Nonprofit outcomes

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.

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.

Board Members:  Are Your Managers & Staffs Effectively Engaging Business Donors?

Board Members:  Are Your Managers & Staffs Effectively Engaging Business Donors?

By: Eugene Fram          Free Digital Image

Fund development should be a partnership between board members and CEOs/Development Officers, if the latter is available. However, I have noted that board members don’t take sufficient responsibility to make certain that CEOs and Development directors are well prepared when they approach potential business donors. This, in my view, is the first step in building a relationship fundraising approach. Many involved with NFP fundraising or management have spent their entire careers in the nonprofit environment, resulting in a gap in communicating with those in the business environment.*  Some may even privately believe that those in business contribute less significantly to society.  While little can be done about the latter, here is what I think can be done to fill or reduce the unfortunate gap in cultures often found between for-profits and nonprofits, especially when it relates to fund development.

Homework: Development officers, executive directors and others meeting potential business donor have an obligation to know a great deal about the potential donor’s firm. The worst opening for those seeking a business donation or grant is, “Tell me about what XXX produces.” It appears the solicitor has no interest in the environment in which the firm operates. In the Internet age, there is no excuse for such lapses. A Google or LinkedIn search is also critical in preparing to understand each of the persons who might be involved in initial contacts.

With this information, a conversation can be appropriately opened with “How’s business been recently?” It can be followed by a discussion of the donor’s industry trends and challenges, establishing a level of comfort for the donor.

What can your nonprofit do for the donor? Sophisticated development officers have ways of asking this important question. Some examples: (1) In the case of a university, this may range from suggesting capable entry-level employees for the firm to answering personal questions such as guidance on seek a relative’s admission to a selective university. (2) In the case of a nonprofit whose mission to assist qualified persons to find locate new employment, its work can be related to the firm when the firm has significant layoffs.

A Business Posture: A development officer or executive director needs to convey they have grounding in the business world and its basics, especially to be able to quickly show that their nonprofit is well managed. A recent study of Silicon Valley donors and nonprofit leaders cited a  empathy gap between the two.  Generally speaking, nonprofit leaders and new philanthropists don’t move in the same social circles. For the latter, community is increasingly defined not by physical place but by socioeconomic class: a particular psychographic and a set of shared experiences that only wealth can buy.*

The objective is to develop a continuing conversation with the donor related to his/h business interests and outlook. This offers a connection to show that the nonprofit fulfills a human service, professional or social need. These may include:

  • Explaining the scope of the “executive director” title directly or indirectly if the operating CEO does have the well-known title “president/CEO.” The ED title puzzles many in the business environment, since the top operational person in a business firm most often is the “president/CEO.” ** 
  • Showing the nonprofit has a viable mission that is being carefully shepherded and the organization doesn’t engage in mission creep. 
  • Clarifying that an achievable business plan is available.
  • Having a well managed internal structure that can achieve impacts for clients. (Like the results of the Zuckerberg gift to Newark schools, many business people are aware that process goals can be achieved without having client impacts.)

Unfortunately nonprofit organizations can have a reputation among members of the business community as being less effective and efficient than for-profit ones. These people may not have encountered many local nonprofit leaders, as I have, with significant management savvy. Consequently, nonprofit representatives first  need to be sure they begin their relationships with donors by showing interest in their business, industry, or firm. This then offers the opportunity to demonstrate that the nonprofit’s mission is managerially strong and looks to impacts, not processes, as measures of success.

*https://www.linkedin.com/pulse/key-trends-silicon-valley-philanthropy-tatiana-fedorova/

**https://non-profit-management-dr-fram.com/2010/05/31/non-profit-governance-executive-title-ceo-versus-executive-director/

Measuring Nonprofits’ Impacts: A Necessary Process for the 21st Century

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?

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

 

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

By Eugene Fram                  Free Digital image

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 many formats to achieve this goal, the best, in my opinion, is what has been described as a customized format.

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When a CEO Exits (or should)—what are the Board’s Succession Options?

When a CEO Exits (or should)—what are the Board’s Succession Options?

By Eugene Fram                  Free Digital Image

CEOs of for-profit and nonprofit organizations typically come and go. Those executives that remain in place for an extended period may be highly valued for their demonstrated skills and accomplishments. One CEO I know has reached a 30 year anniversary and is still innovating. Other CEOs, including organization founders, may remain on the job past the point of growth. The nonprofit environment can be a comfortable workplace—a board member I once interviewed remarked that his long-serving CEO had a great “deal.” He meant the nonprofit wasn’t even close to its potential   I’ve even encountered CEOs who admit that they can run the organization on automatic, convinced that new challenges will be similar to those of the past.

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Measuring Nonprofits’ Impacts: A Necessary Process for the 21st Century

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…)

The Outside Advisory Board: Boon or Bother to Nonprofit CEOs?

The Outside Advisory Board: Boon or Bother to Nonprofit CEOs?

By: Eugene Fram.             Free Digital Image

I have established or served on a number of nonprofit outside advisory boards. As a result I strongly recommend their usefulness to nonprofit CEOs. The counsel provided by a group of unaffiliated members of the community or industry will, in my opinion, complement the existing board, helping to deliver services or products to clients with greater effect. The objective of assembling such a body would be to seek advice and expertise regarding a current major project or issue and/or to provide ongoing support and guidance to the CEO. Advisory board members have no legal responsibilities, nor have authority to require the elected board or staff to act on its advice. However, when advice is not followed, the CEO has a professional responsibility to show how the suggestions were seriously considered and to carefully report on what had transpired in making the decision process. Too many useful volunteers become disillusioned with advisory committees when this step is omitted.

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Nonprofit Boardroom Elephants and the ‘Nice Guy’ Syndrome: A Complex Problem

 

Nonprofit Boardroom Elephants and the ‘Nice Guy’ Syndrome: A Complex Problem

By: Eugene Fram            Free Digital Photo

Revised viewer favorite post

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 term had another year to go, and the board had a bylaws obligation to summarily remove him from the board. However, a majority of directors decided such action would hurt the director’s feelings. They were unwittingly accepting the “nice-guy” approach in place of taking professional action.

In another instance the board refused to sue a local contractor who did not perform as agreed. The “elephant” was that the board didn’t think that legally challenging a local person was appropriate, an issue raised by an influential director. However, nobody informed the group that in being “nice guys,” they could become legally liable, if somebody became injured as a result of the inferior work and their inaction.

Over the years, I have observed many boards with elephants around that have caused significant problems to a nonprofit organization. Some include:

• Selecting a board chair on the basis of personal appearance and personality instead of managerial and organizational competence. Be certain to vet the experience and potential of board candidates carefully. Beside working background (accounting, marketing, human resources, etc.), seek harder to define characteristics such as leadership, critical thinking ability, and position flexibility.

• Failure to delegate sufficient managerial responsibility to the CEO because the board has enjoyed micromanagement activities for decades. To make a change, make certain new board members recognize the problem, and they eventually are willing to take action to alleviate the problem. Example: One board refused to share its latest strategic plan with it newly appointed ED.

• Engaging a weak local CEO because the board wanted to avoid moving expenses. Be certain that local candidates are vetted as carefully as others and that costs of relocation are not the prime reason for their selection.

• Be certain that the board is not “rubber-stamping” proposals of a strong board member or CEO. Where major failures occur, be certain that the board or outside counsel determines the causes by conducting a postmortem analysis.

* Retaining an ED who is only focusing on the status quo and “minding the store.” The internal accounting systems, human resources and results are all more than adequate. But they are far below what can be done for clients if current and/or potential resources were creatively employed.

* A substantial portion of the board is not reasonably familiar with fund accounting or able to recognize financial “red flags.” Example: One CFO kept delaying the submission of an accounting accounts aging report for over a year. He was carrying as substantial number of noncollectable accounts as an asset. It required the nonprofit to hire high-priced forensic accountants to straighten out the mess. The CEO & CFO were fired, but the board that was also to be blamed for being “nice guys,” and it remained in place. If the organization has gone bankrupt, I would guess that the secretary-of-state would have summarily removed part or all of the board, a reputation loss for all. The board has an obligation to assure stakeholders that the CFO’s knowledge is up to date and to make certain the CEO takes action on obvious “red flags”.

* Inadequate vetting processes that take less board members’ time, especially in relation to family and friends of current board members. Example: Accepting a single reference check, such as comments from the candidate’s spouse. This actually happened, and the nominations committee made light of the action.

What can be done about the elephant in the boardroom?

Unfortunately, there is no silver bullet to use, no pun intended! These types of circumstances seem to be in the DNA of volunteers who traditionally avoid any form of conflict, which will impinge upon their personal time or cause conflict with other board members. A cultural change is required to recruit board members who understand their responsibilities, or are willing to learn about them on the job. I have seen a wide variety of directors such, as ministers and social workers, successfully meet the challenges related to this type of the board learning. Most importantly, never underestimate the power of culture when major changes are being considered. As Peter Drucker noted, “Culture can eat strategy for breakfast.”

In the meantime, don’t be afraid to ask naive question which forces all to question assumptions, as in Why are we really taking this action? Have we really thought it through and considered other possibilities? http://bit.ly/1eNKgtw

Board  members need to have passion for the organization’s mission. However, they also need to have the prudence to help the nonprofit board perform with professionalism.

Raising The Bar For Nonprofit Involvement

 

Raising The Bar For Nonprofit Involvement

By Eugene Fram                            Free Digital Image

It’s no secret that some nonprofit board members cruise through their term of board service with minimal involvement. McKinsey Company, a well-known consulting firm, has suggested five steps that can be used to counteract this passivity in for-profit boards. * With a few tweaks, McKinsey suggestions (in bold) are relevant to the nonprofit board environment where director engagement is often a challenge.

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