Non profit outcomes

The Nonprofit CEO Exceeds His/Hers Authority – What Happens Then?

The Nonprofit CEO Exceeds His/Hers Authority –  What Happens Then?

By: Eugene Fram

It happens!  When it does, it’s the board’s job to inform the CEO that he or she has taken on too much authority.  As a board chair of a human service nonprofit, I encountered such a situation. The CEO signed a long-term lease contract on his own that should first have been approved by the board.   The financial obligations involved weren’t significant. <!–more–>  When the CEO recognized his error, I then asked for formal board ratification. None of us does out jobs perfectly.  But a CEO has to recognize  the board’s ultimate authority for long-term contracts and similar issues, even when the financial obligations are insignificant.

I don’t believe you need as much Board-CEO trust in the for-profit world as in the nonprofit world.  In the former, the “bottom Line” can give directors a reasonably clear (not exact) indication of how the CEO is performing.    In the nonprofit world, there is no organizational solid bottom line, except the one that says income must match expenses.  Also of importance, there are many qualitative outcomes, such as community impact, that are not part of the financial statements and must be considered in the evaluation.

Board directors must trust in the ability of the CEO they have selected to do the job, and clearly make the person accountable.  Since there is no complete long-term performance bottom line for many nonprofit organizations, and the costs of obtaining sold qualitative performance metrics is so high, most nonprofits have to rely on imperfect metrics to obtain a semblance of comprehensive long-term performance. *

For a nonprofit organization, it is necessary to hire a president/CEO or executive in whom the board can place a high degree of trust. But along with the trust, the board must ROBUSTLY annually evaluate the CEO and the organization’s performance.

  • See my blog: http://bit.ly/yfRZpz and my 2010 article “Using Imperfect Metrics Well: Tracking Progress and Driving Change.” I can send a copy of the article to those who request it.   eugenefram@yahoo.com

Nonprofit Alert: How Nonprofit Directors Can Acquire Independent Assurances.

Nonprofit Alert: How Nonprofit Directors Can Acquire Independent Assurances.

According to Dr. Richard Leblanc, York University Law School, “Canada’s bank regulators recommended last week that independent third party reviews of (i) of the institution’s board and committee practices; (ii) the institution’s oversight functions and processes.” He and I feel this can set the tone for non-banks and even for nonprofits (more…)

From Mission Specialist to Nonprofit Manager –What Does It Require?

From Mission Specialist to Nonprofit Manager –What Does It Require?

By: Eugene Fram

In over there decades of nonprofit consulting, I have observed a wide range of nonprofit management skills and backgrounds.. One group is interesting because nonprofit boards often appoint mission specialists to executive director or president/CEO of the organization. Those who succeed (more…)

How Nonprofit Board Members/Management Can Make Sense of Sustainability

How Nonprofit Board Members/Management Can Make Sense of Sustainability

By: Eugene Fram

I recently read an article published in April, 2011 issue of the “Nonprofit Quarterly” by Jeanne Bell, titled “Beyond Financial Oversight: Expanding the Board’s Role in the Pursuit of Sustainability.’ I think the suggestions in it will be of interest to nonprofits whose budget expenditures are mainly centered around staff and programs and less on maintaining material & real estate.

First, the article calls (more…)

Using Imperfect Metrics To Evaluate Organizations & The CEO

 

Using Imperfect Metrics to Evaluate Organization and the CEO.

BY: Eugene Fram

At the beginning of the year, the directors conducting the evaluation and the chief executives agree on jointly developed goals and outcome expectations. The full board must ratify the goals, which should be achievable but challenging. Some goals are clearly quantifiable (e.g. membership data, revenues) and readily available.

(more…)