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What's Wrong with My Board?

6/10/2014

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How often do we hear the complaint, "my board doesn't do enough to help our nonprofit organization succeed"? Too often. Must we just live with this situation? After all, nonprofit boards are, by definition, made up of volunteers and we all know they can't be counted on, right? Wrong.

The biggest factor in low-functioning boards is that board members don't know what being a good board member means in the nonprofit. And sadly, nor do many executive directors (ED). Or if they do, they aren't skilled at conveying this to their boards. So, boards end up doing their best, usually a far cry from what is really needed.


But the board role is different from that of the staff. And this really must be clear to both the board and the staff to avoid problems (micro-managing and apathy chief among them) and to achieve the nonprofit's true potential.

A good general guideline for the essential difference between board work and that of the staff is "if it's a matter of what to do, that's the board's work; if it's a matter of how, then it's staff." But, of course, the devil is in the details: the actual figuring out what's a what and what's the how. This is why the most important role in the nonprofit organization is the ED, because its primary responsibility is to bridge between the board and the staff. To be effective, the ED must understand the difference between board and staff work in their particular nonprofit and act to make the delineation clear to all.

Consider these steps to get both the board and the staff working optimally:

1) The board's big job is to set the destination for the nonprofit organization - where is it headed, why and by when? These questions should be asked and answered about once a year (things change!) by the board collectively, in a facilitated process that also includes key staff members. But it's the board perspective that should prevail in this setting, meaning that the facilitator should guard against the tendency to make laundry lists of new program ideas. There's nothing wrong with this, but programs tend to be more about how and so should be considered in staff meetings/retreats.

2) The ED and the board chair should plan this session together with a seasoned facilitator so that the session is productive, engaging and results in simple, clear answers to these important questions.

3) Then the staff should be tasked with creating a work plan by which the organization will make progress toward its chosen destination. The board can review this plan and should officially approve it, along with the annual budget to make it happen. But the board's work is to ask is this plan likely to get us where we want to go and for a cost this organization can afford? If the answer is no, the board doesn't fix the plan, they send it back with comments to the staff for revision.

4) When the year's planning is complete and the implementation is set in motion, then what do board members do? 

Act as expert advisers on issues that arise and decision-makers on important policy decisions

Act as key resources and ambassadors for networking and fundraising

Monitor progress on both the work plan and budget, and offer counsel on course correction where needed

If all this sounds like an unrealistic ideal, it's definitely time to do some leadership development within the organization. It can be challenging for an ED to "train" their board - especially if the board has been functioning in the "old way" for a while. But transforming the board into a meaningful contributor, one that serves the nonprofit wherever it is in its life cycle, and one that fulfills its governing role is the responsibility of the ED (and of board leadership, when the understanding is there).

The best place to start is the ED's own understanding of the board/staff roles: are you clear about what this looks like in your nonprofit? Once the ED is clear, initiating a conversation and process with the board chair to facilitate the board's understanding and then working through board orientation, governance, and meeting processes/standards are excellent places to begin.

And remember, EDs that routinely complain that their boards aren't functioning optimally are essentially wearing a sign that reads "I don't know how to do my job." Boards do what they are cultivated, asked and supported to do. Getting this right is a big job for any ED, but it is indeed the job.

Nonprofit-KnowHow is designed to aid EDs and boards in the important work of redeeming their leadership roles. The two-volume set explains the fundamentals of board/staff roles, accountability, relations and  governance (and much more) - and provides a range of implementation tools, such as board and officer job descriptions, board orientation materials, and more. Many EDs use Nonprofit-KnowHow as the first step with new board members to help them get started on the right foot from the get-go!





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Nonprofit Know-How: Putting the Pieces Back Together

1/14/2013

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By Rebecca Reynolds

Nonprofit organizations, like any group working together for a common purpose, carve out certain of their activities in order to delegate them. For example, the board works on strategic planning, the development staff work on grant writing, the accountant sets up the financials, and so on. This makes good sense - certainly everyone can't (and shouldn't) be involved with everything. That's obvious.

What isn't always as obvious though is when and how these activities should be brought back together.

In consulting with a wide range of nonprofits, I found that it was often my client's ability to see the connections between activities such as strategic planning, board development and grantwriting that really gained the client a quantum leap in their thinking and approaches. So, while delineating and delegation of work activity is key to getting things done, if the results of those activities are not re-connected for the benefit of the whole, the organization suffers.

For example, in many organizations development people write grants for funding from major foundations. Since foundations ask crucial management questions, effective grant proposals express the nonprofit's strategic approach to its mission and to the particular funding request. But even so, few if any board members - or in many cases, even executive directors - ever read the proposals. Nor in many cases, did the grant writers have access to the organization's strategic plan as the foundation for writing the proposals. This disconnect between two primary activities in the organization means a weaker, less effective grant proposal and a weaker, less-informed board.

And this is just one example of how the silo-ing of basic activities in a nonprofit can hinder its overall success.

What can be done about this? The most effective leaders think through what re-integration makes the most sense and then develop the mechanism in their organization by which it will occur. For example, it makes sense that good budget development requires the information provided by past years' financial statements and input from key staff responsible for earned income and for contributed. Leadership should develop policy and procedure to ensure that cross-pollination between responsible board and staff members takes place in budget development as a matter of routine, rather than expecting (or assuming) it to happen as the result of the initiative of those involved. 

In another example, fundraising and marketing campaigns should originate with the strategic plan, but too often these efforts are developed in isolation. This could be the result of the organization not having a strategic plan (or it being out of date) or it could be that leadership has not made it clear that these efforts must synchronize with each other. To address this, leadership could pass policy that all development and marketing materials will reflect the priorities and language of the organization's strategic plan, and then create procedure whereby the board collectively reviews marketing and fundraising materials, e.g., the basic grant proposal template, on an annual basis. Not only would this ensure that there is a strategic plan, that development staff have access to it, and that the intersection of these efforts actually takes place, but also that board members are up-to-date on what is being communicated about the organization.

This may seem obvious, but it's surprising how often nonprofits struggle to delegate activities effectively, and once this is accomplished, consider that the end of the matter. Or they chalk it up to a communication issue and assume the responsible individuals will take care of it. In fact, it is in the bringing of these delegated activities back together by leadership that the real benefits are realized. This is because, simply, everything is connected to and impacts everything else in an organization. A culture that values and nurtures this synergy is what makes for a balanced, resilient, innovative organization - instead of a siloed, reactionary, and defensive one.

The more the leadership of a nonprofit is fluent with the intersection between areas of major activity, the better able it will be to lead. This agility and breadth of understanding across the organization enables an organization to go from good to great, to use Jim Collins’ phrase. While specialized expertise in areas like development, planning, marketing, technology and finance is critical in today's world, it is leadership's ability to integrate them - to see what is greater than the sum of their parts - that gets big results.

Nonprofit-KnowHow: The Guide and The Workbook supports nonprofit leaders in reintegrating often siloed activities such as strategic planning, fundraising, board development, finance and more, for greater resilience and impact. Explore how here.

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The Nonprofit Business Model: Why it Still Works

10/28/2012

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By Rebecca Reynolds

"Nonprofits aren't sustainable."
How many times have I heard that? Too many. The idea that nonprofits aren't sustainable, that they are too dependent on gifts and grants, that they can only truly succeed with some sort of earned income stream reveals a fundamental lack of understanding about the nonprofit business model. Let's take a look.

First off, the idea that only earned income (the exchange of goods or services for money) is sustainable is ridiculous. How many for profit businesses have gone out of business because their source of earned income was no longer viable? Plenty. Earned income falls prey to the same ups and downs of the market that contributed income does. So, it's more apt to say that what is sustainable is having a broad enough income stream (funds coming in from a variety of sources) to ride the vicissitudes of the economy. Just as a financial advisor advises for a retirement portfolio, this is common sense.

Second, contributed income (grants and gifts) being unsustainable long-term is also ridiculous. United Way, Planned Parenthood, and the Boys and Girls Clubs of America - to name a mere few - have been in the nonprofit business with substantial funds coming from donations for more than 100 years each. That sounds pretty darned sustainable to me.

"Over dependence on gifts and grants" is like saying that Coca-Cola has an over dependence on its customers' willingness or ability to buy their product. Ridiculous. In fact, people have always been interested in contributing to good works, especially when there is the added incentive of a tax write-off for doing so. This doesn't mean these gifts can be taken for granted, any more than Coke can keep selling the same old way without regard to changing demographics, social trends and other market drivers. Nonprofits need to innovate just as continually and effectively as Nike or Coke (and rely on those specialists with the expertise to do so - more on this below).

Now let's look at where these fallacious ideas come from. I usually hear the nonprofit sustainability criticism coming from people in the for profit sector (often people with MBAs!) The idea of contributed income - money given without material gain - is foreign there (and I daresay, anathema). So, too many nonprofits are misdirected by board members coming from for profits who, not understanding the asset of the 501(c)3 or the profession of fundraising, push earned income methods such as golf tournaments, galas, and now online programs - all to avoid "dependence" on gifts. This misses the entire point of the nonprofit sector business model!

There's nothing at all wrong with golf tournaments or galas - many nonprofits make good money and many new friends with these types of revenue generators. But there also is nothing wrong with writing grant proposals to foundations that are in the business of granting money each year (5% of their funds, by law) or cultivating relationships with major donors who are looking for ways to put their money to good use. Nor is there anything wrong with applying for government grants that are specifically designed to encourage innovation and good works beyond the reach and ability of government.

In fact, the nonprofit sector is set up to benefit from the fact that it does good and important work for our society that is, for the most part, not commercially viable (if it was, there'd be a for profit taking it on, you can be sure!) In exchange for this good work, the American people 1) don't require income tax be paid on any profits generated (and yes, nonprofits CAN make a profit - it just can't be distributed to owners or shareholders) and 2) allow those who financially support these good works through organizations with 501(c)3 status to deduct the amount on their tax returns. In this way, nonprofits have an income stream wholly unique to them, with people expert in capitalizing on it.

And that's my next point. The only time there's anything wrong with gifts and grants is when the people trying to bring funds in from those sources don't have the know-how to do so. Trust me - I've seen it. It's like a group of earnest folks deciding to perform an appendectomy on someone in need - the gesture may be well-intentioned, but most of us would prefer a surgeon. It's no wonder board members get fed up with "fundraising" and want to do something they understand: sell something!

But this is simply cutting off the nonprofit's nose to spite its face. The fundraising profession has gotten better and better as the demand for good work increases (nonprofits account for more start-ups than for profits) and the pace of change drives the need for innovation. Nonprofits can't rest on their laurels and rely on the same foundations, major gifts and government grants year after year. Times change and so must fundraising strategy. In this environment, the value of expert fundraising professionals is significant, and savvy nonprofit boards will view them as just as critical to business success as their mission professionals. 

So, if we agree that sustainability comes from a diverse revenue stream, then nonprofits having contributed as well as earned income makes good business sense. In fact, it makes them incredibly sustainable, which is why the business model still works.

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Term Limits: Not just for Boards but for Executive Staff, too?

10/4/2012

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By Rebecca Reynolds

The idea of term limits for executive staff leaders in nonprofit organizations came up in a LinkedIn group. It's a provocative concept, one that incited a range of comments and got me to thinking.

For the most part, nonprofits take for granted that board governance should specify term limits for its member and officers. There's more than ample evidence that organizations without board term limits eventually experience problems: stagnating board involvement, decreasing vitality and innovation, and, in some cases, a leadership strangle-hold by a few individuals.

But should terms apply to executive staff positions as well? The idea was considered radical and to some, threatening, and I can understand why. One person explained that in smaller communities where the pool of qualified candidates is small, it would be onerous and even risky to the nonprofit's health and stability to observe staff terms. Another suggested that he saw no reason for terms if the executive was still performing well. Others felt it was in some way insulting to a professional to assume prescribe his/her tenure.

As I considered the proposition, I realized that a leadership staff lifecycle occurs organically in all organizations. In other words, all nonprofits at some point outgrow their leadership staff and need to address this eventuality. Some address it more directly and strategically, others - tragically - only when the situation has become dire. In fact, consultants are often called in to help in just these situations.

Organizations that are attune to the signs of staff leadership "terms" expiring, consider and plan for leadership succession as part of their strategic planning and executive leadership evaluation processes. Those organizations that are not explicitly attune, will instead be faced with the symptoms of leadership that is "beyond its expiration date," such as declining mission relevance, morale issues, financial problems, etc. The more aware organizations are that all things have a lifecycle - boards, staff, the nonprofit organization as a whole - the better they can prepare for change.

For example, the most challenging leadership transition in any organization is from the founder to the organization's first executive leader after the founder. This transition comes for all organizaitons, and yet, too often, it's left unspoken until things turn for the worse. This is because few organizations are able to overcome the emotionality surrounding the transition, least of all the founders themselves. And yet, this transition is a critical one for organizations to foresee and prepare for well in advance. Just having the conversation makes a huge difference.

But, while I find the concept of leadership staff terms useful, I think that may be too prescriptive a solution given the huge range of circumstances in nonprofit organizations. One organization's appropriate executive leadership tenure will be another's stagnating yoke and yet another's "blink and you missed it" time period. For example, a mature and stable organization will likely be benefitted by longer terms for their executives than younger organizations that are growing and changing rapidly.  The bell weather then for when leadership should turn over has everything to do wtih what the nonprofit currently requires - and less to do with an arbitrary number of years. 

So, instead of prescriptive term limits for executives, I endorse that nonprofit organizations build into their planning and evaluation processes explicit conversations about this issue - and this should apply to all major executive staff, from executive director to development director, adminstrators, CFOs and program directors. Evaluation processes for these positions should be developed with criteria defined to drive optimal performance by the nonprofit - this too will change over time, and so must the evaluation process and criteria for each executive position. Bringing aboard all executive staff with full awareness of the nonprofit's values and process around leadership succession will make clear that leadership lifecycle is a reality, not personal to them, and the nonprofit is proactive in defining how it will address such predictable aspects of its business.

The biggest problem in the area of leadership succession is that too many nonprofits just plain get comfortable when things are working well - the "don't rock the boat" mentality kicks in. Perhaps setting term limits would help ensure this doesn't happen. But even better is remembering that the only constant is change and having as the nonprofit's standard procedure being prepared for those changes that are predictable. Executive staff turnover is one. Not only does it make sense to plan for it, it's one of the smartest ways for the nonprofit to avoid highly charged, disruptive, and, at worst, litigious situations.

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    Rebecca Reynolds, author of Nonprofit-KnowHow,  is the author and editor of Nonprofit Navigator, the Nonprofit-KnowHow blog. Contact us if you'd like your nonprofit to be featured or to be a guest blogger on the Navigator!


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