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.
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.
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,
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.
Identify Nonprofit Staff Groups To Help Drive Organizational Change.
By Eugene Fram
Nonprofit executive directors Board Members tend to think of the staff professionals as individual contributors. These individuals are persons who mainly work on their own and increasingly also have to contribute as team players – for instance, counselors, health care professionals, curators and university faculty. However, many executive directors fail to recognize that these individual contributors can be grouped according to identifiable types, with differing work-value outlooks. Each group needs to be motivated differently to drive change in today’s fast moving social, political and technological environments. Nonprofit board members can use these groupings in their responsibilities for overseeing promotable staff members.
From years of observation of a variety of nonprofits the late Robert Pearse, a psychologist, and I have identified four major groups that have been labeled “Nostalgics,” “Maintainers,” “Producers’ and “Builders.” Executive directors and board directors who do not recognize the existence of such groups and the special needs to motivate and evaluate them differently may not achieve the forward motion or the performance goals that are required in the 21st century.
An identifiable group may dominate a department or it may have members in different departments. In many cases, a single group may include professionals with disparate personalities but whose work-value systems are similar.
Meet, for example, Sarah Thomas, a congenial department head who has spent the past decade in a nonprofit trade association, and Jack Engels, a brusque cost accountant in the association’s financial division. Sarah is well liked by the members of her department, while Jack is largely left alone in his work.
On the surface, Sarah and Jack appear to have little in common. Closer observation, however, shows that they are alike in one important aspect. Sarah’s department, which she has headed for the past six years, performs at a satisfactory level. Over the years, Sarah has tended to hire staff professionals who have work-values like her own. They are good – but not outstanding – performers. The group gets regular work done but rarely exhibits creative efforts or critical thinking. A recurring complaint from Sarah and her people is, “The department has too much to do.”
Jack Engels, the brusque accountant, also gets his work done, even though he shows little enthusiasm for his work. It is just a job, and he is averse to any change, except that mandated by accounting requirements.
Both Sarah and Jack are Maintainers, for both are comfortable with the status quo. If the executive director and/or board members were to allow the Maintainers standards to pervade the entire organization’s performance, it would likely stagnate and eventually decline.
Nostalgics are generally easy to recognize because they identify so strongly with the organization’s past history and culture. Many of them tend to be long tenured professionals whose performance has leveled off over time. They tend to take pride in being dedicated to the nonprofit but are uncomfortable with changes they perceive as breaking sharply with tradition.
The following strategies are helpful in working with Nostalgics: • Respond to their need to revere and emotionally relive the past. • Encourage the “willing worker” value system of group members. • Show how proposed changes will perpetuate past glory by contributing to organizational longevity and prominence. • Recognize that Nostalgics lack vision and prefer to avoid direct confrontation about the future direction of the organization.
Maintainers constitute the largest group in virtually all organizations, as illustrated by Jack and Sarah, they are average performers who typically have less tenure but also possess more currently useful skills than Nostalgics. They do only what is required by a job description or implied contract. Although they appreciate having a professional position, they have not internally accepted the self-directed performance behavior one typically associates with being a professional.
Several guidelines are helpful in working with Maintainers. • Be alert to the strong “legacy” value system at work in this professional group-all established processes can be successful in the future. • Depend on group members for low to average productivity but be aware that requests for increased productivity or increased self-management are likely to generate resentment and hostility. • Emphasize the pressures in the organization’s external environment that require professional performance improvement. Indicate how such improvements are important to long-term job security. • Set modest but attainable performance improvement goals on an annual basis. (Note: If a complete turnaround is essential, for the organizational survival, this slow improvement will not be adequate.) • Expect some continuing hostility whenever Maintainers feel new standards put pressure on them for sustained higher performance and commitment.
Producers are a varied collection of highly individual “type-A” workaholics who are motivated by their own goals. They tend to work on their own, but can be useful as team leaders if required for time limited projects. Because work output is the core of their existence, they see few differences between their personal and professional lives, sometimes leading to an unhealthy work-life balance. This can be a larger challenge if work forces are increasingly working from home. Producers will support changes initiated by the executive director that they perceive will enable them to produce more efficiently as individuals.
The executive director can try to motivate Producers’ effectiveness in the following ways:
Channel Producers’ vigorous efforts into organizational priorities by linking Producers’ special interests to the mission and goals of the nonprofit. • To the extent possible, provide Producers with the resources needed to be self-managing and productive. • Wherever possible, remove bureaucratic roadblocks to their productivity. • Agree annually on goals, and let Producers achieve them with a minimum of supervision and with appropriate rewards .
Builders, unlike Producers, are committed to furthering the goals of the organization, even at the expense of his or own personal goals. A senior nurse, who agrees to become an administrator, even though he or she prefers to care for patients, is an example of a Builder. Builders fall into two categories: vague visionaries and organized progressives. The former group’s attention span shifts rapidly from one detail of a proposed change to another. They lack sustained capacity for completing long-term performance improvement. The members of the latter group, organized progressives, are systematic thinkers who think quickly. Once they have a picture in mind, they can provide the executive director with knowledgeable and strong support.
An executive director can motivate the Builder group in the following ways: • Use the vague visionary Builders to help sell others when launching new performance programs. • Explain to organized progressives how their Builder values can contribute to a long-term systematic improvement plan. • Give organized progressives strategic follow-up assignments to ensure the new program will move forward. • Provide Builders with superior performance rewards..
If nonprofits are to continue to serve the nation in the current turbulent difficult time, executive directors and volunteer board members will need to provide strong support to their Builders and Producers and their work-value systems. In addition, they must also motivate the Nostalgic and Maintainer groups, using the suggestions cited above.
We hope this blog will spur board members, executive directors and president/CEOs to identify these four groups in their own organizations. Sources Eugene Fram & Robert Pearse (1991) “The High Performance Nonprofit: A Management Guide for Boards and Executives,” Families International, Milwaukee, Wisconsin. Judith Gordon (1991), “Organizational Behavior: A Diagnostic Approach,” Allyn & Bacon, Boston, pp. 205-207, 742.
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.
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:
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.
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
At coffee a friend serving on a nonprofit board reported plans to resign from the board shortly. His complaints centered on the board’s unwillingness to take critical actions necessary to help the organization grow.
In 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 board member. However, nobody informed the group that in being “nice guys,” they could become legally liable, if somebody became injured as a result of 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 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 executive director/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 directors’ time, especially in relation to family and friends of current directors. 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 board member responsibilities, or are willing to learn about them on the job. This is an important interview question to pose to candidates because it highlights the importance of good governance as a contribution. I have seen a wide variety of volunteer board members, such as ministers and medical personnel, 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.
In the meantime, don’t be afraid to ask naive questions which forces all to question assumptions, as in Why are we doing the particular project? Have we really thought it through and considered other possibilities?
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.
Nonprofit Management 