NONPROFIT FUND-RAISING BY BOARD MEMBERS & CEOS

Does the Nonprofit CEO Need to Go?

Does the Nonprofit CEO Need to Go?

By: Eugene Fram

Viewer Favorite– Revised & Updated

Recognizing and acknowledging that the current CEO is no longer helpful to the nonprofit organization is never easy to come by. Beyond malfeasance and under-performance, obvious reasons for initiating such a discussion, there are often other indicators: his/her modest leadership skills, ineffective discussions between the CEO and the board chair, criticism from external stakeholders, overemphasis on tactics unbalanced by a focus on strategies, etc. (more…)

How Often Do Nonprofit Board Members Need to Question Strategic Norms?

How Often Do Nonprofit Board Members Need to Question Strategic Norms?

By Eugene Fram

A new nonprofit director has a lot to learn. Considering that his/h term of service will be relatively short (typically four to six years), he/s must quickly learn the “ropes” to participate in a meaningful way. In this process, colleagues and leadership will acquaint him/h with prevailing board systems and culture—often ignoring the depth of expertise she/h can employ. Example: An expert in financial strategies may be asked to assist the CFO with accounting details, far below the person’s skill level. Oftentimes the new board member also is greeted with a mantra that says, “We’ve always done it this way.” As the director moves in his path from novice to retiree, during a short tenure, there is little opportunity to suggest innovations that differ from the accepted fundamentals and to successfully advocate for change. (more…)

The Nonprofit Dream Team: a Board/CEO Partnership that Works!

The Nonprofit Dream Team: a Board/CEO Partnership that Works!

By: Eugene H. Fram

Re-balancing and maintaining important relationships in a nonprofit organization can be important to its success. Do various players fully understand and accept their specific roles. Is there mutual trust between players? Are communications open and civil?

I recently encountered an association CEO who complained that his board wanted to judge him without establishing mutually agreeable goals, outcomes or impacts. He felt what is needed is a partnership arrangement where the board does not judge the CEO and organization based on political or personal biases but overviews the two in terms of mutually accepted achievements. This, he contended, forms a substantial partnership between board and CEO and staff. If the board thinks it can judge management, he stated, it gives it a personal political type of power, unrelated to performance. As an example he pointed to an unfortunately common nonprofit situation where a CEO is given an excellent review and fired six months later because there had been a change in the internal board dynamics. (more…)

What’s Needed To Become a Nonprofit Board Change Agent?

What’s Needed To Become a Nonprofit Board Change Agent?

By Eugene Fram

Nonprofit board members with business backgrounds often become frustrated with the moderate pace for change that is characteristic of nonprofit boards. Most resign or remain on the board as passive directors, not wanting to create internal conflict in organizations that are dedicated to developing positive social programs. Here are some qualifications for unusual board members that want to become change agents and lead boards and/or organizations to making substantial positive changes. * (more…)

Do Directors View Their Nonprofit Boards Through Rose-Colored Glasses?

Do Directors View Their Nonprofit Boards Through Rose-Colored Glasses?

By: Eugene Fram

Being asked to join a nonprofit board is, in itself, an honor. To be working alongside other honorees for a cause that addresses world, community, professional or association needs commonly evokes in directors a mix of pride, loyalty and reverence. Call it the nonprofit “mystique” if you will. Having served as a volunteer director, board chair and consultant, I am often tempted to call it the nonprofit “mistake.” It is, in some instances, a perception that may blindside the director and stunt the growth potential of the organization.

Following are some commonly misplaced assertions that I have encountered through my years with nonprofits:

Our board of directors is like a family—this was the response of a director (who happened to be an attorney) to a proposal that called for a restructuring of the board. He warned that the change would negatively impact his emotional attachment to the board, i.e. his “family”

It was clear that the board was far from a family environment. It was a fairly large board of circa 20 people who met for two hours monthly from September through June. Directors’ tenures were limited to two three-years terms, with some directors opting out after one year before resigning because of work/personal pressures. In this eclectic setting, the only family connection appeared to be “dysfunctional!”

Our board is doing a great job—yes, the board is meeting goals and verifying all the compliance policies and impacts. But is this satisfaction with the status quo dissuading the board (and subsequently the organization) from setting stretch goals? Is it motivating management and staff to maximize client service? “Doing a great job” is often a mantra for an organization’s failure to reach its potential.

Our worries are over—we just hired a great new Executive Director—the board needs to monitor the new CEO who may not be “great” if the board is satisfied to set low standards allowing the him/her to simply “mind the store.” Too many boards seem to be content with this modest level of incremental growth– deferring the creative and entrepreneurial efforts until the next strategic planning cycle and then letting them slip between the cracks. A robust evaluation of the new hire should be held annually and never left to the whims of the board chairs or a simple board checklist survey.

When push comes to shove, our board can raise big $$–this may be true but 2015 national statistics show just the opposite. Sixty-five percent of nonprofit CEOs gave their boards academic grades of “C” or below for their fundraising efforts –in this age of rampant grade inflation! * Boards are hesitant to fully partner with the CEO in developing resources for the organization. They often abdicate the responsibility to the CEO or, on occasion, ignore him/h.

Our programs are superior to other similar nonprofits—systematically prove that statement! Actually make the point-by-point comparison. This “comparison-shop” is something an alert board should do every three years. It will provide a clearer picture of the organization’s strengths and weaknesses. In the case of the nonprofit’s relative under-performance, it will generate a relevant discussion on what to do about the gap in standards.

It’s entirely appropriate for a director to act as cheerleader for his nonprofit—that’s what directors are supposed to do. But first they must remove the tinted glasses and take a hard look at what’s happening on the inside— then enlist their esteemed cohort in an effort to right all possible wrongs or seize the potentials for improved client services. That accomplished, he/s will have a compelling reason to spread the word!

* BoardSource (2015) “Leading With Intent – A National Index of Nonprofit Board Practices,” January

Is there truth in the statement that ALL nonprofits are actually businesses, and they need to be run like businesses?

Is there truth in the statement that ALL nonprofits are actually businesses,and they need to be run like businesses?

By Eugene Fram

Updated viewer favorite

In my opinion, too many board and staff members in the nonprofit environment:

Do not realize that a nonprofit can focus even more effectively on “caring” missions, visions and values while operating under a business model. Many functions of a business and are the same for both types of organizations — financial operations, human resources, marketing, board governance, etc. (more…)

Falling in Love With the Mission & Other Sage Advice for a First Time Nonprofit Director

Falling in Love With the Mission & Other Sage Advice for a First Time Nonprofit Director

By: Eugene Fram

Sam Smith recently entered early retirement and wants to become a director on the board of a nonprofit organization. His motive is to give back to the community where he has prospered. As a first time board member, he can look to some advice from pros in the area, from a recently published article by Stanford’s Center Social Innovation (CSI).
http://stanford.io/1qefmx1

Following are my reactions to some of the article’s suggestions, hopefully adding important field information. The comments are based on having served on 12 nonprofit boards over several decades and my experiences as a consultant to at least a dozen additional nonprofit boards.

Fall in Love Wisely
This is good advice. It follows the nonprofit dictum that each director needs to be dedicated to the organization’s mission. In practice, however, some flexibility is required:
• the availability of choices at the time the search for the position takes place
• the board ‘s current composition – example, no board needs six attorneys
• the time and frequency of meetings
• requirements of “get or give” etc.
• the compatibility of he new director with the current CEO — a fast driving director may not be compatible with an ED, doing a status quo job but lacking in entrepreneurial instincts.

In my opinion, good nonprofit directors may only need to have a modicum of mission dedication, as long as long as he/s can be assured the organization is having positive impacts. For example, a director has joined a board for networking contacts does an outstanding fundraising job. Choosing a nonprofit board is akin to finding a spouse. Everybody looks for the perfect spouse, but in the meantime people get married!

Pick Your Preferred Developmental Stage
Like commercial organizations, the CSI article points out nonprofits range though three stages – early stage, growth stage and scaling stage. The early stage can be most frustrating for those who have worked in commercial organizations. Board members often are called upon to doing everything, from securing the facility at night to assuming operations responsibility. Management relies on the board for both direction and operational decisions.

More staff support for the board becomes available in the growth stage. Board oversight committees are organized to reflect operational aspects bush as — building, personnel, budget, program, etc. These can work well until they become redundant, as staff assumes more responsibility. Board meetings can become longer and filled with reports. Board turnover may increase rapidly. Unfortunately, during the growth stage a nonprofit culture can keep this system in place long after it is productive. When this occurs, the board needs to move to a corporate position.

Under a corporate position http://amzn.to/eu7nQl the board focuses on over-viewing management impacts, strategic planning and policy development. Tactical operational decisions become the responsibility of management and, hopefully, micromanagement is completely abandoned.

The CSI article calls for a third scaling stage: “Organizations that understand the difference between scaling solutions versus scaling the organization engage in collective impact strategies that require developing a strong network. The board relies on connections across sectors and disciplines.” Here the board, hopefully, takes leadership through generative “what if” questions to increase the scale of client-based solutions. Mergers and partnerships can take place that should provide better quality client services.

Design for Harmony & Efficiently

Like a business board, the new first time board member has to know that the nonprofit board only has one employment decision – engaging the chief operating officer. However, any sensitive nonprofit CEO should seek the formal or informal board reactions before changing or engaging the senior management team.

Board Engagement – Every nonprofit CEO and board chair wants their board members fully engaged. But few talk about the need to have them meaningfully engaged. Since nonprofit directors representing communities and foundations over such a wide spectrum of backgrounds, the CEO and Board Chair need to clearly assess what is meaningful to each director. To some being involved with the details of the annual dinner is meaningful. Hopefully to most others, strategic planning and overview management outcomes are paramount.

“Cultivating the right composition? (The answer) lies in in the venerable idea of the ‘the 3 Ws:’ work, wisdom & wealth… . [M]embers (should) bring one or two or even three of these assets to the organization. “

Engineer Financial Health

Like the business situation, what constitutes an organization’s overhead can be a debate among professional accountants. “Baring field variations, 15% of overhead is typical in the nonprofit world and reflects salary levels that are significantly lower than in the for-profits… . “

Most nonprofit directors serve limited terms amounting to anywhere from one to six years, with the vast majority in the four to six year ranges. Sometimes this brief tenure of board members precludes some boards from really focusing on the sustainability issue. While some operating expense, can be drawn from endowment (4-5% in recent years) there must be a prudent reserve to assure long-term increases and improvements in client services.

Fundraising should be a joint responsibility between the CEO and board members who are comfortable with the process. At the very least, each board member should feel responsible to provide leads and introductions to potential funding sources.

The Nonprofit President/CEO – How Much Board & CEO Trust Is Involved?

The Nonprofit President/CEO – How Much Board & CEO Trust Is Involved?

By; Eugene Fram

The title, president/CEO for the operating head of a nonprofit, clearly signals to the public who has the final authority in all operating matters and can speak for the organization.* It is not an ambiguous set of titles. However, the terms “manager” or “executive director” can be quite ambiguous and do not generate the same external understanding or respect. An executive director can be the administrator in a small church or the operational head of a large arts organization. The public and some corporate directors often view managers and executive directors (because of the organizational history of nonprofit) as “hired hands,” not as professionals who are able to manage all operational activities. (more…)

How Prepared Are Directors for the Challenges of the Nonprofit Culture?

How Prepared Are Directors for the Challenges of the Nonprofit Culture?

By: Eugene Fram

Given that the typical tenure of a new board member is six years. And assuming that a new director’s intention is to make his/her unique contribution to the organization’s progress before he rotates off the board and is supplanted by another “new” director. With these factors in mind, I estimate that many volunteers enter the boardroom with little understanding of nonprofit culture. Even those who have served previously on business boards may initially spend valuable time in accommodating to the nuances of nonprofit practices and priorities before being poised to make contributions to the “greater good” that nonprofit create. Following are some areas that are endemic to nonprofits: (more…)

Once Again! Nonprofit CEO: Board Peer – Not A Powerhouse

Once Again! Nonprofit CEO: Board Peer – Not A Powerhouse

By: Eugene Fram

Some nonprofit CEOs make a fetish out of describing their boards and/or board chairs as their “bosses.” Others, for example, can see the description, as a parent-child relationship by funders. The parent, the board, may be strong, but can the child, the CEO, implement a grant or donation? Some CEOs openly like to perpetuate this type of relationship because when bad decisions come to roost, they can use the old refrain: the board made me do it.

My preference is that the board-CEO relationship be a partnership among peers focusing on achieving desired outcomes and impacts for the nonprofit. (I, with others, would make and have made CEOs, who deserve the position, voting members of their boards!)

There are many precedents for a nonprofit CEO to become a peer board member, some without voting rights, some with full voting rights. One nonprofit group is university presidents, where shared governance with faculty bodies can be the norm. For example, when General Eisenhower became president of Columbia, he referred to the faculty in an initial presentation as “Columbia employees.” Later a senior faculty member informed him “With all due respect, the faculty is the university.”

Another nonprofit group is hospitals where the CEO may also be or has been the chief medical officer. The level of medical expertise needed to lead requires that a peer relationship be developed. Also if the hospital CEO is a management person, he and the chief medical officer must have a peer relationship, which extends to the board.

Hallmarks of a Peer Relationship
• The CEO values the board trust assigned him/her, and carefully guards against the board receiving surprise announcements.
• The board avoids any attempts to micromanage, a natural tendency for many nonprofit boards.
• When a board member works on a specific operating project, it is clearly understood that he is accountable to the CEO for results.
• The CEO has board authority to borrow money for short term emergency needs
• The CEO understands need for executive sessions without his/her presence.
• The CEO understands the need for robust assessment processes to allow the board to meet its overview duties.
• Both board and CEO are alert to potential conflicts of interest which may occurs.
• Both value civil discussion when disagreements occur.
• The board realizes that nobody does his/her job perfectly, and it does not react to occasional CEO modest misjudgments.

Summary
Elevating a nonprofit CEO to a status of board peer does not automatically make the CEO a powerhouse. The board legally can terminate the CEO at will. However, in my opinion, the following benefits can accrue to the organization.

The peer relationship help will:

• Help the organization to build a desirable public brand.
• Allow a capable person to interface with the media.
• Define a role for the CEO to lead in fundraising.
• Allow the organization to hire better qualified personnel.
• Allow the organization to present a strong management environment to funders. After all, top people readily communicate with people in similar positions.