Nonprofit impacts

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,

Nonprofit Boards Hire and CEOs Must Act

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NONPROFIT BOARDS HIRE AND CEOs MUST ACT!

By: Eugene Fram

Whenever the time is ripe to select a new nonprofit CEO, I think of the old joke that says “…every person looks for the perfect spouse… meanwhile, they get married.” By the same token, nonprofit directors seek perfection in a new ED or CEO– and find that they must “settle” for less. But there are certain defined attributes that are essential to his/her success in managing the organization.

With the 21st century pressures of increasingly slim budgets, fund development challenges and the difficulty of recruiting high quality employees the ED/CEO must be action oriented and come equipped with at least a modicum of the following abilities:

 Visionary: It’s all about the organization’s future.

The ED/elect should bring or at least begin tocultivate a deep concept of where the nonprofit is, should be and what the trajectory should looklike. He/she can do that by immersing himself in the mission field—reading widely and remainingin contact with regional and national leaders in the field. A state-of-the-art CEO should beavailable for consultation with colleagues with similar issues. Included in his span of vision arepotential disruptions that might affect the organization– and how to help the board focus on andimplement appropriate change.

 Board Enabler:

The new chief understands the limits of his/h operational responsibilities and the governance overview role required by the board. To build trusting relationships with the board, she/h realizes that transparency is key.

 Fundraiser:

The optimal fundraising relationship is a partnership between the CEO and theboard. Board members must be alert to outside funding opportunities and the CEO, alert tofunding opportunities from sources related to the mission field. Once an opportunity is identified, the CEO and the board work closely together to develop a proposal and to meet with the donor(s).If the organization has a development director, the person filling the position must be brought intothe discussion at an early stage.

 Communicator:

To be organizationally successful, the Board and CEO must be in a position to interact with a variety of stakeholders: government officials, donors, vendors, clients and theirs surrogates, foundations, etc. One area in which many nonprofit CEOs need improvement in communications is with the business community. It goes beyond simply joining the Rotary or Chamber of Commerce groups. Nonprofit CEOs must have rudimentary knowledge of many businesses so they can interact intelligently with business leaders they encounter in development efforts. This information can be about specific organizations they are approaching or general knowledge acquired from perusing publications like Business Week or The Wall Street Journal.

 Spokesperson:

Although some suggest that the volunteer president must be the spokesperson for the nonprofit, I suggest that the Executive Director/CEO must hold this position for several reasons

1. If a volunteer becomes a president/CEO, he/s may acquire some liabilities that other board directors don’t have. Some nonprofits have given the chief operating the title of president/ceo and the senior board person, board chair.  This eliminates confusion that often surrounds the ED title when contacting business or government officials.

2.The volunteer president typically does not work in the organization daily and does not understand its nuances as well as the CEO.

3.In a crisis situation, the media may contact board members.   It should be clearly understood that the CEO is the only person to comment to the media.

4. In ceremonial situations, it may be appropriate for the president to be a spokesperson.

5. The CEO needs to become the “face” of the organization because volunteer presidents come and go, some annually.

 Team Builder:

She/h needs to build a strong management team, some of whom, over time, may become capable of becoming an Executive Director. The CEO, as head of the management team, needs to be sure all staff are performing well with some being bench strength to move to higher positions.

 Tone Setter:

The CEO needs to set an ethical tone where everybody feels free to express their suggestions for improving the organization. This tone, in various ways, must also be communicated to all stakeholders by the Executive Director.

 Performance Monitor:

Hopefully the board has a rigorous and fair system for evaluating the CEO and the organization, and the values of this system that are embedded in staff evaluations.


 

 

Once Again! What Does Nonprofit Board Oversight Mean?

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By:Eugene Fram

Frequently, I encounter nonprofit case stories surface related to inadequate oversight by nonprofit boards of directors.  Some of the cases result in substantial dollar losses to the nonprofits. Following is my personal list of what reasonable board oversight means to attempt to help nonprofit boards of directors to avoid such losses.

  • At least half the board should be able to analyze the monthly or quarterly financial statements.  Have voluntary information sessions available for those who do not have the skills.
  • Make certain that an external audit is conducted at least every two years, and the board is involved in the selection of the external auditor from a list of two or three suggested by board members and/or management. [i]
  • Be alert to the system used for developing new programs.  Be wary when new programs are described such as “mindboggling.”
  • Be certain the organization has either a comprehensive assessment committee, finance committee, and/or audit committee. (Some states require nonprofits to have an audit committee once the organization has a certain annual revenue.) 
  • Be alert to the development process for filing critical reports –Examples:  990s, employee tax withholdings and both state and federal tax reports.[ii]
  • Make certain the board has developed or is developing a current strategic plan.
  • Make certain that the organization has a knowledgeable CFO.  No board member should have to worry about the safety of the organization’s assets.
  • Be especially alert when financial reports are frequently late or one or more directors perceive financial personnel are inadequately skilled. 
  • If you don’t understand something, be ready to raise questions, even if the question appears to be innocuous
  • Nonprofit transparency is critical in the 21st century.  “Trust But Verify.”

[i] For guidance in this process see: Eugene Fram & Bruce Oliver, (2010)“Want to Avoid Fraud?  Look to Your Board,” Nonprofit World, pp.18-19.

Board Member Networking Pays Off for Nonprofits

By Eugene Fram    

Over decades of nonprofit board membership and consulting, I have rarely observed volunteer board members effectively networking with their peers to develop best board practices. Also rarely do I see them accompany management to regional or national conferences related to the nonprofit’s mission. These types of exposures are necessary to have groups of board members capable of making generative suggestions.

For board members who are willing and able to network, I suggest the following: 

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Once Again!! A Nonprofit Board’s Most Important Job!

By: Eugene Fram

Many people believe as I do that a nonprofit board’s job is to find the best possible person to act as CEO of the organization, then stand back and let that person manage. If your board is in agreement, here are guidelines for action:

• Recruit Widely: Develop a rigorous vetting process. Well before the search begins, make certain that potential internal candidates have had an opportunity to demonstrate management acumen. If an internal candidate is somewhat less qualified than an external one, don’t let the decision be swayed by the fact that the internal candidate would be less costly to employ.
• Understanding The Partnership: The need for the CEO and Board to operate within a partnership framework is well documented and accepted. However, the CEO is both the senior staff manager and a de facto representative of the board-staff relationship. Normal communications to the staff must be through the CEO. The CEO can’t be an insecure manager by withholding negative information from the board.
• A Nonprofit Board Has An Overview Responsibility: Sometimes, this responsibility can devolve into micromanagement of the management and staff. If the overview, policy or strategy functions of the board are not being adequately executed, a lead director may need to be appointed to help focus on them.*
• In terms of organization and CEO measurement, the board must seek data and information on outcomes and impacts, not become overly involved with process details.
• Nobody Does His/Her Job Perfectly: The board needs to be highly tolerant of inconsequential CEO mistakes. However, if these mistakes persist over time, the board needs to assess reasons for their continuing. Major errors need immediate investigation, and the board members also must be honest with itself about their own culpability in its due diligence process.
• The CEO And Staff Must Be Evaluated Fairly: In a nonprofit situation, this must be done in partnership, not hierarchically. Everybody must understand the “rules of the game.” Outcomes and impacts need to be related to the mission of the organization.
• The Board and CEO Must Partner On Fundraising: An effective CEO must, in the 21st century, be the face of the organization to accomplish its mission. Nonprofit board members are part-time stewards. Consequently the CEO must accept a significant responsibility for fundraising.

These guidelines can be useful to nonprofit boards in self-evaluation projects. They can determine whether or not the board is facing the realities of standing back and letting the CEO manage. The CEO should have full operational authority, and the staff should function without an atmosphere of board micromanagement.

*International Journal of Not-for-Profit Law / vol. 14, nos. 1-2, April 2012 / p.57.

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/

How Do Boards Develop Successful Business Practices In Nonprofit Organizations?

By: Eugene Fram    

Every nonprofit needs a business plan to implement marketing, financial, human resources, etc. activities. The goal of the nonprofit business plan is to maximize the achievement of the organization’s mission within existing resources.

Strong service and business practices should be the hallmarks of any nonprofit board that effectively focuses on four business factors: 

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6 Approaches to Innovation for Nonprofit Boards

6 Approaches to Innovation for Nonprofit Boards

By Eugene Fram                    

The Bridgespan Group, supported by The Rockefeller Foundation,  completed an exciting research study. The results identified “six elements common to nonprofits with a high capacity to innovate” * Following are some suggestion how to implement these elements.

  1.  Catalytic Leadership that empowers staff to solve problems that matter. This involves the board to lead with committed and generative leadership. **  Board members must be ready to ask tough questions. They must require management to respond to the classic question, “Who would miss the nonprofit if it were to disappear?” Board members should be able to suggest new ideas drawn from business and the public sector that can be adapted, assessed and tested by management and staff
  2. A curious culture, where staff looks beyond their day-to day obligation, questions assumptions, and constructively challenge each other’s thinking as well as the status quo. This, in my view is difficult to achieve, but boards should attempt to take every advantage to develop it. Boards that question the status quo are hard to find in all fields. They should, at the least, involve the staff in strategic planning efforts and pay close attention to its development. Staffs then are in an excellent position to challenge the status quo. One staff person in a human services agency, for example, challenged the status quo by observing the nonprofit did not have a “safety net” mission, but in reality had a “sustainability” mission. The agency was not only helping clients on a day-to-day basis but also was trying to assist them to achieve sustainable lifestyles.
  3. Diverse teams with different backgrounds, experiences, attitudes and capabilities—the feed-stock for growing an organization’s capacity to generate breakthrough ideas.

As the Bridgespan Group has noted, it is necessary to have board members, “who are diverse across their dimensions: demographics, cognitive and intellectual abilities and styles with professional skills and experiences. In my opinion, nonprofits have been successful in recruiting board members in all of these categories except two—cognitive and intellectual abilities. I have encountered nonprofit boards without a single director with strategic planning or visionary abilities. Board members’ full time occupations often do not require them to have these abilities. As a result, strategic planning was just a SWAT (strengths, weakness and threats) review without any real analytical depth. To rectify the situation, nonprofits need to add these abilities to their recruitment grids. Unfortunately, this makes the recruiting effort more difficult since the abilities don’t appear on many resumes. Candidates must be assessed from an in-depth interview process.

  1. Porous boundarieswiden the scope for innovations, by allowing fresh ideas to peculate up from staff at any level—as well as constituents and other outside voices—and seep through silos.

Because many nonprofits have small travel budgets, they may operate in “bubbles, ” consisting of themselves and similar neighboring organizations. In addition, they can acculturate board members to the “bubble” traditions and environments.   For example, they may ask a new board member, with strong financial abilities to help the CFO with accounting issues, instead of asking her/h to develop a strategic financial plan for the organization. Perhaps as national webinars become more available to nonprofit managements and their staffs, these information flows will help to change the innovation roadblocks. Then they can, “generate new ideas systematically, test ideas using articulated criteria, metrics methodologies and prioritize and scale the highest potential ideas.”

  1. Idea Pathways that provide structure and processes for identifying, testing and transforming promising concepts into needle-moving solutions. For example, the process of Lean Management can allow testing of new ideas quickly. Instead of waiting for a new strategic plan to establish a pathway for something new, a nonprofit can test it with a series of small-scale efforts to determine its viability. The idea can be dropped if positive results are not developed after a couple of tests.   If after successive tests with viable information results, the idea can be moved quickly to an implementation stage when the nonprofit has the necessary resources.
  2. The ready resources—funding, time, training and tools—vital to supporting innovation work. To fully take advantage of most of these six innovation guidelines, fundraising is critical. But each board and staff cannot do it alone. It must be a partnership between the board members and the CEO that recognizes fundraising for innovation is a necessary part of the nonprofit’s resourcing efforts.

*https://ssir.org/articles/entry/is_your_nonprofit_built_for_sustained_innovation

**https://journals.co.za/doi/abs/10.10520/EJC-967dbda2e

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

A Nonprofit Board Has A Problem With A Recently Hired CEO – What To Do?

A Nonprofit Board Has A Problem With A Recently Hired CEO – What To Do?
By: Eugene Fram.         

With some possible variations, is the following scenario one that is frequently repeated elsewhere?

• The nonprofit board had engaged, Joe, an experienced ED.  The prior ED had been in place for 25 years, and was evidently unwilling to move to meet changing client needs. For example, the agency only offered counseling services five days a week, 9 am to 5pm, with hours extended to 8 pm on Thursday night. There were no client options for emergency calls during nights or during weekends.


• Joe had been in place for about 6 months making some changes, evidently in an authoritarian manner. The board heard about the staff’s dissatisfaction with Joe’s management style, met with Joe and the staff together and decided to leave Joe in place. It was assumed that he and the staff were capable of healing the rift.
• However, three outside forces then came in to play. First, a trade union heard about the staff’s dissatisfaction and assigned a recruiter to enroll the professional staff as a chapter of the union to bargain for wages, benefits and working conditions. (The union already had a local governmentally supported human services unit as a member chapter.) Second, the agency was a very old one, and a group of community leaders, fearing this problem would cause the demise of the agency formed an unrequested advisory group called, “Friends of ABC.” Third, the United Way gave the agency 6 months to provide evidence that the problems were subsiding, or it was going to substantially reduce, the large portion of the agency’s budget it provided.
• Joe’s management style did not change. He was terminated with a six-month pay package in order to avoid a legal suit.
 A ED/CEO then was fortunately hired, who was well known in the community, was an experienced social worker, and had union negotiating experience.
• The professional staff decided to join the union.
• The new ED/CEO remained at the helm of the agency for 25 year, bringing innovation and change. However, the professional staff remained in a union chapter. Mistrust was hard to breach.

This is a case with which I was involved as a board member. Based on your nonprofit board experiences, to what extent have you noted a similar pattern?

• A nonprofit board misjudges the requirements for filling the chief executive position.
• Organizational discord becomes a problem.
• The board is slow in taking action, by trying to give the new ED time to resolve the problem.
• The board then terminates the chief executive for failing to meet objectives or because there is still substantial organizational discord.
• Groups in the community become involved in the organization’s internal problems.
• The ED/CEO is fired.
• A ED brings change, but there is still a feeling of mistrust that permeates the communications of the agency for decades.  The union continues to be the bargaining spokesperson for the professional staff, long after most staff members involved with the situation have retired  or taken other positions