Strategic planning

How Can Nonprofits Accommodate To External Influences? Some Field Observations

 

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How Can Nonprofits Accommodate To External Influences? Some Field Observations

By Eugene Fram       Free Digital Image

Ruth McCambridge, editor of Nonprofit Quarterly, points out “Our organizational management, (board) styles and structures are affected by the four external influences.” See paraphrased bolded items below. (http://bit.ly/1HSwrZY) Following are some specific field observations I have encountered that, over several decades, support her model relating to external influences.

The nonprofit’s mission field: McCambridge points out that arts organizations have dual have leadership models—artistic and business. However, unless specified which has final authority, the system can lead to continual conflict between the two; the artistic leader wanting the most authentic productions and the business leader concerned with budget realities. The final authority is often determined by which leader has the CEO title. (more…)

Are Your Nonprofit’s CEO Succession Plans COVID Updated?

Are Your Nonprofit’s CEO Succession Plans COVID Updated?

By:Eugene Fram          Free Digital Image

“CEO succession planning is one of the most important responsibilities of a (nonprofit) board…”  * Yet others and I find it to be a neglected responsibly.  In the for-profit arena, a mistake in choosing the wrong CEO, “leads to a loss of $1.7 billion in shareholder value in addition to a loss of organizational confidence and momentum.“ * Choosing the wrong nonprofit CEO in a situation when I was a board member set in motion a year of staff turmoil, lost growth potentials, decline in the nonprofits reputation and an uncalculated financial loss.  After a post-turmoil CEO took the helm, the agency prospered for more than twenty-five years.

Based on a national study of for-profit boards, following are some COVID-19 CEO succession questions that nonprofit board members should consider now. *

Is our emergency successor still right for this environment?  Is the internal successor capable of managing under turmoil conditions?  If not, a new external person needs to be contacted.  Often this turns out to be a consultant in the mission field.  It’s important to reevaluate all external options now for the CEO’s ability to manage under unprecedented conditions.

Is our CEO role specification still right?  Over several decades, I have encountered a number of what I would call, “mind-the-store” CEOs.  These persons have: nice personalities, keep expenses within budgeted incomes, but are not proactive in seeking innovation and change.  Unfortunately, these types of CEOs can satisfy their boards for decades under what might have been considered normal circumstances.

Because CEOs have a better grasp of current mission-related trends, boards and CEOs should be planning for the Post-COVID 19 period, even while addressing unusual operational challenges.

Do we have the right people in our near-term succession pipeline– are they prepared?  The selection of the CEO is the only employment decision that nonprofit boards make.  But they are also required to overview the near-term staff succession pipeline for those with very special talents.  For many nonprofit boards, this involves an uncomfortable discussion of who might be in line to succeed the CEO or other senior managers should any become temporarily incapacitated.

Is your board ready and able to have these discussions?  Under current tenure requirements, the average tenure for nonprofit board members centers around six years—two six-year terms or three two-year terms. As a result of this brief tenure, many board members may feel that simply raising the question of CEO succession suggests a lack of the CEO’s abilities to manage It also may cause board conflict, if suggested.  However, it is simply the members’ due diligence responsibility and, if ignored, can cause strategic problems for the organization.

First Steps: * 

·      Review your leadership/experiential criteria.  The abilities a nonprofit CEO will need may change substantially.  Working with the CEO, nonprofit boards need to take the lead in surfacing these criteria, for example, better understanding of IT requirements.

·      Ensure that your emergency (succession) plan is more than just a single name on an envelope. It’s a good idea to have a process ready for an unplanned exit by the CEO.  But CEO experience criteria should be reviewed in depth every two years to be current.

·      Do now what you normally would put off for later.  Start listing the criteria that a CEO will need to operate successfully Post COVID -19.  It will enable the board to consider the changes taking place. Also the CEO can have some guideposts on how his/h abilities need to be enhanced.

* https://corpgov.law.harvard.edu/2020/07/26/ceo-succession-plans-in-a-crisis-era/

 

Can A Nonprofit Organization Have An Operational President/CEO & An Executive Director?

Can A Nonprofit Organization Have An Operational President/CEO & An Executive Director?

By: Eugene H. Fram

Yes, if the organization has the following structure:

Board With A Volunteer Chairperson
Full-time President/CEO With Full Authority for Operations
Executive Director for Division A
Executive Director for Division B

However this structure can be confusing to persons in the nonprofit arena. The executive director should have final authority for all operational matters related to the organization, except those designated for the board in the bylaws. For example, pensions plan changes.

The big question is who carries the CEO title. Some nonprofits, in their early stages, have a volunteer, part-time, President/CEO and an operational Executive Director. This signifies the volunteer, representing the will of the board, can have final authority in implementing board operational policies/strategies. This is not a good structure because the CEO title might lead to the volunteer having liabilities that other board members don’t have. (more…)

Questions For Nonprofit Board Meetings—And Why They Are Needed 

Questions For Nonprofit Board Meetings—And Why They Are Needed 

My greatest strength as a consultant is to be ignorant and ask a few questions. – Peter Drucker 

 

By: Eugene Fram 

Knowing the right questions to ask at a nonprofit board meeting is a critical part of a board member’s responsibility. Following is a list that, as a nonprofit director, I want to keep handy at meetings. * I also will suggest why I think each is important in the nonprofit environment. Compliance and overviewing management alone do not guarantee success.   (more…)

Developing A Sustainable Nonprofit–Post Covid-19

 

Developing A Sustainable Nonprofit–Post Covid-19

By: Eugene Fram         Free Digital Image

An analysis of the current pandemic environment should be a clarion call for nonprofit board members. It can be summarized in a couple of sentences:

Great crises tend to bring profound social changes, …. . We seem to be at another point when society will make adjustment for good or ill. * 

As nonprofit board members or managers, are you ready to identify and confront these adjustments as they already have developed or will challenge your nonprofit within the next 10 years? Hopefully, a large portion of nonprofit boards will accept the challenge and begin strategic planning for the post Covid 19 period now!   (more…)

Nonprofit Board Discourse: a Meeting of the Minds??

Nonprofit Board Discourse: a Meeting of the Minds??

By: Eugene Fram        Free Digital Image

Several years ago, a nonprofit board member complained to me that there was too little “conflict” at board meetings. Too few hands were raised to challenge or simply question the efficacy of certain important agenda items. Having participated in hundreds of nonprofit meetings, I have observed that this laissez-faire response still typifies a significant number of board member’s attitudes, especially for items that deserve vigorous discussion. Why is that? And why can the term conflict be  perceived as an asset to an organization that is determined to move forward?

Below are some answers based on my own experienced in the nonprofit environment. (more…)

What Nonprofits Can Do To Maintain Liquidity

 

What Nonprofits Can Do To Maintain Liquidity

By: Eugene Fram    Free Digital Image

It doesn’t take a pandemic to make a nonprofit question its capacity to survive. Events such as a loss of major funding, a damaged reputation, huge unpredicted expenses could swiftly reduce the lifeblood of the organization, plunging the nonprofit into deep concern for its long-term survival.

Any nonprofit CEO has the data to predict how long the organization can stay afloat without income. This, however, would be only one rough measure of the nonprofit’s liquidity. Board members need to take the discussion further. They need to realistically appraise total liquidly from fixed/variable expenses and income venues as they relate to mission accomplishment. (more…)

Business Board Experts Offer Nonprofit Board Gems!!

   

By: Eugene Fram                                  Free Digital Image

The wise person learns from his/h own experiences. The wiser person learns from the experiences of others

The CEO Forum published an article covering the governance views of five business board members, known for their wisdom and vision.   Following are some of topics in the article that relate to nonprofit boards. *

Good governance is dependent upon well-curated boards. This means that nonprofit boards must look beyond the functional competencies (e.g. accounting, marketing, law, etc.) for candidates. Within these groupings, they need to seek candidates who have strategic outlooks, are comfortable with critical thinking and have documented leadership skills.   This requires recruiting and vetting efforts that go well beyond the friends, neighbors and colleagues who traditionally have been the sources for board positions. Also related is the issue of board succession, since that many will leave the board after a four to six year period. The current board(s) has an obligation to make rigorous recruiting and vetting become part of the nonprofit’s culture.

Assessing long-term sustainability. In the past, nonprofits have projected longevity because there will always be a need for the services or products they provide. This is no longer an assured proposition. Nonprofit day care centers now must compete with those that are for-profit. Improvements in medication have decreased the need for individual counseling and many new technologies can quickly solve problems that are embedded in the nonprofit’s mission.

Review governance best practices carefully! Know who is suggesting them and make certain they are appropriate for a specific organization. For example, some experts suggest that executive committees should be eliminated. However an executive committee that is responsible for a slim board committee structure can be effective in driving change and promoting better communications throughout the organization. **

Changing public accounting firms. Nonprofit accounting practice suggests changing public accounting firms about every five years. However one expert suggests, “It is important to ensure that judgment areas such as nonGAAP disclosures are well-defined, supporting calculations are well-documented and that the definitions and calculations are consistent across reporting periods.” At times of accounting firm change, nonprofit board members need to be able to add these issues to their question that they pose to management.

Ethics & Compliance. Like business organizations, nonprofits are subject to significant lapses in ethics and compliance. One study of  nonprofit fraud found that it 46% involved multiple perpetrators.  ***  As shown in the recent Wells Fargo debacle, establishing the tone for rigorous applications of a standard needs to start with the board and flow through all management levels. In the current environment, audit committees have to be especially alert and take immediate actions when red flags arise in either the ethics and/or compliance areas.   In my opinion, a nonprofit audit committee that meets only once or twice a year is not doing the necessary job.

Strategy. The nonprofit board has an obligation to help management see “around the next corner.” This involves board members assessing coming trends and sparking civil and meaningful board and committee discussions.

Board member comfort zones. Like their business counterparts, few nonprofit board members are “comfortable testing how to rock the norms.” It is easier to acculturate new directors to the current norms, a process that is inward bound and self-defeating. But a start can be initiated with questions such as, “If we were to start a new nonprofit across the street, what would it look like and who of the present board and a staff members would we ask to join us?

*https://www.forbes.com/sites/robertreiss/2017/05/22/americas-five-governance-experts-share-perspective-on-boards/#2a2ee326659a    

**For documentation see: https://goo.gl/QEL8x3

***https://nonprofitquarterly.org/nonprofit-fraud-its-a-people-problem-so-combat-it-with-governance/

 

The Fantasy Nonprofit—Who Works There?

The Fantasy Nonprofit—Who Works There?

By: Eugene Fram                               Free Digital Photo

After three decades of immersion in the nonprofit culture, I occasionally allow myself to imagine what it would be like to start all over again. Assuming I were in the process of founding a new nonprofit I would have the authority to choose my own team! In this hypothetical, I could shape the mode of governance and select the participants I think would interface most effectively!

Here are some of the decisions I might make based on current realities:  (more…)

Nonprofit Board Disruption—A Board Member’s Reflections

 

Nonprofit Board Disruption—A Board Member’s Reflections

By: Eugene Fram

 

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

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

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

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

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