Trustee Boards

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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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!

both-books

http://amzn.to/2eVDbxY      http://amzn.to/2fSNW0J

Order Multiple Copies from Createspace Book Store:

https://www.createspace.com/5748081 $4.00 Discount with code 6DLGFAGQ

https://www.createspace.com/3506243 $9.00 Discount with code WXEHFQ7W

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

frameugene@gmail.com

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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

Viewer Favorite: Undated and Revised for Current Conditions

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 next four years.  How can mid-level nonprofits uncover growth opportunities in the present environment? (more…)

The Wells Fargo Debacle—Insights for Nonprofit Directors

 

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The Wells Fargo Debacle—Insights for Nonprofit Directors

By: Eugene Fram                          Digital Free Image

Like apples and oranges, a comparison between a $23 billion corporation and a typical nonprofit organization is hardly appropriate. Yet the recent upheaval at the Wells Fargo Corporation provides a cautionary tale for those who serve on nonprofit boards.

On September 8, 2016, the following report appeared in The New York Times: (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…)

Resolution for 2017—Focus on Long-Term Nonprofit Sustainability

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Resolution for 2017—Focus on Long-Term Nonprofit Sustainability

By: Eugene Fram                            Free Digital Photo

Nonprofit boards, like their business counter-parts, can become complacent and lose their vitality. This sets the stage for nonprofit disruptions by the social and technical environments that surround them.   Following are some crucial priority questions (listed in bold) that have been raised for business boards. * They easily can be modified to drive the thinking of nonprofit directors and help them keep nonprofits sustainable and productive. (more…)

Practical suggestions to improve nonprofit boards’ outcomes and impacts.

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Do any of these describe you or your nonprofit board members?

·         Don’t have a way to effectively measure “client impact.”

·         Must build CEO/board fundraising capacity.

·         Have trustees who “micromanage” management.

·         Never get to strategic discussions. Focus is strictly operations.

·         Need a broad framework that separates policy & strategy development from operational activities.

·         Have a board/staff relationship that isn’t built on trust.

·         Need task forces that deliver more effective, timely results.

These books can help!    Please share this email with others who can benefit!
Order:  http://amzn.to/2eVDbxY           http://amzn.to/2fSNW0J

 

Order Multiple Copies from Createspace Book Store:

https://www.createspace.com/5748081 $4.00 Discount with code 6DLGFAGQ

https://www.createspace.com/3506243 $9.00 Discount with code WXEHFQ7W

Eugene Fram, Ed.D, Professor Emeritus

frameugene@gmail.com

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