NONPROFIT FUND-RAISING BY BOARD MEMBERS & CEOS

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. *

(more…)

Nonprofit Directors/Trustees/ CEOs/ Senior Managers–Improve Board Operations

  •  Have a way to effectively measure “client impact.”
  •  Build CEO/board fundraising capacity.
  • Develop a motivating/friendly process for on-boarding new directors.
  • Reduce # directors/trustees who “micromanage” management.
  •  Develop strategic discussions at meetings.
  •  Develop a broad framework that separates policy & strategy development from operational activities.
  • Have a board/staff relationship that is built on trust.
  • Have task forces that deliver more effective, timely results.

These books can help!    Please share with others who can benefit!

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Eugene Fram, EdD, Professor Emeritus
Saunders College of Business
Rochester Institute of Technology

frameugene@gmail.com

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Nonprofit Board Discourse: a Meeting of the Minds??

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Nonprofit Board Discourse: a Meeting of the Minds??

By: Eugene Fram

Several years ago, a nonprofit director complained to me that there was too little “conflict” at board meetings. Too few hands were raised to challenge or simply question the efficacy of certain important agenda items. Having participated in hundreds of nonprofit meetings, I can vehemently report that this laissez-faire response still typifies the majority of director attitudes, especially for items that deserve vigorous discussion. Why is that? And why is the term conflict perceived as an asset to an organization that is determined to move forward? Below are some answers based on my own experience in the nonprofit environment. (more…)

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…)

Nonprofit Board Recruitment Process Calls For New Approach

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Nonprofit Board Recruitment Process Calls For New Approach

By: Eugene Fram

One thing is certain about nonprofit director turnover is a board completely turns over about every four to six years. * With that fact in mind, both board and management need to act as interim “talent scouts” for potential directors who will be competent to tackle the sometimes unpredictable challenges of the future. Just as unexpected crises will confound the new president elect and his colleagues, those who occupy the nonprofit boardroom must be well equipped to deal with the inevitable issues that are certain to arise.  **

Current recruitment processes in many nonprofit organizations commonly rely on familiarity with past directors whose terms have taken the obligatory year hiatus between tenure periods. Or a superficial scan is done of who’s “available” that may conveniently favor friends and relatives—indeed often legacy directors. The process rarely includes “dark horse” candidates that could allow fresh viewpoints to broaden meeting discussions. And although recruitment grids can be filled by mid-career professionals with special expertise, they lead time compressed lifestyles and may show little interest in the governance function or strategic planning– so critical to running an organization. It becomes clear that the board needs new and different recruiting options.

Following are different approaches that nonprofits can apply when seeking 21st century board members. ***

Find atypical candidates.

This can involve identifying active board members in other nonprofits that are about to term-out of their current positions. In some instances, colleague CEOs or friends on other boards may help identify some of these types of candidates. Also seek the names of people who have had broad experiences in business or professions and are about to retire from full-time positions. Make finding atypical candidates a plank in the strategic plan because it calls for a different and more difficult approach to recruiting.

Look beyond the resume to candidates’ behaviors.

Nonprofit organizations have generally recruited board members on the basis of their working background title. Any attorney with expertise has been acceptable. But, for example, a board  most often needs a corporate practice attorney who will become a behavioral role model for the other directors. It also needs several directors with strategic planning experiences. In recruiting a business CEO, it becomes necessary to assess personality. Some CEOs are great team players. Others have been successful as authoritarian figures. Taking recruiting actions like these have not been built into the DNA of nonprofit boards.

Make diversity a priority

Diverse boards are usually a requirement for nonprofit organizations. But many boards do not pay serious attention to this requirement. Community centered boards, for example, may have gender diversity but continually recruit from family, colleagues, neighbors and friends, a homogeneous cohort. The 21st century calls for boards to be both diverse and inclusive and must recruit well beyond these four cohorts.

Recruitment needs to be speedy and efficient.

Knowledgeable candidates will first judge the nonprofit as to how well it has been managed or whether or not it is on the road to becoming better managed. Except for a person who is highly dedicated to the mission, nobody wants to join a board or organization in conflict. A desirable candidate will also judge the nonprofit board on the basis of how the recruiting process is conducted. A rapid, transparent and efficient recruitment process provides positive evidence.

In my view, much of nonprofit board recruiting is focused on who is available, rather than the board rigorously seeking who should be available.   There is a need to use the four points listed above to add more rigor to the process in order to seek tomorrow’s leaders today.

* The national median board tenure for nonprofit board members cited by several studies.

**Example See: “Going for Impact” ©2016 https://goo.gl/Dwa9le

*** http://www.davidsonwp.com/five-tips-for-hiring-tomorrows-boards-today/

 

 

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Getting The Most From Your Nonprofit Board

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From: Tony Martignetti–Nonprofit Radio     Free Digital Photo

Thanks to today’s guest 10/28/2016, Eugene Fram, professor emeritus at @Rochester Institute of Technology, and author of “Going For Impact: The Nonprofit Director’s Essential Guidebook.” Let’s takeaway!

  • strive for excellence; your board & CEO should avoid mediocrity
  • avoid excess deference to CEO, board chair & major donor board members
  • be explicit about board members’ responsibilities & expectations, don’t turn it into into legalese
  • bad news must rise to management & the board
  • have a vibrant recruiting process, don’t dumb it down
  • your board’s most important job is hiring and overviewing the CEO and developing robust assessment processes
  • develop high levels of trust between Board-Management-Staff
  • understand the big differences between outcome and impact.
  • so much more, listen!

http://podcast.mpgadv.com/2016/10/313-get-the-most-from-your-board-tony-martignetti-nonprofit-radio/

 

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