Nonprofit CEO-Board Relationships

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

Guidelines for Forming Nonprofit-Business Partnerships

Guidelines for Forming Nonprofit-Business Partnerships

By: Eugene Fram

Ashley Halligan, an analyst at Software Advice, http://www.softwareadvice.com/nonprofit, has conducted a pilot study involving business and nonprofit managers, “4 Steps Nonprofits Can Take to Establish a Lasting Business Partnership.” The study has recently been mentioned in the New York Times. Following are a few ways she (in quotations) and I suggest the steps can be implemented to initiate partnerships with business organizations.

1. Assess your Goals – The nonprofit should try to align with businesses that roughly have similar client goals as expressed in terms of the nonprofit’s mission, vision and values. <!–more–>

“For instance, Trees for the Future, a nonpro0fit, wanted to plant more trees in developing countries.” Partnering with international Celestial Seasoning, the nonprofit was able to sponsor the planting of more than one million trees. The relationship between the two was evidently based on the firm’s need for international PR & sales, and the nonprofit’s mission to sponsor the planting of more trees in developing countries. There often does not need to be based on a direct product/service relationship such as cancer prevention nonprofit and a drug company selling cancer drugs.
2. Develop a Shortlist of Potential Busyness Partners – “Look (first) for (local) businesses that have commonalities with the (nonprofit) organization.” They are the most likely to know about the nonprofit’s social values, present and past directors, staff professionals and clients the nonprofit has helped. Seek higher-level executives from the short list companies as nonprofit directors.
3. Start Some Conversations – In developing these conversations, make sure that persons representing the nonprofit are fully comfortable in dealing with senior level business executives. My observations are that few executive directors have a high comfort level in these situations. That is why I strongly recommend the nonprofit’s chief executive officer hold the title, president/CEO. This allows the businessperson to quickly know who has final operating authority. An old adage concludes, “Principals Talk With Principals.”
4. Initiate & Nurture the Relationship – “…[A] Nonprofit-Business relationship requires time and nourishment to flourish. … While the (relationship is) business (to the nonprofit), it is important to remember that the relationship is a highly personal one. Demonstrating a return on investment (ROI) is also important. … Track as many benefits to the company as you can, so you can provide a strong ROI.” *

*See my blog site: http://bit.ly/yfRZpz and my article: “Using Imperfect Metrics Well: Tracking Progress and Driving Change,” Send request for copy to: eugenefram@yhaoo.com.

What Nonprofit & Trustee Directors Have a Right to Know

What Nonprofit & Trustee Directors Have a Right to Know.

By Eugene Fram

A recent blog was published, “raising some (directors’) questions that go beyond the rules…” (See below) Developed by an international for-profit & nonprofit board expert, they are primarily targeted toward for-profit boards. Following are my suggestions how these questions could apply to nonprofit and trustee boards. In addition, field examples show what happened when they had to be raised in crises situations.

Does bad news rise in your organization?
“You may be the last to know.” For example, the board of a human services organization knew that the professional staff was not happy with a new ED, but the board needed to give him a chance to solve the problem. Directors didn’t know that the staff had been meeting with a union organizer for nine months.
An labor election resulted, with the professionals agreeing to work under a trade union contract. (more…)

Custom Designing A New Nonprofit’s Chief Executive Orientation

Custom Designing A New Nonprofit’s Chief Executive Orientation

By: Eugene Fram

Under a customized format, the nonprofit board tailors a program that helps the new executive develop a solid base in the organization and understand its unique climate and culture. Properly structured, this orientation takes about a year to complete. (more…)

Is Your Nonprofit a “Slim & Smart” High Performance Nonprofit?

Is Your Nonprofit a “Slim & Smart” High Performance Nonprofit? 

By Eugene Fram

The “slim and smart” nonprofit approach does not involve specific steps but instead calls for management to develop an overall transitional framework and climate for the organization.[i] It does, however, require planning with sufficient lead-time. (more…)

How does a CEO turn down advice about operations from the board?

How does a CEO turn down advice about operations from the board?

By: Eugene Fram

With difficulty! It all depends on the kind of culture that has been established on the board. Ideally the CEO should be comfortable (more…)

Once Again: Who Should Be Involved in Fund Development and How?

Once Again: Who Should Be Involved in Fund Development and How?

By Eugene Fram

This is a perennial question. Following are suggestions that many will find of interest.

The Board of Directors
• Board members should a have to provide (more…)

How Can Nonprofit Boards More Clearly Define Operational Responsibilities?

How Can Nonprofit Boards More Clearly Define Operational Responsibilities?

By Eugene Fram

My experience shows that well functioning nonprofit boards establish and monitor the organization’s policies. The board operates through the president/CEO. In turn, the CEO executes policy and is responsible for the prudent and creative operations of the organization. In this role, the CEO exercises leadership resulting in the effective and efficient use of board and of other volunteer time.

Although defining what are policy issues and what are operation issues is not always clear, for both for-profit and nonprofit organizations, following is a useful set of guidelines (more…)

Using Imperfict Metrics Well; Tracking Progress And Driving Change

This article on nonprofit evaluation has appeared in a shortened version in a previous blog. However, based on the attention it has received from all over the world, I thought that some viewers might like a direct link to the full article.

http://bit.ly/LLeuyU

A 21st Century Nonprofit Board of Directors – A Volunteer Director’s View

A 21st Century Nonprofit Board of Directors – A Volunteer Director’s View

By: Eugene Fram

Following are my estimates of the attributes a nonprofit board needs to be considered a high performing board in the 21st century.

Has organizational professionalism, flexibility & efficiency
• Operating managers consider themselves (more…)