Two Nonprofits Merge: Synergy or Collision Course?
By: Eugene Fram
Having led a merger committee that resulted in a successful merger with another nonprofit, I thought my field observations might be of interest to others contemplating a merger. These comments center on a merger of two equal partners, which plan to form a new organization, not the acquisition of one nonprofit by another.
Assuming both organizations have merger committees that meet frequently, over an extended time period, the following initial issues need to be reviewed:
• Are the mission, vision and values of both organizations the same or sufficiently similar? • Are there any financial issues that might cloud the negotiations? • Do the two merger committees work well together and view each other positively as potential colleagues? • Are both groups willing to invest the board time and financial resources to bring about a melding of the two groups? • Are there any factions in either of the two organizations that might be emotionally opposed to the merger? • What, at this early stage, might be some barriers (“deal breakers”) to the merger? • What needs to be done to move the merger process forward and to develop an implementation plan, if both boards agree to the merger? • How will the impact of the merger be determined and at what intervals will it be measured? • In the event that either or both organizations are dissatisfied with the merger, what specific detail need to be specified in a “prenuptial” breakup agreement? • How will the CEO of the merged organization be determined? This will have to be decided amicably • How can morale of both organizations be maintained during merger discussions? What incentives need to be developed to maintain those who will certainly need a new job, e.g. CFO?
The Devil Is In The Details – Are These “Deal Breakers?” • Consider various stakeholders who might be impacted by the merger. (These can include: community leaders, managers, staff, funders, vendors media, etc.) How can consensus be achieved? • Where will the new nonprofit be physically located? What are the real estates implications? • The combination will probably require layoffs and new reporting arrangements. How will these be decided? • How will the new board be constituted? Will a larger new board be necessary? If not, what is the plan for paring down the size of the new board. • What legal counsel will be needed and at what costs? Will foundation support be needed to establish the merger? • What systems or interpersonal relationships are necessary to avoid “surprises” before or after the merger?
Never Underestimate the Importance of Culture The failure of the AOL-Time Warner merger has become a classic example of the failure of the two cultures to blend into a new culture. I have observed that blending two nonprofit organizations will certainly encounter cultural “bumps in the road,” starting about six months after the merger and can continue for several years. Although the mission, vision and values of both groups may be identical, culturally inspired blips can arise from differences in which previous boards operated, from expectations of the CEO, from staff differences, etc. However, they do take time, persistence and board leadership to resolve.
Any merger will have its own specific imprint. However, I hope that the guidelines cited above will be helpful in navigating the rough shoals that frequently appear after the honeymoon period.
Is Your Nonprofit’s Strategy Only Stating Ambitions Rather Than Solving Problems?
By: Eugene Fram
McKinsey & Company in a recent article interviewing author and academic Richard Remelt discusses this strategy question for business organizations.* Following is my estimation how the article’s information might be applied to the nuances encountered in nonprofit strategy development.
Strategy Results
In evaluating strategies, nonprofit boards often only use the easier to measure results, for examples, membership size and financial ratios.
But progress for nonprofits often also must be measured in qualitative formats. “Not being able to afford the time and money to develop excellent qualitative metrics (e.g., enhanced life quality, community commitment), to glean whatever they can from using imperfect metrics.” **
Richard Remelt suggests there is a big difference between strategies developed for actions versus ambitions. My experiences with nonprofit strategy development suggest that many nonprofits focus on ambition rather than the problems to be solved by the next three-year plan. He calls a strategy based on ambition “bad strategy.” “Bad strategy is almost a literary form that uses PowerPoint slides to say, ‘Here is how we will look as a company in three years.’ That is interesting, but it’s not a strategy.”
For nonprofits, his analysis also relates to the difference between program outcomes and program impacts. For example, A human services strategy can have good program outcomes but fail to have client impacts because basic causes aren’t/can’t be addressed.
Board Member Motivation
The median nonprofit board member serves a term ranging from four to six years. In contrast, the average tenure for a public board member is 9.7 years.
Assuming this frequent turnover, the nonprofit director/trustee will only be involved with one strategic planning cycle. Even with a board member highly dedicated to the mission’s objectives, the brief tenure structure can dampen motivations to rigorously participate in strategic planning.
I have seen this evolve frequently, especially when the board approves the performance of a “mind-the-store executive director,” as opposed to an “entrepreneurial” type. Operationally, the former executive director can be described as one seeking stability over innovation. She/h can produce modest income increases with balanced budgets, often supported by substantial legacy financial endowments.
Involving Staff in Strategic Planning and Other Insights
Rumelt suggests limiting the number of persons involved in strategic board planning. For larger nonprofits, this might only include senior and/or division management. For smaller and midsized nonprofits, this might involve management and some professional staff. Organizationally, in these nonprofits, the two groups may be only one or two levels apart.
Ask simple questions like: “If our organization were to disappear, who would miss us?” “If we were to establish a new agency, who among the staff, would we take with us?”
“Boards may not need strategy committees, but they just need a sense of best practice, just as ..(accountants).. have well-established best practice in accounting:” I agree that nonprofit boards do not need a standing strategy committee. The development and maintenance of the strategic plan is the joint responsibility of the CEO and Board Chair. Together they can use a simple maintenance device by relating most problem-solving efforts, generated in nonprofit board meetings to the strategic plan.
Over decades of service on nonprofit boards, I have interfaced with board colleagues who possess a variety of performance styles and behaviors. Certain of these types seem to be common to all boards. My comments below are based on adaptations of a board membberclassification system suggested by David Frankel, Partner of Founder Collection. *
The Eager Beaver
This board member (30s to early 40s) has probably been successful as an entrepreneur or is, perhaps, rapidly rising through middle management in a larger organization. He/she wants to “get things done”. His/her impatience with the typically slow nonprofit rate of progress can be channeled and directed by the CEO or Board Chair. Discouraged by lack of action, this director may quietly exit the board on the pretext that work pressures have increase. On the other hand, if properly nurtured, this category can offer substantial leadership contributions.
The Checked-Out Check Writer
Serving on a nonprofit board has likely become a family or company tradition for some directors. (Some local nonprofits are now about 100 years old or older.) Regardless of the person’s dedication to the mission, nonprofit board service becomes part of this board member’s DNA. Often they develop into respected leaders and can be conduits to modest or substantial donations. In addition, they have access to interpersonal networks that are useful in recruiting other able board members. This cohort should be valued and their contributions, and acknowledged.
The Vanilla Director
This is a director who attends meetings regularly, occasionally makes an interesting comment. He/she is dedicated to the mission of the organization and can make substantial financial or other contributions. One such director I observed, volunteered to assist the staff with a difficult field problem. According to Frankel, these directors are “less critical and offer encouragement…. ” However, like many other nonprofit board members, across behavioral types, avoid rigorous discussions at board meetings. If substantial conflict appears between factions of the board on a major issue, they may resign instead of taking an unpopular stand.
The Nonprofit Entrepreneur
This is a board member who has a substantial understanding of the nonprofit sector. He/s has served on other nonprofit boards and is dedicated to the nonprofit’s mission. He/s has a desire to help move the nonprofit to its next level of service to clients. He/s often brings bold or different perspectives to the board and management. She/h knows that to achieve growth and improve client services, it is necessary to “sell” ideas to other board members, as well as the CEO. It’s important that the nonprofit entrepreneur and CEO are on the same page in terms of the organization’s future and potential to serve clients. If not, the CEO, unfortunately, may view the entrepreneur with his/h “fast track” style as a disrupter.
An overview of nonprofit boards tends to focus on the unique set of skills and work experience they bring to the table (doctors, professors, accountants, full-time homemakers etc.) A closer look at the board suggests another layer of classification i.e. individual styles, motivation and behaviors. Herein is challenge and opportunity to develop meaningful board experiences for each individual who has said “yes” to the call to service.*
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.
More Than Passion Needed in Prospective Nonprofit Directors
By: Eugene Fram
What nonprofit selection committee would reject a candidate who demonstrates passion for the organization’s mission? I can attest to the fact that in many recruitment processes, an interviewee who shows strong empathy for the cause is a “shoe-in” for a board position regardless of any obvious weakness in skill areas. By contrast, one who appears less than passionate about the organization’s mission can be overlooked or even eliminated from the list.
Being emotionally overly attached to the organization’s cultural tradition can also trump objectivity when a change in board format is proposed. I once interfaced with a board member who was so attached to his organization’s cultural norms he attempted to block moves towards a more efficient but more formal operational mode, protesting the changes would erode what he thought to be the nonprofit’s sense of family.
Founders’ Syndrome: A sense of ownership resides in some long-term board members that can lead to poor decisions that are in the best interest of the organization. Founders of nonprofits, for example, often fail to delegate operational authority properly while they are building the nonprofit. Many even try to retain micromanaging control as a board member after their retirement. This results in continual board crises and has the potential of eroding all the accomplishments of the organization. Alignment with the mission is always desirable in board members.
Following are some tactics that will help boards to:
Become More Entrepreneurial: Nonprofit boards can hesitant to develop an entrepreneurial management environment when they are dependent on governmental funding. However on an oversight basis, boards need to make certain opportunities are being evaluated by management.
Some board members may fear being charged with misusing these types of funds when entrepreneurial efforts fail. But progress in the 21st century requires small experimentation. It allows the nonprofit to examine new systems, ideas, and understandings. Committed board members can help the CEO to seek additional funding to support these types of activities. For example, I encountered an insurance agent who I can describe as having some passion for the agency’s mission. But he energetically raised funds by using his knowledge of promoting insurance products. He later moved to chairing the board of a major health foundation that was very successful in meeting its objectives.
Become More Effective in Strategic Planning: I have frequently noted nonprofit strategic planning that is entirely based on a simple SWOT analysis—simply listing strengths, weaknesses, opportunities and threats without analysis critically reviewing them. Many nonprofits, such as human service and health organizations recruit their board members from different career backgrounds and are not willing to question or research changes suggested by peers. Two board members, I observed wanted a nonprofit to use an Management by Objectives process. Without any due diligence, the nonprofit adopted a process that was so complex that the staff was over burdened with writing and reviewing objectives that client service levels declined.
Recruit More Effective Board Members: Add to the traditional nonprofit skills grid several career dimensions to recruit, many of whom may be described as being merely empathetic about the mission: 1. Seek recently retired people, both those traditionally retired and those who retired early, who may have time to be candidates for both governing and consulting with boards. 2. Seek individual contributors who may have more control of their time, such as doctors, lawyers, professors and small business owners. 3. Seek successful entrepreneurs who can schedule their own time, can resonate with the organization’s mission, vision and values and who want to give back to the community. 4. Beyond the time requirement, seek persons with experience on profit or nonprofit boards so they can share their board knowledge and become models for those having their first board experience. Their questions and behaviors can teach as much or more than formal seminars.
There is no doubt that passion for a nonprofit’s cause drives action. But how that passion is framed–with what degree of respect and objectivity it is presented–can advance or disrupt the organization.
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:
I have conducted nonprofit board recruitment projects. The boards with which I worked had rather similar challenges
.• They had concerns recruiting sufficient numbers of board members to fill their needs.
• Current board members, largely composed of younger people, in the 30-40-age range, had significant problems balancing work and family obligations and attending board and committee meetings.
• Attendance was sporadic. Although the boards were small, members really did not know each other. Another board member sent a work subordinate to attend board meetings. In anopther case, a nationally known board member never attended meeting and only occasionally met with the ED to offer advice. One one board member with decades of board experience admitted she did not know other members. The EDs and board chairs had significant power. One ED complained she was doing the work of operating the organization and operating the board, and She had too much potential liability.
• Although these organizations, with budgets in the $8-$10 million range were operating successfully, the EDs involved realized that they were in line for long-term problems if board recruiting didn’t change.
What to Do
• Consider establishing two boards, a board for governance and a consulting board. For the governance board, make certain the typical directors in the 30-40 year age range they have a good understanding of their work-family obligation to be able to devote time for the organization
.• For the consulting board, ask volunteers to work on projects that have a defined time limit. They will not be asked to be involved in more than one or two projects per year, an ideal inducement for millennials who are used to short bursts of activities. It may be necessary to recruit several persons with the same skills to provide coverage for several projects.
• Keep communications flowing to the consulting board like one would to the governing board. Have occasional social and educational events that allow the groups to meet informally. If the organization has a volunteer manager, this person should be charged to keep the communications flowing. Members of the consultingboard will only have occasional contact with the organizatio
• Overlay the traditional nonprofit skills grid with several time dimensions to recruit for both types of boards:
1. Recently retired people, both those traditionally retired and those who retired early, who may have time to be candidates for both the governing and consulting boards.
2. Seek individual contributors who may have more control of their time, such as doctors, lawyers, professors and small business owners.
3. Seek successful entrepreneurs who can schedule their own time, can resonate with the organization’s mission, vision and values and who want to give back to the community.
4.Beyond the time requirement, seek persons with experience on profit or nonprofit boards so they can share their board knowledge and become models for those having their first board experience. Their questions and behaviors can teach as much or more than formal new board seminars.
Summary:The traditional nonprofit board skills grid can still be helpful in the 21st century. However it needs to be extended to lifestyle and behavioral information for each board candidate, such as experiences with strategy development and critical thinking abilities. A more time consuming practice.
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 