Trustees

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.
Help other customers find the most helpful reviews

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.

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…)

A Nonprofit Board Has A Problem With A Recently Hired CEO – What To Do?

A Nonprofit Board Has A Problem With A Recently Hired CEO – What To Do?
By: Eugene Fram

With some possible variations, is the following scenario one that is frequently repeated elsewhere?

• The nonprofit board had engaged, Joe, an experienced ED, as President/CEO of human services counseling agency. The prior ED had been in place for 25 years, and was evidently unwilling to move to meet changing client
needs. For example, the agency only offered counseling services five days a week, 9 am to 5pm, with hours extended to 8 pm on Thursday night. There were no client options for emergency calls during nights or during
weekends. (more…)

Nonprofit Directors/Trustees Alert: Volunteer Chairman Held Liable for Nonprofit’s Unpaid Payroll Taxes

 

Following is part of a  blog that I strongly suggest that you, your colleagues and friends associated  with nonprofit or trustee organizations read carefully.  As you read it, pleas keep the following  in mind:

  • I think the situation presented here 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.”  

For more insights in how to avoid such situations, review these items on my blog site. Other items also may be of interest  http://bit.ly/yfRZpz  .

Nonprofit Directors & Trustees: Are You Aware of the IRS 990 Form?
Attn: Crisis Planners – A Leadership Plan For a Nonprofit Organization in Trouble
What To Do About Weak Nonprofit Board Practices
Your Dysfunctional Nonprofit Board – What to Do
Nonprofit Management/Governance – Avoiding Fraud – Internal Controls

For the full blog see: http://www.mercadien.com/index.html

Nonprofit Directors/Trustees Alert: Volunteer Chairman Held Liable  for  Nonprofit’s  Unpaid Payroll Taxes   

by Sherise D. Ritter, CPA, CGFM, PSA

A recent tax court case held that a volunteer chairman of the Board of Trustees is personally liable for a nonprofit organization’s unpaid payroll taxes. This is a scary development (more…)

Designating a ‘Lead Director’ Can Help Nonprofit Boards Improve Their Operations

For several years, I have suggested that some NFP boards experiment with the addition of a Lead Director to their rosters, just as for-profit boards successfully have since 2002.  This blog is divided into two sections.  First is an abstract of an article published I published on  the topic in the Chronicle of Philanthropy (June 2, 2011, p.34). This will help the viewer understand how I am adapting a business board process to a nonprofit board   Following that is a field critique of my proposal provided by Mark Soundie.   Mark is uniquely qualified to comment. He provides counsel to boards for the following types of nonprofits:  social housing providers, voluntary & social enterprise organizations from all sectors and all sizes & types of charities,  His essay below  provides an excellent summary of the pros and cons. Also, I have noted from a current study that about 37% of a small subgroup of 420 nonprofit directors responding to an NACD study have designated directors on their nonprofit boards. In addition, 88% of the group concluded that their lead directors enhanced board effectiveness.* These nascent results are encouraging news. Finally, a link follows to a comprehensive article on lead directors that appeared in April, 2012 in The International Journal of Not-For-Profit Law, Vol.14, Numbers 1-2.pages 52-57.
Lead director article: bit.ly/15s4eVv

At this point, April 2013, there has been little field interest in my proposal.  If some NFP boards are interested in conducting a trial or experiment with the idea, I would be  delighted to be in contact. Please send me an e-mail at frameugene@gmail.com . 

ABSTRACT

Few nonprofit boards do a great job of overseeing their organizations. Both nonprofit board members and CEO’s share that concern: Asked to rank their performance with academic-style grades by the nonprofit group BoardSource, chief executives gave their boards a C+, while board members gave themselves a B. <!–more–>

The use of such directors became popular as a way to deal with the public concern about the business world that prompted passage of the Sarbanes-­Oxley law in 2002. That legislation spurred the New York Stock Exchange to enshrine the idea of lead directors as a way to show that a company was well governed.

Given how time consuming it is to serve as a nonprofit board chair, especially of a complicated organization like a university or hospital, it seems logical to empower another volunteer to formally fulfill some of the responsibilities expected of a board chair.

A lead director can assist the chair in the day-to-day needs of leading a board (while not micromanaging) and to assist in rehabilitating a dysfunctional board. This is especially important when the chair has little management or board experience. (Example: a concert pianist chairs a social-services board.)

At first glance, adding a lead director to the structure of a nonprofit board seems like formalizing a position in a way that could impede the relationship among the chair, the CEO, and other board members.

The lead director should be viewed as just the opposite, as the business world has demonstrated.  H/she can help the CEO work more effectively and efficiently with board committees, especially in driving the work of the strategic-planning groups.

What’s more, the lead director can be an additional consultant or mentor to the CEO, especially when the board chair is unavailable. Because the lead director would help the board run better, this move could also do much to build morale at nonprofit groups.

CRITIQUE FROM MARK SOUNDIE

I think this is a great concept and the introduction of a Lead Director into most non-profits could make a huge difference.

These are my thoughts;

The role of Lead Director as outlined is a real departure from the established governance model that NFP organizations have worked to since their inception. The successful implementation of this new model would be a real challenge to many organizations that may see this as a criticism of their performance.

This is a multi-skilled and multifaceted position that most would find daunting (more than most are prepared to do). To support prospective Lead Directors there would have to be a specific and quite intense training programme (although I hate to use qualifications in respect of board members in the NFP sector this role could call for this level of commitment and validation). I believe that the title (Lead Director) is unhelpful in the NFP arena due to the connotation that a board member has a higher role than others and is a possible barrier to organizations looking at this model. I will continue to use the title in my response, but strongly recommend a change of title (still with director in it).

The relationship with the Chair and other board members needs a Lead Director to have great people skills, otherwise there is a danger of a “Big Brother” feeling developing. There also needs to be clear lines of demarcation between this role and that of others such as Company Secretary. I feel that as each of the identified roles in your article are developed for the NFP sector; they are built into a framework document for Lead Directors that contains a set of guidance documents, good practice examples and reference points. I see a real need for flexibility of approach within a strong framework as an essential factor in the successful delivery of Lead Directors.

To ensure continuity of role and delivery a Lead Director may have to be appointed in the same way that a Company Secretary can be and not subject to Board rotation/renewal in the same way as other board members. The role would then have to be written into the rules/constitution of the organization

To ensure quality and standards for Lead Directors an assessment criteria would have to be developed (probably internal and external validation).  Some sort of organisation/resource for Lead Directors would be needed to provide information, advice, training and networking opportunities. [Note: For-profit boards in the U.S. have a group of lead directors, from Fortune 500 companies, which meet several times a year.  Their suggestions are published in [Lead Director Network–Tapestry-Network — See Google]

There is a challenge in trying to sell this to a sector that does not have a great deal of confidence in its boards. The NFP sector sometimes need a proven model before they will adopt new thinking, this could be delivered through a pilot programme either delivered through academic means or by attracting funding or private sector support, this would probably take three years to design, implement, trial and evaluate. If the value of having a Lead Director can be established and then championed by those in the pilot, the sector is far more likely to adopt this.

Unfortunately some CEO’s are happy to have a weak board that does not challenge them too much, and this role could be perceived as a real threat by them (resistance from organisations in most need)

It is a shame that non-profits have not as yet seen the benefit of this but as with all new ideas a level of marketing/promotion is needed before people begin to see the possible advantages.

Mark Soundie, Governance Matters UK & Independent Community, Housing & Tenant Advisor

* NACD Nonprofit Governance Survey, 2012 – 2013, pp.10-11

Who is Primarily Accountable for Long Term Planning – Board or CEO?

Who is Primarily Accountable for Long Term Planning – Board or CEO?

By: Eugene Fram

THE QUESTION

 Can you further clarify whom you see as accountable for making what decisions in relation to the various aspects of corporate strategy creation and execution? If the board approves the CEO’s decisions do they not become board decisions? Where is the scope for the CEO to be accountable for making his or her own decisions?

MY ANSWER
“(My model)… promotes accountability. It requires the board and the CEO to work together to paint the big picture for the organization. It then holds the CEO accountable for implementing that vision. The (board’s) planning and resource committee (also) plays a major part in painting this picture by helping the organization and the CEO to look ahead to look to the future.” <!–more–>

Now for some details also found in “Policy vs. Paper Clips. *  (http://amzn.to/eu7nQl)

The CEO is asked, in addition to heading operations, to be looking ahead in the organization’s mission focused field. This is very important where the board is largely an eclectic group of volunteers. The CEO should be thinking about these issues 24/7 and bringing what S/he considers the important ones to the board’s planning and resource committee, from which the board has a process for selecting those that have potential for further study by a board-staff ad hoc committee or task force. Where the board is composed of field professionals, like the Associated Press, the CEO still has an obligation to be on the frontiers of field changes and opportunities, obviously very important to the AP.

* Board members from all backgrounds have an obligation to bring GENERATIVE, out-of-the-box, thinking to the board. Where this often falls short with nonprofit boards is that many attempt to acculturate directors to the culture of the organization, instead of being open to the person’s expertise and culture. For example, if a director has expertise in financial planning, nonprofits often will ask the director to be involved with immediate accounting issues, instead of expanding the organization’s financial outlook.

Many of these field insights are covered in my blog site, now numbering a selection of over 100 current blogs. http://bit.ly/yfRZpz

See previous blog:  Differences: Nonprofit Board Board Policy/Strategy Development vs. Management Operations

*PS: Recent Comment on the Model

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.

Difference: Nonprofit Board Policy/Strategy Development vs. Managing Operations

Difference: Nonprofit Board Policy/Strategy Development vs. Managing Operations

By: Eugene Fram

Following is how I view the difference between the nonprofit board functions versus operations management functions. Based upon my governance model (see bottom of page), all of the responsibilities listed below are board functions. <!–more–>

A. DIRECTS MANAGEMENT
1. Establishes, in partnership with management, long-term organizational objectives
2. Sets overall policies affecting strategies designed to achieve objectives.
3. Employs the CEO.

B. JUDGES MANAGEMENT ACTIONS
1. Evaluates short-term and long-term management performance.
2. Determines whether policies/strategies are being carried out and goals achieved.

C. APPROVES MANAGEMENT ACTIONS
1. Critically reviews, approves, or disapproves proposals in policy areas (for example, major capital needs or expenditures and major contacts)
2. Provides formal recognition and acceptance of executive decisions when related to operational concerns.

D. ADVISES MANAGEMENT
1.Acts in an advisory consultative capacity, when sought by management.

E. RECEIVES INFORMATION FROM MANAGEMENT
1. Regularly receives reports on the organization (e.g., performance, program development, external factors, other challenges or concerns).

F. ACTS AS A PUBLIC AND COMMUNITY RELATIONS RESOURCE FOR MANAGEMENT.
1. Keeps the organization attuned to the external environment in which it operates.

G. FUNDRAISING PARTNERSHIP BETWEEN BOARD & CEO

1. CEO & staff act as “scouts” for fundraising opportunities.  Board members act as the “cavalry” to team with management,  to make generative proposals, to make formal proposals and to make needed interpersonal contacts.

For more detail on how this fits into my policy/strategy model, see: “Policy vs. Paper Clips,” Third Edition, (2011). Available on

Amazon.com: http://amzn.to/eu7nQl

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…)

Reissue: Can a board member ever hold a staff position in the same nonprofit organization?

Can a board member ever hold a staff position in the same nonprofit organization?

THIS BLOG CONTINUES TO HAVE CONSIDERABLE READERSHIP SINCE IT WAS ISSUED EARLIER THIS YEAR.

By Eugene Fram

Sometimes a board member acts not as a director but as a different kind of volunteer. For example, Director Z has a particular accounting skill and wants to utilize it to help the nonprofit. The CEO agrees.

In this instance the board member is not a board member, but a volunteer working under the direction of the CEO. This distinction is easy to understand if you think about the example of a Girl Scout leader who also serves as a board member on a Girl Scout regional group. As leader, she follows scouting guidelines and directives provided by the organization’s professionals. As a council director, she helps to set policy for the movement in the geographic area. In only one instance does she act as a director.

Whether or not he/she should receive a payment for the work is subject to various state law nonprofit laws and approval of the board.

Source: Policy vs. Paper Clips, Third Edition, 2011, pp.231-232.

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

What To Do About Weak Nonprofit Board Practices

What To Do About Weak Nonprofit Board Practices

By Eugene Fram

Peter Rinn, Breakthrough Solutions Group, recently published a list of weak nonprofit board practice. * Following are some of the items listed and my estimation of what can be done about them, based on my experiences as a nonprofit board director, board chair and consultant.

• Dumbing down board recruitment – trumpeting the benefits and not stressing the responsibilities of board membership.
Board position offers frequently may be accepted without the candidate doing sufficient due diligence. At the least, the candidate should have a personal meeting with the executive director and board chair. Issues that need to be clarified are meeting schedules, “give/get” policies and time expectations.
In addition, the candidate, if seriously interested, should ask for copies of the board meeting minutes for one year, the latest financials, and the latest IRS form 990. (more…)