nonprofit boards

Do Nonprofit Board and For-Profit Boards Face Similar Major Challenges?

Do Nonprofit Board and For-Profit Boards Face Similar Major Challenges?

By: Eugene Fram

The answer is Yes! Although the nonprofit’s objective is to develop maximum impact for its mission, while the business organization wants to maximize shareholder returns, a listing of current major challenges by Deloitte Touche Tomatsu indicates the two types of boards face similar challenges*

1. Overseeing enterprise risk management
Many nonprofits facing reductions in financial support must make heartbreaking choices between focusing on financially viable programs and dropping needed programs. Fraud is a continuing concern for nonprofit directors, both from a reputational standpoint and potential personal liabilities. Developing new competitive services and products continues to be a top priority for business concerns.

2. Focusing on executive compensation programs and related regulations
Regulators and media outlets are focusing on outsized salaries for some top managers in both nonprofit and for-profit organizations, especially where nonprofit and commercial organizations are in the same field, e.g., health care. Increased governance attention to the expanded IRS form 990 and to the Intermediate Sanctions Act, covering granting illegal excess benefits, are challenges for nonprofit boards. I have noted that many volunteer directors and nonprofit executives are unaware of the latter piece of legislation.

3. Ensuring corporate strategy will achieve long-term value creation
Numerous nonprofit and for-profit reports indicate both type of boards need to focus more on strategic planning. Both types of boards are wrestling with the problems of making investment decisions about emerging technologies.

4. Addressing heightened levels of shareholder (stakeholder) activism
Nonprofit stakeholders, such as foundations, are expecting grantees to show impact results for their financial grants. Both types of boards are expected to respond to environmental and business sustainability concerns, whether they be forest conservation or child obesity.

Conclusion: A board is a board is a board … The Major Challenges Are The Same!!
* Deloitte Touche, Tomatsu (2014) “Selected Challenges for Boards of Directors in the Current Environment”

Is Your Nonprofit Forward Focused or A Prisoner of the Past?

Governance arguably suffers most … when boards spend too much time looking in the rear view mirror and not enough scanning the road ahead. *
It has been my experience that nonprofits rarely address the possibilities and perils of “…the road ahead.” …. Here are some “prompts” that might guide nonprofit board members and CEOs as they attempt to provide leadership in this important but often neglected area:
http://www.huffingtonpost.com/eugene-fram/is-your-nonprofit-forward_b_5101415.html

Is Your Nonprofit Strategically Deprived? Updated & Revised

Is Your Nonprofit Strategically Deprived? Updated & Revised

By: Eugene Fram

A vital concern to the future of any nonprofit organization is frequently neglected. Responsibility for the lack of strategic planning must reside with the chief executive, board members and the tactical challenges that inevitably flow to the board.

Before a nonprofit board can begin successful strategic planning, it must: (more…)

Target More Specific Skills in Nonprofit Board Recruitment – Revised & Updated

Target More Specific Skills in Nonprofit Board Recruitment – Revised & Updated

By: Eugene Fram

When the nominating committee sits down each year to fill vacant or termed-out board slots, their challenge is to identify the “right” directors for the organization. Typically, the group will work with a grid to define the types of skills they deem valuable to the board composition. While this kind of generic search (e.g. marketing, financial, human resource,) is adequate in many cases, the committee would do well to narrow the probe with an approach more focused on a candidate’s specific experience and skills. (more…)

2014 Thoughts for Nonprofit Board Members

2014 Thoughts for Nonprofit Board Members

By Eugene Fram

Nonprofit board members and managers should be interested in two sections of the 2014 predictions from the Harvard Law School Forum on Corporate Governance, * which can be extended to nonprofit governance. <!–more–>

  • …[T]he focus has shifted from check-the- box policies to more complex questions such as how to strike the right balance in recruiting directors with complementary skill sets and diverse perspectives. … 

(more…)

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…)

Reflections on Nonprofit Success Stories

Reflections on Nonprofit Success Stories

By: Eugene Fram

As a veteran business professor, former students occasionally contact me to recount how I may have impacted their lives. Some have become senior executives in Fortune 500 companies, others have become attorneys, have founded profitable businesses and a few successfully have followed in my footsteps into the academic world after some years of business experience.

I recently reviewed the comments on my book, Policy vs. Paper Clips, listed on Amazon.com and thought my blog post viewers might like to see some abstracted comments, showing successful use of the governance model in my book. Eight out of ten reviews were top “five star” ratings.

My boards recognized the danger of fiddling with paper clips while strategy burns.

We had no board turnover (because) of the change (moving to the Corporate Model of Governance.)

The model is intended to convey a sense of professionalism, discipline and organizational skill.

We were able to start acting on the core idea (focus on policy not operations) immediately.

The board’s most important job is to find the best possible person to manage the organization, then stand back and let the person manage.

An added benefit is that a Leader’s Guider is available (free from the author) to facilitate discussion.

But he (the author) gets you to think about things the board needs to address.

After 15 years, the board members love (the model) because they are engaged at a strategic level.

For more details see: http://amzn.to/eu7nQl

What Is The Level of Your Nonprofit Board’s Behavioral Quotient (BQ)

What Is The Level of Your Nonprofit Board’s Behavioral Quotient (BQ)?

By: Eugene Fram

Most viewers will have a working knowledge of Intelligence Quotient (IQ), a predictor of academic achievement or Emotional Intelligence (EI), an assessment of a person’s social skills and intelligence.

I would like to suggest that nonprofit boards, as a team, assess their behavioral intelligence (BQ). BQ involves the acknowledgment that how leaders behave will directly impact the success of the organizations they lead. Following are some critical BQ questions for the board team.* Answering all these questions openly will enable a board to develop its own BQ. (more…)

Focusing the Nonprofit Board on Strategy – Same for For-Profit & Nonprofits? Updated & Reissued

Focusing the Nonprofit Board on Strategy – Same for For-Profit & Nonprofits? Updated & Reissued

By: Eugene Fram

Writing in the third quarter, 2012, of Board Member.com, Peter Dailey begins with the following conclusions about for-profit company’s strategic process (es):

As directors become increasing involved in their company’s strategic process, it’s evident that some fail to have the competencies to meaningfully contribute. Some deficiencies may result in only benevolent dabbling. … But at the extreme, deficiencies can result in destructive deliberative processes and the adoption of faulty strategic decisions. Often these scenarios operate with the context of by well meaning directors – not within hostile environments. * Skill matrices related to specific director experiences are needed. But they fall short in addressing how a director might behave.

For example, I once observed two influential directors establish complex “management by objective” programs for which the staff was forced to focus on process minutiae rather than program outcomes and impacts. The organization suffered. Large company executives can be a problem source when they force extensive discussions on minor operational items. These are items that they would never allow on their own board agendas. Why this happens is a decades old mystery for those of us who have observed it (more…)

Absenteeism at Nonprofit Board Meetings On the Rise? Technology Can Help!

Absenteeism at Nonprofit Board Meetings On the Rise? Technology Can Help

By: Eugene Fram

Dear Fellow Board Members: as you know, we have had to cancel recent board meetings due to a lack of quorum. It is imperative that we take certain annual administrative actions that require a duly called meeting and quorum of our board. To date we have been unable to do so due to our lack of attendance….

Twenty-four directors recently received this note from the organization’s volunteer president at the end of June. His sense of frustration was obvious. Lack of a quorum had precluded action on a number of important issues. And although no meetings are scheduled during the summer months, the president felt impelled to call one to take care of unresolved business.

From my experiences with a variety of nonprofits, this single case is indicative of continuing problems. What are the expectations of board attendance at these meetings? And why should it matter when directors have poor attendance records? Finally, what can be done to get a majority of the directors to the boardroom for what is usually no more than nine two-hour sessions a year? How can technology best assist? (more…)