How Can A Chief Operating Officer (COO) Advance Your Nonprofit Organization?
By: Eugene Fram Free Digital Image
In my decades of involvement with nonprofit boards, I have encountered several instances in which the CEO has failed to engage the services of a COO–when this addition to the staff was clearly needed. In each case and for whatever reasons, this reluctance to act left the nonprofit organizationally starved.
This means that the CEO continues to handle responsibilities that should have been delegated, some of which a predecessor may had assumed during the start-up stage. I once observed a nonprofit CEO with an annual $30 million budget personally organize and implement the annual board retreat, including physically rearranging tables/materials and cleaning the room after the retreat! When top leadership is deflected in situations at this level, client services and the general health of the organization is likely being negatively impacted.
Nonprofit Boards Should Consider the Implications of Artificial Intelligence (AI)
BY: Eugene Fram Free Digital Image
AI is rapidly being implemented in many environments, some with aggressive intensity. Walmart, for example, will be replacing 7,000 jobs with artificial intelligence powered technology. Foxconn will be replacing 60,000 factory jobs with machines. * While this is a minuscule portion of Walmart’s total employment, it presents a new reality—machines create fascinating outputs that require less energy to produce and do so at lower costs. They are capable of making decisions, regardless of skill level. *
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 directors who are willing and able to network, I suggest the following: *
Board cultures can be difficult to modify or change in for-profit and nonprofits. A recent McKinsey study demonstrated the strength of the board culture in three different levels of board operations—ineffective, complacent and striving. * Differentiated achievement seems to be largely dependent on four behaviors. (See bold type.) Centered on my experiences, they can be applied to nonprofit boards. At the least, the behaviors can motivate considerations for board modifications. (more…)
How Seriously Does Your Nonprofit Board Take the Matter of Ethics?
By Eugene Fram Free Digital Photo
Most board members are aware of their obligation to ensure their nonprofit’s compliance with certain standard regulations e.g. making tax payments, submitting IRS Form 990s and/or avoiding potential fraud. But what I have found missing in the nonprofit environment is a sense of board member responsibility to provide for and sustain a viable ethics program.
What Attributes Qualify a High Performing Nonprofit Board?
By: Eugene Fram Free Digital Image
Every Board—whether for- or non-profit –creates its own organizational “stage.” True, there is an ever-revolving cast of characters and variable props. But as any artistic director will tell you, it’s the quality of the performance that can make or break the perceived value of the production.
On a parallel plane, Russell Reynolds Associates, an international executive search firm, lists six key issues (in bold) that can determine the performance level of a for-profit board. (http://bit.ly/1f5Yt7F) Following are my views on how these questions can be applied to nonprofits. Such information may help directors to assess their own organizational impacts.
Good News for Nonprofit Board Members & CEOs—Examples From The Behvorial Sciences
By Eugene Fram Fee Digital Image
Behavioral economics, finance and marketing apparently are making significant strides in helping nonprofits to understand how to maximize their development efforts. Following are three studies that appear to have significant nonprofit interest.
I happened to read a report from Deloitte Consulting suggesting ways that for-profit organizations can improve their performance in uncertain times. The report centers on key drivers of board effectiveness that, in my opinion, resonate with similar nonprofit situations. * Most nonprofit boards typically live with uncertainty and are perennially “on the edge.”
Conservative leadership: Nonprofit boards are responsible for donor and charitable types of revenues that place directors in a public trust position. In addition board members typically will only be active for a median tenure period of four to six years. As a result they often become overly conservative in their strategic views and may accept CEOs that “mind-the-store” with modest incremental growth annually.
To prevent the organizational boat from capsizing in the perpetual seas of the pandemic and beyond, the board needs to rely on the best forward looking information about strategy, people, culture and clients. All of this must be in solid alignment with a substantial mission, or a modified one if the external environment requires it. This allows the nonprofit to cut through the barriers that impede strategy development.
Opportunities & Strategies: Even when the organization is prospering, the board has a responsibility to press for innovations and to support small-scale experiments as called for in a “Lean Management” structure. Within this structure, the staff can test the waters via experiments to move more boldly, as long as the experiments yield positive results. ** At a minimum, the the board and management, need to focus on near-term planning during the pandemic period. They then need to move to a “north star” approach, with a ten year framework, once the pandemic recedes. This requires management to balance the needs of the various client groups that can call for heartbreaking decisions. For example, should revenues be allocated to marketing or used for client programs?
Match fit: Boards have a responsibility to motivate the nonprofit to realistically evaluate the tensions between new models and existing ones, for example between face-to-face meetings and virtual ones. It is already clear the virtual format has caught the attentions of nonprofits. If nonprofits plan to rely on virtual meeting to a significant extent, board and managements will need to improve their technologies, presentations and develop better ways for participants to become involved in discussions.
Culture, culture, and culture: As Peter Drucker has noted, “Culture eats strategy for breakfast every morning,” Nonprofit boards’ cultures play a key role in determining the level of risk the board is willing to take. With key drivers, nonprofit boards will have to take reasonable risks to survive the impacts of the pandemic, and work with management to take some crafted entrepreneurial risks. It now appears that fund raising, for example, will emphasize greater focus on major donors, and board members will need to provide more time and effort
Diversity and inclusion: Board diversity is a well established need. Inclusion not only means differences by demographics but recruiting new board members and maximizing the best they have to offer. Nonprofit boards traditionally try to acculturate new board members to the current culture instead of maximizing their potentials. For example, a person with financial strategy and accounting backgrounds will be asked to work with the CFO on accounting related problems because this has been the prior process. Instead, he/s should be asked to develop a long term-term financial plan. This should be more meaningful work for the new board member and of significant benefit to the organization.
Meeting format: For the thousands of nonprofits that have had to suddenly change meeting format from face-to-face to a virtual format, it is time to consider what is best for the organization post-Covid. Can the board, management and staff be productive working from home? Will a virtual-face-to-face process be acceptable in terms of productivity and client satisfaction? How can productivity be assessed under the virtual format?
Curiosity is Key: To keep a nonprofit sustainable in the long term beyond the pandemic, Deloitte Consulting concludes, “Directors should get out of the ‘same old’ board room, and should even look across borders to learn from approaches in (different nonprofits) and companies… . Developing news skills and insights are essential for innovation and should be sought to create the questioning and challenging environment needed to imagine, inspire and deliver better outcomes (and impacts). Complacency (in uncertain times) can be a killer.”*
How Do Nonprofit Boards Keep Stakeholders Engaged?
By: Eugene Fram Free Digital Photo
First, exactly who are the “stakeholders” in the nonprofit environment? Most board members would readily define the term as clients, staff, donors and board members. But what about other participants such as external auditors and significant vendors? Surely a nonprofit that depends on a vendor to supply groceries can be hobbled if the food is not delivered properly. And, last but not least, the backbone of the organization — the volunteers! Many cogs in the wheel make the nonprofit world go around and need consistent and careful attention. Following are some guidelines for engaging all types of stakeholders:
Don’t marginalize, dismiss, or ignore a stakeholder: Unfortunately, for example, termed-out board members * are often dismissed in more than one sense of the word. After serving the typical tenure of four to six years, the retired board members may only receive boilerplate materials or fund solicitations. Any residual interest or enthusiasm for the nonprofit is not encouraged unless the retiree initiates a desire to remain connected. The assumption is that the past board members are content with the disconnect.
For those board members who have been active participants during their term, this tactic may actually be counterproductive from many points of view—talent, expertise and development possibilities. I have observed several cases in which this unintended marginalization has resulted in losing substantial financial support and needed talent. In each case, the retirees have declined to help, using the excuse that they have been too far away from the activities of the organization. Boards must be creative in finding ways of reigniting the former directors’ commitment to the organization’s mission. This can be accomplished in a variety of ways—in an advisory capacity, forming “alumni” groups and/or by including them in social events and other occasions.
Recognize who may be a true partner: Such a partner can range from a vendor that has supplied the organization or a volunteer whose interests have moved to another nonprofit to a legacy board member who has developed new insights. “It is generally easier to build consensus, request help and engender trust when those who support you are well-informed, candidly and truthfully.” **
Stakeholders must know about the nonprofit’s challenges and needs: Even the best-managed nonprofits have their ups and downs. During the latter periods, educating stakeholders about the issues can help to dissuade some to avoid posting job cuts and other actions.
Self–perpetuating boards can became insular and lose touch with other stakeholders: “These boards tend to retreat into a silo-or bunker-mentality that only serves to intensify bad habits and practices, as well as preclude consideration of other perspectives.” ** At difficult times, the board can tend to lose trust in the ED even when the problem is beyond the EDs control. If the board is at fault, it may look for a scapegoat on which to hang the root cause of the problem, often people in senior management.
How Do Nonprofit Boards Keep Stakeholders Engaged?
By: Eugene Fram Free Digital Photo
First, exactly who are the “stakeholders” in the nonprofit environment? Most directors would readily define the term as clients, staff and board members. But what about other participants such as external auditors and significant vendors? Surely a nonprofit that depends on a vendor to supply groceries can be hobbled if the food is not delivered properly. And, last but not least, the backbone of the organization — the volunteers! Many cogs in the wheel make the nonprofit world go around and need consistent and careful attention. Following are some guidelines for engaging all types of stakeholders: