Nonprofit policy decisions vs operational decisions nonpofit management

Does A New Nonprofit Board Director Really Understand Your Organization?

Does A New Nonprofit Board Director Really Understand Your Organization?

By: Eugene Fram

The careful nurturing of a board member, whether for-profit or nonprofit, is critical. The pay-off of a robust orientation process is an informed and fully participating board director. The following are very similar occurrences in both for-profit and nonprofit boards:

The CEO of a transportation firm agrees to become a board director of a firm developing computer programs. He has risen through the transportation ranks with a financial background, but he knows little about the dynamics of the computer industry.*

A finance professor is asked to serve on the board of a nonprofit school serving handicapped children. She has no children of her own and has never had any contact with handicapped children, social workers or teachers serving handicapped children.

In these similar cases, the new director needs to become reasonably conversant with a new industry or a new human service field in order to be able to better apply policy development skills, strategic planning skills and to allow generative thinking.

On nonprofit boards, the problem is exacerbated when the new director often is asked to immediately join a specific board committee without being able to understand the board perspectives and the organization’s mission vision and values. Following are ways in which the nonprofit board can resolve this problem:

• Don’t appoint the new board member to committee until she has completed a board orientation program including a review of board procedures, attending several board meetings, has had visits with the staff, as they normally operate, and becomes alert to the major trends in the field. This ideally should take about six months assuming the director is employed full-time elsewhere.
• During this time, the chief executive and board president should be available to the new director as frequently as she wants in order to respond to questions.
• Hopefully, the chief executive would informally meet the new director (and each established director) quarterly to review current issues and opportunities. ** In addition, to the information presented at the board meetings, this will provide a better perspective of the board’s mission, vision and values.
• Ideally, the board volunteer should attend one staff meeting and one outside professional meeting to acquire a feeling for the topics reviewed at these gatherings and the field terminology.

If most of these actions can be accomplished within a six-month period, major blind spots are removed, and the new board member can then join a standing board committee. Now, reasonably understanding the organization and her own participation on the board, she has a background to make a substantial contribution for years to come.

• *Robert Frisch, Managing Partner of The Strategic Offsites Group, presented this type of example as a common one for business boards. SVNACD Meeting January 17th, 2013, Rock Center for Corporate Governance, Stanford University.
• ** For more details, see my book and blog site:
Blog: http://bit.ly/yfRZpz

Book: http://amzn.to/eu7nQl

Attn: Nonprofit Directors, Trustees & Mangers – New Reviews of “Policy vs. Paper Clips: Applying the Corporate Model to Nonprofit Boards”

Positive reviews continue to arrive for my recently updated & expanded nonprofit governance book. Click on this link for a story about the book.
Policy vs. Paper Clips See the latest reviews below.

Must Read for Nonprofit Boards, December 9, 2012
By: Casey Wheeler

This review is from: POLICY vs. PAPER CLIPS – THIRD EDITION: How Using the Corporate Model Makes a Nonprofit Board More Efficient & Effective (Paperback)
This book was an informative and entertaining read. The author uses the techniques of a series of emails between two individuals to explain how using the corporate model for nonprofit boards is beneficial to the organization. The exchange of emails takes the reader through the process from needs assessment to implementation.

What I enjoyed most about the book is that it was written so that the concepts are easily understood through the question and answers presented in each set of emails. In addition, the concept has been successfully implemented in a number of nonprofits around the country that are mentioned in the introductory section of the book and examples in the emails exchanges.

At the end of the book an additional series of questions and answers with suggestions on how to successfully implement the corporate model. An added benefit is that a Leader’s Guide is available for use to facilitate a discussion of the corporate model process.

I must admit that nonprofits that are totally volunteer operated or with a limited staff may find the overall process unachievable, but there are many useful ideas within the email exchanges from which small organizations can benefit.

I strongly recommend this book to any nonprofit CEOs or Board Members who feel that too much time is spent on operational issues and not enough spent on planning and policy.
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Fram Nails It! November 16,2012
By Philip G. Bookman (Los Gatos, CA)

This review is from: POLICY vs. PAPER CLIPS – THIRD EDITION: How Using the Corporate Model Makes a Nonprofit Board More Efficient & Effective (Paperback)
When I joined the not-for-profit board that I now have the honor of chairing, I struggled with how to apply my business experience to a non-profit. I was often heard saying, in frustration, “We should be discussing policy and strategy, not counting paper clips!” Then I came across this book with a title that I obviously could not resist, and found that Fram has formalized what I was struggling to figure out. And his approach works.

As with any model, you need to pick and choose which parts of it your organization needs to adopt, and in what order. But he sure gets you to think about the important things the board needs to address. This is a must read for any non-profit board leader who wants to make the organization more effective in meeting community needs.

A Little Book that Yields Big Results, November 18,2012
By: A. Hopf (Geneseo, New York United States)

This review is from: POLICY vs. PAPER CLIPS – THIRD EDITION: How Using the Corporate Model Makes a Nonprofit Board More Efficient & Effective (Paperback)
Our Board applied the principles in Policy Vs. Paper Clips after the first edition came out many years ago. We were fortunate to have the author himself consult with us. I can unequivocally state that the Corporate model spelled out in this book works and is responsible for the incredible growth and success my not for profit has experienced over the last 15 years. More importantly the Board members love it because they are engaged at a strategic level that allows them to use their brains and contribute in a meaningful way. Every not for profit CEO and Board member should read this book regardless of size or scope of the organization. Its how Boards need to work in the 21st century.

Critiquing My Blog: “All Nonprofit’s are a Business – Need to be Run Like a Business”

Critiquing My Blog: “All Nonprofit’s are a Business – Need to be Run Like a Business”

By: Eugene Fram

I encountered a torrent of comments from consultants, chief executives and staffers replying to the blog listed above. Following are some abstracts of support and questioning I received:

One could say this is true, if we know what is truth, but one should avoid ALL. … We are called to be faithful, not to be successful. Why do we… avoid all ethical questions? … Granted, one should hope to wind up with excess revenues at year-end but to affirm who you suggest doesn’t appear to be worked through.” Philip S. Wood, CPA.

Sorry I disagree. Many/most nonprofits are aimed at creating social good. To be run like a business means risk – (taking) decisions for the short/near term, based on financial tradeoffs. While I agree nonprofits benefit from excellent leadership, discipline, solid strategy and financial planning, they should be run as nonprofits. Linda Williams

If businesses exist to create and retain customers, then nonprofits exist to create and retain members. I think this could be a good learning for many of the nonprofits I have (encountered). This is terrific, but they cannot do this without capital. The more those inside the nonprofit are motivated by their own sprite of “contribution to the world,” the more they could undermine their ultimate survival. (Companies that focus) inside-out rather than outside in will run into trouble.
Elliott Schreiber

I work for an organization … that (has a) mind-set to a for-profit business, … keeping in mind our core values, mission and vision. …

• A research department … regularly checks to make our programs are successful. We follow clients for two years after receiving services.
• Though measuring programs, … our donors have confidence is what we do and we have expanded contacts in the community.
• Our strategy department ensures that expansion will not drain resources from other areas.
• Our direct service employees are results oriented and goal focused.
• Also we take our employees very seriously. We would hate to expand, hire people or have our staff relocate and then havet o close up shop one year later.
• We are more mission focused – we are fiscally solvent, jobs are not in danger and have the numbers to prove that what we do works. Catherine Hayley

My Reactions

Philip: You hit the nail on the head with you comments about “ALL.” I concede the adjective was not well placed. However, some businesses also have a mission or creed to generate social good, like Ben & Jerry’s Ice Cream. However, if you examine the product that emanates from the firm, one can easily view it as creating obesity. Businesses and nonprofits must be judged on their missions and how they execute them.
I would take Ben & Jerry’s over a commercial call center that says its mission is to help charities, but then takes, as fees, 75% of the money donated. Or it might be a nonprofit that gives excess benefits to its management. (The IRS now has become a watchdog over these giveaways.)

Linda: Some businesses also have a double bottom line. For example utility companies have to please their stakeholders and meet utility commission regulations. Unfortunately, the term “being run like a nonprofit has become a negative term and only a high senior nonprofit mangers, who execute the functions you listed at a effective and efficient levels, will contribute to improving the situation.

Elliott: In my opinion you are correct. Nonprofit strategic plans should always have a section showing the estimated economic impact of what is projected. For an example, according to Cynthia Montgomery, a Harvard business professor, a nonprofit hospital whose mission is to “save lives” will not succeed long term if it does not “save lives efficiently and effectively.”

Catherine: I just want to join the chorus of people who commented how fortunate you are to work with an organization with a structure that makes such impacts.
It really shows that many nonprofits need to move towards a business model.

As one other respondent stated, nonprofits in the 21st century need to be “SMART i.e., Sympathetic, Malleable, Active, Realistic and Timely.

Nonprofit Board Responsibilty for Social Media – What Needs To Be Done?

Nonprofit Board Responsibility Social Media – What Needs To Be Done?

By: Eugene Fram

Nonprofit boards, for several years, have been struggling to find proper uses for social media. Many of the decisions on this issue will become strategic board decisions because they will require using alternative promotional strategies, experimental trials and infusion of capital and human resources. The December 8, 2012 issue of the NACD Directorship* cites a Stanford study concludes for-profit boards should develop a better understanding of this new phenomenon. Following are how I think the steps should be applied to smaller and medium sized nonprofit board decisions: (more…)

Nonprofits: To Which Group Do You Belong – The 5% Having Successful Strategies or the 70% Who Do Not?

Nonprofits: To Which Group Do You Belong – The 5% Having Successful Strategies or the 70% Who Do Not?

By: Eugene Fram

According to a recent Deloitte report, two Harvard Professors issued a recent study* that highlighted the above statistics, also showing the remaining 25% having “middling success.”
I recently attended a presentation by Cynthia Montgomery, also a Harvard strategy professor. Following are some major strategy guidelines she presented, with examples mainly relating to the business community, and how I see them applying to nonprofit and trustee boards. (more…)

Once Again: How to Keep a Nonprofit Board Informed.

Once Again: How to Keep a Nonprofit Board Informed.

By: Eugene Fram

At high-performing nonprofit boards, members of the board will rarely be invited by the CEO to participate in operational decisions. Yet the board still needs to know that is going on in operations.

The name of the game is for the CEO to communicate the important information to board members and to keep them informed of significant developments.  Still, there’s no need to clutter regular board meetings by reporting endless details about operations. <!–more–>

Probably the most effective way of keeping board members aware of what is going on within the organization is to have staff frequently make short presentations.  However, I have seen this approach used in dozens or nonprofit board meetings without success.  Two problems frequently occur.   First the staff person is so enthusiastic about an opportunity to talk with the board that the presentation time continues well beyond the allotted time, and, second, board members raise “micromanagement” level questions, which further extends the presentation session. To solve these problems, the board chair needs to suggest to detail seeking directors that the questions are very operational and can be answered “offline.” Second, the chief executive must meet with the staff person well ahead of the meeting and make sure that the material to be presented is succinct and the staff person is well aware of the time constraint. A “dress rehearsal” might even be appropriate for some staff personnel

Another technique is to use a consent agenda.  With a consent agenda, routine and previously agreed upon items are organized together in the pre-meeting agenda and then, hopefully, approved as a group.  If one or more board members questions an item in the group, it is placed on the agenda for the next board meeting. This process eliminates the time consuming effort of having a separate discussion for each item.

A third way is for the chief executive to meet with board members informally about every quarter. Occasionally, these meetings are with two directors at one time.  At these sessions, the chief executive can discuss the more “entrepreneurial or wild ideas” that might need testing and update them on operational decisions in greater detail.  Some of the meetings can happen quite informally, before or after a committee meeting or after a monthly board meeting. Some can occur at  appropriate social events. It is important to have the executive’s assistant keep track of the meetings and then to have authority to make new appointments to meet the quarterly schedule.  Obviously, the CEO would need to meet wit the board chair more often, and if the board is a national one meeting less frequently, a scheduled phone call is appropriate. One veteran CEO I know meets frequently with two board members. One is a long serving member, and the other is a newly appointed board member.

Source: “Policy vs. Paper Clips” Third Edition (2011).  Available on Amazon

My blog site: http://bit.ly/yfRZpz

A Traditional Nonprofit Board vs. A Nonprofit Policy Focused Board: The Difference is Operational

A Traditional Nonprofit Board vs. A Nonprofit Policy Focused Board: The Difference is Operational

By Eugene Fram

Scenario: The nonprofit agency, ABC, has been criticized for not having enough minority staff members. Because ABC, a large well-known organization, primarily serves urban residents in a major U.S. city, board members are concerned about the criticism. (more…)

A 21st Century Nonprofit Reality – The Chief Executive Needs to be a President/CEO

A 21st Century Nonprofit Reality – The Chief Executive Needs to be a President/CEO

By: Eugene Fram

Many of my viewers* know that I strongly favor nonprofit boards, which develop a budget level of more than $1 million (US) and employ about 10 full and part time people, should designate their chief executive as the President/CEO. A volunteer director then becomes the board chair. Below, in italics, is a response I received to my viewpoint listed on the Board Source blog site:

Interesting points. However, where I come from, executive director is the recognized title for the heads of non-profits, with the possible exception of multimillion-dollar agencies. Everyone understands it. Even when the ED is recognized (in bylaws and/or policies) as the CEO of the agency, they still tend to use the ED title, The CEO title smacks of the for profit sector, which may be off-putting to the social service sector, perhaps a tinge of “playing out of your league.” President is definitely from the for profit sector, and could be confusing from the perspective that some boards still refer to their chairs as “presidents. (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…)

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…)