Nonprofit CEO-Board Relationships

Creating High Performing Boards–A Veteran Nonprofit CEO’s Insights

 

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An Important Guide to Creating High Performing Boards, February 14, 2017

 

The nonprofit governance model outlined in Policy Vs. Paper Clips (https://goo.gl/j4EK5) has served my organization extremely well for more than two and a half decades. The proof of the model’s value is the growth and performance of our organization, our respected stature in the community (and beyond), and our ongoing ability to recruit top talent to our Board. Our Board governance structure has made possible several bold decisions over the last 30 years that have changed the trajectory of our organization.

 

Thirty years ago I was a brand new leader of a not for profit agency in Rochester NY with an annual budget of $5M and 160 employees who served 800 clients a year throughout 5 counties. Today, I am still the CEO; however it is a very different agency, having expanded its services significantly, broadening the populations we serve throughout 35 counties with a budget of 37M and 800 employees with a much bigger impact of 150,000 clients served annually. I feel very fortunate that early in my agency career that the book’s author (then a respected professor at a major university in my city) accepted my invitation to come talk to my Board about the model and its advantages for our nonprofit.

 

We adopted the model soon after and ever since it has defined our governance structure. We’ve only made one modification (creating a separate audit committee) because it was required by state regulations. Here’s why I think the model has been so powerful for us:
  • The basic premise that the Board and CEO are partners who mutually respect each other’s roles is paramount to our success.
  • The Executive Committee serves as the “steering committee” and sets the Board’s annual agenda and priorities, and fulfills the key role of being the CEO’s “sounding board.”
  • Our lean committee structure (Assessment & Planning and Resources) allows for substantive discussion on important issues. Board members who aren’t officers have only one commitment and can devote both time and attention to their committee’s mission.
  • As CEO, I work very closely with the Executive Committee to ensure the right leadership is selected to serve in officer roles. The Executive Committee also provides “succession” for senior Board leadership. Typically committee heads are groomed for Board Chair, though this position can also be filled from other officer roles.
I’ve lived the model for a very long time and happily attest that it works!

 

A. Gidget Hopf , Ed.D., is President and CEO of Goodwill of the Finger Lakes and its affiliate The Association for the Blind and Visually Impaired-Goodwill Industries of Greater Rochester.

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An Important Guide to Creating High Performing Boards
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The nonprofit governance model outlined in “Policy vs. Paper Clips”  has served my organization extremely well for more than two and a half decades. The proof of the model’s value is the growth and performance of our organization, our respected stature in the community (and beyond), and our ongoing ability to recruit top talent to our Board. Our Board governance structure has made possible several bold decisions over the last 30 years that have changed the trajectory of our organization.

Thirty years ago I was a brand new leader of a not for profit agency in Rochester NY with an annual budget of $5M and 160 employees who served 800 clients a year throughout 5 counties. Today, I am still the CEO; however it is a very different agency, having expanded its services significantly, broadening the populations we serve throughout 35 counties with a budget of 37M and 800 employees with a much bigger impact of 150,000 clients served annually. I feel very fortunate that early in my agency career that the book’s author (then a respected professor at a major university in my city) accepted my invitation to come talk to my Board about the model and its advantages for our nonprofit.

We adopted the model soon after and ever since it has defined our governance structure. We’ve only made one modification (creating a separate audit committee) because it was required by state regulations. Here’s why I think the model has been so powerful for us:

• The basic premise that the Board and CEO are partners who mutually respect each other’s roles is paramount to our success.
• The Executive Committee serves as the “steering committee” and sets the Board’s annual agenda and priorities, and fulfills the key role of being the CEO’s “sounding board.”
• Our lean committee structure (Assessment/Planning and Resources) allows for substantive discussion on important issues. Board members who aren’t officers have only one commitment and can devote both time and attention to their committee’s mission.
• As CEO, I work very closely with the Executive Committee to ensure the right leadership is selected to serve in officer roles. The Executive Committee also provides “succession” for senior Board leadership. Typically committee heads are groomed for Board Chair, though this position can also be filled from other officer roles.

I’ve lived the model for a very long time and happily attest that it works!

Gidget Hopf, Ed.D, President/CEO at Association for the Blind and Visually Impaired-Goodwill of Greater Rochester

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How Does a Nonprofit Board Know When a CEO Is “Just Minding The Store?”

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How Does a Nonprofit Board Know When a CEO is “Just Minding The Store?”

By Eugene Fram

Viewer Favorite Revised & Updated.       Free Digital Image

David Director (DD) has been the chief executive of a nonprofit for about 15 years. Currently, the organization has a budget of $1.5 million, mainly from governmental contracts and a sprinkling of donations. The nonprofit employs about 20 people full and part-time, and annually serves about 500 people in dire need.

Following is an abstract of the board’s evaluation of DD as the CEO.

• High Job Satisfaction: * DD enjoys his work and his position as a chief executive. Staff turnover is very low, and last year, DD led a board-staff committee to configure the new sign in front of the building. An engaging personality, he is liked by both board and staff. He has good press relationships and frequently uses press releases to call attention to client success stories.

• A Healthy Organization: During DD’s tenure, revenue growth has averaged about 2% annually. Client growth has been in the same proportion. Organizational finances are is good shape with a balanced budget plus a modest yearly surplus. He has a dashboard to monitor finances.

• A Fully Engaged Board: Board members enjoy working on committees such as the new sign campaign (see above), the annual dinner-dance and selecting endowment investments. The audit committee only meets once a year after the completion of the financial audit and its accompanying management letter has been received.

• Positive Community Impact: DD keeps records of clients who exit the programs each year, but has been unable to track their long-term impact on the community.

The big question is whether or not DD is just minding the store? I argue that he is.
This hypothetical organization is typical of the types of nonprofits I have encountered over a long time period. The basic fault is that the board is composed of well meaning people attracted to the mission as well as the personality of the chief executive. As a result, the operations of the organization are kept at a steady state with the active minutiae  support of the board. Their rationale for this support is the need to focus on the mission. There also might be a mistaken view that the board must protect staff positions.

Some directors come to the conclusion that there is little one can do to drive change, but stay on to enjoy the networking relationships that can develop. Others who join the board resign quickly, citing work pressures. Still others decline board invitations.

A number of other hints are contained in the case:
• Low staff turnover and DD’s interest in the sign committee. The committee can spend hours talking about its color and lettering!
• Revenue and client growth percentages are very low, probably supported by certainty, to date, that government dollars will continue to be available.
• The committees cited don’t contribute much to clients.  These are management not  boards tasks.
* Many directors who don’t have financial responsibilities seem to get some satisfactions out of making decisions about moving endowment assets around. A robust audit committee meets more than once a year. It is not unusual for fraud to occur in such a situation.
• There is no strategic planning indicated. Nonprofits, like these, also can confuse a SWAT analysis with a strategic plan. Where financial or behavioral objectives are established, measurement outcome data are not included to more rigorously assess outcomes and impacts.
• DD evidently does have the ability to become an effective development person but prefers to spend his time on smaller operational items, such as the new sign committee.
• DD does not provide any strategic insights or vision on trends in his service field. This gap needs to be closed, especially where most of the board members’ experiences are outside those of the nonprofit’s mission.

Summary
In my opinion, there are thousands of nonprofits like the one described. Making changes in their governance or operations is difficult; culturally changes can only take place after a long tenured CEO leaves. Since they never measure up to what they could be, are those organizations with “store minding” leadership limiting the financial and human (board and management) resources needed to serve more clients in dire need?

*Categories described by Molly Polidoroff, Executive Director, Center for Excellence in Nonprofits, Redwood City,

 

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Sustainability: Hot Nonprofit Governance Issue

 

 

 

Sustainability:  Hot Nonprofit Governance Issue

By: Eugene Fram                  Free Digital Imageid-10098886

In the next four years, nonprofit boards will face exceptional challenges affecting long-term financial and operational sustainability. It is likely that governmental grants will substantially decline. Business/individual donor gifts can be reduced should the economy teeter towards recession or the tax code changes in an unfriendly way. But, as usual, demand for nonprofit services will increase substantially.

Based on national survey data, Alice Korngold, highly regarded nonprofit consultant, concludes that these issues are driving the problems.

  • Demand for services has increased every year since 2008.
  • 50% of nonprofit survey respondents are unable to satisfy demand.
  • Half of the organizations surveyed only have three months of cash readily available.
  • Government contracts don’t provide full costs for programs. *

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Can A Nonprofit Find Strategic Ways To Grow in Unsettled Times?

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Can A Nonprofit Find Strategic Ways To Grow in Unsettled Times?

By: Eugene Fram                                Free Digital Image

 

Nonprofits have always had to struggle to meet their client needs, even when economic conditions and social turmoil were much less constraining than today  and they have dim prospects for the immediate future.   How can mid-level nonprofits uncover growth opportunities in the present environment? (more…)

Unwritten Protocols for Directors Can Boost Nonprofits’ Effectiveness

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Unwritten Protocols for Directors Can Boost Nonprofits’ Effectiveness

By:  Eugene Fram                                        Free Digital Photo

Nonprofit boards are governed by a series of obligations —some are clearly defined as legal responsibilities such as financial actions. Others, however, are less clearly defined and relate to people who are, in some way, associated with the organization. Guidelines to these diverse interactions are not typically archived in policies but are important to the overall professionalism of the board. They include consideration of its: board structure, internal operations, recruitment methods and leadership style. (more…)

Stay on That Nonprofit Board!

id-100264818Stay on That Nonprofit Board!

By: Eugene Fram                      Free Digital Photo

Viewer Favorite Updated and Revised

Gene Takagi, noted San Francisco attorney, who specializes in nonprofit organizations published an article listing 12 reasons for resigning from a nonprofit board. It is worth reading. (http://bit.ly1r2M5Hi)

BUT

Nonprofit directors often become impatient with the slow pace of progress toward positive changes that will  impact client services. Here are some actions that may change the situation, improve service to clients and prepare the organization for any long-term mission disruptions. These changes may be necessary to sustain the nonprofit in uncertain times.    (more…)

Nonprofits in Limbo: Preparing for the Unexpected
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Nonprofits in Limbo: Preparing for the Unexpected

By: Eugene Fram

As the nation is reeling from the jolt of the 2016 election results, I happened to read a recent report from Deliotte Consulting suggesting ways that for-profit organizations can improve their performance in uncertain times. The report centers on key drivers of board effectiveness that, in my opinion, resonate with similar nonprofit situations. Most nonprofit boards typically live with uncertainty and are perennially “on the edge.” Here are some ideas from the Deloitte * report that, when adapted early, can bolster their operation in times of disruption.

  • Bold, decisive leadership: Nonprofit boards are responsible for donor and charitable types of revenues that place directors in a public trust position. In addition board members typically will only be active for a median tenure period of four to six years. As a result they often become overly conservative in their strategic views and may accept CEOs that “mind-the-store” with modest incremental growth annually.

To prevent the organizational boat from capsizing in the perpetual seas of uncertain times, the board needs rely on  the best forward looking information about strategy, culture, people and clients. All of this must be in solid  alignment with a substantial mission, or a modified one if the external environment requires it. This allows the  nonprofit to cut through the cultural barriers that impede strategy development. As Peter Drucker has noted, “Culture eats strategy for breakfast every morning.”

  • Opportunity mind-set: Even when the organization is prospering, the board has a responsibility to press for innovations and to support small-scale experiments as called for in a “Lean Management” structure. Within this structure, the staff can test the waters via experiments to move more boldly, as long as the experiments yield positive results. **
  • Stakeholders: Nonprofits have a multitude of stakeholders, complicated by the fact that often those who receive the service are not the ones who support or pay for it.   This requires management to balance the needs of the various groups and that can call for heart-breaking decisions. For example, should revenues be allocated to marketing or used for needed client programs? To solve the dilemmas Deliotte suggests, “Building valuable, open relationships across multiple stakeholder groups is key to building trust and organizational resilience”
  • Match fit: Boards have a responsibility to motivate the nonprofit to realistically evaluate the tensions between new models and existing ones. Two examples show contrasting results. Easter Seals boards perceived the market changes involved with polio vaccines and modified their missions.   Nonprofit counseling agencies failed to assess the positive impacts of new pharmaceuticals and the need for face-to face counseling declined. To develop a fit, Deliotte suggests, “the board and the organization need to be agile and open.”
  • Culture, culture, and culture: Nonprofit boards’ cultures play a key role in determining the level of risk the board is willing to take. With key drivers, nonprofit boards have to take reasonable risks to survive and even encourage management to take it. Small scale, yet bold, experimentations that are jointly reviewed by board and management provide a “Lean Management” approach that has been used by venture supported business firms.
  • Cracking the diversity Code: Instead of recruiting new board members and maximizing the best they have to offer, nonprofit boards try to orient new board members to the current culture. A new member with a financial planning background, for example, will be asked to work with the CFO on accounting related problems. Instead, he/s should be asked to develop a long term-term financial plan.   Board background (such as strategic planning abilities, critical thinking) diversity, as well as demographic (such as gender, ethnicity) ones, must be carefully crafted and utilized as well as demographics.
  • Curiosity is Key: Deliotte Consulting concludes, “Directors should get out of the ‘same old’ board room, and should even look across borders to learn from approaches in (different nonprofits) and companies… . Developing news skills and insights are essential for innovation and should be sought to create the questioning and challenging environment needed to imagine, inspire and deliver better outcomes (and impacts). Complacency (in uncertain times) can be a killer.”

*https://www.google.com/search?q=Sevn+ways+to+im%5Bprove+board+effectivness+in+uncertgain+times&ie=utf-8&oe=utf-8#q=Seven+ways+to+improve+board+effectiveness+in+uncertain+times

**https://www.snpo.org/publications/sendpdf.php?id=2014

 

 

 

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

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

Updated & Revised

By Eugene Fram                            Free Digital Photo

This is a perennial issue. Following are suggestions that can clarify questions related  to it. (more…)

Once Again! Do Nonprofit Directors Face Cyber Security Risks?

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Once Again! Do Nonprofit Directors Face Cyber Security Risks?

By: Eugene Fram     Free Digital Photo

Viewer Favorite: Updated & Expanded

The cyber security (CS) debacles faced by Target, Sony Pictures and others may seem far afield from the concerns of nonprofit directors, except for the giants in the area, like AARP. However, think about this hypothetical scenario.

A group of high school students hacked into the computer system of a local nonprofit offering mental health services and gain access to records of clients, perhaps even placing some of the records of other teenagers on the internet.

What due care obligations did the board need to forestall the above situation? A move to recruit directors with special expertise in information technology or cyber security would be nonproductive. A nonprofit director has broader responsibilities such as the overview of management, approval of budgets, fostering management and staff growth etc. Similarly, when social media became a prominent issue a few years ago, boards debated the advisability of seeking directors with that specific kind of background. Today, a consultant with management experience in the area is likely needed to provide guidance to directors on these social media issues.

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