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Policy vs. Paper Clips

How Can Nonprofit Boards More Clearly Define Operational Responsibilities? Revised & Updated

How Can Nonprofit Boards More Clearly Define Operational Responsibilities? Revised & Updated

By Eugene Fram

My experience shows that well functioning nonprofit boards establish and monitor the organization’s policies. The board operates through the president/CEO. In turn, the CEO executes policy and is responsible for the prudent and creative operations of the organization. In this role, the CEO exercises leadership resulting in the effective and efficient use of board and of other volunteer time.

Although defining what are policy issues and what are operation issues is not always clear, for both for-profit and nonprofit organizations, following is a useful set of guidelines (more…)

Building The Autonomous Nonprofit Board

Building The Autonomous Nonprofit Board

By Eugene Fram

I recently came upon a current article about building an autonomous business board. * Some of the suggestions in the article, I think, can be applied to NFP boards. The overall viewpoint in the article is summarized as follows, but it is modified to be useful for NFP boards:

Simply adopting the right policies and complying with the rules can no longer achieve good nonprofit governance. As increased scrutiny of the board’s mission imperatives (for example, via IRS 990 Forms) intensifies, both directors and management must be willing to respect the boundaries that define their exclusive roles while working together to ensure that their actions support the goals of the nonprofit and its various stakeholders. (more…)

Why Are Dysfuctional Nonprofit Boards Interesting? Revised/Updated

Why Are Dysfunctional Nonprofit Boards Interesting?

By: Eugene H. Fram

My blog (http://bit.ly/yfRZpz) has been drawing an unusual number of views related to dysfunctional nonprofit boards.  Is it because:

  • Nonprofit evaluations have become a prime media interest?
  • Dodd-Frank passage has alerted a greater number of nonprofits to really review their charters?  
  • More boards have found board problems arising as a result of reviewing the expanded 990-form section on governance?
  • More audit committees are being given expanded responsibilities?  

Can a nonprofit organization focus on its mission vision and values if it has a dysfunctional nonprofit board?  I have seen this accomplished in situations where the CEO is managerially oriented and can live with the board’s problems or foibles.  For example, one nonprofit I encountered had an eleven person board, four of which never attended meetings and several others were sometimes absent for personal reasons.  Meeting minutes clearly showed a focus on operational detail. However a strong CEO was able to focus well, and the organization prospered. On the other hand,the CEO openly complained that she was overworked, needed board assistance and could become a “dictator” for the nonprofit!!

In another situation I encountered, the board chair and ED were very strong, but the board governmentally weak. Work and family pressures constrained the time directors could devote to their governance responsibilities. While the organization performed reasonably well, performance problems and board liability issues might arise, if either the chair or ED retired or resigned.
 

If you have any other insights as to why I am getting so many views related to dysfunctional nonprofits, I and other viewers would be delighted to have your comments.

 

 

 

 

Nonprofit CEO: Board Peer – Not A Powerhouse

Nonprofit CEO: Board Peer – Not A Powerhouse

By: Eugene Fram

Some nonprofit CEOs make a fetish out of describing their boards and/or board chairs as their “bosses.” Others, for example, can see the description, as a parent-child relationship by funders. The parent, the board, may be strong, but can the child, the CEO, implement a grant or donation? Some CEOs openly like to perpetuate this type of relationship because when bad decisions come to roost, they can use the old refrain: the board made me do it.

My preference is that the board-CEO relationship be a partnership among peers focusing on achieving desired outcomes and impacts for the nonprofit. (I, with others, would make and have made CEOs, who deserve the position, voting members of their boards!)

There are many precedents for a nonprofit CEO to become a peer board member, some without voting rights, some with full voting rights. One nonprofit group is university presidents, where shared governance with faculty bodies can be the norm. For example, when General Eisenhower became president of Columbia, he referred to the faculty in an initial presentation as “Columbia employees.” Later a senior faculty member informed him “With all due respect, the faculty is the university.”

Another nonprofit group is hospitals where the CEO may also be or has been the chief medical officer. The level of medical expertise needed to lead requires that a peer relationship be developed. Also if the hospital CEO is a management person, he and the chief medical officer must have a peer relationship, which extends to the board.

Hallmarks of a Peer Relationship
• The CEO values the board trust assigned him/her, and carefully guards against the board receiving surprise announcements.
• The board avoids any attempts to micromanage, a natural tendency for many nonprofit boards.
• When a board member works on a specific operating project, it is clearly understood that he is accountable to the CEO for results.
• The CEO has board authority to borrow money for short term emergency needs
• The CEO understands need for executive sessions without his/her presence.
• The CEO understands the need for robust assessment processes to allow the board to meet its overview duties.
• Both board and CEO are alert to potential conflicts of interest which may occurs.
• Both value civil discussion when disagreements occur.
• The board realizes that nobody does his/her job perfectly, and it does not react to occasional CEO modest misjudgments.

Summary
Elevating a nonprofit CEO to a status of board peer does not automatically make the CEO a powerhouse. The board legally can terminate the CEO at will. However, in my opinion, the following benefits can accrue to the organization.

The peer relationship help will:

• Help the organization to build a desirable public brand,
• Allow a capable person to interface with the media.
• Define a role for the CEO to lead in fundraising.
• Allow the organization to hire better qualified personnel.
• Allow the organization to present a strong management environment to funders. After all, top people readily communicate with people in similar positions.

What Does Nonprofit Board Oversight Mean? Revised/Updated

Once Again! What Does Nonprofit Board Oversight Mean?

Every week, three or four nonprofit case stories surface in the meida related to inadequate oversight by nonprofit boards of directors. Many of the cases result six or seven figure dollar losses to the nonprofits. Following is my personal list of what reasonable board oversight means to attempt to help nonprofit boards of directors to avoid such losses.

  • At least half the board should be able to analyze the monthly or quarterly financial statements. Have voluntary information sessions available for those who do not have the skills. (more…)

Can a 9-Year Tenure Promote Nonprofit Director Effectiveness?

Can a 9-Year Tenure Promote Nonprofit Director Effectiveness?
Milestone:This blog-post is number 200, since late 2011, for my blog-site. Like this blog-post, I have attempted to show how board practice and research from other areas might help nonprofits to achieve better mission outcomes and impacts. In other posts, I have attempted commented on traditional issues, such as is the board or CEO primarily responsible for fundraising? That blog-post went viral on the Internet abut 10 days ago and continues to go viral today. Thanks to all who added their insights and experiences to my comments.

By: Eugene Fram

Having served on two nonprofit boards for a period of ten consecutive years, I was interested to read a current study of the optimal tenure for business board directors. The business study found that a director’s effectiveness peaked at nine years, after which it falls off.* If a parallel study were to be run with nonprofits, what conclusions might be drawn given that the usual nonprofit board tenure is two three-year terms? What, if any, might be the impact on nonprofits by extending directors’ term of office? Although there are differences in their missions, nonprofit and for-profit boards should be able learn from each other., (more…)

The NonProfit Overhead Myth – Devil in the Details

A frank discussion of the overhead myth may impact the very survival of nonprofits. Article in the September-October issue of Nonprofit World?

Click to access V310509.pdf

When Nonprofit Missions Get Muddled

When Nonprofit Missions Get Muddled

By: Eugene Fram

It happens over time. A passionately conceived mission starts to drift from its original intentions. Stakeholders begin to view a nonprofit’s purposes from a different angle. There is a discrepancy between how the organization is committed to act and external perceptions of its current actions. Nonprofit boards need to be on the alert to such misalignments that can go unnoticed in the perceptual “fog” of daily challenges. (more…)

Who in a nonprofit organization is responsible for fund-raising? Should the CEO follow or lead the board? Updated/Revised

Who in a nonprofit organization is responsible for fund-raising? Should the CEO follow or lead the board?

By Eugene Fram

The CEO is the advance guard when it comes to fund-raising. First and foremost, he/she has to be alert to all places where the CEO can raise funds on his/her own initiative. (more…)

A Nonprofit Board’s Most Important Job!

A Nonprofit Board’s Most Important Job!

By: Eugene Fram

Many people believe as I do that a nonprofit board’s job is to find the best possible person to act as CEO of the organization, then stand back and let that person manage. If your board is in agreement, here are guidelines for action: (more…)