Developing nonpofit management trust

Nonprofit Boards Can Drive Organizational Innovation & New Strategic Directions

Nonprofit Boards Can Drive Organizational Innovation & New Strategic Directions

Recently, Marla Capoozzi, Senior innovation Expert at McKinsey Company, provided some guidelines to assist business directors to help drive organizational innovations and lead to new long term strategic planning.* Following are my suggestions how nonprofit boards can adapt her guidelines.

1. Have a Defined mission A mission statement guides most nonprofits. However, few if any, have innovation as an inherent part of that statement. For example, a counseling nonprofit will want its staff to work with the latest treatment modalities. But few boards will want their staffs to actively seek ways to improve on these modalities. Budget constraints, related to staff costs, interfere. However talented staff members may develop new innovative practices within the confines of regular contacts with clients. These can lead to new strategic directions. To drive innovation, boards will need to stay on message to management and staff that innovation is desired outcome to support the mission statement. (more…)

Management Expectations of the Board – The Nonprofit Story – Part II

Management Expectations of the Board – The Nonprofit Story – Part II

I am indebted to Dr. Richard Leblanc of York University for the action headings used in this blog. The blog uses headings developed by Dr. Leblanc for his blog: “What a Board Expects from Management, and What Management Expects from a Board, January 27, 2013, York University Governance Gateway Blog. (rleblanc.apps01.yorku.ca) For reading simplicity, Dr. Leblanc’s specific quotations, which can apply to either FP or NFP boards, are noted in italics.

1. Candor
The board should speak with one voice and not send mixed messages to management (and staff when dealing with nonprofits). Nonprofit boards are usually composed of people with widely diverse backgrounds, as compared with for-profit ones. (more…)

Bridging Effectiveness Gaps in Nonprofit Organizations

Bridging Effectiveness Gaps in Nonprofit Organizations*

By: Eugene Fram

Like for-profit boards, nonprofit, “Effective board oversight demands information that is as current and relevant as possible. There are, however, natural gaps between what management communicates and what the board needs to know. “ The purpose of this blog is to highlight major gap areas, cited in the NACD report listed below, and to show their relations to nonprofit governance. (more…)

Enhance New Directors’ On-boarding Orientations: Give Copies of Reader Friendly “Policy Vs. Paper Clips” (2011)

Enhance New Nonprofit Directors’ On-boarding Orientations: Give Copies of Reader Friendly “Policy Vs. Paper Clips” (2011)

By it at a Discount Price

What To Do About Weak Nonprofit Board Practices – Reissued based on viewer interrest.

What To Do About Weak Nonprofit Board Practices

By Eugene Fram

Peter Rinn, Breakthrough Solutions Group, recently published a list of weak nonprofit board practice. * Following are some of the items listed and my estimation of what can be done about them, based on my experiences as a nonprofit board director, board chair and consultant. (more…)

Once Again: How to Keep a Nonprofit Board Informed – Reissued based on viewer interest.

Once Again: How to Keep a Nonprofit Board Informed.

By: Eugene Fram

At high-performing nonprofit boards, members of the board will rarely be invited by the CEO to participate in operational decisions. Yet the board still needs to know that is going on in operations.

The name of the game is for the CEO to communicate the important information to board members and to keep them informed of significant developments. Still, there’s no need to clutter regular board meetings by reporting endless details about operations. (more…)

Critiquing My Blog: “All Nonprofit’s are a Business – Need to be Run Like a Business”

Critiquing My Blog: “All Nonprofit’s are a Business – Need to be Run Like a Business”

By: Eugene Fram

I encountered a torrent of comments from consultants, chief executives and staffers replying to the blog listed above. Following are some abstracts of support and questioning I received:

One could say this is true, if we know what is truth, but one should avoid ALL. … We are called to be faithful, not to be successful. Why do we… avoid all ethical questions? … Granted, one should hope to wind up with excess revenues at year-end but to affirm who you suggest doesn’t appear to be worked through.” Philip S. Wood, CPA.

Sorry I disagree. Many/most nonprofits are aimed at creating social good. To be run like a business means risk – (taking) decisions for the short/near term, based on financial tradeoffs. While I agree nonprofits benefit from excellent leadership, discipline, solid strategy and financial planning, they should be run as nonprofits. Linda Williams

If businesses exist to create and retain customers, then nonprofits exist to create and retain members. I think this could be a good learning for many of the nonprofits I have (encountered). This is terrific, but they cannot do this without capital. The more those inside the nonprofit are motivated by their own sprite of “contribution to the world,” the more they could undermine their ultimate survival. (Companies that focus) inside-out rather than outside in will run into trouble.
Elliott Schreiber

I work for an organization … that (has a) mind-set to a for-profit business, … keeping in mind our core values, mission and vision. …

• A research department … regularly checks to make our programs are successful. We follow clients for two years after receiving services.
• Though measuring programs, … our donors have confidence is what we do and we have expanded contacts in the community.
• Our strategy department ensures that expansion will not drain resources from other areas.
• Our direct service employees are results oriented and goal focused.
• Also we take our employees very seriously. We would hate to expand, hire people or have our staff relocate and then havet o close up shop one year later.
• We are more mission focused – we are fiscally solvent, jobs are not in danger and have the numbers to prove that what we do works. Catherine Hayley

My Reactions

Philip: You hit the nail on the head with you comments about “ALL.” I concede the adjective was not well placed. However, some businesses also have a mission or creed to generate social good, like Ben & Jerry’s Ice Cream. However, if you examine the product that emanates from the firm, one can easily view it as creating obesity. Businesses and nonprofits must be judged on their missions and how they execute them.
I would take Ben & Jerry’s over a commercial call center that says its mission is to help charities, but then takes, as fees, 75% of the money donated. Or it might be a nonprofit that gives excess benefits to its management. (The IRS now has become a watchdog over these giveaways.)

Linda: Some businesses also have a double bottom line. For example utility companies have to please their stakeholders and meet utility commission regulations. Unfortunately, the term “being run like a nonprofit has become a negative term and only a high senior nonprofit mangers, who execute the functions you listed at a effective and efficient levels, will contribute to improving the situation.

Elliott: In my opinion you are correct. Nonprofit strategic plans should always have a section showing the estimated economic impact of what is projected. For an example, according to Cynthia Montgomery, a Harvard business professor, a nonprofit hospital whose mission is to “save lives” will not succeed long term if it does not “save lives efficiently and effectively.”

Catherine: I just want to join the chorus of people who commented how fortunate you are to work with an organization with a structure that makes such impacts.
It really shows that many nonprofits need to move towards a business model.

As one other respondent stated, nonprofits in the 21st century need to be “SMART i.e., Sympathetic, Malleable, Active, Realistic and Timely.

Nonprofit Board Responsibilty for Social Media – What Needs To Be Done?

Nonprofit Board Responsibility Social Media – What Needs To Be Done?

By: Eugene Fram

Nonprofit boards, for several years, have been struggling to find proper uses for social media. Many of the decisions on this issue will become strategic board decisions because they will require using alternative promotional strategies, experimental trials and infusion of capital and human resources. The December 8, 2012 issue of the NACD Directorship* cites a Stanford study concludes for-profit boards should develop a better understanding of this new phenomenon. Following are how I think the steps should be applied to smaller and medium sized nonprofit board decisions: (more…)

A Nonprofit Board Has A Problem With A Recently Hired CEO – What To Do?

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, as President/CEO of human services counseling agency. 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. (more…)

Nonprofit Innovation: What Can Barbers Teach Nonprofits?

Nonprofit Innovation: What Can Barbers Teach Nonprofits?

By: Eugene H. Fram

Reading several different blogs comments on nonprofit innovation reminded me of a story I tell my marketing. Here is a brief abstract: When men started to wear their hair longer in the 1980s, two classes oh barbers responded. One class cursed the change, while they became innovative stylists. In the area in which I was living, during the 80s, the number of barbers dropped from 1,000 to 300.

Seth Godin, the famous marketer, thinks that nonprofits have a charter to be innovators. But they aren’t he states in a recent blog. “The thing about most cause/welfare non-profits is that they haven’t figured out how to solve the problem they’re working on (yet). … Too many don’t have a method for getting to the root cause of the problem and creating permanent change.” He than suggests that some nonprofits should, “Go fail. And then fail again. Nonprofit failure is rare, which means that non-profit innovation is too rare as well. Innovators understand that their job is to fail, repeatedly, until they don’t. ”

Comments to a recent BoardSource exchange on innovation had the following reactions:
• Nonprofit founders are focused on specific goals and never go beyond them.
• Decision makers in nonprofits follow the “not invented here” viewpoint and fresh ideas are threatening.
• Many executive directors do not see the “potentially positive role board-level committees (including of non–board members & staff) can play in generating new ides.”

My reaction is that Godin is off base, although I strongly suggest that nonprofits can prosper by adopting the better business practices and vice versa. Few foundations would play “venture capitalist” to nonprofit leaders who have a record of failure. For example, Geoffrey Canada has successfully led the development of the Harlem Children’s Zone. Although the HCZ model is well know, it has yet to be duplicated elsewhere.

The comments from the BoardSource blog have been developed from field experience and remind us that nonprofit innovative leaders are in short supply. The barbers of the 1980s teach us that we must be prepared to innovate when change impacts our field, whether it be style or technological innovation.

But be prepared to think outside of the box. I still go to one barber who cuts my hair, less often, but he still doesn’t work on two heads at a time. Similarly, it is unlikely that marriage counselors will soon be mediating two warring couples at a time, unless some drug company comes up with a pill that enables the counselors to be more innovative.

Nonprofit innovation, as shown by the HCZ project, is very difficult, but it is still very possible in the nonprofit governance arena. For some practical examples, see my blog (http://bit.ly/yfRZpz) & book (http://amzn.to/eu7nQl )
What do others on this exchange see as the state of nonprofit innovation? Is it as dire as indicated by the comments cited above?