Management Expectations of the Board – The Nonprofit Story – Part II Revised/Updated
I am indebted to Dr. Richard Leblanc of York University for the action headings used in this blog. The blog uses headings developed by Dr. Leblanc for his blog: “What a Board Expects from Management, and What Management Expects from a Board, January 27, 2013, York University Governance Gateway Blog. (rleblanc.aps01.yorku.ca) For reading simplicity, Dr. Leblanc’s specific quotations, which can apply to either FP or NFP boards, are noted in italics. (more…)
Trustee Boards
Board Expectations from Management – The Nonprofit Story – Part I Updated/Revised
Board Expectations from Management – The Nonprofit Story – Part I Updated/Revised
I am indebted to Dr. Richard Leblanc of York University for the action headings used in this blog. The blog uses headings developed by Dr. Leblanc for his blog: “What a Board Expects from Management, and What Management Expects from a Board,” January 27, 2013, York University Governance Gateway Blog. (rleblanc.aps01.yorku.ca) For reading simplicity, Dr. Leblanc’s specific quotations, which can apply to either FP or NFP boards, are noted in italics. (more…)
Once Again! Should a Nonprofit CEO Be a Voting Member of the Board of Directors?
The question continues to be debated, and the need for comment and opinion seems insatiable.
http://www.huffingtonpost.com/eugene-fram/once-again-should-a-nonpr_b_4408917.html
2014 Thoughts for Nonprofit Board Members
2014 Thoughts for Nonprofit Board Members
By Eugene Fram
Nonprofit board members and managers should be interested in two sections of the 2014 predictions from the Harvard Law School Forum on Corporate Governance, * which can be extended to nonprofit governance. <!–more–>
- …[T]he focus has shifted from check-the- box policies to more complex questions such as how to strike the right balance in recruiting directors with complementary skill sets and diverse perspectives. …
How A Nonprofit Board Director Can Initiate Positive Change
How A Nonprofit Board Director Can Initiate Positive Change
By: Eugene Fram
A nonprofit board member comes up with an idea that he thinks will do wonders for the organization. He is convinced that establishing a for-profit subsidiary will not only be compatible with the group’s mission but may even bring in new sources of revenue. It’s his ball–now what’s the best route to run with it? All too often in the nonprofit environment, initiating change can be as daunting as trying to get consensus in the US Congress! There are, however, certain interpersonal levers, which, if pushed, can accelerate the process–although one hopes that not all the levers will be needed in any specific situation. (more…)
Can the Deloitte® Governance Framework Be Applied to Nonprofits?
Can the Deloitte® Governance Framework Be Applied to Nonprofits?
By Eugene Fram
I have been impressed with the Deloitte® Governance Framework (Copyright-Deloitte®), and following are my opinions on how nonprofits might benefit by understanding the model.
The lower four sectors of board governance chart are functions that can be delegated to management. The level of delegation should depend on the stage of the board’s development. However many boards unfortunately continue to micromanage the nonprofit, long after it has outgrown the start-up stage. (more…)
Nonprofit Directors/Trustees Alert: Volunteer Chairman Held Liable for Nonprofit’s Unpaid Payroll Taxes – Updated and Revised
Following is a blog-post that I strongly suggest that you, your colleagues and friends associated with nonprofit or trustee organizations read carefully. As you read it, please keep the material below the link in mind.
http://www.mercadien.com/PDF/Volunteer_Chairman_Held_Liable_for_Nonprofits_unpaid_payroll_taxes.pdf
I think the situation presented above is more common than most directors/trustees think. As a layperson, I am surprised that the court did not spread the fine among all the directors.
The chairman was clearly trying to support a nonprofit in trouble. Perhaps he was so dedicated to the mission that he was trying to do everything possible to save it? Not Shown here is the fact that, “[T]he chairman is burdened with proving that they (the IRS) are not correct. … The law does not require the individual to have complete control over the finances, only what the court calls significant control.” (more…)
Nonprofit Alert: Follow the Government’s Regs!
Nonprofit Alert: Follow the Government’s Regs!
By Eugene Fram
Stakeholders of every nonprofit want their board members and managers to be passionate about the organization’s mission. However, in the current century, directors and managers must navigate a regulatory environment that can lead to substantial personal liabilities and possibly impair their own reputations and that of the organization.
For example, I recently read about a director of a nonprofit who was fined $10,000 by the IRS for failure to vote “no” on a proposed $2 million building contract between the organization and his building firm. The logic behind the fine appears to be a violation of the Intermediate Sanctions Act, Section 4958 of the IRS Code. (more…)
Director Independence: a Nonprofit Board Issue?
Director Independence: a Nonprofit Board Issue?
By: Eugene Fram
In the best of all nonprofit worlds, every director is an independent agent whose ability to make critical decisions on behalf of the organization is regularly uncompromised by outside pressures. This, unfortunately, is not always the case. Based on field observation I have concluded that questionable practices can plague nonprofit boards when social or political pressures are brought to bear on a director. In governance terms nonprofit decision-makers should be “outside directors,” not overtly or covertly susceptible to management or board colleague personal pressures.
Discerning recruitment committees can screen candidates to be certain they are not subject to influences that might impair their judgment as board members. Lack of independence could easily divide and perhaps polarize the board as has happened in our country’s Congress. A candidate who is “sponsored” by a major donor and maintains personal ties with the donor can create a “hornet’s nest” for the recruitment group. There are no easy solutions to these problems. (more…)
Nonprofit CEOs and Board Directors: How Expert Is Your CFO? Updated/Revised
Nonprofit CEOs and Board Directors: How Expert Is Your CFO? Updated/Revised
By: Eugene Fram
When hiring a chief financial officer (CFO), nonprofit organizations often find themselves with a major challenge, since many financial and accounting functions are identical with those of for-profit organizations. To compete, the nonprofits may need to offer higher salaries than typical for their types of organizations. Some trim the level of expertise required to fill the position. This is a dangerous move, especially if the organization is growing. Also the current CFO, if hired five or ten years ago, may not be up to date and make a major error that will harm the organization’s reputation, leading to a board restructuring and/or firing the CEO.
Both the nonprofit CEO and the board need to assess the CFO’s expertise annually by:
*Asking knowledgeable board members if they are receiving financial data and analysis in a format helpful for decision-making.
*Having an executive session with the external auditors yearly to obtain the firm’s assessment of the expertise of all financial personnel.
*Keeping track of reports that are frequently submitted late. Something might be radically wrong. (I know of one case where the board and CEO were only receiving a subsidiary report intermittently. The problem was the data reported involved old accounts that should have been written off months ago. The organization had to hire forensic accountants to determine what needed to be done to resolve the situation. The board terminated the CEO.)
*Making certain all financial personnel take two weeks vacation each year, so that a substitute needs to handle the duties.
*Having the CEO review the CFO’s expertise annually with knowledgeable board members.
For a current case of a board that evidently failed to adhere to such guidelines see:
Nonprofit Management 