Nonprofit CEO-Board Relationships

The Devil’s Advocate on a Nonprofit Board: Asset or Liability?

The Devil’s Advocate on a Nonprofit Board: Asset or Liability?

By: Eugene Fram

Viewer Favorite Updated and Enhanced

An unwritten rule for nonprofit board membership is that it is best to “go along to get along.” But sometimes a nonprofit director’s “no” vote to an action that has had inadequate discussion can allow him/h to avoid tax penalties that have been levied on other board members for lack of due care.

Stanford University research results indicate that groups with a lone minority dissenter outperform other groups where all members agree. In addition, these groups…”are more successful than (groups) in which all members disagree and fall prey to escalated emotional, difficult-to resolve (group) brawls “ *

The key to success, according to these data, is to,” … have a devil’s advocate (DA) on the nonprofit board. … This is a person or a small board minority that “has the sensitivity to see the differences, perceives them as conflict, and then communicates about the differences in non-confrontational ways.” **

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Nonprofit Board/Staff Relationships: An Uncomfortable Partnership?

Nonprofit Board/Staff Relationships: An Uncomfortable Partnership?

By: Eugene Fram

I have always been of the opinion that nonprofit directors don’t give sufficient consideration to the relationships between the board and staff. The following passage reasserts the complexity of such relationships and why misunderstandings might occur on either side of the fence. (more…)

Should Mature Nonprofits Allow Board Micromanagement?

Should Mature Nonprofits Allow Board Micromanagement?

By: Eugene Fram

Viewer Favorite:  Updated and Enhanced

Accepted View of Micromanagement: “…Directors spend more time with the details of the operations instead of planning its short-term and long-term growth strategies. …
(http://linkd.in/1q84pMm)

The Need for a Micromanaging Board
Board micromanagement is an appropriate approach when a nonprofit is in a start-up stage. Financial and human resources are modest, and the volunteer directors must assume some responsibilities normally executed by compensated staff. The chief executive often has managerial responsibilities as well as a list of clients to service. It is not unusual to promote a person who is only familiar with direct service to become the first chief executive of the organization. In turn , this neophyte manager has to depend on board members for managerial counsel and direction. A culture of board dependency is created out of necessity.

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Identify Nonprofit Staff Groups To Help Drive Organizational Change

Identify Nonprofit Staff Groups To Help Drive Organizational Change

By Eugene Fram

Nonprofit executive directors tend to think of the staff professionals as individual contributors. These individuals are persons who mainly work on their own and not as team players – for instance, counselors, health care professionals, curators and university faculty. However, many executive directors fail to recognize that these individual contributors can be grouped according to identifiable types, with differing work value outlooks. Each group needs to be managed differently to drive change in today’s fast moving social, political and technological environments. Nonprofit board members need to use these groupings in their responsibilities for  overseeing promotable staff members.    (more…)

A Nonprofit Boards Must Focus On Its Organization’s Impacts

A Nonprofit Board Must Focus On Its Organization’s Impacts

By: Eugene Fram

“One of the key functions of a (nonprofit) board of directors is to oversee (not micromanage) the CEO, ensuring that (stakeholders) are getting the most from their investments.” * State and Federal compliance regulations have been developed to make certain that boards have an obligation to represent stakeholders. These include the community, donors, foundations and clients, but not the staff as some nonprofit boards have come to believe. The failure of nonprofit boards, as reported almost daily by one blog site, ** shows something is wrong.  (Also see: : http://amzn.to/1OUV8J9)  Following are some inherent problems. (more…)

WHAT NONPROFIT BOARD MEMBERS AND MANAGERS DON’T KNOW CAN HURT THEM FINANCIALLY: IRS FORM 990 AND THE INTERMEDIATE SANCTIONS ACT

International Journal of Not-for-Profit Law / vol. 18, no. 1, February 2016 / 78
Article
WHAT NONPROFIT BOARD MEMBERS AND MANAGERS
DON’T KNOW CAN HURT THEM FINANCIALLY:
IRS FORM 990 AND THE INTERMEDIATE SANCTIONS ACT
EUGENE H. FRAM, ED.D1
Nonprofit 501(C)(3) charitable organizations and 501(C)(4) social welfare organizations
fall under two IRS regulations—the extended annual Form 990 and the Intermediate
Sanctions Act (Act). Form 990 requires answers to 38 corporate questions on corporate
governance operations. The Act covers prohibitions related to providing or seeking
excess benefits. Most board members know about the Form 990, but few know about its
board obligations; and few board members and managers know the Act exists. With the
IRS aggressively enforcing the Act to eliminate faux nonprofits, unwitting nonprofit
board directors and managers can become ensnared financially.
Two classes of nonprofit organizations, 501(C)(3) charitable organizations and 501(C)(4)
social welfare organizations, are covered by two IRS regulations not applicable to for-profit
corporations. One regulation requires the organization to file an IRS Form 990 each year, including
financial data plus answers to 38 questions related to corporate governance. Many board
members may be unaware of their obligations to be involved in preparation of the form each
year. If there were an audit involving the 38 board questions, further, board members might be
expected to know about any exceptions to be reported, such as conflicts of interest. For example,
any board member whose firm or employing firm has a business relationship with the nonprofit
must specify it as a conflict of interest on Form 990 and probably abstain from voting on related
issues. Also, if the report is late, the nonprofit must file an IRS form, and the board needs to be
advised of the situation.
If the organization ignores any of the requirements, it can lose its tax-exempt status—a
penalty already imposed on thousands of smaller nonprofits. In some instances, moreover, failure
to heed the requirements might leave nonprofit board members open to personal liability for
failing in their corporate duties for “due care.” (more…)

Can A Nonprofit Organization Have A President/CEO & An Executive Director?

Can A Nonprofit Organization Have A President/CEO & An Executive Director?

By: Eugene H. Fram

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Yes, if the organization has the following structure:

Board With A Volunteer Chairperson
President/CEO With Full Authority for Operations
Executive Director for Division A
Executive Director for Division B

However this structure can be confusing to persons in the nonprofit arena. The executive director should have final authority for all operational matters related to the organization, except those designated for the board in the bylaws. For example, pensions plan changes.

The big question is who carries the CEO title. Some nonprofits, in their early stages, have a volunteer, part-time, President/CEO and an operational Executive Director. This signifies the volunteer, representing the will of the board, can have final authority in all daily and policy issues. This is not a good structure because the CEO title might lead to the volunteer having liabilities that other board members don’t have. (more…)

Big Data Are Great—But Imperfect Metrics Work for Nonprofit Boards!

Big Data Are Great—But Imperfect Metrics Work for Nonprofit Boards!

By Eugene Fram

Nonprofit boards need to expand their evaluations of nonprofit managers and their organizations adding more behavioral impacts * to their evaluations.
For example it might be the number of volunteers that have been trained by the organizations. But boards must go to the next level in the 21st century.
In the case of volunteers, they must seek to understand the impacts on those trained. They need, for instance, to understand how well these volunteers are assisting clients and how they are representing the nonprofit to the clients. The training is a process, but their relationships with clients are impacts.

Qualitative data must be developed to the next level, and the average nonprofit CEO will argue that he/she doesn’t have the staff or expertise to develop impact data. Engaging an outside organization to complete a simple project can cost thousands of dollars. (more…)

Nonprofit Board Members Have The Potential To Become Great Ambassadors!

Nonprofit Board Members Have The Potential To Become Great Ambassadors!

By: Eugene Fram

There is no shortage of able communicators on most nonprofit boards. Directors usually bring a degree of passion, purpose and special abilities to their term of service. Many come from business or professional environments that require at least a measure of experience in advocacy, often referred to as “selling” an idea or product!

But rarely do Board Chairs and CEOs avail themselves of the opportunity to develop nonprofit directors as fully functioning ambassadors for the organization. With a constantly rotating board and emerging crises, it becomes difficult to find the time and energy to coach board members in the art of putting the organization’s public face on view. In some cases the CEO simply doesn’t encourage contact between the board and staff. At other times, they fail to include selected directors in important conversations with key public figures and/or major donors or foundation executives. Such omissions represent a major talent loss in the advocacy process. (more…)

Who is Primarily Accountable for Long Term Planning – Board or CEO?

Who is Primarily Accountable for Long Term Planning – Board or CEO?

By: Eugene Fram

THE QUESTION

Can you further clarify whom you see as accountable for making what decisions in relation to the various aspects of corporate strategy creation and execution? If the board approves the CEO’s decisions do they not become board decisions? Where is the scope for the CEO to be accountable for making his or her own decisions?

MY ANSWER
“(My model)… promotes accountability. It requires the board and the CEO to work together to paint the big picture for the organization. It then holds the CEO accountable for implementing that vision. The (board’s) planning and resource committee (also) plays a major part in painting this picture by helping the organization and the CEO to look ahead to look to the future.”

Now for some details also found in “Policy vs. Paper Clips. * (http://amzn.to/eu7nQl) (more…)