater community. After some years of direct service experience,some may discover they have leadership potential. Without a leadership development culture, nonprofits will lose these able persons to the for-profit sector, for better financial rewards, or find they will become staff persons who do their job adequately but look other outside activities, like political office, to satisfy their leadership ambitions.

* http:/hbr.org/2015/12/nonprofits-cant-keep-ignoring-talent-development

** Ibid

Nonprofit Board Disruption—A Board Member’s Reflections

By: Eugene Fram

A tsunami can suddenly erupt on a nonprofit board. Or, instead, dissension can smolder within the organization, and finally burst into flame. In any case, polarization of opinion can damage an organization unless skillfully managed. It can occur on many fronts: fraud, sharp division of opinion, staff morale or any number of issues. In turbulent times such as the Covid 19 environment, latent problems can swiftly escalate and create chaos.

Disruption on the Board can only be resolved with strong leadership. In most cases, the Board Chair (BC) assumes the responsibility of addressing the problem. In my 30+ years of board consulting and participation, I have had a number of opportunities to view nonprofit boards in trouble. In this post, I share some of the suggestions that have “worked” to resolve problems and help rebuild broken organizations.

When the BC has to accept the challenge of uprooting the problem, he/she is likely to be met with some resistance. Board members may resign from the board in anticipation of a substantial increase in meetings and time involved. Some may be concerned that their management reputation could be sullied or personal financial liabilities leveled by the IRS, the possibility of lawsuits.

If the BC is unable to persuade the distressed board members that their expertise is needed to achieve the nonprofit’s mission, and has made them aware of the Directors & Officers’ Insurance policy which will protect them from financial liability, it will be difficult to recruit new people in this period of instability.

However, the BC can ask former board members to return for another term or two. In one case, a human service organization persuaded a board member about to be termed out to stay for another two years. He happened to be a senior vice president of a listed firm–and a valuable asset to the nonprofit.   He accepted the offer to stay and agreed to become BC of the weakened organization. During his extended tenure, he successfully recruited some former members dedicated to the organization’s mission.

A Case of Disruption

One nonprofit long-tenured CEO retired. He was well-liked and had a “laid back” management style..

His replacement style was quite different. Soon after the new CEO had established himself with the organization, complaints from senior staff members reached the Board. They described his style as too “authoritarian.”

Board response was mixed—proposed solutions to the situation created polarization between two groups. One insisted on immediate termination of the newly hired executive. The other group suggested that he be retained and counseled by board members with significant management experience. A vote was taken and the latter group won by a small majority.

Three months later, the complaints escalated. The CEO’s “I’m in charge” attitude continued to cause friction and this time, he was replaced. The organization prospered for years under the newest CEO’s direction. In the interim between the two CEOs, a union hearing about the conflict, organized the professional staff. Because trust couldn’t effectively be restored, the union still represents the professional staff today!

Other Stakeholders

Other stakeholder groups will need the leadership of the BC or the BC and CEO.

  • The media: Assuming the nonprofit’s issues become public, either the BC or CEO should be designated as the organization’s spokesperson. If neither of these persons feels comfortable in assuming this role, another board member should be appointed to the position. It must be clear to others on the Board or in senior management that only the designated spokesperson speaks for the nonprofit.
  • Staff Personnel: Generally the CEO should be responsible for keeping Staff informed. Under no circumstances should Staff be first informed by a media source.
  • Donors: Significant donors, foundations, government officials and others need to be contacted by the BC or CEO. If other board members or the CEO are also needed to handle the task, a list of “talking points” needs to be provided.
  • Vendors: If fraud or other financial manipulation is involved, the BC needs to consult with legal counsel, to determine who best should be the contact person to assure that vendors know they will be paid.

Legal Considerations

  • Engage An Attorney? It all depends on the complexity of the situation. Consulting with legal counsel would be required when terminating a staff person with a contract. It might not be needed if a police investigation determines a staff person has been stealing the nonprofit’s assets.
  • Board Determines Theft Punishment? I read about a situation where a staff person stole money. The Board continued the person’s employment as long as he repaid the funds. I hope that the board reviewed the action with an attorney to determine if its action met the criteria for due care.
  • Friends Group: Nonprofit board dissensions may motivate a group of former board members, donors or employees to form an outside cohort to help solve the problem. In several situations I have observed or have been involved, they have assumed the name “Friends of…..”. Based upon my experiences and observations, these cohorts have not been effective.

Several years ago I was in contact with two nonprofit BCs facing board and/or membership disruptions issues. Both have reported their frustrations with this comment, “ I didn’t sign up for this, when I volunteered.” One has been able to settle the problem; the other is ongoing. I hope that other nonprofit BCs will keep the above guidelines in their repertories should they be placed in a similar position.

How Does Your Nonprofit Retain Termed-Out Board Members?

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Nonprofit board members whose terms have expired are typically recognized at annual meetings with gifts, plaques or certificates of service. In many cases, this is like saying, “Here’s your hat–there’s the door.” Rarely does the organization have a plan for continuing to connect with these folks, many of whom represent significant assets – i.e. talent and expertise – that can be meaningful to the organization for years. For the very best among them, there is no guarantee that replacements will have the same or superior skills and talents.

Here are some new and established ways to keep them engaged or to reengage those who have drifted away from the organization.

Advisory Board – Include them in an advisory board to the CEO and/or Board Chair. For prestige purposes, it is important that the board be clearly designated as a sounding board to the CEO and/or Board chair when both are appropriate. This group should include selected former board members plus others from the community or industry. Agendas should not be packed with detailed power point presentations, leaving only brief time periods for open discussion. My experiences with these boards are that they should meet three or four times a year. A reasonably large one, 15-20 people, is required; understand that on the average, not all will be able to attend.

Form an “Alumni Group” – Major consulting and business organizations (e.g., McKinsey and P&G) actively support a networking group of former employees who also may meet on an occasional basis. The organizations have newsletters which report on former employee professional changes and successes, and provide current membership rosters that offer tremendous networking opportunities. It also gives the group an opportunity to reconnect on their own with old friends/colleagues and to become updated on their families and activities. Obviously the costs and efforts for maintaining the activity are modest.

Nonprofits could improve on this model by also offering occasional short conferences, 1.5 days maximum, for former board members related to the mission of the nonprofit. They can be conducted locally or at some off-site retreat, so spouses or significant others can be included. The conferences can be operated on a self-sustaining basis if developed at a moderate cost that is divided among participants. Agendas will need to be carefully planned with a small group of potential attendees.

Continued Direct Contact – The nonprofit CEO needs to have informal contact with each current board member three or four times a year to update board members to new potential strategies and ongoing challenges faced by the organizations, a minimum of 45 informal personal or phone contacts a year to help solidify his/h relationship with the board.
Current board members may assist the CEO by performing the same function to keep former board members engaged through some informal contacts each year. To be certain that all responsible for making these contacts are on the same page with current information, some reorientation on current organizational policies and strategies will need to be developed.

Establishing Effective Nonprofit Board Committees – What to Do.

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Establishing Effective Nonprofit Board Committees – What to Do.

Following are ways that many nonprofit boards have established effective board committees using mygovernance model as described in the third edition of Policy vs. Paper Clips. ( https://goo.gl/QEL8x3)

• In the planning effort, focus board personnel and financial resources only on those topics that are germane to the organization at a particular time. For example, financial planning, long-range planning or short-rangeplanning. However the board needs to be open to generative planning if new opportunities present themselves or are developed via board leadership.

• Reduce the number of board standing committees to no more than five, even less if possible

• Use subcommittees, also known as ad hoc committees or task forces, to review a range of board levelt topics, as needed, such as personnel policies, OSHA requirements and long-term space needs.

• Generally the CEO should attend all major committee meeting. He or she may or may not serve on subcommittees, depending on the information and guidance needed by the group.

• Staff input is critical. Professional staffs make major contributions to board policy decisions. It needs to be remembered that nonprofit staff in most organizations are more closely related to the board than they are in for-profit situations. The nonprofit staff are only a few organizational levels below the board.

• The CEO needs to foster an atmosphere in which staff members feel free to express opinions to board members and administrative staff. Such an atmosphere benefits the organization and isn’t just social activity.

• When confronted with a particular difficult issue, an excellent means of communications is the board/staff workshop. The professional interaction between board and staff should enhance the quality of decision-making. There are also secondary benefits, as a workshop enhances professional communications between board and staff and engages board members in meaningful hands-on projects. In addition, the board can assess the capabilities of promotable staff. Many boards have been content to analyze proposals endlessly (i.e., engage in analysis-paralysis). Others to avoid conflict, have tended to rubber-stamp proposals made by vocal or overly aggressive board members or the CEO. Neither of these types of boards truly participates in the challenging act of establishing policy and direction for their nonprofit groups.

The times are currently changing very rapidly due to the introduction of AI. Nonprofit Boards are being held much more personally accountable for their actions by the community and by legal statute. For example, if a volunteer board chair assumes the ED/CEO title or becomes president/CEO, he or she may face increased exposure to liability for not meeting his or her duties to be beinging very current on financials, compliance regulations, organizational limitations, etc.

A Special Relationship: Nurturing the CEO-Board Chair Bond

By Eugene Fram             

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Here are suggestions to assure the best possible partnership between the board chair and CEO.

Keeping boards focused on strategic issues is a major challenge for nonprofit leaders.  This leadership crisis is intensified by the fact that board chairs tend to have short terms (according to BoardSource, 83% stay in office only one or two years). Thus, nonprofit CEOs  and board chairs need to bond quickly. For the good of the organization, they must come together swiftly and create a partnership that works. Here are golden rules for the CEO and board chair to follow:

1. Be sure the CEO and board chair share strategic issues with each other—negative as well as positive ones. A failure by either the chair or CEO to share information, such as a potential cash flow issue, can be disastrous for the nonprofit.

2. It’s critical for the CEO to conduct orientation sessions with a new chair, explaining the challenges facing the nonprofit, and reviewing the fundamentals of the mission. The CEO can help the chair keep the board focused on strategic issues, whether they’re programmatic or financial.  With many nonprofits electing a new president each year, the CEO needs to prioritize these tasks.

3. Make sure staff know who has the final say. Some employees mistakenly view the board chair as the ultimate authority, even when the organizational table lists the CEO as holding that position. As a result, they may try an end run around the CEO, asking the board to overturn the CEO’s decision about salaries, promotions, or programs, for example. Both the CEO and board chair must emphasize the fact that the CEO is the final authority. If they make this message clear enough, they can probably keep staff from attempting any end runs. If an end run still occurs, the board chair must refer the issue to the CEO for resolution, except if the CEO is being charged with malfeasance.

4. The CEO should arrange for individual board members to meet with management staff on occasion so that the board can gather information about how the organization is operated and obtain an understanding of the promotional abilities of managers. The Sarbanes-Oxley act (a federal statute relating to public corporation boards) recommends this process for for-profit boards, and it’s also a good one for nonprofit board members.

5. Give staff members opportunities to participate in strategic planning and to support board committees. The board chair and CEO should work together to arrange such board-staff interactions, including joint celebrations of organizational success.

6. The CEO and board chair need to agree on the use of ad hoc board committees or task forces and their relationship to standing committees. For example, should the HR/personnel committee be a standing one or only an ad hoc one to address major personnel policies? In the 21st century, a board should only have maximum of five standing committees, many can only have three.  If task forces are used to provide provide options for occasional policy issues, for example pension plan changes, there may be little need for a standing board HR/personnel committee.

7. The board chair and CEO should be the active leaders in fundraising efforts, with the CEO as administrative leader. The board chair and other board members must provide the CEO entrée to funding sources. They often need to accompany the CEO on fundraising visits. The CEO should keep the board chair informed of all entrepreneurial development activities being explored.

8. The board has only one major employment decision to make – to recruit and hire the CEO. It’s usually a long and exhausting process. But once it’s completed, the employment of all other staff personnel is the responsibility of the CEO and the CEO’s management team. For senior positions, most CEOs ask their chairs and/or other board members to meet with candidates, but the ultimate responsibility remains with the CEO.  The board also has a responsibility to overview staffing to make certain that adequate bench-strength in in place for succession placements,  at the CEO and the senior management

9. When hiring a CEO, or soon after employment, the board chair and CEO must face a stark reality—the need for emergency leadership should the CEO become temporarily incapacitated. These plans can either be established informally by the chair-CEO partnership or more formally via board resolution. The following are possible interim CEOs: a senior manager in the organization, a semi-retired experienced CEO living near headquarters, a consultant living in a neighboring city. CEO succession planning is an important issue for the partnership should the CEO decides to leave or retire.

10. The CEO can be helpful to the board chair in recruiting new board members by suggesting possible volunteer candidates or other contacts who have demonstrated an interest in the organization’s mission, vision, and values. Board candidates will want to meet with the CEO as part of the interview process. As a result, the two partners must agree on how to present the organization to board candidates.

11. The chair and CEO need to lead in establishing meeting agendas. The two partners must work together to assure there’s sufficient meeting time to discuss and resolve strategic issue While many nonprofits call their top executive the “executive director,” the term CEO or president/CEO is a more leader-focused.

12. For the current environment, board members should be ready and willing to be ready to involved in a heightened level of board activity.   If not, the board chair and board member should determine what constraints the member needs to be in place for his/h activity.

Is Your Nonprofit Strategically Deprived?

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Is Your Nonprofit Strategically Deprived?

By: Eugene Fram   

A vital concern to the future of any nonprofit organization is frequently neglected. Responsibility for the lack of strategic planning must reside with the chief executive, board members and the tactical challenges that inevitably flow to the board.

Before a nonprofit board can begin successful strategic planning, it must:
• fully understand the difference between strategic and tactical planning.*
• have a fully engaged chief executive involved with the board in the leadership of the strategic planning process.
• have a proportion of board directors with some specific types of strategic oriented experiences.

For example, one faith based organization recreational facility I know built a modern new building. However, the leadership was unaware of the quietly growing demand for preschool education in the area. As soon as the new building was opened, several parts of the structure had to be remodeled to accommodate a growing preschool population.

While I admit that planning for coming societal and behavioral, changes is difficult, like the one in the example, I suggest that any nonprofit board needs to take “inventory” of the following backgrounds of the current chief executive and board members.

How strategically capable is the organization’s chief executive? Does he or she stay at the leading edge of the field? Has the board recruited the chief executive for a strategic acumen or for just keeping the organization on a stable course?

How successful has an organization been in recruiting some of the following types of board members?
1. Those with enough time to become thoroughly acquainted with field related to the mission, visions, values of the organization’s operations. After all, many nonprofit board members serve on boards whose fields of focus are quite different from those in which they have working experience.
2. Those who can distinguish between a strategic plan and a tactical plan?
3. Those capable of critical thinking, questioning past assumptions as they relate to the future assumptions.
4. Those who have had successful strategic planning experiences at a high (not tactical) levels on other FP or NFP boards.
5. Those who have innate visionary abilities to assess future opportunities or roadblocks.
6. Those who have failed with past unsuccessful strategic plans but learned from their mistakes.
7. Those who can realistically project the financial challenges a strategic plan will develop.
8. Those with significant prior NFP or FP experience who can be models for younger directors with time restrictions who contribute via time limited task force assignments. But they need much more seasoning with understanding governance functions because they often rubber stamp board chair or CEO suggestions.

Addressing these recruitment issues in a forthright manner should enable nonprofit organizations to determine if they are strategically deprived. This move also might improve nonprofits’ records for strategic planning.

*  “strategy is the action plan that takes you where you want to go, the tactics are the individual steps and actions that will get you there,