Beyond the Bylaws: A Clarification of Nonprofit Board Responsibilities
By: Eugene Fram
A nonprofit director’s duties may be much more difficult than those of a for-profit board member. Both types of directors have the same basic duties: fiduciary responsibilities; establishing, with staff input, mission vision and values; setting policies/strategies; over-viewing outcomes/impacts and conducting annual meetings. (more…)
How Seriously Does Your Nonprofit Board Take the Matter of Ethics?
By Eugene Fram
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 director responsibility to provide for and sustain a viable ethics program. (more…)
What Defines the Culture of Your Nonprofit Board?
By: Eugene Fram
The General Motors debacle is fresh in everyone’s minds. A deficit in the company culture was recognized as being responsible for the disaster that resulted in the deaths of 13 people. (more…)
Can A Nonprofit Organization Have A President/CEO & An Executive Director?
By: Eugene H. Fram
Yes, if the organization has the following structure:
Board With A Volunteer Chairperson
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. (more…)
Once Again! 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.
Once Again! Are Three Standing Nonprofit Board Committees Enough?
By: Eugene Fram
Nonprofit boards are often known for the proliferation of board standing committees. Current thinking is to reduce the number substantially. Following is one model, with only three standing committees which has been used by thousands of nonprofit organizations for over 20 years. Ad hoc committees or task forces, are used when needed for investigation of policy decisions and major strategic issues such as changes in pension plans.
Is Your Nonprofit Board Chair Productive?
By: Eugene Fram
Hundreds of articles have probably been published about the skills and abilities nonprofit CEOs need to have to meet the challenges of the nonprofit environment. These include: reduced funding, increased use of technology and increased responsibilities for fundraising.
Relatedly, nonprofit board chairs have been encountering escalating challenges to recruit able board personnel. Current chairs must develop a more active partnership with the CEO in fundraising and lead the board in making difficult financial, technology and other strategy decisions.
To address these challenges, following are the attributes that I think a nonprofit board chair should have to be productive, within the confines of being a volunteer (part-time) chairperson.
• Great Communication Skills: Current issues can be so pressing that chairs will need to be the types of people who don’t limit their board communications to regular meetings. Those who head the board must be in positions to return phone calls or other communications promptly and proactively seek the counsel of directors as needs arise. As a communicator, the chair should listen intently as well as provide outward-bound communications.
• Understands Importance of External Stakeholders: Traditionally chairs have not have much contact with external stakeholders. This is rapidly changing as funders want more assurance about board overview involvement in the grants they award; those providing gifts want more assurance that the intent of donor is being clearly recognized. The chair understands that an organization’s modern stakeholders range broadly from vendors to staff/management to donors. She/h understands that the nonprofit board represents the interests of a community, profession or trade association.
• Manages Board as an Organization: The chair makes certain that all directors understand their roles to overview, to have robust compliant financial and legal processes and to generate civil meeting discussions. He/s is able to abort any board attempts at micromanaging the executive group or staff. Board decisions should be viewed as being democratically developed, even when there is not unanimous agreement.
• Positive Relations With CEO: Mutual respect between the two is the hallmark of the relationship. Differences are settled without rancor, understanding that each role has boundaries – the board has the final word on policy and strategy while, at the same time, the CEO has final authority on operational decisions.
• Acquainted With Technology Basics: Since the use of technology is pervasive, the chair should be able to intelligently lead the board discussions on major technology issues. These currently include the use of the Internet, use of cloud computing and social media. Discussions can range from purchasing technical hardware and software to questions of privacy protection.
• Strategy/Policy Development: The chair has major responsibility to see that these topics are placed on the agendas, and, where approved, are implemented on a timely basis. Over the years, both issues on FP and NFP agendas have not been given the discussion time they deserve. These topics can range from pension reforms to whether or not an organization should have an acquisition/merger strategy.
The challenges facing nonprofits, their CEOs and board chairs have escalated and will likely continue to escalate. The managerial requirements for nonprofit CEOs have risen. But it has not been the same for the board chairs. Although a part-time position, nonprofit boards and their stakeholders should realize that they need to elect people with leadership know-how. They are not necessarily the people who make the largest financial donations. The two can be the same, but nomination committees must be certain that whoever is chosen to preside as board chair has the requisite skills to do so.
What Nonprofit Boards Are Not Doing – But Should! A 2013 Top Post With 681 Viewers!
By Eugene Fram
A recent New York Times article* reports that public company directors are coming under scrutiny this proxy season based on what they are not doing. Based on my experiences with dozens of nonprofit organizations, the litany of complaints cited in the Times article, can easily apply to nonprofits, whether they are professional organizations, trade associations, educational institutions or charitable organizations. (more…)
Are You Recruiting Board Directors With a 21st Century Approach?
By: Eugene Fram
Over the last three years, I have conducted several nonprofit board recruitment projects. The boards with which I worked had rather similar challenges. (more…)
Is Excessive Deference Shown To Nonprofit Boards?
By: Eugene Fram
Expectations of volunteers serving on a nonprofit board are often thought to be lower than necessary. Paul T. Hogan, Executive VP of the John R. Oislei Foundation, recently agreed with this position,
Because board members…are volunteering, their time to serve on a board, there is a tremendous hesitancy to ask them…to devote additional time, (especially for learning.) … Respect them enough to teach them what they’ll need to know to (fully) contribute (what they have to offer)*
Hogan’s point is a good one. Management and staff’s continued deference ** to the board can lead to an unhealthy power equilibrium that can weaken the organization’s performance.
Here are some thoughts on the challenges involved:
• The Board-Management Compact: Nonprofit CEOs and staff often feel that they have to defer to boards for various reasons.*** They can view the board as possessing ultimate powers, and its members having unusual insights because of their working positions. Many nonprofit managers, however, have much more management experiences than board members who work as independent contributors such as professors, physicians, attorneys and accountants. Also just because a board member works for a large complex commercial or nonprofit organization doesn’t mean he or she has had management education, experiences or has acquired the strategic know-how necessary to contribute to a state-of-art NFP board.
Excessive deference to the board can, in turn, lead board directors to passively accept lower performance standards, especially when it is a nonprofit with a human service mission, as Hogan has noted. (In some instances, CEOs even prefer this arrangement! It reduces their responsibilities, as a number with whom I have had contact, have openly admitted.) From my decades of experience as a nonprofit director and consultant, I have seen the development of an unwritten compact between nonprofit boards and managements, with each tolerating minimal performance from the other. Where subtly or overtly present, these compacts need to be eliminated in the 21st century. The organization needs a relationship between the two that provides an equal partnership, with a clear trust and respect for the differences in the required roles.
Directors’ Learning:
• Volunteer Time: Currently Baby Boomers and Millennials are the two age groups from which board candidates are being selected. Except for the leading edge of Baby Boomers, now beginning to retire, both cohorts have time-restricted schedules in terms of work-family obligations. Asking them for more time to formally learn about the nonprofit through traditional orientation sessions or classes, in my opinion, has a little potential to develop long-term learning.
There are alternatives that can be adopted. One is to first make certain that the board has a subgroup of directors with experiences in strategy development, management assessment, governance processes and the field of the organization’s mission. Then ask the “veterans” to become informal mentors for newly appointed directors.
Example: Ask these mentors to meet informally, or by phone, with the neophytes to review, for example, governance obligations for due diligence other important issues. (In some cases, the CEO, CFO or other senior managers can become mentors.) After a year, proactively schedule a series of brief convenient conferences or conference calls to enable the new directors to pose unanswered questions and make certain all are reasonably acquired the knowledge needed to effectively contribute. This shouldn’t be an unreasonable task, if about three to four new directors are elected each year.
• Teachable Moments: During the course of board meeting or committee meetings, issues can arise on which new directors may have little background. It should be the obligation for the board chair or committee chairs, prior to or after the meeting, to make certain that new directors are properly briefed in a non-judgmental manner on these issues.
Recently, I encountered a nonprofit board where the board chair, an experienced senior business executive devoted to the organization’s mission, privately complained that there was no one on the board who understood strategy development. The board was largely composed of millennials stressed with work-family obligations. They completed specific helpful time-limited projects in professional manners but just couldn’t find time to become involved in the essences of board responsibilities. Board turnover was high. In my opinion, it was a compact-type situation where the board performance was low, but the staff met goals that might have been higher.
Obviously the board needed a better balance with experienced directors having time to act as mentors for these busy millennials and to eventually eliminate the culture of deference to the board, its strong chair and to eventually form a true partnership culture between board, management and staff.
*Paul T. Hogan (2014), “Boards Cannot Be Sacred, Staffs Cannot Be Saints, and Founders Should Never Be Martyrs,” Nonprofit Newswire, May 20th.
**Hogan referred to the board as being “sacred.” I consider that to be excessive “deference.”
*** Compacts between students and faculty also have been reported in university settings, under which faculty require modest educational rigor in exchange for students providing their class room instructors with superior teaching ratings. See: Richard Arum & Josipa Roksa,(2011)Academically Adrift, Chicago, The University of Chicago Press p.5.
Nonprofit Management 