Developing nonpofit management trust

Once Again! Should a Nonprofit CEO Be a Voting Member of the Board of Directors?

Once Again! Should a Nonprofit CEO Be a Voting Member of the Board of Directors?

   By:  Eugene Fram         Free Digital image

BoardSource, a professional governance organization, reports that this question is one of the most frequently asked. Google reports eighteen million+ citations related to the issue or related issues. The question continues to be debated, and the need for comment and opinion seems insatiable.

But here are the issues as I see them:

State Legislation: Most nonprofit charters are issued by states, and it appears that the vast majority of American nonprofits are governed by these regulations. California does not permit the CEO to be a voting member. Until a recent change, New York did allow the CEO to become a board member. The motivations behind the legislation center on preventing a CEO developing conflicts-of interest, especially as they relate to salary decisions. Also, there is a feeling among some nonprofit directors that the board must be the “boss.” This attitude can even go as far as one nonprofit board member’s comment: “We have a real board, we tell the CEO exactly what to do.”

It appears that the restriction is considered a “best practice.” Some nonprofits move around it by naming the CEO an ex-official member of the board, a member without a vote. However, there is a “better practice,” available where permitted by legislation.

Developing An Even Better Practice in a Nonprofit

Start At The Top: Allow the CEO to hold the title of President/CEO and allow the senior volunteer to become Board Chair. This signals to staff and public that the board has full faith in the CEO as a professional manager. In addition, the change absolves the senior volunteer of potential financial liability, not unlike the volunteer who unwittingly received a $200,000 bill from the IRS because it appeared he had strong control of a bankrupt nonprofit’s finances and operations.

Ask The CEO: Make certain the CEO is willing and able to accept full responsibility for operations. Not all CEOs, designated as Executive Directors, want the increased responsibilities attached to such a title and to become a board member. These managers frequently feel comfortable with having the board micromanage operations and often openly discuss their reservations.

The CEO Becomes A Communications Nexus: Under the CEO’s guidance, board-staff contact takes place on task forces, strategic planning projects, at board orientations and at organization celebrations. It openly discourages the staff making “end runs” to board members, not a small problem in community-focused nonprofits

Brand Image: As a board director, the CEO can be more active in fund development. The board position and the title can easily help the CEO to build the organization’s public brand image through the clear public perceptions of the board’s choice to lead the organization. This provides leverage to make greater use of the board-CEO relationship required to develop funds. It can allow the CEO to be the spokesperson for the organization’s mission and to quickly become the center for public statements when a crisis develops.

Peer Not Powerhouse: Probably descending from early religious nonprofits, its personnel may be seen by part of the public as not being “worldly.” They must be over-viewed by a group of laypersons that encounters the real world daily. The CEO, as a voting member and a board team peer, takes on increasing importance to reducing these attitudes. As long as the CEO works successfully as a peer not a powerhouse, there should be substantial benefits to the organization.

 

 

 

 

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Nonprofit Board Recruitment: Can Google’s Process Apply to NFPs?

 

Nonprofit Board Recruitment: Can Google’s Process Apply to NFPs?

By: Eugene Fram                Free Digital Image

Following are Google’s hiring attributes that might be helpful to consider, if applied to nonprofit board recruitment as well as employee recruitment. * Nonprofits should especially consider them for board recruitment. Although nonprofits traditionally use an attribute matrix emphasizing skills such as finance, marketing and accounting, here are some others to consider. (more…)

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…)

Anticipating Tomorrow’s Nonprofit Crises Today

Anticipating Tomorrow’s Nonprofit Crises Today

By: Eugene Fram

In the decades in which I have been a nonprofit/business board member or consultant, I fortunately have only been in the mire of a crisis situation twice.   In both cases, the board was totally unprepared to take appropriate actions to minimize the turmoil that followed.

Following some guidelines that nonprofit boards can use to plan to respond effectively to crises in the 21st century: * (more…)

Nonprofit Chief Executives Should Have Title: President/CEO, Updated and Expanded

Nonprofit Chief Executives Should Have Title: President/CEO, Updated and Expanded

By Eugene Fram

This post, over several years, has developed a record of continued viewing interest. Rarely a day passes with the post’s count isn’t one to five views. On a recent day  there were 18 views.  Since originally published in 2013 , this post has had a  total of  about 1400 views. The  year-to-date August 2017 total is 508  views and counting, predicting another record year   Perhaps the controversial nature of topic causes the longevity of interest?

When nonprofit organizations reach a budget level of over $1 million and have about 10 staff members it is time to offer the chief operating officer the title of PRESIDENT/CEO. In addition, the title of the senior board volunteer should become CHAIRPERSON OF THE BOARD, and the title of EXECUTIVE DIRECTOR needs to be eliminated. Experience has shown that with a reasonably talented PRESIDENT/CEO at the helm, he/she can provide the following benefits: (more…)

Are Nonprofit Boards Capable of Evaluating Themselves?

Are Nonprofit Boards Capable of Evaluating Themselves?

By: Eugene Fram

A recent study of business boards by Stanford University yielded the following results:

  • Only one-third (36%) of board members surveyed believe their company does a very good job of accurately assessing the performance of individual directors.
  • Almost half (46%) believe their boards tolerate dissent.
  • Nearly three quarters of directors (74%) agree that board directors allow personal or past experiences to dominate their perspective.
  • And, perhaps most significant, the typical director believes that at least one fellow director should be removed from the board because the individual is not effective. *

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? (more…)

Business Board Experts Offer Nonprofit Board Gems!!

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. * (more…)

Wanted: Nonprofit CEOs with Entrepreneurial People Skills

Wanted: Nonprofit CEOs with Entrepreneurial People Skills

By: Eugene Fram      Free Digital Image

Viewer Favorite—Revised and Updated

The need for superior leadership skills is as critical to CEOs in nonprofits as it is in the entrepreneurial world. * Following are four such skills and the unique challenges they bring when employed in the nonprofit environment. (more…)

A Nonprofit Board’s Best Friend: A Robust Business Plan

A Nonprofit Board’s Best Friend: A Robust Business Plan

By Eugene Fram            Free Digital mage

Viewer Favorite—Updated and Revised

In 2014 after a 70-year run and a terminal struggle to keep it alive, the 70-years old New York Opera declared bankruptcy. At the time, Anthony Tommasini noted critic for The New York Times summarily commented, “In short, artistic excellence isn’t enough.” Mayor Bloomberg, observed that the opera’s “business model doesn’t seem to work.” *

The opera’s demise is a classic reminder that all nonprofits, even those offering quality services, need to do deep-dive reviews of their business plans every three to five years. Following are some alternatives that can be developed if changes are needed. (more…)

Beyond the Bylaws: A Clarification of Nonprofit Board Responsibilities

 

Beyond the Bylaws: A Clarification of Nonprofit Board Responsibilities

Viewer Favorite–Revised and Updated

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.

I suggest nonprofit directors may not be fully addressing some duties specified in the bylaws and some that are culturally driven. This latter group might be called “latent duties.” (more…)